WASHINGTON — The Consumer Financial Protection Bureau's consumer complaint database is riddled with errors and distrusted by some of its own employees, according to internal documents and interviews with current and former agency officials.
In one instance, a single complaint was counted as 35 different ones, while in another example a complaint was filed against a bank even though the consumer sending it was actually complaining about an unrelated payday lender.
While the CFPB argues any mistakes are minor and limited in scope, they are worrisome to agency officials because of how much the CFPB is guided by consumer complaints. The agency uses them as a partial basis for industry guidance, rulemaking and enforcement actions. But in interviews with five current and former CFPB officials — most of whom would only speak anonymously due to sensitivity around the issue — they said they are afraid to rely on the data.
"CFPB employees don't trust the system," said one former senior official. "When we were asked to look into a complaint, more than 25% of the time it turned out that the data we were looking at didn't really pan out or it was just incorrect in the way it was reported."
In many cases, the flaws in the system are an unintentional byproduct of the CFPB's internal policies regarding complaints. The CFPB examines a consumer's narrative and creates a new complaint for any entity that is named. As a result, in one instance in which documentation was shown to American Banker, a single complaint that was referred by another agency became 35 different complaints.
Moira Vahey, a CFPB spokeswoman, defended the practice, arguing it was the only way to ensure that each named company had "the opportunity to respond to the consumer."
"When a consumer complains about a complex problem involving more than one company, the bureau brings the complaint to the attention of each company involved and works to get the consumer the timely response they deserve. Consumers often describe complex problems with multiple companies in a single complaint submission," Vahey said. "The idea is to give each company a chance to address their part of the issue and respond to the consumer and to limit the burden on consumers."
The agency maintains that it is not double, triple — or more — counting complaints because each mention of a separate company is technically a new complaint. But the situation feeds into the banking industry's distrust of the CFPB's complaint numbers. Since the agency began taking complaints in 2011, many bankers have argued the overall numbers are misleadingly inflated. The damage goes beyond making individual banks or other institutions look bad, however, considering the CFPB can use complaints as a basis for enforcement actions and policymaking.
"CFPB reports on complaints underscore their interest in complaint numbers, regardless of whether that number is inflated by duplicates or non-complaints," said Virginia O'Neill, senior vice president of the American Bankers Association's Center for Regulatory Compliance. "We get calls from banks about how to get errors off of the public portal."
Still, some said they understand the CFPB's point of view, considering that multiple companies may be at fault in a single complaint.
"Sometimes when a consumer has a dispute that involves a credit between a bank and payday lender, for example, both companies will bounce the customer back and forth," said Nicholas Smyth, a former CFPB enforcement attorney who's now at Reed Smith LLP. "In that case, given the constraints of the CFPB's complaint form, it does make sense to treat a complaint as separate complaints for each company named so everyone has a chance to give both sides of the story."
But multicounting complaints isn't the only problem CFPB officials have seen. In another example, a state banking department referred a complaint to the CFPB in which the consumer explicitly complained about a payday lender. Yet the complaint was instead filed under the consumer's bank — not the payday lender — which was mentioned in passing. (Personal consumer information was scrubbed before being shown to American Banker.)
The bank wrote back to the CFPB saying it spoke with the consumer, who verified that the complaint "in no way concerns" the bank, asking for it to be reassigned to the payday lender. It's unclear what the CFPB did as a result of the bank's concern, but there is no complaint listed in the public portal against the payday lender that the consumer initially wrote about in 2014.
In another case detailed in documents seen by American Banker, a consumer complaint was referred by a state banking department but the CFPB filed the complaint under the name of the general counsel of that agency rather than the consumer's name.
The CFPB's Vahey declined to comment on both examples above unless American Banker sent a copy of the documentation it had obtained. American Banker was unwilling to do so because it did not want to inadvertently reveal its sources.