The Consumer Finance Protection Bureau announced last week that it has expanded the Consumer Complaint Database it launched last summer, increasing the number of complaints about credit card companies from 19,000 or so to 90,000. The added data comes from additional players such as mortgage companies, banks, private student loan providers and other consumer lenders.
The CFPB is also releasing this data as an API and is encouraging developers to use it.
Pushback From the Finance Sector
Although supporters welcome the bold move, the finance community has cried foul, arguing that the data is not vetted properly, and that the institutions don’t have sufficient time to respond before it is made public.
Some of the worrisome scenarios they have painted range from reputation damage due to disgruntled customers to smear campaigns by rivals or even organized protests that encourage people to file false complaints en masse against an institution that is seen as having committed a wrong.
This essentially is raw data, said White & Case Banking Partner Ernie Patrikis, who is a former general counsel of the New York Federal Reserve and alternate member of the Federal Open Market Committee.
“Raw data is not always very reliable, so one has to be very careful,” he told CRM Buyer.
The system could conceivably be gamed, he said.
Indeed, the notion of the government posting unverified complaints seems unprecedented, said Travis Nelson, counsel at Reed Smith, and former enforcement counsel at the Office of the Comptroller of the Currency.
“Even in cases where a governmental agency posts a charging document on its website, such has typically been the result of extensive precharging investigation by law enforcement or examiners,” he told CRM Buyer. “Here, these consumer complaints will not have undergone the same level of internal agency scrutiny before making them public.”
Then there is the issue of the APIs, noted Mark Melodia, partner and head of Reed Smith’s Global Data Security.
The CFPB designed this as a database to be mined for trends and other Big Data-style insights, he told CRM Buyer.
“App developers are at work as we speak,” he said.
The angst of the finance industry isn’t universal, however.
This database is evolutionary — not revolutionary — in that it expands what has been done with credit card companies, noted David Reis, a professor of law at Brooklyn Law School.
“As a general rule, regulators should favor disclosure, which is integral to most consumer protection regimes,” he told CRM Buyer. “Banks and financial institutions have focused on the way that the database can be used inappropriately — allowing, for instance, adversaries to build an unverified record of wrongdoing by financial institutions.”
There is no evidence that this has occurred so far, Reis said — and if it does occur, it can be addressed.
There are reasons consumers would want this data, raw though it may be, said Bruce White, professor of computer information systems at Quinnipiac University.
Ninety thousand consumer complaints seems like a lot, but it might be the case that one institution has gotten an overwhelmingly large number — such as 4,000 compared to another bank’s 10 complaints.
“As a consumer, I might be leery of a large number of complaints against a particular financial business,” he told CRM Buyer. “Further analysis shows that there are about 4,500 banks in the United States — that equates to about 20 complaints per financial institution on the average.”
In the long run, the Consumer Financial Protection Bureau seems to ask for accountability for users of financial services, he said, “and that is a good thing.”