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On December 31, the CFPB issued a report to the Senate and House Committees on Appropriations to fulfill its statutory responsibility under Section 1017(e)(4) of the Dodd-Frank Act. The report covers the CFPB’s 2015 fiscal year (FY), spanning from October 1, 2014 through September 30, 2015, and provides an overview of the Bureau’s operations and finances. In its report, the Bureau highlights that, during FY 2015, among other things, the CFPB (i) began to publish consumer complaint narratives in the Consumer Complaint Database and launched monthly reports to highlight trends in the complaints submitted to the Bureau; (ii) brought supervisory actions and announced orders through enforcement efforts for $209 million and $5.819 billion in consumer redress, respectively; (iii) released three editions of Supervisory Highlights Report; (iv) published new examination procedures, supervisory guidance documents and studies; and (v) published several proposed rules, final rules, and requests for information, as well as plain-language compliance guides and video presentations summarizing certain Bureau rules. During FY 2015, the Bureau collected more than $183 million in civil money penalties, and more than $108 million in Bureau Administered Redress funds. Looking ahead, the report identifies potential rulemaking initiatives, as reflected in its Fall 2014 and Spring 2015 regulatory agendas.
On December 22, the CFPB released its monthly complaint report, which focuses on money transfer complaints. According to the report, as of December 1, the CFPB has handled approximately 5,100 money transfer complaints, domestically and internationally. The most complained-about issues include difficulties with the safe and efficient transfer of money, as well as fraud allegations. Additional complaints include inadequate customer service and issues resolving refund errors. Similar to previous complaint snapshots, the report identifies the most-complained-about companies. The CFPB identified the District of Columbia and Delaware as having the highest complaint volume per capita in the country, and placed Georgia as its geographic spotlight, noting that as of December 1, consumers submitted more than 31,000 complaints, with mortgage-related complaints taking the lead.
On November 24, the CFPB released its monthly complaint report, which focuses on bank account and service complaints. According to the report, the most commonly reported bank account or service complaints include (i) problems opening and managing an account; (ii) difficulties disputing transactions; and (iii) issues with depositing and withdrawing funds. Nationwide, the CFPB identified debt collection as the most-complained-about financial product or service, representing about 28% of complaints submitted. According to the report, complaints about prepaid products rose 193%, while payday loan complaints showed the greatest decrease. The report also identifies the most-complained-about companies. The CFPB acknowledged that Idaho showed the greatest increase in complaint volume and placed Connecticut in its geographic spotlight, noting that as of November 1, 2015, Connecticut consumers submitted more than 8,000 complaints, with mortgage-related complaints taking the lead.
On October 27, the CFPB released its Monthly Complaint Report focusing on credit card complaints. The CFPB has received over 79,000 credit card-related complaints since it began receiving those complaints in July 2011. According to the report, consumer complaint issues specific to credit cards include: (i) confusion over how late fees are assessed; (ii) confusion about how to dispute inaccuracies in billing statements; (iii) accounts being closed without consent; and (iv) inability to allocate payments as consumers desire. The report also notes that, as of October 1, the CFPB has handled about 726,000 complaints across all product lines since it started receiving complaints.
On October 13, the FTC, as part of the International Consumer Protection and Enforcement Network (ICPEN), announced an updated version of ICPEN’s econsumer.gov, a website containing cross border consumer complaints and designed to assist law enforcement authorities investigate and take action against international scams. Originally launched in 2001, the website’s update includes (i) additional language availability; (ii) an improved complaint form, providing consumers with complaint trend data and guidance on how to resolve complaints; and (iii) an interface that is reader-friendly on tablets and smart phones. The FTC enters complaints received via the website into its complaint database, Consumer Sentinel, which is available to enforcers and regulators participating in ICPEN.
Buckley Sandler Webcast Recap: Strategies for Meeting the CFPB's Expectations for Consumer Complaint Management
On September 29, BuckleySandler hosted a webcast, “Meeting the CFPB's Expectations for Consumer Complaint Management,” presented by partner Jonice Gray Tucker and counsel Kari Hall. This recap covers highlights from their discussion, which included a discussion of the CFPB’s expectations and practical advice for managing consumer complaints in the evolving regulatory environment.
The webcast began with a brief background on the CFPB’s approach to consumer complaints. In particular, the presenters touched upon how the CFPB has used complaints as a driving force in determining priorities in guiding supervisory work, identifying leads for enforcement, and in informing rulemaking efforts. The presenters also discussed how the Bureau may deal with deficiencies in consumer complaint management in examinations and ways in which the outgrowth of such deficiencies may lead to enforcement actions. In addition, the presenters highlighted key elements of effective complaint management programs.
Fundamental Issues in Consumer Complaint Management
The presenters continued with a discussion of threshold issues in developing and implementing a consumer complaint management system. In particular, the presenters focused on why complaint management is important, the challenges of defining what is or is not a complaint, and timelines for responding to complaints. The presenters pointed out that the CFPB expects capture of both written and oral complaints, as well as awareness and understanding of third-party service provider complaints.
CFPB Complaint Management Guidance to Date and Recent Complaint Developments
The presenters then covered the CFPB’s existing guidance on complaint management, as well as recent developments.
CFPB guidance includes:
- CFPB Supervision and Examination Manual
- Consumer Response Annual Report
- Company Portal Manual, Version 2.15 (August 2015)
- CFPB Supervisory Highlights
Recent developments include the publication of complaint narratives and the issuance of monthly complaint reports. Both CFPB initiatives are viewed as controversial by the industry because the Bureau does not verify complaint information or “normalize” the data to account for the fact that larger companies may receive more complaints than smaller companies.
The webcast concluded with a discussion of best practices for consumer complaint management. Among other things, the presenters discussed strategies that can be used to centralize the complaint management function; key issues to consider in connection with monitoring, tracking, and escalating complaints; issues that should be covered in policies, procedures, and training as well as mechanisms for maintaining an open dialogue with regulators and consumer advocates.
On September 22, the CFPB published the third volume of its monthly consumer complaints report, examining mortgage complaints received through its complaint database. In its latest snapshot report, the CFPB revealed that it has received more than 190,000 mortgage complaints as of September 1, 2015, making mortgage the most-complained-about financial product. Specifically, the report finds that ongoing questions persist with respect to (i) how consumers can prevent foreclosure; (ii) how and when to make payments when mortgage loans are transferred to a different servicer; and (iii) how to ensure accurate payment on mortgage loans. According to the CFPB, as of September 1, 2015, over 700,000 complaints have been handled since the consumer complaint database’s inception.
On August 25, the CFPB released the second of its monthly complaint reports, highlighting complaints received from consumers regarding the credit reporting industry. In its latest snapshot report, the CFPB revealed a 56 percent increase in the number of credit reporting complaints submitted by consumers between June 2015 and July 2015, and a 45 percent increase in credit reporting complaints from last year. The report also stated that 77 percent of credit reporting complaints involved inaccurate information on consumers’ credit reports. Despite the large volume of data used to prepare the report, the Bureau cautioned that the data is not normalized and that company-specific information should be considered in context of a company’s size.
On July 16, 2015, the Consumer Financial Protection Bureau (“CFPB” or “Bureau”) launched the first in a new series of monthly complaint reports highlighting key trends from consumer complaints submitted to the CFPB. Importantly, its monthly report provides significant detail on the complaints the CFPB has received, including the names of the companies that received the largest number of complaints.
Currently, the most-complained-about companies are also the largest bank and nonbank financial institutions in the country. Since these institutions have the highest numbers of customers, it is only natural that they have received the highest number of complaints. On the same day as the monthly report’s release, CFPB Director Richard Cordray provided remarks at an Americans for Financial Reform event in Washington, D.C. Director Cordray noted that in future monthly reports, the CFPB hopes to “normalize” its consumer complaint data by accounting for financial institutions’ respective size and volume. To that end, the CFPB issued a Request for Information seeking input on ways to enable the public to more easily understand company-level complaint information and make comparisons. The comment period closes August 31, 2015.
The report also provides data on complaint volume, state and local complaint information, and trends relating to specific consumer financial products or services. In June 2015, for example, debt collection was the most-complained-about product or service with the 32% of complaints filed with the Bureau, while complaints relating to mortgages and credit reporting were next in line.
Going forward, each monthly report will spotlight a particular financial product and geographic area. In the first report, the CFPB closely examines debt collection complaints and complaints from consumers in Milwaukee, Wisconsin.
The CFPB began accepting complaints in July 2011 and launched its Consumer Complaint Database in June 2012, which is the nation’s largest public collection of consumer financial complaints. As of July 1, 2015, the CFPB has handled 650,700 complaints.
In its press release for the monthly report, the Bureau issued a reminder that it expects companies to respond to CFPB complaints within 15 days. The Bureau also expects companies to describe the steps they have taken or intend to take to resolve each consumer complaint. In fact, in its monthly report, the Bureau provided statistics on how often certain debt collection companies were “untimely” in responding to complaints.
Notably, the CFPB stressed that complaints inform the Bureau’s work and can directly feed into its supervision and enforcement prioritization process. “Consumer complaints are the CFPB’s compass and play a central role in everything we do. They help us identify and prioritize problems for potential action,” said CFPB Director Cordray. The publication of this monthly report, together with continuing consumer complaint initiatives from the CFPB, highlights the critical importance of developing an effective complaint management program.
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Questions regarding the matters discussed in this Alert may be directed to any of our lawyers listed below, or to any other BuckleySandler attorney with whom you have consulted in the past.
- Jonice Gray Tucker, (202) 349-8005
- Clinton R. Rockwell, (310) 424-3901
- Jeffrey P. Naimon, (202) 349-8030
- John P. Kromer, (202) 349-8040
- Joseph M. Kolar, (202) 349-8020
- Kari K. Hall, (202) 349-7967
- Daniel Cheriyan, (202) 461-2917
Today, the CFPB expanded its consumer complaint database, publishing for the first time over 7,700 consumer narratives which provide descriptive details of issues consumers face with respect to mortgages, bank accounts, credit cards, and debt collection, among other topics. As previously covered in InfoBytes, the Bureau finalized its Policy earlier this year requiring consumers who file complaints to “opt-in” to have the actual narrative of the complaint disclosed in the CFPB consumer complaint database. In addition, the Bureau issued a Request For Information seeking feedback on how complaint information contained within the database can be more easily identified and “normalized.” The Bureau also announced that it had received more than 627,000 complaints as of June 1, with mortgages and debt collection among the most frequent sources of complaints.
- Daniel A. Bellovin to discuss “Perspectives on proposed private flood insurance” at a CoreLogic webinar
- Jonice Gray Tucker to discuss “How the new administration sets the tone for 2021” at the American Conference Institute Legal, Regulatory and Compliance Forum on Fintech & Emerging Payment Systems
- Sherry-Maria Safchuk to discuss UDAAP at an American Bar Association webinar
- Jeffrey P. Naimon to discuss "What to expect: The new administration and regulatory changes" at the Mortgage Bankers Association Legal Issues and Regulatory Compliance Conference
- Jonice Gray Tucker to discuss “The future of fair lending” at the Mortgage Bankers Association Legal Issues and Regulatory Compliance Conference
- Steven R. vonBerg to discuss "LO comp challenges" at the Mortgage Bankers Association Legal Issues and Regulatory Compliance Conference
- Michelle L. Rogers to discuss "Major litigation" at the Mortgage Bankers Association Legal Issues and Regulatory Compliance Conference
- Michelle L. Rogers to discuss “The False Claims Act today” at the Federal Bar Association Qui Tam Section Roundtable