Prepared Remarks of Director Richard Cordray at the Consumer Response Field Hearing
Director of the Consumer Financial Protection Bureau
March 28, 2013
First, and most obviously, each complaint is a chance for us to evaluate a perceived problem and see if it can be resolved successfully. Behind each complaint lie the troubles of real people – people like Roxanne from Iowa whom I talked with this week. After losing her husband of 35 years to cancer, Roxanne took over responsibility for their mortgage and successfully negotiated a loan modification. Each month, after her Social Security check arrived, she would dutifully make her mortgage payment by the due date of her grace period. Nonetheless, she still got constant phone calls asking for her deceased husband. Some days, the mortgage servicer would call three to six times to find out if, when, and how the payments would be made. She told them to stop calling, but they did not. So Roxanne filed a complaint with us. Less than one week later, her mortgage servicer sent her a letter of apology and stopped the calls.
Yesterday, we had the chance to visit the Consumer Bureau’s contact center in Coralville, near Iowa City, where we were able to listen in to several people asking for assistance. We heard from Lisa in Virginia about her foreclosure, from Martina in Florida about her car loan, and from Jane in California about her credit card.
I share these stories with you because they are the people behind the data. Once a consumer submits a complaint to us, it is individually processed. We forward each complaint via a secure web portal to the appropriate company, which reviews the information, communicates with the consumer as needed, and determines what action to take in response. The company reports back to us and to the consumer. We then invite the consumer to review the response and provide feedback. We assess the feedback, and if the complaint merits further review, we elevate it to our investigations unit. Throughout this process, consumers can call us or log onto our website, at ConsumerFinance.gov, to receive status updates, provide additional information, and review the responses by the company.
Thus far, the Consumer Bureau has received more than 130,000 complaints from individual consumers, including complaints about mortgages, credit cards, student loans, auto loans, bank accounts, credit reports, and more. We have helped consumers secure millions of dollars in monetary relief and further satisfaction in the form of non-monetary relief, such as cleaning up their credit reports, which helps them put problems behind them that have been affecting them for months or even years. In this way, our consumer response team is making a real difference in the financial marketplace.
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The second important way these complaints make a difference is by informing our work and helping us identify and prioritize problems. We know that if we hear about a particular problem from fifty consumers, that likely means it looms larger than if we hear about it from two. We know that if we begin to see a disturbing trend among the complaints we receive, that we should consider allocating some of our limited resources to combat that particular problem.
For these reasons, we examine issues raised in consumer complaints as we go about our own work. They are a source of information that we consult in approaching our supervisory work of examining financial institutions. They provide leads for our enforcement work of investigating and addressing potential wrongdoing. And they help guide our efforts as we deal with issues of concern through consumer education and engagement. In fact, we find complaint information to be so helpful that we also access the FTC’s Consumer Sentinel database to supplement our own, which has been invaluable to our work. And we are mindful of the need to share such data in return, so we recently launched our secure Government Portal to allow other federal and state law enforcement officials to view our data and inform their work. As we are able to wield each of these tools in a more informed manner, we are acting to clean up problems and improve the workings of consumer financial markets.
So it is important to recognize that even for those consumers whose complaints do not lead to an individual solution or restitution, their complaints are still making a difference. If they are students who took out more than they could afford in private student loans and who are now working two jobs to make ends meet, we still hear them and understand the effect on their lives. If they are homeowners having trouble making their mortgage payments but cannot qualify for a loan modification, we take note. Or if they are elder Americans who were hurt by a reverse mortgage, we are sensitized to the kinds of problems their experiences highlight. People who contact the Consumer Bureau are constantly informing our priorities and improving our work.
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But there is also a third way consumer complaints can matter to our work, which is the specific focus of our discussion today. The accumulation of complaints from many thousands of individual consumers yields an ever-more informative impression of what is happening to consumers en masse in the marketplace. And so, quite apart from how this information informs our own work at the Bureau, it can have real consequences and ramifications for the operations of the financial marketplace. To put it most bluntly, if we find, as we do, that this information can be helpful to us in going about our own work, then almost certainly it can be helpful to industry and to consumers themselves in figuring out how they approach consumer financial issues as well. For here is the key point: not all, or even most, consumer protection comes from government agencies, after all. Instead, the first two places to look for consumer protection are out in the marketplace, in how a business decides to treat its customers and also in how effectively those customers are able to stand up for themselves when they are mistreated.
Let me try to come at these points from a different direction. Think for a moment about the American economy, or even just about the American financial marketplace. These are among the single largest uncoordinated aggregations of human behavior ever developed. They operate not according to some central plan, but by the endless interactions of hundreds of millions of independent actors, each with their own needs, wants, expectations, patterns, and reactions. The basic task even of understanding what is happening in these huge, sprawling arenas of human life is formidable. Each month, some of the best minds make predictions about growth, employment, prices, and many other economic and financial variables. Immense sums are riding on the accuracy of their views. Each month, they routinely get it more or less wrong and are surprised by what they find to be happening. Even after the fact, their estimates of these variables are frequently shown to be wrong and in need of revision, sometimes over the course of months, other times over the course of many years. The humbling lesson is that every additional piece of data that can shed more light on hard subjects like these is well worth having.
In this imperfect world of ours, the ability to create and utilize new data that illuminates what is happening to consumers, in real time, can be immensely valuable. Think of the old parable about a group of blind men and an elephant. Each man touches the elephant to learn what it is like. Each one feels a different part, and comes away with a vastly different impression. To one who touches the leg, the elephant seems to be a pillar. To another who touches the tail, it seems to be a rope. To one who touches the trunk, it seems to be a snake. All of them are partly right, and all of them are partly wrong. The elephant, like the consumer financial marketplace, can be many different things depending on how we encounter it. But the more data we can assemble, process, and share, the more complete and accurate picture we can forge of this immense and seemingly contradictory creature, and the more we can come to a better understanding of it.
Today, the Consumer Financial Protection Bureau is going live with the largest collection of complaint data on federal consumer financial products and services ever made public. We are immediately expanding our existing Consumer Complaint Database from roughly 19,000 credit card complaints to more than 90,000 complaints about mortgages, bank products, student loans, consumer loans, and credit cards. By opening up this searchable data to public scrutiny, we are helping to enable all the players in the consumer financial marketplace – including consumers themselves – to see a much bigger whole. By sharing these complaints with the public, we are creating greater transparency in consumer financial products and services, which ultimately will lead to a better marketplace for consumers.
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Looking through the database, you will see twelve fields of information, including the type of complaint, the consumer’s zip code, the company to whom we sent the complaint for response, and how the company responded. Essentially, the database allows the public to see the who, what, when, where, and why of each consumer complaint.
There are two important things to note. First, no personal information about a consumer is included other than the consumer’s zip code. And second, while we do not verify each and every allegation that consumers make in their complaints, we do verify that a commercial relationship exists between the consumer and the named company. The complaint only gets uploaded onto the database after the company verifies that the consumer is in fact its consumer.
To offer another metaphor, think of the database as like a mosaic. While every tile on the mosaic is certainly not perfect, you can still step back from it and see something new. And as the mosaic comes to contain more and more tiles, each tile becomes like a pixel and begins to blend together with the others to give a sharper and clearer view of the whole picture. The static generated by individual cases tends to get canceled out by the weight of cumulative information. That is what the database offers – an aggregate of an increasing number of consumer complaints that gives you a more complete and refined view of the consumer financial marketplace.
It is a live database, updated daily. So, as the Consumer Bureau handles more complaints, more information will be added. And as we accept other types of consumer complaints, they also will be added in time. For example, credit reporting complaints, which we recently began to accept, will be included in the database in the near future, as the processing of those complaints ripens to the point of yielding data for all of the twelve information fields.
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Today’s launch will allow the public – be it individual consumers, analysts, private groups, or the companies themselves – easily to track, sort, search, and download this data. With all of this information being assembled, the most interesting thing to watch will be not what we do with it, but what you do with it. Users will be able to filter across any of the fields and build their own visualizations, such as charts and graphs. They can also embed the data on other websites and share it through social media. They can normalize the information to make meaningful “apples to apples” comparisons, since the raw data typically needs context to fully understand its various possible meanings. Larger companies, for example, typically show up on the database as having more complaints when they might just have a much larger number of customers.
It will be possible to slice and dice the data in countless ways. For example, a third of complaints about bank accounts concern deposits and withdrawals. About 6 percent have to do with using a debit or ATM card. In Iowa, about two-thirds of all the complaints concern mortgages or credit cards. One in ten of Iowa’s mortgage complaints has to do with mortgage brokers and mortgage applications.
The amount of information you can glean from our Consumer Complaint Database is gigantic. So we are most excited to be making this information available because we believe that disclosure is one of the best tools government agencies can use to improve the operation of the marketplace. People across the spectrum can draw their own conclusions from the database. But let me home in on two users in particular – financial companies and consumers.
For financial companies, this data can help them identify their pain points so they can detect and understand problems. If they want to do so, they can use this information to improve their customer service and their general practices. Data can help them detect regulatory risks and address problems before they are faced with potential enforcement action or private litigation. They can also view the strengths and weaknesses of their competitors in a new light. And perhaps they can find things to tout in the data: taking credit, for example, for having the highest resolution rates or the quickest response times. Most good companies already access all the information available to them to assess these data points. Now they will have another significant source of information to evaluate.
If the data informs us, and it informs companies, then it should also inform consumers. So we are making the information about each complaint broadly accessible not only to the company, the regulator, and those willing to pursue a formal inquiry through the Freedom of Information Act, but to anyone who wants to make ready use of it. Consumers can see, for example, which companies provide timely responses or higher rates of resolution. They can draw their own conclusions. For consumers, this will become a valuable educational and shopping tool.
It will also be possible for anyone who wishes to do so to use this information to rate companies in these areas. Just as Consumers Union uses publicly available information to rate the safety of cars in their Consumer Reports, it will now be possible for third-party sources to rate the performance of different financial products and services by evaluating what the public, in the aggregate, has to say about them. No doubt the companies will respond with their own take on the data, and we encourage them to do so. For that is exactly where these matters should be fought out: in the marketplace of ideas, subject ultimately to the verdict rendered by the court of public opinion, which is just how economic marketplaces are designed to work.
For those who have criticized our database and suggested that this information should be suppressed, we would respond in the words of that noted consumer advocate, Justice Louis Brandeis. As he once wrote for the Supreme Court, for those “with confidence in the power of free and fearless reasoning,” in responding to concerns raised about possible falsehoods and fallacies of information, “the remedy is more speech, not enforced silence.” By providing consumers with this timely and understandable information about financial products and services, we will help to improve the functioning of the consumer financial market.
So in this age of data and transparency, we believe sharing this information is in everyone’s best interest. Indeed, the Consumer Bureau generally supports an open-data agenda. As part of our Project Catalyst, a program developed to support innovation in the consumer finance space, we will be using this and other upcoming opportunities to participate in more open-data initiatives.
Right now, however, we want everyone to take a look through this data-rich window into consumers’ financial lives. So we encourage the public, including consumers, the companies that serve them, analysts, data scientists, civic hackers, developers, policymakers, journalists, and academics, to analyze, augment, and build on the public database. We want you to do whatever you want with this data, including developing ways for consumers to access the data more easily or mashing it up with other public data sets to reveal potential trends. To borrow a phrase, we have faith that you can help us sift through the data and help us separate the signal from the noise. And we ask you to share your work, from visualizations to new tools, by tweeting @CFPB using the #CFPBdata.
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We are eager to see what people will be able to do with the growing universe of data about consumer financial issues included in our Consumer Complaint Database. The insights you glean, and the perspective you bring, will help consumers all across America. We have a deep confidence that the marketplace of ideas, driven by human ingenuity, can do great things with this data. And as we go along, we will be glad to share those things with all of you.