Many people may not realize it, but the popular ratings website Yelp does more than allow people to review restaurants. It also allows reviews of other local businesses, like banks. For instance, in reviews of major national bank branches near my home, one anonymous reviewer claims that the staff members are all racists. Another accuses the branch manager of driving a family into bankruptcy.
The thing about Yelp, of course, is that you know exactly what you are getting: anonymous reviews by people who face no accountability for what they write, posted on a site that makes no promises that the information it hosts is accurate.
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But what if the federal government created a website that allowed people to tell stories about their bad experiences at financial institutions and, like Yelp, made no independent effort to fact check them?
That’s exactly what the Consumer Financial Protection Bureau is proposing to do. The agency already has an online database of consumer complaints about financial services firms, but this week, CFPB director Richard Cordray announced that the agency is proposing to go further by including the “narrative” element of complaints in the searchable database.
“I think of the database as a mosaic,” Cordray said at an appearance in El Paso. “While every tile on the mosaic shows only one tiny piece of the picture, you can step back from it and see how the tiles fit together to form the whole picture. That is what the database offers – an aggregation of stories that gives a more complete picture of the consumer financial marketplace.
“We are now proposing to make that mosaic even more vibrant and clear by including consumers’ own narrative of their experiences, as stated in their own words,” he said.
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Bankers and other financial services professions were, to put it gently, not pleased.
“At first blush the risks of unwarranted reputational harm to good actors far outweigh any benefits this proposal would create to assist the CFPB to resolve legitimate complaints,” National Association of Federal Credit Unions Director of Regulatory Affairs Mike Coleman said in a statement.
“Credit unions take great care to address their members’ complaints directly and foster ongoing relationships with their members,” Coleman said. “NAFCU has serious concerns about the potential for undue reputation risks to financial institutions relative to unsubstantiated claims.”
CFPB’s proposal goes on at great length about the protections it plans to build into the system – protections for the people filing the complaints, that is. It will scrub personally identifiable information from the narratives, and will only share them if consumers opt in. But while the agency will verify that the individual actually has a commercial relationship with the company he or she is complaining about, there was no indication in the proposal that it will try to verify their claims.
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It will, however, allow financial institutions to respond to complaints if they choose to, with the responses appearing at the same time as the complaints.
The decision was cheered by consumer activists.
We strongly support the proposal,” said Ed Mierzwinski, consumer program director for the U.S. Public Interest Research Group. “Why? How long a consumer fought with a bank, how many communications occurred, how frustrating it was to talk with frontline staff who didn't have authority to help her and what kinds of "help" or compensation were offered at different times are among the elements that are not in the fact-based database now but could be in stories (narratives). Adding the stories adds a dimension that will enable examiners, researchers, banks and other consumers to see what experiences reflect widespread problems and demand further action.”
Bankers obviously feel differently, and though he has not yet weighed in on the issue, it seems likely that the powerful chairman of the House Financial Services Committee, Rep. Jeb Hensarling (R-TX), will too.
Hensarling has been a vocal foe of the CFPB since before the agency opened it doors, and has taken every opportunity to hold hearings on what he sees as the industry’s overreach. Odds are, there’s another hearing in the agency’s future.
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