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that these complaints will be taken at face value and used to target companies for examinations and supervisory action. Others, such
as the credit reporting agencies and debt collection companies, feel that because they typically do not have a business relationship with the consumer, a complaint against them does not represent anything meaningful to consumers in decid- ing where to go for credit.
Clear as Mud
Another major focal point for in- dustry criticism is the failure to normalize the public database or to provide complaint data relative to the overall size of the company. Companies claim that consumers cannot properly measure companies against one another using complaint data if they don’t have su cient context for the volume of complaints received relative to the overall size of company portfolios. Smaller institutions, such as credit unions, are concerned that a system driven by complaint volumes, without di erentiation among companies, will subject them to particularly signi cant harm.
The CFPB has responded by saying that it tries to ensure that a valid business relationship exists be- tween the consumer and the com- pany by enabling companies to choose from a set of “administrative response categories.” Through
these categories, the company can indicate if it has been misidenti ed, if the product is related to consumer nance or if the complaint was submitted by a third party lacking
authorization (e.g., not an actual customer), among other options. Furthermore, despite its emphasis on the value of data in decision- making, the CFPB actively disclaims responsibility for the reliability of the data that it releases publicly.
In a September 2015 report on int- ernal controls governing accuracy in the database, the O ce of Inspector General (OIG) for the Federal Re- serve found a number of ways that the CFPB’s management of the public database could improve.
The OIG recommended several changes to policies and data con- trols, including increased monitoring of company responses, improved transparency of procedures for consumers ling disputes and com- panies ling late responses, and a number of mechanisms for ensuring accurate uploading of information
to the database. The study made particular note of the potential for consumer and industry confusion where there is a disconnect be- tween the CFPB’s Consumer Re- sponse Division’s public guidance and its internal procedures.
The OIG report also draws atten- tion to the division’s e orts to manage the growing volume of
complaints, which have nearly tripled since the study was con- ducted. As complaint volumes move steadily toward the 1 million mark, the challenges associated with managing the quality of the data grow as well.
Quantity over Quality
The CFPB’s announcement that it would begin publishing the content of consumers’ complaint narratives introduced a signi cant new ele- ment to how the CFPB’s consumer data is put to use. The bureau now asks consumers if they want their scrubbed complaint narratives to be released publicly and gives companies the option to choose a public response from a small menu of options, such as “closed with explanation” or “closed without explanation.” Also, companies are expected to provide a response narrative depending on the re- sponse category they choose.
Between the public database and published narratives, the CFPB pro- vides the loose equivalent to a Yelp service—combining numerical scores for companies in the form
of complaint volumes, as well as narrative consumer comments. In practice though, the tools the CFPB
How PrePaid StackS UP
volume 9 • spring 2016
The total number of complaints in the CFPB’s monthly reports dwarfs prepaid- speci c complaints as these 2015 gures show.
July August September October November December
total cFPB complaints
26,486
25,309
22,855
23,886
20,586
20,388
Prepaid-related % of Prepaid complaints complaints
188 0.71%
178 0.70 %
180 0.79%
891* 3.73%
257 1.25%
230 1.13%
*The uncharacteristic spike in October’s tally might have been the result of RushCard’s temporary service disruption during a technology conversion, after which the CFPB was soliciting related complaints via social media.
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