Introduction

What Determines Consumer Complaining Behavior?

Devesh Raval

Federal Trade Commission

December 2016

Raval (FTC) What Determines Consumer Complaints? December 2016 1 / 29
Introduction

Disclaimer:
 

The opinions expressed here are those of the authors and not necessarily
 

those of the Federal Trade Commission or any of its Commissioners.
 

Raval (FTC) What Determines Consumer Complaints? December 2016 2 / 29
Introduction

What Determines Consumer Complaining Behavior?

Who complains to the Consumer Sentinel?

What do they complain about?

How do complaint rates compare to victimization rates?

Raval (FTC) What Determines Consumer Complaints? December 2016 3 / 29
Introduction

What Determines Consumer Complaining Behavior?

Who complains to the Consumer Sentinel?

What do they complain about?

How do complaint rates compare to victimization rates?

Raval (FTC) What Determines Consumer Complaints? December 2016 4 / 29
Introduction

Consumer Demographics

Consumer Zip Code matched to ACS 2008-2012 Demographics

� Race: Percent Black, Percent Hispanic, Percent Asian

� Culture: Percent College Graduates, Degree of Urbanization

�	 Cost of Time: Median Household Income, Unemployment Rate,

Median Age, Household Size

Examine how per capita complaint rate for Consumer Sentinel varies

with demographics

Data from 2015, excluding identity theft

Raval (FTC) What Determines Consumer Complaints? December 2016 5 / 29
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Variable - Black - Hispanic 

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Introduction

Do minority areas complain at different rates?
 

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Population Share 

Variable - Percent Urban 

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Introduction

Do urban areas complain at different rates?
 

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Population Share 

Variable - Percent College Educated 

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Introduction

Do college educated areas complain at different rates?
 

Raval (FTC) What Determines Consumer Complaints? December 2016 8 / 29
 
Introduction

How do complaint rates vary across areas?

Higher rates for black, college educated, higher unemployment areas

Lower rates for Hispanic, rural, greater HH Size areas

Small differences for median age and income

Raval (FTC) What Determines Consumer Complaints? December 2016 9 / 29
Introduction

What Determines Consumer Complaining Behavior?

Who complains to the Consumer Sentinel?

What do they complain about?

How do complaint rates compare to victimization rates?

Raval (FTC) What Determines Consumer Complaints? December 2016 10 / 29
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category - Auto - Bank - DebtCollection - Imposter - Prize 

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Introduction

Minority areas complain about different issues (% Black)
 

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Minority areas complain about different issues (% Black)
 

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Minority areas complain about different issues (% Hispanic)
 

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Introduction

Urban areas complain about different issues
 

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Population Share 

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category - Auto - Bank - DebtCollection - Imposter - Prize 

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Introduction

College educated areas complain about different issues
 

Raval (FTC) What Determines Consumer Complaints? December 2016 15 / 29
 
Introduction

What Determines Consumer Complaining Behavior?

Who complains to the Consumer Sentinel?

What do they complain about?

How do complaint rates compare to victimization rates?

Raval (FTC) What Determines Consumer Complaints? December 2016 16 / 29
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Introduction

Why do consumers complain?

Higher rates of consumer complaints could reflect:

Higher Propensity to Complain

Worse Consumer Experience

Typically difficult to disentangle these two stories

Raval (FTC) What Determines Consumer Complaints? December 2016 17 / 29
Introduction

I separate the two using a set of legal cases

Victim Datasets matched to Consumer Sentinel Network complaints

Linked to demographics at zip code level

Do policymakers learn about problems affecting all communities?

Raval (FTC) What Determines Consumer Complaints? December 2016 18 / 29
Introduction

For four cases, I can compare victims to complaints

Case Number of Victims Number of Complaints

Case B 12,311,307 4,271

Ideal Financial 2,010,169 1,403

Platinum Trust 69,576 510

WinFixer 304,493 1,062

Raval (FTC) What Determines Consumer Complaints? December 2016 19 / 29
Analysis

Complaint rates are correlated with victim rates

Case Effect

Case B 0.125

(0.033)

Ideal Financial 0.151

(0.026)

Platinum Trust 0.155

(0.023)

WinFixer 0.173

(0.036)

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Analysis

Victim rates vary widely by case (% Black) ...
 

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Analysis

Victim rates vary widely by case (% Hispanic) ...
 

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Victim rates vary widely by case (% Urban) ...
 

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Analysis

Victim rates vary widely by case (% College) ...
 

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Analysis

... but complaint rates lower in minority areas (% Black)
 

Raval (FTC) What Determines Consumer Complaints? December 2016 25 / 29
 
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Population Share 

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Case - Case B - Ideal - Platinum - WinFixer 

100 

Analysis

... but complaint rates lower in minority areas (% Hispanic)
 

Raval (FTC) What Determines Consumer Complaints? December 2016 26 / 29
 
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Population Share 

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Case - Case B - Ideal - Platinum - WinFixer 

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Analysis

... but complaint rates higher in urban areas
 

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Analysis

... but complaint rates higher in college areas
 

Raval (FTC) What Determines Consumer Complaints? December 2016 28 / 29
 
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Conclusion

How can we account for differences in complaint

propensity?

Policy answer - Outreach
 

Contact groups that typically complain less
 

FTC: Outreach events
 

Marketer: Surveys / Incentives?
 

Statistical answer - Weighting

Overweight complaints from groups that complain less

But: Need data on consumer experience to construct weights

Raval (FTC) What Determines Consumer Complaints? December 2016 29 / 29