Opportunities exist to enhance the management controls over the Consumer Financial Protection Bureau (CFPB)'s controversial Consumer Complaint Database, according to a recent audit from the Office of the Inspector General for both the Federal Reserve and the CFPB.
The database was launched in 2012 as a way to help consumers make informed and responsible decisions about financial transactions, and to ensure the transparent and efficient operations of markets for consumer financial products. The Bureau generated some controversy in June 2015 when it began publishing consumers' narratives of complaints; some analysts and stakeholders in financial markets say that since the CFPB does not verify the allegations made in the complaints, in some cases the Bureau may just be offering up the biased opinions of disgruntled individuals for everyone to see.
In order to assess the effectiveness of the CFPB's controls over the accuracy and completeness of the database, the OIG performed an audit of these controls relevant to the database covering processes from January 1, 2014, through June 30, 2014, and complaints in the database through June 30, 2014. The OIG identified areas in which management controls could be improved in order to enhance the database's accuracy and completeness.
"The Office of Consumer Response (Consumer Response) has implemented controls to monitor the accuracy of complaint data in the internal case management system, which contains all consumer complaints received by the CFPB, but it has not established separate management controls to ensure the accuracy of data extracted from the system and included in the Consumer Complaint Database," the OIG said in its report.
"In its response to our draft report, Consumer Response concurs with our recommendations and indicates that it has already initiated actions to address them."
The OIG said it analyzed 254,835 complaints and found "several noticeable inaccuracies." While the OIG said the number of complaints with inaccuracies it found was relatively small, "enhancing existing controls would help ensure that as the number and types of complaints published increase, overall reliability of the data is maintained."
The audit also found that Consumer Response does not:
- review all closing responses posted by companies, which includes verifying whether the closing response the company selects is consistent with the definition;
- consistently publish untimely closing responses posted by companies in the Consumer Complaint Database.
The audit also revealed that consumers were being allowed 60 days to dispute responses from the companies instead of 30 days, as was stated in Consumer Response publications, and that consumers were not consistently being offered the opportunity to dispute untimely responses from companies. Also, the OIG found that the public was not being consistently notified by Consumer Response when the database was not updated, although the website asserted that complaint data are refreshed daily.
The OIG made recommendations to improve the operational controls to improve the accuracy and transparency of the database, based on the audit. Those recommendations can be found by clicking here.
"In its response to our draft report, Consumer Response concurs with our recommendations and indicates that it has already initiated actions to address them," the OIG said in its report. "Consumer Response also stated that it implemented a system change to update the process for untimely company responses and related consumer disputes, and it is replacing the DT Complaint Database."
To view the complete executive summary, click here.
To view the IG's full report of the audit, click here.
(Editor's Note: The Five Star Institute and Black Knight Financial Services published a study in April adding more context to the complaints received in the CFPB's database. The Five Star Institute is the parent company of DS News and DSNews.com.)