The Consumer Protection Financial Bureau, a watchdog government agency created after the financial collapse of 2008, is under the microscope in Congress. Here’s what you need to know.
Complaints about businesses should remain public
Iowans have filed 5,466 complaints with the Consumer Financial Protection Bureau since the agency launched in 2011. They sought help with unlawful calls from debt collectors, errors on credit reports and problems with student loans, banks and mortgage companies. About 800 of the grievances came from military members or seniors.
Though businesses may want to ignore griping customers, they are less inclined to ignore the federal government. Companies respond within 15 days to complaints filed through the bureau 97 percent of the time. Struggling consumers get help.
For example, John Lukach, a Minnesota social worker recently quoted in the Wall Street Journal, said he repeatedly contacted his student loan servicer to negotiate monthly payments on a $120,000 debt consuming 80 percent of his income. He was offered a temporary reduction for a few loans.
Then he filed a complaint with the CFPB. The lender called him two days later and offered several repayment options. Lukach credited the bureau with putting the company’s “feet to the fire.”
Congress created the consumer watchdog after irresponsible lenders fueled a housing, banking and economic crisis in this country. The bureau is tasked with uncovering and stopping unfair, deceptive and unlawful practices in the financial services sector. It has secured $12 billion in refunds and relief for victimized Americans and puts pressure on financial companies to resolve disputes.
Part of that pressure is the result of consumer complaints being public. Anyone with a computer can view the bureau’s online database of more than 700,000 complaints.
Iowans can search for grievances made about specific companies. The Des Moines Register editorial board has used the database to check for disputes with payday lenders and pre-paid debit card companies.
“By sharing complaint data publicly, we empower consumers with information they can use to make decisions and give public officials insight into issues affecting our communities. Likewise, industry can see direct feedback from customers and review complaints made about others in the same markets. This helps them fix current problems, keep small problems from growing, and prevent future problems,” CFPB director Richard Cordray wrote in a June report.
Translation: Shining light on problems helps prevent and resolve them.
Who would oppose such openness? The businesses people complain about.
Some of them say the public nature of the database aids the spread of unverified rumors. They cannot put the kibosh on Yelp or numerous other privately operated consumer review websites, but they can lobby public officials to put government’s complaint database under wraps.
Now, voila, the Trump administration says it wants to make CFPB’s database private because complaints are not sufficiently verified by the government. (This is the same administration that set up a hotline to gather and share unverified allegations from callers who claim to be crime victims of undocumented immigrants.)
The CFPB database should remain public. Transparency encourages businesses to pay attention to customers and keeps the bureau accountable for doing its job.
The Consumer Financial Protection Bureau has published a rule barring financial companies from using arbitration to shut down class-action suits.
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