Academic journal article Fordham Journal of Corporate & Financial Law

Skeletons in the Database: An Early Analysis of the Cfpb's Consumer Complaints

Academic journal article Fordham Journal of Corporate & Financial Law

Skeletons in the Database: An Early Analysis of the Cfpb's Consumer Complaints

Article excerpt

Abstract

Analyzing a new dataset of 110,000 consumer complaints lodged with the Consumer Financial Protection Bureau (the "CFPB" or the "Bureau"), the authors find that: (i) Bank of America, Citibank, and PNC Bank were significantly less timely in responding to consumer complaints than the average financial institution; (ii) consumers of some of the largest financial services providers, including Wells Fargo, American Express ("Amex"), and Bank of America, were significantly more likely than the average consumer to dispute the provider's response to their initial complaints; and (iii) among the companies included in the database that provide mortgages, OneWest Bank, HSBC, Nationstar Mortgage, and Bank of America all received more mortgage complaints relative to mortgages sold than other mortgage providers. In addition, regression analysis suggests that consumer financial companies respond differently to complaints, depending on the type of product and issues involved, thereby generating significant differences in the timeliness of responses and whether consumers dispute those responses. Moreover, demographics matter: mortgage complaints per mortgage significantly increased in ZIP codes with larger proportions of certain populations, including Blacks and Hispanics. Companies were also less timely, and more likely to have their responses disputed, in areas with higher concentrations of senior citizens and college students, groups on which the CFPB is mandated to focus.

Introduction

Since its inception in 2011, the CFPB has enabled consumers to submit complaints about "unfair, deceptive, or abusive acts or practices" by financial services companies. The purpose of this complaint process, required under the Dodd-Frank Wall Street Reform and Consumer Protection Act1 ("Dodd-Frank") is threefold: (1) to assist individual consumers with specific complaints; (2) to focus the Bureau's enforcement and regulatory efforts on specific companies and general "business practices that may pose risks to consumers" based on aggregate consumer concerns; and (3) by making the data publicly available, to provide the financial services industry with a high-level view of what matters to consumers and to provide consumers with a view into how companies are meeting those needs.2 The raw complaint data is updated nightly and available to download from the Bureau's website.' Although the CFPB analyzes some of the data internally for its semiannual reports to Congress, the Bureau encourages "the public, including consumers, the companies that serve them, analysts, data scientists, civic hackers, developers, policymakers, journalists, and academics, to analyze, augment, and build on the public database" as well.4

The analysis that follows is in keeping with that request. The authors of this Article have assessed the approximately 110,000 complaints included in the CFPB's Consumer Complaint Database (the "Database") as of June 3, 2013. The results indicate that in the aggregate, these complaints provide a veritable treasure trove of data for assessing the work of the Bureau and the companies under its watch.

The authors analyzed the complaints in three key ways. First, they looked at the data by company to analyze differences in performance on the percentage of company responses disputed by customers, the percentage of company responses that the CFPB did not receive in a timely manner, and for mortgages specifically, the number of complaints relative to products sold. The authors found that Bank of America, Citibank, and PNC Bank were all significantly less timely in responding to complaints than the average financial institution. Additionally, consumers of some of the largest financial services providers, including Wells Fargo, Amex, and Bank of America, were significantly more likely than the average consumer to dispute the company's response. Among companies that provide mortgages, OneWest Bank, HSBC, Nationstar Mortgage, and Bank of America all generated more mortgage complaints relative to mortgages sold than other banks. …

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