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The Bottom Line on the CFPB + Consumer Complaints

Marketing Compliance

Across the news these days, you're seeing the trend of consumer empowerment through education-telling consumers about their rights in the event that they feel they've been harmed in their efforts to complete a service. These days, consumers are encouraged to report their issues, especially if they feel they are being taken advantage of due to the pandemic or are experiencing what they believe to be matters of racial inequities. 

Earlier this year, David Uejio, Acting Director of the Consumer Financial Protection Bureau (CFPB) shared his vision for protecting consumers, especially those that are economically vulnerable. He went further to say that one of his top priorities was to be sure that consumers who submit complaints to the CFPB received timely responses and the relief that they deserved. 

In 2020, the CFPB reported that they received 542,300 complaints, which was a nearly 54% increase over the 352,400 complaints received in 2019. As of June 30, 2021, a whopping 237,480 complaints had been logged, with credit reporting, credit repair services, or other personal consumer reports being the product that consumers have identified as the reason for their complaint. Consumers are no longer sitting silent. They are poised and ready to voice their dissatisfaction. The Complaint Database has always been a driver in the way that the CFPB sets its priorities, but this year as we are emerging from the pandemic and a new administration is taking over, it is clear that these complaints will play a larger role as it applies to how the CFPB will respond to keep their promise on their commitments to consumers facing hardship due to COVID-19 and issues that impact racial equity. 

At the end of June, the CFPB finalized rules for mortgage servicers making clear that they would do everything within their power-be it rulemaking or enforcement-to prevent unnecessary foreclosures. The rule goes into effect on August 31, 2021, leaving servicers a short amount of time to get their "houses in order." The National Law Review gave a great summary of the updated rule in its July 7, 2021 newsletter (check out that link as their summary, it gives you more information than I ever could). The big takeaway is that the clock is ticking for servicers and as servicers were warned in April by the CFPB… unprepared is unacceptable.

In its most recent Supervisory Highlights, the CFPB noted concerns around the Truth in Lending Act (TILA) and the Equal Credit Opportunity Act (ECOA), even noting the actions of an unnamed lender who they say engaged in acts and practices that they believe discourage persons from minority neighborhoods from applying for credit. The lender received fewer applications from minorities than their peer lenders. Communications discouraged minorities from applying to the lender for a loan, direct mail campaigns featured white models, open house materials only highlighted white loan officers, and office locations were found to be in areas where there were little to no minorities. But, the most shocking discovery was that of internal emails where loan officers were found to have engaged in discussions that were deemed to have content that was considered racist and derogatory. It is unfortunate that this is still happening in our great nation, however, this is why oversight and enforcement are so important. According to the CFPB, the lender is undertaking corrective action and they will continue monitoring them. Let's hope they get it right.

Marketing materials should always be created with the idea that we live in a multicultural economy and consumers live, work, and play in many spaces. When minority consumers engage with your business, they pay attention to everything, including if the representatives of those businesses look like them, be it at the client-facing level, or sitting in the C-Suite. There is so much work to be done, which is why having a strong compliance process in place to guide and protect your business is so important.

Here at PerformLine, we continue to keep the conversation going about the importance of compliance in the financial services space. This year we have hosted several industry roundtables and client workshops where we brought in regulators and industry veterans to discuss the importance of all things compliance. We have also continued to update our rulebooks, and when necessary, we have assisted our clients with creating custom rules to protect their business. 

The Bottom Line

Stay close to your marketing and sales teams to avoid being on the wrong end of issues like those identified in the CFPB's most recent Supervisory Highlights. Be timely in your response to complaints. If you see an issue, address it! Don't wait for regulators to come knocking at your door before you get your compliance in place. The reality is that regulatory oversight is not going away and now more than ever, regulators want to know that your business is protecting consumers, especially those facing hardship as well as those that are seeking their equitable right to be treated fairly in the lending process. 

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Rhonda McGill Senior Director of Client Success
Rhonda is the Senior Director of Client Success at PerformLine.

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