CARY, N.C. -

FNI Inc. president David Bafumo took a couple of weeks to analyze the complaint database policy the Consumer Financial Protection Bureau revealed; a move that generated immediate skeptical reaction for industry associations.

Now that potentially the immediate dust has settled from the CFPB’s decision, Bafumo offered three reasons why the online publishing of consumer complaints might not be as disconcerting as finance companies originally anticipated.

“Once I got past the we-will-continue-to-do-whatever-we-please preamble, I really scoured the policy for the gritty operational details in search of the terrifying ‘bad news’ that has industry publications buzzing the last couple weeks,” Bafumo said in his most recent FNI newsletter.

“And happily, at the end of the day, there are at least three reasons why it’s not that scary at all,” continued Bafumo, who has more than 15 years of industry experience and has relationships with the National Independent Automobile Dealers Association, the National Alliance of Buy-Here, Pay-Here Dealers and the American Financial Services Association.

1. Not The Same Kind Of Online Narratives That Concern Most Businesses

Bafumo explained that for private industry, finance or otherwise, the “scariest and most potentially damaging” types of narrative complaints appear on websites such as Ripoff Report. He indicated these kinds of sites allow visitors to post “completely unverified” data about consumer transactions and in some cases even charging “fees” to victimized companies to remove or notate that the data is suspect.

Comparisons of the CFPB’s narrative complaint policy to these consumer websites are not well founded, according to Bafumo, who added these sites are “long misused by consumers and easily manipulated by competitors in every industry.”

Bafumo pointed out the most significant power of these complaint narratives that appear on these websites is based on one single factor — complete consumer anonymity.

“And while the CFPB will scrub narrative complaints for personal identifying data as far as what the world sees online, the consumer opting in to ‘tell their story’ and publishing a complaint publicly will be far from anonymous,” Bafumo said.

“The bureau’s verification of both consumer identity and commercial relationship with the company create critical distinctions between the kind of narratives likely to result and what everyone familiar with Internet complaint websites thinks about when they hear ‘narrative complaints,’” he continued.

2. Most Companies Already Have a Process for Handling These Kind of Complaints

In Bafumo’s opinion, what the CFPB has decided to implement is much more analogous to the kind of narratives currently published via the Better Business Bureau or by individuals through major social media outlets and industry rating websites.

And he added that most finance companies already have policies and procedures and resources dedicated to handle them.

“Yes, it is arguably a new burden to have one more channel to address consumer complaints. But, here’s where the on-the-surface inequality of a free form consumer narrative versus canned company response is actually a blessing in disguise for the industry,” Bafumo said.

First, Bafumo described how the bureau’s policy “levels the playing field” so that every company’s response is precisely the same. Furthermore, he noted the strategy is efficient, describing it as an inexpensive and fast way to respond initially to these kinds of complaints.

“The policy’s ‘structured response’ process is also a big part of the reason why the CFPB’s laudable ‘Tell Us Your Story’ concept will ultimately have little value to consumers or the bureau’s mission — and little practical impact on the industry,” Bafumo said.

3. Consumers Likely Won’t Read the CFPB Database Much

Bafumo asked finance company executive and managers to consider a couple of questions about choices they might have made.

“So, when was the last time you checked all the state and federal government industry regulatory websites before you purchased a house, car, or a cell phone? Or how about when you opened a bank account? That’s what I thought,” he said.

“On the other hand, when you last booked a new hotel, vacation or restaurant reservation, did you read a bunch of reviews about it first? I bet you did,” Bafumo continued.

Bafamo insisted that most individuals are experienced consumers, meaning that people are driven to online content that is engaging.

“A million websites are fighting for visitors and readers every moment. And government websites, with the possible exception of the IRS’ page for a seven-day window every April, are not ordinarily big competitors for consumer attention,” Bafumo said.

In this case, Bafumo asserted that the bureau’s policy will lead to a website that is “precisely the opposite” of engaging.

“Consumers read the popular complaint sites for the pure, unfiltered voice of the angry consumer — made especially entertaining thanks to the shield of anonymity,” he said. “And they read TripAdvisor or Expedia reviews to see personal stories, maybe even some pictures, and to consider the thoughtful (or not) company responses.

“Ultimately, the CFPB’s ‘scrubbed’ complaints and company ‘structured responses’ are just not going to cut it for web surfing consumers,” Bafumo went on to say.

Final Thoughts About Responding to Consumer Narratives

Bafumo acknowledged one of the biggest unknowns in the policy is precisely what the “structured” company response options will be. But he emphasized that part of the entire process “matters very little.”

Since all company public answers will appear the same, Bafumo determined that from a Web surfing consumer perspective, the only real distinguishing features of the narrative database will be two elements, including:

— Volume of complaints

— Whether companies responded publicly or not

Bafumo recommended that finance companies improve their complaint response in two ways:

1. Resolve published or pre-published complaints so that customers may choose to opt-out of publication.

2. Timely answer designated complaints with whatever “structured responses” are made available to prevent a narrative appearing alone without a visible company response.