By Stacy Cowley
Financial companies have worked to diminish the Consumer Financial Protection Bureau’s powers since the day the agency was created. Now, they’re on the brink of having one of their top demands granted: an end to the regulator’s public database of complaints about their products and services.
Since 2011, the bureau has maintained an open, searchable record of more than one million consumer reports about inaccurate debt collections, illegal fees, improper overdraft charges, mistakes on loans and other problems. By law, the consumer bureau has to collect those complaints. But it is not legally required to share them online.
Mick Mulvaney, the bureau’s acting director, hinted Tuesday that he would like to end that public access.
“I don’t see anything in here that says I have to run a Yelp for financial services sponsored by the federal government,” he said at a banking industry conference in Washington. “I don’t see anything in here that says that I have to make all of those public.”
Consumer groups argue that taking the database offline would neuter one of its core purposes: pushing companies to take complaints more seriously. The move would also prevent outsiders, including academic researchers, from using its data.
“Making complaints public gives companies a stronger incentive to treat people right,” said Lauren Saunders, associate director of the National Consumer Law Center. “It also helps people stay away from companies with bad track records. It lets the free market help steer us in the direction of consumer protection.”
The Consumer Financial Protection Bureau asks the subjects of complaints to respond within 15 days. Complaints are later posted online, regardless of a company’s response. The bureau has used the complaints to spot patterns of bad behavior. A wave of complaints about Wells Fargo helped spur the agency’s investigation and exposure of the bank’s sham accounts. Complaints have also prompted actions against student loan servicers, debt collectors, mortgage lenders and credit card companies.
More than 185,000 complaints to the bureau have been resolved with some form of compensation or relief, often with financial institutions changing their practices or making customers whole.
David M. Perry was one of the beneficiaries.
Last year, he filed a complaint against Midland Credit Management, a collection firm, over an inaccurate entry on his credit reports. Years earlier, a thief had fraudulently opened credit card accounts in his and his wife’s names, Mr. Perry said. Most of the accounts were shut down, but one slipped through and was referred to Midland. Mr. Perry learned of it only last June when he applied for a mortgage and discovered that his credit score was hundreds of points lower than he expected.
When he contacted Midland, a representative suggested that he simply pay off the balance owed, Mr. Perry said. So he filed a complaint with the consumer bureau.
Thirteen days later, Midland sent Mr. Perry a letter: “Midland Credit apologizes for the inconvenience caused to you.” The collection firm agreed to close the disputed account, end collection efforts on it and instruct the credit bureaus to delete the record from their files.
“I don’t spend a lot of time feeling grateful to the federal government, but I was really grateful to the C.F.P.B. at that moment,” Mr. Perry said. “We need more accountability and transparency from our financial institutions, not less.”
Financial institutions, however, say the database can be misleading because the agency publishes a record of all the complaints that it receives, without vetting them. The companies also argue that they already have channels for resolving customer disputes.
“Publishing unverified complaints — or, worse, using those complaints to paint a picture of guilt in the public domain — is irresponsible,” said Richard Hunt, the chief executive of the Consumer Bankers Association.
Mr. Mulvaney’s disdain for the complaints database has already lessened its use. The New Economy Project, a community organization, has shifted its focus to reporting disputes to other regulators, including New York’s attorney general and the state’s Department of Financial Services.
“When Mulvaney stepped in, we saw the writing the wall and stopped advising our clients to file C.F.P.B. complaints, which anyone paying attention to what’s going on at the agency can see would be an exercise in futility,” said Sarah Ludwig, the New Economy Project’s founder and co-director.
A bureau spokesman declined to comment further about the agency’s plans for the complaints database. Last week, the agency put out a public call for feedback on its complaint process — a standard precursor to making changes.