Please note: This article was published in 2020 and the data outlined may no longer be accurate.
Our recent analysis of the Consumer Financial Protection Bureau (CFPB)'s Consumer Complaint Database and their enforcement actions uncovered key observations and trends that can help organizations mitigate their risk and head off potential investigations. These valuable insights can help organizations understand their own complaint issues and potentially use the resulting Risk Signals to improve regulatory compliance efforts, customer experience and operational effectiveness.
While the Complaint Risk Signal Report has a number of valuable insights, here are our 3 major takeaways that can help your organization mitigate risk right now.
More Consumer Complaints = Higher Chance of Enforcement Actions
The trends show that more consumer complaints likely means a higher chance of enforcement actions:
Based on the previous complaint counts and the CFPB’s enforcement actions, once an organization reaches 2,000 complaints, the probability of being fined increases to 36%. Once it hits 10,000 complaints, that probability jumps to 71%!
This means that if your organization has over 2,000 complaints, the potential penalties could be anywhere from $81 million to $284 million.
While all companies are at an increased risk, large enterprises are at even greater risk due to their sheer size and number of customers. In fact, the 5 companies with the largest amount of total fines by the CFPB are 5 of the largest financial institutions in the industry.
It’s important to be aware of the complaints that consumers are submitting against your company– taking note of both the quantity and what issues they are complaining about. Learn more about how monitoring your consumer complaints can help improve your compliance program here.
Credit Reporting Complaints Are On The Rise
Credit reporting complaints accounted for 43% of all consumer complaints to the CFPB in 2018–that’s a 153% increase in credit reporting complaints since 2016!
Additionally, the number of Fair Credit Reporting Act (FCRA) cases has increased significantly in recent years. The increase in both FCRA cases and credit reporting-related consumer complaints can likely be attributed back to Equifax’s data breach in 2017.
To date, Equifax has over 103,000 complaints against them in the CFPB’s complaint database– that’s 31.5% of all credit reporting complaints.
This steep spike in credit reporting-related complaints demonstrates that consumers are more sensitive to credit reporting companies. These credit reporting bureaus, even the smaller players, are under increased scrutiny by regulators.
The CFPB and the FTC recently held a workshop around accuracy in consumer reporting. Credit reporting was one of the key topics they discussed–watch the video here.
Company Response Time Is Important
When the CFPB receives complaints, they’ll send them to that company for review and response. According to the CFPB’s database, 97% of companies responded in a timely manner (15 days or less).
Company response time is important for two reasons:
- If your organization doesn't respond in a timely manner to consumer complaints, you will stand out amongst your competitors–and not in a good way. A lack of responsiveness can hurt your brand’s reputation, especially when consumers are running into problems with their finances. Tracking complaints and responding in a timely manner will help de-escalate situations and, in turn, protect your brand’s reputation.
- The CFPB is planning to soon announce a policy that will give companies accused of wrongdoing consumers a chance to get released early from their consent orders. Under the new policy, companies that have entered into settlements with the bureau can petition to have an order terminated ahead of schedule once the terms of the agreement are met.
Learn more about these takeaways and other important trends in the latest edition of the Complaint Risk Signal Report.