A Two-Way Flow of Information at the CFPB

A two-way flow of information between the public and government is important for government to operate effectively. The public needs to know details of government operation – how it spends tax dollars, for instance – in order to provide feedback and make voting decisions. And the government needs its constituents to provide information on the problems they face, in order to be able to address those problems effectively.

The Consumer Financial Protection Bureau and its Consumer Complaint Database provide a good example of this two-way flow of information in action – and how it can benefit from modern online tools for sharing data. Its complaint system allows any consumer to file a complaint online when facing a problem in the financial marketplace. The CFPB responds to the complaints it receives – more than 1 million so far – by working with the financial company in question to resolve the issue, whether by providing restitution, halting a bad practice, or simply providing additional information. The complaint system isn’t just a mechanism for getting complaints resolved – it is also a rich source of “crowdsourced” data on the problems consumers face in the financial marketplace. The CFPB uses this data in a variety of ways that make it a more effective advocate for the public.

The CFPB also uses its complaint database to perform in-depth research, which it releases to the public and also uses to inform policy decisions. For example, in March 2016, the CFPB released a study of debt collection complaints, the findings of which included that “the most common debt collection complaint is about attempts to collect on a debt the consumer reported was not owed.” Just a few months later, the CFPB proposed a new rule to safeguard Americans from improper debt collection – including by ensuring that debt collectors “have more and better information about the debt before they collect,” a measure that would help protect consumers against harassment over debt they do not owe.At a recent consumer roundtable I attended with the director of the CFPB, Richard Cordray, he brought attention to a particularly modern way that the CFPB uses its complaint database: for real-time monitoring of and response to problems facing consumers in the financial marketplace. He referred to a recent incident in which CFPB analysts noticed a spike in complaints toward a particular company (that he left unnamed). When the CFPB followed the lead, the company in question revealed that a financial product was in fact not functioning correctly, and was costing their customers money – and then worked with the CFPB to fix the problem, and provide restitution. This data-driven, real-time consumer protection would have been close to impossible even a couple decades ago; now it provides a model for effective government action.

Finally, by publishing its complaint data (after scrubbing it of personal information) the CFPB enables non-governmental organizations to conduct their own analyses. Frontier Group has published a number of complaint data analyses, including our most recent look into complaints of military servicemembers. In 2016, the Center for Responsible Lending published an analysis of impacts on consumers from bank overdraft fees. These analyses can help the CFPB improve its own operations and focus the attention of the media and decision-makers on problems that might otherwise go unseen.

The fact that data on consumer problems are publicly available through the Consumer Complaint Database is not universally liked – today, it is the subject of fierce attacks by the financial companies that are subjects of the complaints. Nevertheless, the CFPB’s complaint system should serve as a model: for its transparency, its effective use of modern tools, and its ability to fulfill an important communication function. While not every government agency can or should carry out the same types of consumer interaction as the CFPB, many would do well to investigate how modern online tools can help improve interaction with the public, and can help increase effectiveness and responsiveness.