MINNEAPOLIS -

ACA International dissected the 2015 fiscal year annual report by the CFPB Ombudsman’s Office that’s generated for Richard Cordray, director of the Consumer Financial Protection Bureau.

Officials found the recently released report focused heavily on three potential changes to the CFPB’s consumer complaint database to make it a more effective tool for companies that participate in it.

For instance, the ombudsman followed up on findings from its fiscal year 2014 annual report about the need for data normalization in the consumer complaint database. “This year, we provided feedback and suggestions to the CFPB regarding normalization of the data,” the report said.

The report also noted that the CFPB addressed this issue by putting out a request for information on how to go about data normalization. ACA International was among the organizations that submitted a response this past summer.

“ACA’s comments stressed the importance of complaint data normalization as one way to improve the flawed complaint database so that it is less misleading than what currently exists,” organization officials said.

“By providing context to raw complaint data, ACA argued that the database will be less likely to mislead consumers into attaching undue weight to sheer numbers of complaints, as well as better reflect a company’s actual performance,” they continued.

After examining the consumer complaint database in response to stakeholder concerns, the ombudsman indicated that it worked with the CFPB in an effort to address issues with third party consumer complaint submissions and duplicate complaints.

According to the report, “when third parties submit complaints online on behalf of multiple consumers and complete the submission forms incorrectly, the resulting complaints may have inconsistent information. As a result, the company that is the subject of the complaint may not recognize the consumer and/or the consumer may not be able to access the complaint.”

The ombudsman’s report noted the CFPB plans to address this issue in the future by updating the instructions for consumer complaint submissions.

The report also highlighted company concerns over the CFPB’s definition of “duplicate” in assessing consumer complaints.

According to the CFPB’s Office of Consumer Response, to be considered a duplicate, a complaint must be a verbatim copy of a complaint already submitted.  Because of this definition, multiple complaints submitted by the same consumer, regarding the same transaction, the same company, and essentially the same issue — even without presenting any new information — do not meet the definition of a duplicate if the consumer does not use the exact same language in each.

As a result, companies have shared with the ombudsman that when they flag such similar complaints as being duplicates, Office of Consumer Response returns the complaints to the company for a reply because the underlying complaints are not verbatim copies of one another.

To address this, at a Sep. 9 Ombudsman Forum, in which ACA participated, leaders in the financial service industries suggested re-defining a duplicate complaint as one that comes from “the same person, same transaction, and same issue.” 

According to the report, to address industry’s concerns over the identification of duplicate complaints, the ombudsman recommended that Consumer Response either provide an updated definition to companies for a duplicate that is not a verbatim copy (such as the definition suggested by industry at the forum), or alternatively to share the existing verbatim definition of a duplicate on the Consumer Complaint Database webpage so that users have a clearer understanding and can make appropriate adjustments.

More about press releases and field hearings

ACA International recapped that the report also included information about the ombudsman’s broader study of CFPB field hearings, and consent orders and their accompanying press releases in 2015.

“This year, the CFPB has faced increased scrutiny for the seemingly harsh language it uses in press releases announcing consent orders with companies. This is an issue that ACA has raised with the ombudsman and one that she discussed in her presentation to ACA members during the Washington Insights Conference in April,” organization officials said.

“In addition, participants in the Ombudsman Forum told members of the CFPB ombudsman’s office that companies view consent orders as a larger notice to their industries about the direction of future enforcement or regulation,” they added.

Here is what the ombudsman’s office shared in the report

“At the same time, without accompanying guidance on general applicability, they indicated that some companies do not know how to proceed,” the report said. “They shared that additional clarity would lead to better compliance. Participants also suggested that the CFPB: include additional context to the issues highlighted in the Supervisory Highlights publication; offer working groups that incorporate industry and consumer groups to inform practical solutions to process issues; and provide additional interpretative guidance on inherited regulations.”

Finally, the ombudsman contrasted the stated goal of CFPB field hearings — “to foster equal participation from consumer and industry groups as well as the public in bureau activities, to obtain feedback in different regions of the country on the Bureau’s work, and to share the work of the CFPB” — with feedback from industry participants.

Industry and consumer groups alike suggested that the CFPB give more than two weeks of lead time in announcing field hearings and be more transparent about the hearings’ logistics.

“ACA has also been vocal about the short notice and logistical challenges surrounding the CFPB’s announcements of field hearings,” organization officials said. “ACA will continue to engage with the Ombudsman on this and other process-related issues on behalf of ACA members.”

The entire Ombudsman's report can be downloaded here.