It is known the Consumer Financial Protection Bureau (CFPB) makes public all the complaints lobbied by consumers against financial companies. Have you looked at it? The volume of these complaints is exploding: nearly 100,000 per month now compared to about 20,000 per month in 2018. What companies are driving this explosion of consumer disappointment? Which companies are below average, and which are doing better? And what are all the complaints about?
Let us answer these questions using the actual data, available here. Through the following analysis (and easy-to-digest charts) we uncover the companies and the issues driving the growth in consumer complaints. We also provide a method to detect when a specific company has a complaint problem growing out of control.
A macro view of companies called out by consumer complaints
The good news is only a minority of consumer finance-related companies have any complaints. Roughly 3,000 companies are named in the published CFPB complaints each year. This is but a fraction of the companies under CFPB purview: less than the number of U.S.-based credit unions (around 5,000) and less than the number of U.S.-based banks (around 4,500). Not to mention there are thousands of non-bank lenders, collections, tech, and data companies also engaged in consumer finance activity.
To say it another way, the median number of complaints in a year for a consumer finance company is zero! Now that we recognize this reality, let us move the focus to the 3,000 or so companies that did have complaints.
The chart below shows companies with complaints, which had more than X complaints in 2022. About 95% of companies had less than 200 complaints, and 50% of companies had less than 4 complaints. But of course, a small fraction are drowning in complaint volume. These are important baseline metrics for a company trying to determine where it stands.
Significant attribution to the Big 3 credit bureaus
Digging further, we see the vast majority of the CFPB complaints pertain to just three companies: Equifax, Transunion, and Experian. 69% of all complaints are against these companies in 2022. Complaints against them - often called the Big 3 - account for most of the growth of the CFPB consumer complaints system over the last few years.
What do people complain about in regards to the Big 3? 96% of the complaints are for 3 just issues: access, information, and remedy related to a credit report.
- Access: Improper use of a credit report; unrecognized, or without permission
- Information: Incorrect information on a credit report
- Remedy: Complaint about the credit report dispute process or resolution
Each of these Big 3 has 13x more complaints than the next most complained about company: Capital One. Given this disproportion, it is useful to remove the Big 3 related complaints for specific analyses to help elucidate other trends in the data.
A macro view of complaints after removing the Big 3 credit bureaus
After removing the Big 3, the biggest major complaint category is still credit reporting: it surpassed debt collection as the most common complaint category in 2022. In fact, 25% of all non-Big 3 complaints were about basic credit reporting issues: access, information, or remedy. It is useful to know the majority of these credit reporting complaints are directed against actual finance companies such as banks, lenders, and credit card issuers, not credit agencies.
Concentration of complaint categories
It is useful to compare companies facing a large consumer complaint problem to those with a small complaint problem. For example, credit card or prepaid card-related complaints are mainly against large companies with a commensurately large problem: 97% of them are concentrated in only about 100 companies (with more than 200 complaints each) shown in the chart below. Meanwhile, debt collection complaints tend to be diffused broadly over a large number of small companies with fewer complaints each: 35% of them come from nearly 2,000 different companies (each having less than 200 complaints).
What is happening in 2023
Looking ahead to this current year, overall non-Big 3 complaint volume is trending upwards of 18%. The chart above shows the most common complaint issues and their frequency. Those shown in orange are growing the fastest with double-digit growth.
Determining when a company has a complaint problem
It is valuable to know if a specific company is experiencing a new complaint issue, or generally experiencing a growth in complaint volume. You can determine this with the published CFPB consumer complaint data.
For example, the chart below shows complaint growth in 2023 for a specific debt collection company. Each bar is a 12-month projection of complaint volume for a specific issue. The percent value shown is the year-over-year (YOY) change. Bars shown in blue indicate the severity is in the worst 5% faced by any company.
The chart makes it easy to see this debt collection company has a big problem, especially with consumers stating they do not owe a debt, among the worst of any company, and the problem is growing aggressively.
More positively, the chart shows the company made meaningful improvements in the severity of its problem related to consumer treatment. Complaints about communication tactics and threats are down 25%-45%.
You can drill into a single issue for the above company and do a trend analysis. In the below chart, complaints related to written notification about debt are projected to reach 100 complaints by the end of the year.
The data is available for you to access. It is advisable to create a reporting process that monitors your company’s complaint exposure for multiple reasons:
- Quality Control and Compliance
- Regulation Risk Management
- Customer Satisfaction
If you need help, please reach out. We are happy to help guide you through it.
Conclusions
Consumer usage of the CFPB complaint system is growing, it is 5x what it was just a few years ago. While 70% of the complaint volume is related to the Big 3 credit bureaus, complaints against other companies are also on the rise, up 18% this year, and among them, the most common complaint category is credit reporting issues. While most companies do not have any complaints, thousands of companies have a few complaints. For some companies the complaint volume is increasing, so it is a good idea to have a process that monitors if your company becomes one of them.
Hopefully, this article was a good opportunity to gain some insight into the CFPB complaints data and how you can use it. Did we skip over anything you would like to see? If there is interest, we can also publish updates to these trends on a more regular basis.
The next article will examine the relationship between consumer complaints and actual CFPB enforcement activity. It should be especially valuable to anyone involved in compliance and risk management.
Footnotes
Special thank you to Jonathan Pompan, Venable LLP for sharing his insight and suggestions.
[1] Source data available here as of April 2023. Note, the CFPB also conducts oversight and investigations that do not yield a public enforcement event, and such non-public efforts are not included in the linked data table.
[2] Companies may be a subsidiary of another. Multiple companies and subsidiaries can be involved in the same enforcement action.
