PDF 2016 How Companies Respond to the CFPB ... - Morning Consult
RISK SIGNAL REPORT BY
2016 How Companies Respond to the CFPB Consumer Complaint Database
An analysis of trends and key Risk Signals for companies from the CFPB's Consumer Complaint Database
OCTOBER
The CFPB's Consumer Complaint Database, launched in July 2012, has given American consumers a public platform for expressing their grievances against financial companies. The database is currently a repository of over 610,000 consumer complaints submitted to the CFPB, along with their relevant data, including type of complaint, date of submission, and actions taken by a company in response to a complaint. The database contains complaints in multiple product categories: credit cards, mortgages, bank accounts, student and consumer loans, credit reporting, debt collection, and payday loans.
By analyzing data from the Consumer Complaint Database and CFPB reports from July 2011 to July 31, 2016, PerformLine uncovered a number of observations about the nature of recent complaints and CFPB enforcement actions.
These valuable insights can help financial institutions understand their own internal complaint issues and databases and potentially use the resulting insights to improve their regulatory compliance efforts, customer experience, and operational effectiveness.
? 2016 PerformLine, Inc. All rights reserved. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.
SECTION 1: CONSUMER COMPLAINTS
Consumer Complaints to CFPB
*projected The number of complaints recorded by the CFPB has increased by an average of 26% year-to-year since 2012.
Complaint Trend by Industry
OBSERVATION:
The number of consumer complaints continues to rise year over year.
TAKEAWAY:
The CFPB is continuing to phase in new industries into their Consumer Complaint Database, increasing the number of consumer complaints received each year. Added into the mix in 2016 are complaints about marketplace lenders.
Complaints by Industry
11%
4%3% 3%
33%
12%
16%
18%
Mortgage
Debt collection
Credit reporting
Credit card
Bank account or service
Consumer loan
Student loan
Payday loan
Money transfers
Prepaid card
Other financial service
SECTION 1: CONSUMER COMPLAINTS
Complaints vs. Probability of Being Fined
Consumer Complaint Scale
100 - 2,000 complaints
2,000 - 10K complaints
10,000+ complaints
Probability of Being Fined
6%
*50%
58%
Avg. Fine Plus Restitution
$49 Million
$116 Million
From Dec 2011 ? July 2016
$651 Million
OBSERVATION:
When a company incurs more then 2,000 consumer complaints, the probability of being fined jumps to 50%!
NOTE: This data reflects complaints through July 2016 and does not include the CFPB's largest fine levied:
$100 million against Wells Fargo in September 2016.
EXAMPLES OF TOTAL FINES FOR COMPANIES WITH 2K+ COMPLAINTS
Company Bank of America
Capital One GE Capital
# of Complaints Before Date of Enforcement Action
50,273
13,347
7,650
Total Fine Amount $747,000,000 $390,000,000 $262,500,000
NEW INDUSTRIES WITH CFPB ENFORCEMENT ACTIONS Payment Processors
June 2016: CFPB Sues Intercept Corp and two of their executives
Marketplace Lenders September 2016: CFPB Orders LendUp to Pay $3.63M for Failing to Deliver Promised Benefits
SECTION 2: COMPANY RESPONSES
What Happens to Complaints Submitted to the CFPB?
In 2015, out of 271,600 complaints received by the CFPB
63.3% were handled and sent to companies for response
0
10
20
30
40
50
60
70
80
90
100
Percent (%) of submitted complaints handled by the CFPB
Company Responses to Consumer Complaints
2.5% .05%
5%
Closed Untimely response
12.5% 7.5%
In progress
Closed with non-monetary relief
Closed with monetary relief Closed with explanation
From Dec 2011 ? July 2016
72%
SECTION 2: COMPANY RESPONSES
Complaints vs. Probability of Being Fined vs. Company Response
Consumer Complaint Scale
Company Responses to Complaints
100 - 2K complaints
2K - 10K complaints
10K+ complaints
100+ "Untimely"*
100+ Closed w/ Monetary
Relief
Probability of Being
Fined
Avg. Fine Plus Restitution
6%
*50%
58%
$49 Million
$116 Million
$651 Million
From Dec 2011 ? July 2016
41%
46%
$534 Million
$169 Million
*Company did not respond to complaint within 15 days
OBSERVATION:
Of the companies that failed to respond to 100 or more complaints in a timely manner (i.e. in 15 days or less) or closed over 100 complaints with monetary relief, there was over a 40% probability that company would become the subject of a CFPB enforcement action.
TAKEAWAY:
It's imperative that companies have a streamlined system to respond to consumer complaints in a timely manner in order to avoid CFPB scrutiny.
Top 10 Companies with Untimely Responses
Company
1.
2. O C W E N
3.
4. 5. Southwest Credit 6. Mobiloans 7. 8. Premier Recovery Group 9. National Star Mortgages 10. High Point Asset
Fine Amount ($) 747,000,000
2,125,000,000 34,800,000
735,000,000
1,600,000
Out of these 10 companies,
5 received fines.
OBSERVATION:
Of the top 10 companies with "Untimely Responses," half of them were the target of a CFPB enforcement action.
TAKEAWAY:
Companies with untimely responses to consumer complaints are at risk of enforcement actions. They should take care to reply to complaints within 15 days, the CFPB's time frame for what they consider to be timely responses.
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