Consumer Financial Protection Complaint Database Extends Vital Role for Citizens in Enforcement Process
By Scott Klinger, Center for Effective Government
Using Citizen Stories, the CFPB Identified Abuses, Won $5 Billion in Refunds for Consumers from Illegal Charges by Banks
The nation’s newest government agency, the Consumer Financial Protection Bureau (CFPB), is also one of the most responsive to the changing needs of Americans. Born in the aftermath of the Great Recession, the CFPB is using citizen complaints as a powerful enforcement tool to crack down on abusive banking practices.
Since it was founded in 2011, the CFPB has received more than 627,000 complaints about the policies and practices of the nation’s financial institutions. CFPB employees are trained to spot trends among these complaints and use them to direct the agency’s enforcement actions. To date, those enforcement actions have resulted in $5 billion in illegal fees being refunded to customers. In addition, dozens of banks and other financial institutions have been sanctioned with fines, and the most abusive institutions have been shut down.
Sharing personal stories helps Americans avoid bad banks and abusive lenders.
The CFPB began sharing the number and type of complaints against individual financial institutions in 2012. In June, the agency once again demonstrated its commitment to transparency by posting the first 7,700 complaints in the citizens’ own words in its Consumer Complaint Database. For the first time, financial service customers can read about the experiences of their fellow citizens before they make decisions to enter a relationship with a particular bank.
The CFPB began collecting stories of abusive practices shortly after it opened its doors. When consumers file a complaint with the CFPB, they are offered a choice of whether they want their complaint publicly shared; 59 percent of those submitting stories have chosen public disclosure.
The agency’s decision to make the complaints public was bolstered by about 30,000 citizen comments on a proposed rule last year. Americans for Financial Reform, U.S. PIRG, and many other consumer advocacy groups helped organize citizen pressure. Overwhelming public support for the measure allowed the agency to reject industry objections to allowing consumer comments to be posted directly on the agency’s website.
Banking regulators have fined the nation’s top banks billions of dollars to settle charges of illegal and abusive practices. Too often, these steep fines have been written off as a cost of doing business, and little else changes. The CFPB’s database of consumer experiences takes aim at the financial industry’s market-tested brand messaging, creating a potentially potent tool for eliciting changes in real bank practices that fines alone often fail to accomplish. This kind of exposure can affect a bank’s ongoing bottom line in a way a one-time fine rarely does – hence, their concerns about a consumer database.
In an effort to also reward good behavior by financial institutions, the CFPB has just concluded a public comment period concerning the establishment of a consumer compliment database, providing positive stories of consumer experiences with the financial services industry.
The CFPB is not the only agency that uses citizen reports to bolster enforcement.
The CFPB is not the first federal agency to collect and organize citizen complaints. For more than three decades, the U.S. Department of Transportation’s Aviation Consumer Protection Division has collected complaints from airline customers. It compiles these complaints and reports monthly by issue and by airline. Citizens can compare the relative number of complaints filed against the nation’s air carriers, but they know nothing of the specifics of the incidents involved.
Similarly the Consumer Product Safety Commission gathers consumer complaints about defective or dangerous products through its SaferProducts.Gov website. It uses this information to inform and direct its investigative resources. The National Highway Traffic Safety Administration also collects information from consumers, auto mechanics, and insurance companies about vehicle safety concerns, with this data serving as the basis for vehicle recalls and other enforcement actions.
In addition, the Occupational Safety and Health Administration collects citizen reports of unsafe workplaces and uses them to guide inspection and enforcement efforts.
Increased disclosure of citizen complaints would help improve corporate performance.
Each of these important government agencies should consider following the CFPB’s actions and give citizens with product safety concerns the option of sharing their complaints with their fellow citizens. The real-time sharing of information could save lives and speed up industry responses when problems arise.
Share your story. Become a citizen-enforcer.
Exercise your voice as a concerned citizen and consumer and let the appropriate government agencies know when you’ve had a problem with a business that they regulate. Your stories help direct government inspectors toward the most glaring problems and abusive practices. And if more agencies follow the lead of the CFPB in facilitating information sharing among citizens, the quality of products available to American consumers will steadily improve.
Here’s a list of select agencies eager to hear your concerns and complaints about companies they oversee:
Consumer Financial Protection Bureau’s Tell Your Story Form (the public database of narratives about consumer experiences with a company) or Complaint Form (CFPB forwards your complaint to the company and asks for its response on your behalf)
Consumer Product Safety Commission’s SaferProducts.Gov Reporting Form
Department of Transportation’s Aviation Consumer Protection Division Comment Form
National Highway Traffic Safety Administration’s SaferCars.Gov Complaint Form
Occupational Safety and Health Administration’s (OSHA) Complaint Form