September 10, 2014

Disclosure of Consumer Complaint Narrative Data

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Dear Ms. Jackson,

We appreciate the opportunity to comment on the proposed policy statement regarding the Disclosure of Consumer Complaint Narrative Data issued by the Bureau of Consumer Financial Protection (the Bureau).1 The Mercatus Center at George Mason University is dedicated to bridging the gap between academic ideas and real-world problems and advancing knowledge about the effects of regulation on society. This comment does not represent the views of any particular affected party or special interest group but is designed to assist the Bureau as it considers expanding the consumer complaint database to include consumer narratives.

INTRODUCTION

In its current consumer complaint program, the Bureau invites consumers who “have an issue with a financial product or service” to make complaints.2 The Bureau forwards these complaints to the relevant companies and solicits a response. Mortgages, auto loans, student loans, bank accounts, virtual currencies, and credit cards are among the products and services about which people can submit complaints. The Bureau publishes the complaints in a publicly accessible consumer complaint database. Other than verifying that the customer has a relationship with the company that is the subject of the complaint, the Bureau makes no attempt to assess the veracity of the facts, let alone whether the financial institution named in the complaint has violated a law. As the Bureau explains,

We don’t verify all the facts alleged in these complaints but we take steps to confirm a commercial relation- ship between the consumer and company. Complaints are listed here after the company responds or after they have had the complaint for 15 calendar days, whichever comes first.3

The database currently includes basic information about the complaint and its resolution. The Bureau proposes to expand the existing database to include unverified consumer narratives and company responses. The Bureau will scrub complaints and responses of information that could identify the consumer.

This public interest comment suggests that there is not a market failure that would justify the public database. The comment identifies the costs to the consumers whom the database will mislead; the financial service providers whose reputations the database will tarnish; and the Bureau, which will have to incur great expense to prevent the database from undermining its mission of protecting consumers. The comment also raises concerns about the lack of statutory authority to expand the database and its incompatibility with open government directives.

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