New Complaint Database Will Empower Credit Card Users, May Expand to Other Financial Products

6/26/2012

On June 19, the Consumer Financial Protection Bureau (CFPB) issued a policy that establishes a public online database of credit card complaints from customers. The database allows consumers shopping for a credit card to view data about other customers' experiences in order to avoid abusive practices and poor customer service.

The database will allow consumers to make more informed choices about credit cards. In addition, transparency should create an incentive for companies to improve their business practices. While the initial database only includes information about credit cards, the CFPB has proposed to expand the database to include the other financial products it regulates, such as mortgages and student loans.

Background

The Dodd-Frank Wall Street Reform and Consumer Protection Act, passed in 2010, created the CFPB and gave it authority to address consumers' complaints about financial services providers. The law established the CFPB to ensure "that markets for consumer financial products and services are fair, transparent, and competitive," as part of a response to the financial crisis of 2008.

According to Federal Reserve data, 72 percent of consumers have at least one credit card, as do 83 percent of small businesses. Thus, if credit card companies load on unnecessary fees, raise interest rates, or fail to resolve incorrect charges, they could have a significant effect on the economy and on families and small businesses.

In July 2011, the CFPB began accepting consumer complaints, beginning with credit cards. The agency subsequently expanded the system to include mortgages, bank products such as checking accounts, private student loans, and consumer loans, with plans to eventually accept complaints about all financial products under its jurisdiction. In December of that year, the agency proposed to create a public online database containing the complaints it received about credit card companies and asked for public comment.

The Database

In the Consumer Complaint Database, the public can view key information, including the type of complaint (such as "late fee," "APR or interest rate," or "collection practices"). In addition, the database shows the name of the company that issued the credit card, the type of response the company offered to the complainant, and whether the consumer disputed the company's response. The data does not contain any personal information, such as the consumer's name.

The database allows users to search and sort the data and to export it in spreadsheet or database formats. The data tool, called Socrata, also allows users to create custom visualizations of the data, such as charts and graphs. Users can also subscribe to updates to the database. In addition, an application programming interface (API) helps external developers use the data, facilitating the development of innovative new tools.

Journalists and analysts have already begun using the data. Just hours after the database launched, the Charlotte Observer had created a chart showing each company's share of the complaints. The database will also allow the public to evaluate the effectiveness of CFPB’s complaint system and ensure that the agency is responsive and accountable to the public interest.

The Future

At the same time that the CFPB issued the policy to disclose credit card complaints, the agency proposed expanding the database to the other financial products that the CFPB regulates. The public can comment on the policy until July 19. Expanding the database would make it useful to consumers of other financial products, such as mortgages and student loans. Given the many abuses practiced by the mortgage industry, that dataset would be particularly important for American consumers.

CFPB staff also identified several potential ways that it might improve the database going forward. Most significantly, the agency will examine the feasibility of publishing the actual text of consumers' complaints and companies' responses while protecting privacy. Such narratives are important because they allow the public to better evaluate complaints and responses.

The CFPB may also consider making its database available to other regulators, which would provide those agencies a tool to disclose their own complaint data. The CFPB's authority includes banks or credit unions with more than $10 billion in assets; credit cards issued by smaller banks or credit unions are supervised by other regulators, including the National Credit Union Administration (NCUA) and the Treasury Department's Office of the Comptroller of the Currency (OCC). Including complaint data from those regulators would make the database more complete and useful to the public.

Transparency that Empowers Consumers

With the launch of the database, the CFPB joins a handful of other federal agencies that make their complaint data accessible to the public, including the Consumer Product Safety Commission (CPSC) and the Transportation Department's National Highway Traffic Safety Administration (NHTSA). The Food and Drug Administration, within the Department of Health and Human Services, also discloses data on reported problems with drug safety, but not in such consumer-friendly formats.

Nonetheless, the transparency models pioneered by the first two agencies should provide valuable lessons for other federal agencies that handle consumer complaints or incident reports, like the National Credit Union Administration and the Office of the Comptroller of the Currency, as well as the Federal Trade Commission, the Federal Communications Commission, the Coast Guard, the Agriculture Department, and the U.S. Environmental Protection Agency. With very few exceptions (national security and privacy concerns among them), information that is collected by government agencies should be readily available to the American people.