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 as consumer groups worried that a business-friendly CFPB would shut off public access to complaints.

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)

“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. 

‘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. 

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.

'Snake oil salesmen': Two neurologists respond to the CBD craze

The ski industry is going through a tech transformation

What would a healthy social network look like? Maybe like Strava.

9 tips for not getting spied on while traveling

Large-scale credit card hackers back for the holiday season, ex-FBI investigator says

How to know if your next flight is on a 737 Max

Read the latest financial and business news from Yahoo Finance

Follow Yahoo Finance on TwitterFacebookInstagramFlipboardLinkedIn, YouTube, and reddit.

Read Full Story