CFPB’s Complaint Box—It’s All Over Except for the Shouting

Bank Technology News | January, 2011

People who want to complain to the government about their bank or credit card will soon have a dedicated in-box for their problems, though the specific channels involved are still evolving and the complaint database is itself the target of complaining.

In a recent notice the U.S. Department of the Treasury—acting under powers derived from the Dodd-Frank law—has proposed a new record keeping system for the Consumer Financial Protection Bureau. The database could be operational as early as Feb 9, sans any further regulatory action or changes resulting from public comments before that date.

The database would store details about consumer complaints and inquiries made to the bureau’s implementation team—creating a repository for banking regulators and the FTC. There’s a lot of consumer angst to catalogue. For example, analysts say the FTC alone received more than 9,000 formal complaints about banks in 2009.

Once stored in the database, complaints can be mined by regulators for trends or signs that a bank has engaged in noncompliant, dangerous or otherwise suspect lending or business practices. "Regulators will have access and can do searches on subjects or on specific institutions to find information to support actions or enforcements," says Mercedes Tunstall, counsel at Ballard Spahr.

Database information will be stored electronically, with data fields including name, address, phone number, social security number and account numbers (though the bureau will be required to produce written copies of complains by request). Consumer information is subject to the Privacy Act, with disclosure exceptions including certain regulatory, Congressional and other government action.

The Treasury’s notice didn’t address whether or how the database would include "crowdsourcing" complaints, such as Twitter, Facebook, blogs and other social media. Elizabeth Warren, an advisor to the Treasury who’s helping set up the CFPB, in the past has said the bureau would use crowd-sourcing to identify consumer financial protection issues.

The omission in the formal notice doesn’t mean social media won’t be part of the bureau’s research. "The database is meant to identify individuals, if you try to pull people off of a blog that’s hard to do," says Tunstall. "But it shouldn’t be lost that the CFPB will look at social media to identify issues. The FDIC and OCC are already out on social media sites today."

The database has also caused controversy. On its website, Jones Day, a law firm that represents financial institutions among its clients, has called for companies subjected to civil litigation connected to financial products to submit formal comments suggesting limitations or clarifications of the circumstances under which parties can obtain records of others’ complaints. And while not directly addressing the database, U.S. Rep. Randy Neugebauer (R-TX) of the Financial Services Committee, has asked Warren for more information about the bureau itself, including a timetable for the naming of a director.