Tell the World Your Banking Horror Story
By: Alexis Goldstein
Tags: Transparency, Cfpb, Banking

This week marked a small victory over big bank lobbyists — the Consumer Financial Protection Bureau (CFPB) will now allow consumers to publicly share their horror stories when they register a complaint against their bank.

The ability to register a complaint against your financial institution isn’t new — the Consumer Complaint Database has existed since 2012. But it was missing the most important part: the narrative about what actually happened to a customer. Did their bank fail to apply a payment? Were they charged for products they didn’t sign up for? Were they foreclosed on illegally? Previously, the details of the actual stories were kept hidden.

But beginning this week, if you need to file a complaint with the CFPB about your financial institution, you have the option of making the story of what happened to you public.

CFPB Director Richard Cordray announced the decision on March 18th, and wrote on the CFPB’s blog, “Making your story public will give more people, including you, the power to improve the financial marketplace.”

A coalition of consumer groups — led by Consumer Action — issued a statement praising the initiative, and noted that by reading the Complaint Narratives, consumers may be able to dodge financial bullets:

“Consumers will learn whether a billing dispute with a credit card issuer is a problem with a merchant or card company and where the process broke down. Those who search the database will be able to learn if foreclosure problems persist because a mortgage servicer continues to misplace key documents, and identify emerging trends that reveal how lenders treat homeowners with damaged credit when seeking new loans.”

The financial industry is, predictably, not happy about this.

Banks and their trade groups worked hard to ensure complaint details would never be added to the CFPB’s database. As I noted last year, Wells Fargo complained that “well-established privacy rights” could be violated by making these complaints public. And the Financial Services Roundtable, a powerful lobbying group led by former Minnesota Governor Tim Pawlenty, waged an aggressive campaign against the CFPB sharing complaint narratives. The Roundtable pushed back in a comment letter, told they press they were considering a lawsuit, and even launched an entire website devoted to trying to block the effort — albeit a website they eventually abandoned due to negative press attention.

Now that the decision has been made, some in the financial industry are already airing their grievances. The Consumer Banker’s Association, which represents retail banks, released a statement complaining that the CFPB will be publishing “unverified complaint narratives from unidentified consumers.” But the Consumer Banker’s Association’s concerns are unfounded: complaints are evaluated by the CFPB prior to publication. And the fact that consumers are not identified is a feature, not a bug, of the Complaint Database: the scrubbing of personal information is “modeled after the HIPAA Safe Harbor Method, which is generally considered to represent a best practice for de-identifying data.”

One has to wonder: how much better would consumer’s experiences be if, instead of lobbying against the mere airing of complaints, the financial industry re-directed that energy into actually solving the problems behind said complaints?

Despite ardent lobbying, the CFPB has sided with Main Street, and against the big bank trade groups. And this is a promising sign, given how many more chances the CFPB has to make the financial landscape fairer for consumers — from their ability to write rules to rein in payday lending, to their authority to prohibit forced arbitration clauses, which deny consumers their right to a day in court when their bank wrongs them.

By choosing to publish the details of consumer complaints against their banks, the CFPB has chosen to put consumer empowerment ahead of financial industry lobbying. Let’s hope this is just the first of many such instances.