Since 2011, the government has provided a place for consumers to complain about the financial industry. It's popular. The Consumer Financial Protection Bureau's consumer complaint database houses more than 1 million gripes about mortgages, debt collectors, credit reports, banks and a host of other financial products.
Not everyone likes it. The American Bankers Association and other financial industry groups urged the CFPB to stop publishing the complaints. Mick Mulvaney, acting director of the bureau, seemed to agree in a speech before the group.
"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 in the April speech. "I don't see anything in here that says I have to make all of those public."
This summer, the CFPB asked for and received more than 25,000 public comments on how it should change the database. The agency is still sorting through them, a spokesperson said in an email.
The law requires the CFPB to maintain the database, so the chances of it going down entirely are low, especially before the midterm election, said Christopher Peterson, financial services director for the Consumer Federation of America and a former CFPB official. But Mulvaney has said he is not required make it public. So the database could stay up, only hidden from view.
"That could happen quickly and without further notice to the public," Peterson said.
Why the database matters
Maintaining database is one of the most important CFPB functions, said Ira Rheingold, executive director of the National Association of Consumer Advocates. The fact that it's public allows consumers making complaints to see whether others have faced the same problems. The CFPB sends the complaints to the relevant financial companies for a response, which often leads to a resolution, Rheingold said.
The public posting of complaints encourages companies to behave, Rheingold said.
"There's no better proof that it's an effective mechanism than the fact that these guys want it down so badly," he said.
Even if consumers don't check the database before doing business with a financial institution, it gets attention from the press and enforcement agencies, Peterson said. For example, the complaints against Wells Fargo piled up before the phony accounts scandal at the bank became big news, he said. A string of complaints is like a "check engine" light for a company, showing something may be wrong under the hood.
"It may not be as effective of a tool in getting the complained-about bank or other financial company to provide some relief to the customer if the complaint narrative is no longer public," Peterson said.
What are the alternatives?
Vetting a bank will be harder without a public database, said Peterson. You can try to look for complaints on your own by reading the news or pulling court records, but that's a lot of work to expect from most consumers. (Policygenius can help you vet life insurance companies.) The federal government provides other ways to complain about companies: The Federal Trade Commission takes consumer complaints and makes them available to law enforcement through its Consumer Sentinel Network, but it's not public.
You can also complain to your state attorney general, Rheingold said. Each provides a way for consumers to complain, but the complaints usually aren't public either. Unlike the CFPB, neither attorneys general nor the FTC don't mediate between consumers and the companies they're complaining about.
You can also take your complaint right to the company. You might be able to get redress this way, but you'll have no idea whether it's a systemic problem that others have had, Rheingold said. A public database allows people to see patterns of bad behavior.
Maybe someone can develop a Yelp for financial services, as Mulvaney suggested.
"I guess anything is possible," Rheingold said. "I'm not sure there's a private business incentive to do that."
Besides, the CFPB database is more than a portal where people can complain. The CFPB, as an enforcement authority, gives it teeth and can spur changes in companies that don't care about their reputation.
"It's just an incredibly powerful tool," Rheingold said. "There was never anything like it in this space before."
Image: Alita Ong