Want to Understand What the CFPB and the FTC Are Thinking? Start With Consumer Complaints
“The customer is always right” is no longer just a common business principle, but a regulatory imperative.
The Consumer Financial Protection Bureau and the Federal Trade Commission are both embracing an enforcement approach steeped in customer complaints—and banks, lenders, financial services companies, and similarly positioned entities would be wise to adopt the same ethos.
As a direct feedback channel, customer complaints serve a vital function for any kind of commerce. People looking for a place to eat frequently check Yelp or equivalent sites to preview a restaurant before setting foot inside. Many shoppers look at a product’s reviews on Amazon and other online retailers to determine whether a deal is worthwhile or if a certain manufacturer is trustworthy. A high (or low) star ranking or effusively positive (or highly critical) review can make or break—or break—a business. But, more often, these forms of feedback allow companies to tweak their products and services for the better and curb disasters, such as recalls and class action lawsuits, before they happen.
Not all feedback presents a benign opportunity to make things right. When consumers allege that a business has violated the law, complaints start to get serious. And when complaints get serious, the FTC steps in. As the largest federal consumer protection agency in the US, the FTC handles everything from false advertising to telemarketing fraud to identity theft. Complaints lodged with the FTC about a certain business may prompt an investigation of that business, and may lead to a heavy fine as well as the possibility of further legal action.
The same is true for consumer finance companies, but with an extra wrinkle: the CFPB. Created in the aftermath of the 2008 financial crisis, the CFPB advocates on behalf of borrowers and account holders. Complaints are a basic part of its DNA. Since the agency’s inception six years ago, the bureau has assembled a public database of more than 700,000 consumer complaints against finance companies, as well as those companies’ responses.
This vast collection of exchanges between businesses and and consumers provides valuable insight into the bureau’s priorities. While many finance companies carefully manage complaint collection and resolution processes, the CFPB has continually heightened industry standards, and compelled institutions pay close attention to not only their internal controls, but to their vendors and partners—and the financial sector as a whole. Last October, bureau director Richard Cordray said the following at a Mortgage Bankers Association meeting:
[T]here is much to be learned from the complaints consumers raise about your industry, even if the complaints are not directed to you specifically. … We share this data not only to empower consumers and inform the public, but also so that companies can learn from the data and improve their own operations. By closely analyzing complaint patterns, we can identify spikes in specific complaint types, emerging trends, issues with new and evolving products, and patterns across geographic areas, companies and consumer demographics. We urge you to be doing the same thing, not only with our complaints and the feedback you receive directly from your own customers, but also by reviewing complaints made about others in the same markets.
How do you track and manage consumer complaints aimed at your business—and others’? Pay attention to our blog in the next few weeks as we continue to probe the agendas of the CFPB and the FTC, and explore new ways you can stay on top of pivotal feedback about your organization and industry.
Just a Reminder: We’re not your lawyer (of course, right?) Since we’re not, remember that this article’s for informational purposes and not intended to provide legal advice.
