The Consumer Financial Protection Bureau complaint database is a treasure trove of opportunity for mortgage lenders and servicers.
Reviewing the complaints and corresponding aggregated data attributed to them in the database is a quick and cost-effective way for companies to manage customer service and avoid litigation.
The CFPB will likely use the aggregated data to focus in on areas of concern for upcoming exams and possible enforcement actions.
Unfortunately, lenders and servicers are often missing the opportunity to get ahead of CFPB inquiry.
Out of the nine available options the bureau offers to companies to utilize as their public response, an overwhelming number of companies choose the last option — no response.
Without public record of company response or effort to resolve consumer complaints, companies put themselves at risk for increased reputational damage, by the public only seeing a one-sided argument.
This has to be weighed however with the reputational risk of providing a response narrative which may appear to the general public that the bank is uncaring or unwilling to work with customers.
This is a real risk, as the general public does not have an understanding of the consumer laws, regulations or policies that may shape a bank's response. There is also the looming fear that the searchable data will be used for less benevolent purposes by plaintiffs' attorneys trolling for ammunition in their current cases against a specific lender or servicer pending in the same jurisdictions — or worse yet, for possible class actions.
This data is searchable and sortable by date received, ZIP code, state, keywords, products, issues, sub-issue and lenders, which is troublesome enough.
Also problematic is the broad disclaimer language from the CFPB's website states the bureau doesn't verify all allegations in the complaints, but does actively try to confirm that lenders and servicers have relationships with the complaining consumers.
Broad disclaimer language combined with advanced search options can easily go from troublesome to nightmare. In the CFPB's final policy statement, the bureau confirms its intention to offer companies the option of responding to the public narrative with a public-facing response of their own.
This was met by an industry pushback concerned about the limitations of their abilities to provide public-facing, unstructured narrative responses.
Staffing a department trained in the risks involved in drafting responses that would be viewable to the public can get very costly and burdensome. This database might be unfair to the financial services industry, but it can be a relatively painless way for lenders to see a spike or trend in complaints for any product area, service or specific region.
The complaint database was created with altruistic intentions, and is here for the foreseeable future. The bureau envisioned a tool that consumers could use to search a downloadable database for research on a product or specific lender, just as they would research any other service they use in their day-to-day lives.
Lenders and servicers desiring to stay out of the CFPB's crosshairs need to keep an eye on any complaints publicly logged, and put in place a realistic strategy for responding in order to head them off at the pass.
Craig Nazzaro is an attorney with Baker Donelson.