Consumer watchdog now downplaying a major Obama-era tool


Kathy Kraninger, director of the Consumer Financial Protection Bureau, may be keeping the agency’s consumer complaint database, but may not be doing much with the data.

The database was in question over the summer as consumer groups worried that a business-friendly CFPB would shut off public access to complaints, but the Director announced in September that it would stay.

In an interview with Yahoo Finance, the director of the country’s primary consumer watchdog downplayed the role of the complaint database in its operations and even its utility as a major tool at its disposal.

Kraninger said she wants the complaint data “in context” and that is not “the end-all be-all.”

In the past, the database has been a core part of the CFPB’s operations to identify potential enforcement actions. The bureau has maintained a complaint database that the general public can contribute to and view. The complaints have highlighted problems and poor experiences in a variety of consumer financial services and products, including payday lenders, credit reporting agencies, and student lenders.

In its 2016 annual report, the CFPB’s former director Richard Cordray prioritized the complaint database, noting that handling complaints allows the agency to learn about experiences in the marketplace and note emerging trends.

UNITED STATES - MARCH 7: Kathy Kraninger, director of the Consumer Financial Protection Bureau, prepares to testify at a House Financial Services Committee hearing titled "Putting Consumers First? A Semi-Annual Review of the Consumer Financial Protection Bureau," in Rayburn Building on Thursday, March 7, 2019. (Photo By Tom Williams/CQ Roll Call)
Kathy Kraninger, director of the Consumer Financial Protection Bureau, prepares to testify at a House Financial Services Committee hearing titled "Putting Consumers First? A Semi-Annual Review of the Consumer Financial Protection Bureau," March 7, 2019. (Photo By Tom Williams/CQ Roll Call)

“By closely analyzing complaint patterns, we are able to identify spikes in specific complaint types; emerging trends; issues with new and evolving products; and patterns across geographic areas, companies, and consumer demographics,” Cordray wrote. “These insights help us prioritize our own supervision and enforcement work and ask better and more targeted questions when examining a company’s records.”

Under Cordray, CFPB complaints often provided the seeds for the next steps of an investigation of a company, which often included a Civil Investigative Demand (CID), a type of subpoena, that became a source of pain for many companies, which characterized them as overly broad. Problems found in the CID could result in a settlement or lawsuit.

Kraninger’s different approach to the complaint database could help explain why the CFPB has been criticized as ineffectual recently, though she said in September that the database plays a “key function” that supports its “education, regulatory, supervision, and enforcement tools.”

‘How many lawsuits have you filed... zero.’

In March, the presidential candidate Sen. Elizabeth Warren dug into Kraninger for not doing enough to protect consumers, specifically not pursuing enforcement action.

Warren, who was key in establishing and launching the CFPB, asked at a Senate Banking Committee hearing how many student loan-related lawsuits had the Trump appointees, Kraninger and Acting Director Mick Mulvaney, filed since Cordray’s departure, a period of a year and a half. The number, a matter of public record, was zero.

“Money returned to consumers as a result of the CFPB’s lawsuits has slowed to a trickle,” Warren told Kraninger at the time, noting that when there has been a settlement, it’s been about 1/25 the size of Kraninger’s (non-acting) predecessor Cordray. (Cordray filed 15 cases and recovered $712 million, Warren said.)

Warren said the agency was permitting hundreds of millions of dollars “that companies stole from consumers” to be kept.

In addition to being seeds for enforcement actions, the CFPB used the complaints to identify potential rulemaking opportunities and ways to learn about consumers.

In an interview with Yahoo Finance, Kraninger played this down as well, calling the complaint database something of a “later resort” tactic to be used by consumers after they had exhausted other options like talking directly with a credit agency or bank.

Like any list of complaints, the idea of a vocal minority is to be expected as most people do not complain. Kraninger noted that “millions and billions” of transactions don’t generate complaints or concerns.

Kraninger pointed to this as proof the database is not “a grand articulation of the marketplace.” However, data scientists routinely can adjust for these types of “vocal minority” biases to find patterns of wrongdoing, which is what happened at the bureau under Cordray.

In her remarks about the decision to keep the database, the director noted that the bureau would add disclosures containing hedging language saying that experiences in the database may not be representative of the company in question, and also that the bureau would build and launch dynamic tools to analyze trends and complaint data to enhance the database for public use.

Kraninger didn’t speak much about enforcement, but instead highlighted the issue of education and specifically making sure Americans are financially educated and saving money.

“Savings is the unique aspect in becoming more secure and confident and bettering our lives,” she said.


Ethan Wolff-Mann is a writer at Yahoo Finance focusing on consumer issues, personal finance, retail, airlines, and more. Follow him on Twitter @ewolffmann.

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