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Compliance Risks from the CFPB’s Consumer Complaint Database

As our longest-running and most in-depth piece of content, PerformLine’s Complaint Risk Signal Report analyzes consumer complaints to the Consumer Financial Protection Bureau (CFPB) to identify emerging compliance risks to consumer finance organizations.

In a recent webinar, I was joined by Rhonda McGill, PerformLine’s Senior Director of Client Solutions, to take a deeper dive into key consumer complaint trends, the impact on enforcement and supervision, and how your company can get out ahead of risk. Below is a recap of key discussion points.

Consumer complaints are increasing for a variety of reasons

 2021 was yet another record year of consumer complaints…but 2022 has already blown 2021 complaint counts out of the water.

As of November 30th, 2022, there are 708,524 complaints in the CFPB’s consumer complaint database—a 57% increase from the same time frame in 2021. 

Total consumer complaint counts have been increasing almost exponentially year over year, but why did we see such a large increase from last year? Is it the aftermath of the pandemic? Is it the current state of the market and the economy? Are consumers just more aware of their ability to submit complaints to the CFPB?

The short answer—it’s a combination of all of these different factors. 

2022 has been a challenging year for many consumers, and the CFPB has been working to empower consumers to use their voices. 

Pay attention to special groups—military servicemembers and older consumers

One key trend that we saw this year is that complaints from what the CFPB defines as “special groups”—military servicemembers and older consumers— are up significantly.

For the first time since 2018, complaints submitted by servicemembers drastically increased, up 64% in 2021 from 2020. We’ve already surpassed this number for 2022, up 45% from 2021.

We also saw a 43% increase in the number of complaints by older consumers in 2021 from 2020, and have already surpassed that number in 2022 with complaints up 10% from last year.

This increase in special group complaints makes sense given the significant increase in overall complaints submitted in 2021. But, what does this mean for companies whose primary customers are older or are servicemembers?

There is an opportunity for the financial services industry to focus on these two groups and really listen to their complaints and address how to best resolve these concerns. Following up on complaints before they make it outside of your four walls is important—this is where having a monitoring process in place can really make a difference. Our clients can put rules in place so that they are able to identify the issue and follow up in a timely fashion to make sure that concerns have been addressed.

– Rhonda McGill

Fair lending will continue to be a top priority across several regulatory agencies

Fair lending was a big focus for the CFPB over the last year—the Bureau has taken several enforcement actions against mortgage companies for discrimination, updated the UDAAP examination manual to include discrimination as “unfair,” and has been vocal about their continued commitment to enforcing fair lending laws.

Fair lending will definitely be a focus for not just the CFPB, but I believe that we will see more focus on fair lending across several regulatory bodies.

– Rhonda McGill

The last few years have brought so many new ways for consumers to access credit—buy now, pay later (BNPL) products, fintechs partnering with banks, banking-as-a-service (BaaS) models, and now even the mortgage space is looking at more innovative products.  

All of this is great for the market and hopefully will drive competition so that the consumer has access to several options. But, unfortunately, it does require that some level of regulation is put in place so that the consumers’ interests are protected.  

Here at PerformLine, we’re constantly deploying our teams to attend conferences, listen in on webinars, join trade groups, and so on so that we can stay a few steps ahead on all of it because the world of consumer finance and regulation is ever-changing. 

Rhonda McGill

Keep an eye on enforcement actions from the CFPB

Director Chopra has made it clear that the Bureau is prioritizing enforcement over consumer education and believes that consumer education can actually cause more harm than good because it can lead to overconfidence in consumers.

With that being said, what can we likely expect for enforcement over the next year?

More UDAAP scrutiny

UDAAP will continue to be a focus of the CFPB as we move into the new year. 

The CFPB has not been shy to use its authority as it applies to abusiveness claims. They have taken action in at least five instances using this authority including 3 banks, a payday lender, and online lenders on a wide range of complaints that they deemed to be a violation of UDAAP. I doubt that this will change in the coming year, we may just see a shift in who they are focusing on.  

Rhonda McGill

Fifth Circuit ruling could impact the CFPB’s enforcement activities

There’s been a lot of buzz around the CFPB’s funding structure, and the Fifth Circuit deemed it unconstitutional in October 2022.

The CFPB will be going before the Supreme Court in the coming year to address the matter and, if upheld, it could have huge implications in the consumer finance space. 

For more insight into how the ruling could impact enforcement, check out this article from Manatt.

With that being said, I don’t anticipate that there will be any slowing down on anything at the CFPB.  I believe that they will continue to do what they have been doing

– Rhonda McGill

How to get out ahead of compliance risks

No matter what the next year brings, there are a few ways to get out ahead of potential compliance risks:

  • Take a proactive approach to compliance, not a reactive one
  • Put consumer protection at the forefront of your business
  • Implement an automated compliance monitoring solution for full visibility and quick remediation
  • Stay on top of consumer complaints for both your company and the industry as a whole

Watch the full webinar

To get complete insights into compliance risks from the CFPB’s consumer complaint database, watch the full webinar here.

Ready to get started?

Schedule a demo or contact us.

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