CFPB Complaint System Comes Under Federal Scrutiny

The Office of the Inspector General for the Federal Reserve last week issued a report on its evaluation of the Consumer Financial Protection Bureau’s (CFPB) consumer complaint system. The report made several recommendations on how the system can be improved.

The Office of Inspector General (OIG) for the Federal Reserve Board, which also has oversight of the CFPB, formally evaluated Consumer Response, the CFPB’s new compilation, tracking, and reporting system for consumer complaints.

Consumer Response was launched when the CFPB officially opened for business in mid-2011, but only accepted complaints about credit cards at the time. The legislation that created the CFPB, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, explicitly states that one of the primary functions of the new agency is “collecting, investigating, and responding to consumer complaints.” The system is different than most on the Federal level, especially the Consumer Sentinel Network managed by the FTC. Consumer Response is designed to provide a feedback loop between consumers, the CFPB, and companies that are targeted in a complaint. (Editor’s Note: a detailed explanation of Consumer Response’s mechanics is available in insideARM’s Debt Collection Complaints Compendium – Q1 2012)

This summer, the CFPB made available to the public the details of consumer complaints against credit card companies.  With so much information being disseminated, the OIG wanted to make sure the system was operating as intended.

The OIG’s evaluation ran from October 2011 to May 2012. The stated objectives of the evaluation were to “(1) evaluate the process the CFPB has established to receive, respond to, and track consumer complaints; (2) assess the CFPB’s coordination with federal and state agencies regarding the processing and referral of complaints; and (3) determine the extent to which the CFPB is assessing its effectiveness and timeliness in responding to consumer complaints.”

Overall, the OIG determined that Consumer Response had a “reasonable” process to receive, respond to, and track consumer complaints. But the inspectors “identified areas in which the CFPB can improve its processes and strengthen controls in the Consumer Response unit,” according to the report.

The report noted, “the CFPB can improve processes and strengthen controls in the Consumer Response unit to address the following:”

• inaccurate manual data entry of consumer complaints

• inconsistent complaint management system data

• lack of a finalized agency-wide privacy policy

• lack of a comprehensive QA program

• lack of a centralized tracking system for QA reviews

Consumer Response is now responsible for consumer complaints for many financial products and is expected to start taking non-financial complaints, such as debt collection. As Consumer Response takes on more responsibility for complaints, the OIG wanted to make sure the agency was properly scaling its system.

For example, the report noted that a CFPB conceded that the “manual data entry process [for complaints] was subject to 100 percent verification, but when complaint volume increased, the agency did not have sufficient resources to verify all manually entered data.”

For its part, the CFPB generally agreed with the OIG’s report, concurring on all recommendations and providing updates on advancements made in meeting the objectives laid out in the report.