[author: Barbara S. Mishkin]
Last month, when the CFPB announced its decision to publicly disclose credit card complaint data and its proposal to also publicly disclose data from complaints about other financial products and services, we questioned the value of such data to the public. Soon after, we wrote about an example we saw of how the data can lead to misleading information.
Now, in a hard-hitting comment letter on the CFPB’s proposal to disclose non-credit card data, the American Bankers Association is asking the CFPB to reconsider its position on disclosing complaint data. In the ABA’s view, the CFPB’s “decision to adopt and propose to propagate a policy to publish details of complaints, which it correctly characterizes as not verified for accuracy and therefore unreliable, [is] inconsistent with its proclamations to be ‘data-driven’ and contrary to its mission to ‘provide consumers with timely and understandable information to make responsible decisions about financial transactions.’” The ABA also asserts that Congress did not intend for the CFPB to release the complaint data and that the CFPB “overreaches” when it relies on the rulemaking provisions of Dodd-Frank for its authority to do so.
In the letter, the ABA challenges the CFPB’s reliance on the “marketplace of ideas” to lead to reliable information and criticizes its decision to release the credit card data without addressing how to “normalize” the data (meaning , putting it in context by, for example, comparing it to the universe of potential complaints) despite the CFPB’s acknowledgment of the need for “normalization.” The ABA writes that “the short 30-day public comment period for a significant expansion of this not-quite-ready-for-prime-time public resource suggests the Bureau has pre-determined its next steps and is not going to let failure to normalize deter those steps. It was one thing to launch a non-public database when it was admittedly flawed and correct it as it developed; it is another to knowingly take the same tact with a public database.”
Although the ABA believes the data should not be released, its letter also includes suggestions for how the CFPB can improve the transparency, accuracy and public understanding of the data.
While we are not optimistic that the CFPB will change its position on the release of complaint data, we hope it will seriously consider the valid points made by the ABA and, at a minimum, take immediate steps to address the potential for the data to mislead rather than inform consumers.