When the Consumer Financial Protection Bureau in January 2012 proposed creating a free, public database of consumer complaints against credit-card issuers, financial firms urged officials to reconsider. In letters to the agency, trade groups argued that doing so would expose trade secrets and breach customer privacy. Posting company names without verifying the accuracy of the complaints levied against them, wrote the Consumer Data Industry Association, would unfairly cast reputable businesses “in the shadow of possible guilt.”
Despite protests, the database went live in June. And, in a step that further irked the industry, the CFPB on March 28 expanded it to include customer gripes about mortgages, student loans, credit scores, and other products. That move brought the number of entries to 90,000, an almost fivefold increase.
Anybody equipped with a computer, an Internet connection, and a rudimentary knowledge of Excel can now discover that Bank of America (BAC), the No. 2 bank in the U.S., is the target of almost one in four consumer complaints lodged with the CFPB—and has double the volume of mortgage-related entries as rival Wells Fargo (WFC). In an e-mail, Rick Simon, a BofA spokesman, says the bank has “been intensely focused on improving the process for our mortgage servicing customers and, importantly, virtually all (98%) of the mortgage-related files received from CFPB since the process was initiated have been closed.”
Further data crunching reveals that JPMorgan Chase (JPM) responds to mortgage-related complaints within the allotted time in almost 100 percent of cases, whereas Regions Financial (RF) and USAA Savings Bank are late to respond to more than one in five complaints. Representatives from Regions and USAA said they strive to answer in a timely manner.
Although the consumer bureau does not verify the accuracy of the grievances it logs, it does route the information to the banks, which have 15 days to acknowledge that the person is a customer. If the company confirms the relationship or if it does not respond by the deadline, the information goes live online. Entries do not include the complainant’s name, just the Zip Code, the name of the bank, and the nature of the dispute.
Consumer advocates love the CFPB’s database because in the past there were few options other than to register gripes privately with a lender, then bring a lawsuit if they weren’t satisfied with the outcome. Now there’s a middle path, says Loraine Martinez, a lawyer at the Connecticut Fair Housing Center who specializes in foreclosure cases. Martinez says once her clients’ complaints are logged into the database, she often gets a call back directly from the office of the bank’s chief executive officer: “You get the VIP experience.”
The choice to go public with the data, say officials at the bureau, was meant to pressure companies to improve their customer service. If consumers and the media can see how competitors stack up against one another, firms will make more of an effort, says Scott Pluta, the CFPB’s assistant director for consumer response. “To the extent that we can inject information into the market, it furthers competition,” he says.
Response times have sped up by 3 percent since the database came online, data compiled by Bloomberg show. And banks are giving more customers a break: The number of credit-card cases Capital One Financial (COF), Citigroup (C), American Express (AXP), and GE Capital Retail Bank (GE) have resolved in clients’ favor rose 12.9 percent in the past six months, according to Bloomberg.
Steven Ramirez, CEO of data-mining consultancy Beyond the Arc, says his financial industry clients are asking him to find patterns in the CFPB data that show where they’re lagging. “They want to nip it in the bud before it becomes a lawsuit,” he says. “For the first time, the companies have a benchmark to compare themselves to their competitors. Previously, they were acting in a vacuum.”