The Consumer Financial Protection Bureau’s latest proposal is earnestly offered, well meaning, and full of good intentions.
It’s also as dumb as a wet bag of hammers.
The CFPB, ensconced in its temporary dwellings, may not be thinking clearly without having the serenade of the waterfalls at their under-renovation headquarters.
But that’s no excuse for what they are floating: they want to allow public access to the database of complaints they get about financial products and services.
Currently, that information isn’t public, but the CFPB wants to allow consumers to have the option to “share their account of what happened in the CFPB’s public-facing Consumer Complaint Database.”
Apparently, the people at the CFPB have decided this whole social media fad is here to stay and they better hitch their wagon to it. After all, if the CFPB doesn’t provide a place on the Internet for consumers to yelp about their complaints, no one will, right?
Sure, there’s Angie’s List. Epinions. ConsumerAffairs.com. About a hundred others. And Yelp.
Of course, none of those have the official stamp of the U.S. government. And that’s the problem.
The CFPB says that publishing consumer narratives would “provide important context to the complaint, help the public detect specific trends in the market, aid consumer decision-making, and drive improved consumer service.”
Which would be true in a world where everyone is honest, well-meaning and apparently as naïve as the CFPB.
But the Internet is a weird and irrational place. I know; I work there. Is this the CFPB’s first time on the Internet?
The complaints the CFPB wants to publish on their site will not have been vetted, investigated or adjudicated.
Even setting the trolling aside, has the CFPB never looked at the actual content of complaints they get, and what the outcome usually is? Here’s a hint: eight out of 10 mortgage complaints – when the CFPB investigates them – are tossed out.
The CFPB received 163,700 consumer complaints in 2013, nearly double the total 90,000 they received in 2012. Of that, 59,900 are mortgage related.
Of all mortgage complaints, 77% are closed with a simple explanation or clarification to the consumer, without relief of any sort.
Another 3% are closed without relief or explanation. Right at 5% involved an administrative response. The company in question was reviewing the complaint in 6% of the cases, and in less than 1% of the cases, the company did not provide a timely response.
Just 2% involved the case being closed with monetary relief for the complainant, while 7% involved non-monetary relief for the consumer.
So in less than 2% of the cases, the company was demonstrably wrong and monetary relief was provided. In 7% of the cases, non-monetary relief was provided.
That means four out of every five complaints get closed with an explanation, or dismissed without even bothering with an explanation, much less relief to the consumer complainant.
So, assuming a sample portion of all people who file a complaint about a financial company agree to let their complaint be made public – eight out of 10 will be pretty baseless.
“By publicly voicing their complaint, consumers can stand up for themselves and others who have experienced the same problem. There is power in their stories…” CFPB Director Richard Cordray says.
There is also bull hockey in a lot of their stories.
Oh, but don’t worry, the CFPB will redact any identifying information so that the consumer can stay anonymous.
Yes. Anonymous complaints on the Internet, hosted on a government database – what could possibly go wrong?
It only takes a few thousand stupid people to upgrade dumb to destructive, and the Internet has proven there’s not nearly a shortage of the former.
(Please trust me on this, CFPB. No matter how smart and tight your system is for verifying the relationship between the consumer and the institution, it’s not half as smart as the merry sociopathic pranksters at 4Chan, or the denizens of Anonymous.)
And how about fairness?
The CFPB responds, “Companies would be given the opportunity to post a written response that would appear next to the consumer’s story. In most cases, this response would appear at the same time as the consumer’s narrative so that reviewers can see both sides concurrently. This response would also be scrubbed of personal information.”
Ooh, almost sounds fair. Except it’s not, because if the company actually addresses the complaint online (and it likely won’t, given legal liability such a whizzing match could create) it won’t be able to address the specific complaint because of consumer privacy protections. They can’t pull up the customer’s financial records and use them to prove the customer is wrong, or making a false allegation.
So we’ll get this.
Customer: “Fred’s Bank changed the terms of my mortgage after I signed it, the bank manager stole my wife and the VP of finance kicked my dog. They donated all my savings account to the Dark Church of Mighty Cthulu.”
Fred’s Bank: “At Fred’s Bank we value all our customers and strive to meet their needs with professionalism, compassion, integrity and our core values. We investigate all consumer complaints, but cannot comment on ongoing cases.”
Call it asymmetric information warfare. The customer gets to level any accusation they want, no matter how damaging and no matter how confabulated. The financial company gets to go into the ring wearing handcuffs and a blindfold.
I know it’s hard for most people to have sympathy for financial companies. And if all those complaints the CFPB get were legit, I’d be more open to this. But considering eight out of every 10 complaints the CFPB gets on mortgages alone are absent any merit, I’m not wasting a lot of faith on trusting the rest of the complaints they get.
The CFPB says that this proposal will help “spotlight specific trends” and “help consumers make informed decisions.”
How can you do that with unvetted and flawed data? How informed a decision is a misinformed decision?
This is when you know several people along the line only know about business from what they studied in college and what they’ve been told by fellow, lifelong public employees.
You can’t get good conclusions from bad data, and data that is 80% flawed is bad data. These “stories” are worthless if their charges haven’t gone through some kind of due process.
Same old, same old in the old journalism world: The complaints will get the headlines, while the final adjudication that exonerates a company gets buried on page 3.
The combination of arrogance and ignorance is infuriating.
Why not do the smart thing and publish only the stories of those cases that have been adjudicated? Be fair to both sides, and not treat someone or some entity as guilty until proven innocent?
Is it because it might show less of a demand for the CFPB than the overstock they keep pushing on the market?