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The CFPB's Search For Better Data On Consumer Complaints

BY Sarah Lai Stirland | Friday, April 26 2013

The Consumer Financial Protection Bureau is working on a pilot project to better contextualize the data it publishes on consumer complaints about credit cards, said Scott Pluta, the CFPB's assistant director for the office of consumer response, in an interview Thursday.

The CFPB recently expanded public access to its database of consumer complaints over a variety of financial products. The database of complaints, which is searchable and sortable to the public, now covers more than 90,000 complaints about mortgages, credit reports, and student and consumer loans. The CFPB first began publishing the complaints about credit cards in July 2011.

The move sparked controversy because although the CFPB verifies that the complainants do in fact have a relationship with the bank, the complaints themselves are unverified, and there's not a huge amount of detail associated with them. In a comment letter filed with the bureau last July the American Bankers Association opposed the expansion of public access to the unverified complaints about financial products, noting that the data also hadn't been "normalized," i.e. put into context. For example, larger banks are likely to receive more complaints than smaller banks (in the case of the CFPB's public database, only banks with more than $10 billion in assets are covered.)

In our interview, however, Pluta noted that the Freedom of Information Act makes all this complaint information accessible to the public anyway. The idea behind making the raw complaint data accessible to the public is for enterprising individuals, the media and companies to normalize the data and make it meaningful for themselves, he said. But that doesn't mean that the bureau isn't working to provide more context itself.

"We knew we wanted to do it at some point," Pluta said. "The value of releasing what we had, we thought at the time, outweighed waiting to normalize, because I do think that the data has value without being normalized."

Beyond the Arc, a consulting firm in Berkeley, has made a business out of interpreting the CFPB for banking clients. Steven Ramirez, the company's CEO, said that the company puts the data in context for its clients when using the complaint information to compare how banks stack up against each other in terms of number of complaints they receive per product.

In a recent blog post, the company noted that the percentage of customers disputing how companies addressed their complaints had declined from 23 percent in December 2011 to 10 percent in March 2013, and that the number of untimely responses had also declined to one percent from 10 percent in the same period.

"Although the available data cannot verify whether the CFPB is making a difference in the financial services industry, the data suggests that customer experience is improving," wrote the author of the post. "Because we’re seeing a steep drop in both the volume of consumer rebuttals and the time between complaint submission and accepted resolution, it appears that banks are responding more quickly and effectively to resolve customer complaints."

But beyond such correlations and vague conclusions, it's difficult to tell much more from the information. For example, CFPB's recent summary report on its complaint database notes repeatedly that many of the complaints across the various product areas result from confusion. It's difficult to discern whether the complaints area result of malfeasance.

Like other federal agencies, the CFPB collects the data to enable it to discern trends and to investigate possible cases of malfeasance. It differs from other agencies like the Federal Trade Commission in that it makes some portion of those complaints searchable and accessible online (the FTC publishes aggregate complaint trends in a PDF file.) The CFPB's complaint internal databases actually contain much more detail -- it's just a question of what else and when it decides to make public.

As for the ABA's concerns, Pluta responded: "We've worked pretty closely with them over the past couple of years, and they've given us a bunch of feedback about how our complaint handling system works, and our public database, and I feel we've been pretty responsive to that."