My partner, Sam Friedman and I have frequently written about the importance of handling customer complaints. Sam likens customer complaints to the canary in the coal mine. If that canary quits singing, you had better don the oxygen mask.
When regulators address an audience of consumer finance lenders, there is usually a discussion about customer complaints. Last year, I listened to the Texas OCCC director report to the Texas Consumer Finance Association on customer complaints, breaking them down by category. Collection complaints led the list, followed by disputed account balance, alleged improper payment application, complaints about the cost of the loan, and complaints about difficulty in repaying the loan.
Traditional installment lenders continue to fall near the bottom of the list of financial service providers receiving complaints. Those near the top include debt collectors, payday lenders, title pawn lenders and credit reporting agencies. I think this is a function of the type of loan provided as well as an indicator that traditional installment lenders take complaints seriously.
Further, most traditional installment lenders and credit sellers have adopted meaningful Compliance Management Protocols that address customer complaints. If you are one of the few who has not, you may want to go find that oxygen mask.
Meanwhile, it is not uncommon for us to hear from clients and trade association members, who have received a letter or a call from the Bureau of Consumer Financial Protection f/k/a the Consumer Financial Protection Bureau that goes something like this: “The CFPB has received a complaint against your company. You must register with the Bureau's Portal in order for us to give you information concerning this serious matter. Your failure to address this matter may result in our taking of your first born.” (Well, maybe I exaggerate a bit.)
The point here is that there is no requirement in the Dodd-Frank Act or the Bureau regulations that you register your company with the Portal. There are valid reasons to decline the invitation to do so, not least of which is the exposure of a great deal of information about your company on the 11 page Boarding Form. Check out the form here.
In deciding whether or not to join the Portal, one consideration is whether it is or it is not likely that your Complaint Management Protocol will successfully capture all legitimate complaints made against your company. If so, then even if the BCFP has delivered the letter to the proper company (and often it has not), there can be little for the Bureau to complain of, if there is a clear process, known to customers, for addressing complaints.
Practice Pointer: The response to the invitation to join the Bureau's Portal is one to be carefully considered with your legal counsel.