The Opportunity Behind the CFPB’s Consumer Complaint Database

The Consumer Financial Protection Bureau’s collection and use of consumer complaint data has been a hotly contested issue among lenders and lawmakers.

But a new effort to streamline the response process under the CFBP’s database for lenders and other companies may present an opportunity for lenders to respond to the CFPB on how complaints have been handled.

The Consumer Financial Protection Bureau (CFPB) recently published a notice that the bureau is developing a form to allow companies to proactively participate in its online consumer complaint database for viewing and responding to consumer complaints.

Until now, many companies have not had direct access to the portal that the CFPB requires large banks to review. Under the Dodd-Frank Act, company portal users must provide the CFPB with a response to each complaint within 15 days of when the company received it via the portal.

Essentially, companies that can log in to the portal are able to interface more directly with the CFPB’s Office of Consumer Response, and have greater access to complaint information, says Michelle Rogers, partner at BuckleySandler LLP.

While the CFPB aims to make applying to the portal easier for companies not already required to register, whether more companies should be expected to respond to all complaints is another question.

The benefits of increased access

For companies subject to the CFPB’s jurisdiction, there are often benefits to knowing what and when consumers are saying negative things about the company to the CFPB, so the company can address the complaint, says Jeffrey Naimon, partner with BuckleySandler LLP.

“[Action taken] could include determining that [the complaint] has no merit, but might indicate better communication is needed, or if it has merit determining whether consumer remediation is appropriate or whether operational or policy changes are in order,” Naimon says.

In addition, it can also be useful in spotting trends to proactively address risk, which could lead to an investigation, he says.

And, participation in the portal can also look good from a compliance management perspective, Rogers says.

“It looks good from a regulatory standpoint to be able to say, ‘We’re monitoring our complaints within the bureau’s portal’ —both in an examination and in an investigation context,” she says.

The CFPB also uses complaints to decide which companies will be targets for enforcement actions, says Barbara S. Mishkin, counsel with Ballard Spahr LLP, in client alert.

“By demonstrating that it is responsive to complaints, a company may be able to forestall enforcement action or mitigate any penalties if an enforcement action is begun,” Mishkin says.

Why some lenders disagree

But mounting skepticism toward the database and other related CFPB initiatives also play a role in the way the proposed form is being received by some in the industry.

Following the CFPB’s recent proposal of a Consumer Complaint Narrative Database, the Mortgage Bankers Association (MBA) lent its voice to the growing opposition against the initiative.

“There are some institutions that are skeptical about the process in general,” Rogers says. “Because the complaints aren’t vetted, they may not view it as constructive.  And, particularly for smaller companies, having to monitor and respond to complaints through increased access can be a costly resource expenditure.”

Comments regarding the proposed Company Portal Boarding Form are due by Feb. 2, 2015.

Written by Cassandra Dowell

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