Dodd-Frank empowered CFPB to treat consumer complaints as an integral part of CFPB’s mission. As of March 1, 2015, CFPB has handled 558,800 complaints on many consumer financial products, including credit cards, mortgages, bank accounts, private student loans, vehicle and other consumer loans, credit reporting, money transfers, debt collection and payday loans. Despite objections from many industry commentators, yesterday,  the CFPB finalized its policy to permit consumers to publish complaint narratives in its public database. This policy is relatively unchanged from its July 2014 proposal.

Purpose of Policy Change
The CFPB’s Consumer Complaint Database was launched in June 2012 and permits anonymous, individual level information about the complaints received, including the date of submission, the consumer’s zip code, the relevant company, the product type, the issue the consumer is complaining about and how the company handled the complaint. The new policy, which is expected to be published as early as March 26, 2015, will allow consumers to “opt in” to publishing the entire consumer narrative of their customer experience. However, the CFPB will not publish any scrubbed and consented to narratives until sufficient time has elapsed to allow the CFPB to adequately assess its implementation of the policy which will be at least 90 days after publication of the Consumer Complaint Narrative Policy in the Federal Register. The rationale behind this policy change is to “shed light on the full consumer perspective behind a complaint. Narratives humanize the problems consumers face in the marketplace.” said CFPB Director Richard Cordray.

Complaint Procedure
The CFPB has published a “Consumer Complaint Narrative Policy” which details the specific procedures and safeguards that the agency has put into place to publish narratives in the database. Consumers can submit a complaint to the bureau and identify who they are, the complaint they have and when it occurred. They will be given a text box that allows them to attach documents and describe what happened and there will be an option to check a box to consent to the sharing of their narrative. The complaint is then forwarded to the company for a response. Companies are not obligated to offer a public response. The CFPB will give companies the option to select from a set list of structured response options as a public facing response to address the consumer complaints. Once the CFPB has determined that the complaint is not a duplicate complaint and that the consumer has a confirmed relationship with the financial institution, the CFPB will publish. The CFPB will list the complaint in the database the earlier of (i) 15 days after the company has received the complaint and (ii) once the Company has responded to the complaint. The consumer narrative portion will be disclosed by the CFPB the earlier of (i) 60 days after the company has received the complaint and (ii) once the company provides its public-facing response.

CFPB will Scrub Consumer Information
A consumer can decide at any time to “opt out” and withdraw their consumer narrative from the Consumer Complaint Database. Prior to publishing the narratives, the CFPB will take steps to remove personal information from the complaint according to a “robust scrubbing standard” methodology which will scrub the complaint of names, telephone numbers, account numbers, social security numbers and other direct identifiers such as gender, age, race and ethnicity. It is unclear at this time what the “scrubbing methodology” is. The CFPB has indicated that it intends to finalize and post on its website the Consumer Complaint Database scrubbing standard in the near future.

Takeaways

  • The implementation of this policy may increase operational costs to companies’ complaint handling operations. It will also increase burdens on the CFPB’s own complaint handling operation since presumably, it will need to ensure that it is holding itself to a robust “scrubbing methodology” to ensure that consumer’s personal information does not get disclosed to the public.
  • Although companies are not required to respond in the CFPB’s forum, companies will be strongly incentivized to do so since these complaints could cause significant reputational damage to a company’s business. For complaints that may require a company to enter into settlement agreements with the consumer, some settlement agreements contain “non-disclosure” or “confidentiality” provisions.   The CFPB has indicated that it will “look disfavorably upon agreements that require a consumer to withdraw his or her consent to have a narrative published as a condition of settlement.”
  • Companies will be limited in their ability to combat “defamatory” narratives posted by consumers. Although narratives provide an opportunity to humanize the consumer complaint, it also provides an opportunity for facts to be presented in a false light. Companies will be given finite response opportunities, which may be inadequate to combat false narratives. Moreover, companies will have little recourse to remove the false narratives.  Some states, as previously described on this blog, have forbidden companies from including “non-disparagement” clauses in their online contracts with consumers.
  • Companies may also be exposed to increased litigation. Consumer rights advocacy groups, some of which are funded out of the budgets of government agencies, will look to these consumer complaint narratives to help them identify “trends” of unlawful behavior so that they can target their legal efforts more effectively.
  • Consumers should think twice before they rely on others to scrub their personal data and ensure that they won’t be “reidentified” to the public. There is currently no recourse to CFPB if the agency’s “scrubbing standards” prove inadequate or if the implementation of their scrubbing standards is poor.