NAFCU Letter to CFPB on Complaint Data Policy

July 18, 2012

Monica Jackson
Office of the Executive Secretary
Consumer Financial Protection Bureau
1500 Pennsylvania Ave. NW
(Attn: 1801 L Street)
Washington, D.C. 20220

RE: Docket No. CFPB-2012-0023

Dear Ms. Jackson:
On behalf of the National Association of Federal Credit Unions (NAFCU), the only trade association that exclusively represents federal credit unions, I write to you regarding the Consumer Financial Protection Bureau’s (CFPB) proposed disclosure policy regarding financial products and services.  The CFPB plans to disclose consumer complaints it receives regarding different financial products and services in the same manner that it currently discloses complaints regarding credit cards.  NAFCU remains concerned with the policy of disclosing consumer credit card complaints and the Bureau’s proposal to expand that policy to complaints regarding all financial products and services only compounds those concerns.
In NAFCU’s comment letter to the CFPB on its proposed policy to disclose credit card complaints, we outlined several concerns revolving around the publication of inaccurate or groundless complaints.  In particular, NAFCU is concerned that the publication of all complaints, regardless of their validity, is misleading to the public and creates reputational risk issues that cannot easily be mitigated.  Given today’s viral media and the speed at which information is disseminated, NAFCU remains concerned that  data base’s disclosures will not accurately represent the facts and circumstances surrounding this important issue.  The media, researchers and policy makers will focus on the aggregate number of complaints and pay little, if any, attention to the CFPB’s disclaimer, or other nuances that would help provide a more accurate picture of the number of complaints and the validity of those complaints.
In its final policy statement, the Bureau defended disclosing complaints, without verification, by stating that the harms of inaccurate, incorrect or baseless complaints “can be mitigated through the use of disclaimers that warn consumers that the public database contains data reflecting unverified complaints that consumers submit to the Bureau.”  The disclaimer, however, is inadequate and, in practice, is unlikely to ever be used.  Press coverage of the Bureau’s decision to make the database publicly available routinely did not make any mention of this disclaimer.  Indeed, the CFPB’s own press release1 announcing the database does not include the disclaimer that the Bureau does not verify the complaints.  Certainly, if the Bureau itself does not include the disclosure in its own release announcing the creation of the database it cannot reasonably expect news outlets and other sources of information to include the disclaimer.  If the CFPB and the press do not mention the disclaimer, certainly consumers will be unaware of it.
The disclaimer included regarding the data base is inadequate, it will routinely be ignored and it does nothing to actually resolve this issue.  Given that the CFPB has not adequately addressed this matter, all of NAFCU’s initial concerns regarding safety and soundness issues and reputational risk remain unresolved.
The CFPB responded to concerns regarding manipulation by stating the “burden of submitting a complaint is not negligible” and that “[c]onsumers must affirm that the information is true to the best of their knowledge and belief.”  While NAFCU is not as concerned about manipulation, it is worth pointing out that if an individual or group is dedicated to manipulating the process, submitting a complaint is simple and straightforward.  Further, the affirmation requirement provides little, if any, actual deterrent in the case of individuals who do wish to manipulate the process.
NAFCU also remains concerned with the possibility that the CFPB will disclose narrative fields.   As NAFCU discussed previously, disclosing narrative fields increases the likelihood of personal information being disclosed.  Further, disclosing narrative fields may confuse the issues as often as it clarifies the reasons behind the complaint.  Further, disclosing narrative fields will impose a significant new burden on financial institutions.  According to the Bureau, it has received 45,000 complaints since the CFPB began operating.  Financial service providers are undoubtedly already paying careful attention to the narrative fields through the complaint process.  Nonetheless, the possibility that every single narrative field may be publicly disclosed will require significantly heightened controls.
In conclusion, NAFCU remains concerned that public disclosure of all complaints, regardless of their legitimacy creates safety and soundness concerns and will unduly place a financial institution’s reputation at risk.  Both of those concerns are compounded by the expansion of complaints beyond the field of credit cards to include all complaints regarding all financial products and services. Further, the possible disclosure of narrative fields will also multiply these concerns.  Moreover, the CFPB’s disclaimer regarding the veracity of the complaints is simply inadequate and does nothing to address these concerns.
As always, I appreciate the opportunity to share NAFCU’s thoughts on this important issue.  Should you have any questions or require additional information please feel free to contact Carrie Hunt, NAFCU’s General Counsel and Vice President of Regulatory Affairs, at (703) 842-2234 or me, at (703) 842-2215.


Fred R. Becker, Jr.

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