Initial analyses of CFPB complaint data show misleading nature of data

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Recall that when the CFPB launched the Consumer Complaint Database, its expressed hope that “the marketplace of ideas” – i.e., the public – would study and analyze the information disclosed in the database in order to “determine what the data show[s].” 77 FR 37559. The CFPB also stated that the purpose of the database is to “provide consumers with timely and understandable information to make responsible decisions about financial transactions and to enhance the credit card market’s ability to operate transparently and efficiently.”  Id.

Well, achievement of Goal #1 – public analysis of the data – already appears to be in full swing. As Jeff Sovern remarked yesterday, the Charlotte Observer recently created a chart showing which company received the most complaints out of the total number of complaints currently available in the database (which includes any received by the CFPB since June 1, 2012).

However, achievement of Goal #1 risks undermining achievement of Goal #2 – providing information to assist consumers in making informed purchasing decisions. As noted by Mr. Sovern, the Observer’s chart does not contain any contextual information regarding the resolution of the complaints or how the number of complaints received by the CFPB compares to the total number of credit card customers each issuer has. As a result, the limited information available in the database seems to result in a limited analysis that risks steering consumers away from companies who, in reality, receive very few complaints as compared to their total number of customers or who may actually resolve customer complaints more favorably than their competitors.

In addition to the fact that the database does not contain any information pertaining to the validity of those complaints (thereby making it impossible for consumers to assess whether the complaints relate to legitimate issues that consumers should be concerned about), by reporting only the raw number of complaints, consumers are unable to evaluate how many complaints each company receives in comparison to its total number of customers. Such an analysis could show that as a percentage, fewer customers file complaints against a particular company as compared to that company’s competitors. If the database made such calculations possible, the Observer’s chart could show very different results.

This type of confusion is not surprising – indeed, as noted in our prior post, the industry predicted this is exactly what would occur in light of the current information available in the database. Nevertheless, the CFPB does not appear to be inclined to make any changes and continues to plan an expansion of the database to include other financial products. Given that the concerns expressed by the industry during the comment period already are coming to fruition, we sincerely hope that the CFPB will take a hard look at ways to improve the database in order to permit more robust analyses and ensure that Goal #2 actually is achieved.

Published In: Administrative Agency Updates, Consumer Protection Updates, Finance & Banking Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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