Every year, we release our Complaint Risk Signal report that dives deep into consumer complaint data from the Consumer Financial Protection Bureau (CFPB) to uncover valuable observations and insights that help financial institutions identify and mitigate risk.
The recently released edition of this report dives into several trends regarding consumer complaints, the potential of a financial institution’s enforcement risk based on various complaint thresholds, the impact of COVID-19 on consumers and financial institutions, and more.
Complaint Trends: 2020 and 2021
There are over 2.2M complaints in the CFPB’s Database as of September 1, 2021. The CFPB saw a record year of consumer complaints in 2020, totaling almost 450,000—a 60% increase from complaint totals in 2019.
In 2021, the Bureau continues to experience record complaint volumes. As of September 1, 2021, there are over 332,000 complaints in the CFPB’s database (a 23% increase from the same time period in 2020), signaling that the total complaint count for 2021 is likely to exceed totals from 2020.
“Recently, we have been receiving more than 75,000 complaints every month, a testament to the scale of the financial hardships in our nation today. The consumer experience will always be an invaluable part of our work, and we will continue to ensure companies engage with consumers to address problems.”
– CFPB Acting Director Uejio
The Impact of COVID-19
The pandemic presented unprecedented challenges to financial institutions, such as handling escalating call volumes and requests, complying with new regulations and guidelines (such as the CARES Act), and monitoring a remote workforce—all of which impacted consumers, as well.
Out of the 776,045 complaints submitted from January 2020 through August of 2021, 10% (~80,000) of these complaints were related to the pandemic.
The products with the most COVID-related complaints are Credit Reporting, Debt Collection, Mortgages, and Credit Cards.
Do Consumer Complaints = Enforcement Actions?
In the early months of 2021, Acting Director David Uejio expressed the Bureau’s commitment to increase its enforcement authority, saying that they will be reversing policies of the previous administration and rescinding public statements conveying a relaxed approach to enforcement (specifically as it applies to COVID-19 and racial equity).
When analyzing complaints, the CFPB suggests that complaint volume should be considered in the context of company size and/or market share. For example, companies with more customers may have more complaints than companies with fewer customers. The Bureau encourages pairing complaint data with public and private data sets for additional context.
Taking this into consideration, we’ve analyzed all of the Bureau’s previous public enforcement actions (2012 - 2021) to explore the average complaint count before an enforcement action is taken, the average fine amount, and what percentage of annual revenue that fine could be—all based on annual revenue.
Take this quick assessment to find out your potential risk of enforcement based on complaint counts:
Tougher Enforcement Ahead
On September 30th, Rohit Chopra was confirmed by the Senate as the next Director of the CFPB and was officially sworn in on October 12th. Under his leadership, the CFPB “will likely return to the vigorous use of its authority to promulgate rules, conduct examinations, and bring enforcement actions that it was known for under its first Director, Richard Cordray,” predicts Pillsbury Law.
Even more recently, it was released that Eric Halperin, a former official with the Department of Justice (DOJ), will serve as the new Enforcement Director—and that the Bureau will be adding 20 to 30 enforcement attorneys as it ramps up its fair lending and redlining enforcement.
Consumer complaints are at the forefront of the CFPB’s supervisory and enforcement actions. Financial institutions should be proactive in handling consumers’ issues before they get escalated to the regulators—and should prepare for increased regulatory scrutiny and be extra diligent in their consumer protection and regulatory compliance efforts.
For more insights on consumer complaint trends and the compliance risk signals they present, download the complete 2021 Complaint Risk Signal Report.