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Episode 38: CFPB Complaints, Enforcements, & Navigating New Compliance Challenges

Rhonda McGill
January 5, 2024
This COMPLY Podcast episode is part one of a discussion featuring CFPB alumni Gary Stein and Melissa Baal Guidorizzi, where they discuss consumer complaint trends in 2023 how to leverage consumer complaint data.

Facing another record-breaking year of consumer complaints in 2023, the consumer finance industry faces a pivotal crossroads. This surge, along with intensified rulemaking and enforcement activities from the CFPB, signals unprecedented regulatory and compliance pressures.

Today’s COMPLY Podcast episode is part one of a discussion featuring CFPB alumni Gary Stein and Melissa Baal Guidorizzi, where they discuss:

  • Consumer complaint trends in 2023 and factors that led to the record volume
  • Leveraging consumer complaint data for internal compliance processes
  • Recent enforcement action numbers and the impact they have for the CFPB
  • How CCOs can navigate new challenges in 2024

Show Notes:

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The state of marketing compliance and regulation is evolving faster than ever, especially for those in the consumer finance space. On the COMPLY podcast, we sit down with the biggest names in marketing, compliance, regulations, and innovation as they share their playbooks to help you take your compliance practice to the next level. 

Episode Transcript:

Hey COMPLY Podcast listeners, and welcome to this week’s episode. This is not only our first episode of the new year, but this is also my first episode as your new podcast host. Hello, my name is Rhonda McGill, and this year we will be gearing up to bring you some fantastic content, and I am so excited to be a part of it. 

This COMPLY Podcast episode is part one of a discussion between John Zanzarella PerformLines, SVP of Sales and CFPB alumni Gary Stein and Melissa Baal Guidorizzi, where they will discuss consumer complaint trends in 2023 and the factors that led to the record volume, how to leverage consumer complaint data for internal compliance processes, recent enforcement action numbers and the impact they have for the CFPB, and how CCOs can navigate new challenges in 2024. Thanks for listening and enjoy!

Hi everyone and welcome to PerformLine’s webinar. My name is John Zanzarella. I am the SVP of Sales at PerformLine, and I’m really excited to be here today with you all, be with our guest speakers and talk about all things CFPB. So we’ll jump right into it. You know, at PerformLine for anyone who follows our content you know, we are big on following consumer complaints. One of the most notable trends that we’ve seen here with our different reports at PerformLine is just the increase in complaint volume. Some of the numbers even surprise me. Consumers submitted about 500,000 complaints in 2021. That number increased to 800,000 last year and is already over 1 million in 2023. Of those numbers the last two years makes up about 43% of all complaints received by the CFPB since it established the Bureau in 2011. Curious to hear from you all, what do you make of this trend and the increase of consumer complaints and what does it mean for the consumer finance companies who are trying to track those complaints?

So I’m happy to jump in first. I think first all the data geeks on this webinar and maybe amongst ourselves and probably want to normalize some of those numbers and make sure the complaint increases are not because, you know, there is more companies onboarded to the portal or topics and other things like that. I think it is hard to disentangle anything over the last few years from the pandemic, and what’s happened since then. When the period of 2021 we were still coming off stimulus payments and things like that, and maybe inflation was just starting to make us grouchy, maybe not as grouchy as it has been. And so there is those macro events. 

I think there is also things that you can observe in the use of consumer financial services, products like credit cards, we see reportedly revolving line utilization increasing and delinquencies. And I think for consumers, especially subprime borrowers, access to credit and things maybe getting more challenging, and being able to pay those off. So that could lead to more disputes and frustration with those disputes. Same thing on payments all the major P2P and emerging payment providers are growing at about a clip of around 10% a quarter. So you have a greater volume that even when most of the time things go well, still creates more opportunities for things to go poorly. And on the credit side, especially because the majority of complaints always tend to hover around the credit bureaus, if people’s credit isn’t what they need to get them access to purchases or just day-to-day living, it is probably going to generate some volume.

So I’m going to just riff off of what Gary said with a couple of points. So I’m a lawyer, Gary is not, although he plays one very well usually. And I was in the Office of Enforcement for all eight years, I was at the CFPB and we used complaints really regularly. So what I’ll validate on, I totally agree with Gary on the consumer experience during COVID and pandemic times, there were stimulus payments, there was an increase in digitization and payments that were online. Some of the downside effects, you didn’t see that much in the complaints at the time, but now we’re coming out of that time with more debt, wages are flat, the economy is in a state where you’ll see more of those complaints. And so the fact that fraud has gone up in this market, in these markets, has been really difficult on some consumers. And so complaints have gone up. 

Second point is really this is showing that the CFPB has succeeded to some extent. It is only 12 years old. It started out as a startup federal agency where sometimes I would call another federal agency and they didn’t know who we were. And now the CFPB has succeeded in brand recognition and letting people know more about what their rights are and where you can complain. So since I’m more qualitative than quantitative, I’m not going to try to do any of the statistical stuff, but some of this may be just the fact that the system has more participants because there is more knowledge about it. But what I really think it should matter to both, to all people in this ecosystem, is that there is more out, there is more data out there in general. So state and federal regulators, plaintiff’s attorneys, they’re using the consumer complaint database base to sort of mine what they should focus on. And so companies should be doing the same. It’s the same data set, you can use it too, and it is a good way to help figure out how to have a continuous improvement cycle for your products and services.

Yeah, I think when we first spoke Melissa, that was one of the things that really stood out that you mentioned. We talk about it at PerformLine, we see a lot of our clients using consumer complaints as an early warning system for potential regulatory action. I do think it is one thing to be aware of the complaints. It’s another thing to be organized as an organization to understand how do we bucket complaints? How do we respond to these complaints? What are we required to do from a regulatory standpoint versus what do we want to do from a brand and a proactive standpoint? Both of you had the opportunity to work in-house at companies to support companies as external advisors. How are you coaching your clients today on how to use these complaint information for their own internal processes?

You want to go first?

Yeah, so I think trend analysis is important. Trying to figure out what types of products and services are hitting the highest. Because if you’re going to have an exam or if there is a product or service that’s hitting higher on the consumer complaint database, you might get a CID you might be the target of an investigation. And so you need to know what those things are yourself. It’s also a good way to trend, how is your staff, how are your systems dealing with customer service. Customer service is continuing to be an increasing focus for all regulators, particularly the CFPB. And how quickly and how well you answer your own customers can really help you mitigate risks and actually improve your uptick and your portfolio, your market share.

Yeah, I agree. If you’re not really attuned to this information, you’re putting on blinders that forget about regulatory risk and consumer harm, you’re just doing a disservice to your business and your revenue potential. It’s interesting because the clients we work with, I can think of several instances in which we get into this subject and there is a debate about what’s the definition of a complaint. And I think from a regulatory obligation standpoint, it is good to have a pretty tight definition. But from an internal management I think keeping a broad scope is bright. You know, consumers may call in a non angry manner and express very politely confusion about an offering or a service or what they’re doing or how things are supposed to work. And those are really important smoke detectors because for everybody that’s calling in, there’s got to be dozens, if not more, that are not, that are inhibiting that. Some of those will be quiet attrits, and some of those are maybe talking to plaintiff attorneys and all kinds of other things.

And so having that focus on that experience and what they’re saying I think is important. And there is the whole, let’s have a game plan for resolving these things and reporting them and all those things. But really, the goal isn’t to use this information to show a regulator that we care, it is to walk the walk.

We see that—we have clients who use tools like call monitoring. Well, they want to monitor a hundred percent of their calls and then separate out the ones that have some sort of consumer complaint. But you can always tell they’re not doing that because of a regulatory requirement. A lot of times they’re doing that because that’s in their business DNA. Where they really want to hear the voice of the consumer and then be able to respond to that. And so while we agree that the complaint database is this great early warning system, another notable trend from the CFPB is that the number of public enforcement actions has actually decreased in recent years. Now, consumer relief increased significantly. The CFPB is talking about plans to hire more enforcement attorneys and support staff. But what do you expect, do you think the number of enforcements is going to go up, and what do you attribute maybe the decrease over the last few years of enforcements to? And Melissa, maybe you can start with that one.

Sure, so part of this is just natural progression, perhaps because I was in the Office of Enforcement my whole time. The CFPB is growing and its jurisdiction continues to grow, and so you need more staff. But this director has made it very clear that his focus is on big tech. Big, big, big. So the focus is on larger market moving type matters instead of focusing on trying to get a wider swath necessarily of smaller matters. And that’s born out in the cases that you see. The other thing I would say is the CFPB as a maturing agency is getting more pushback. So not only because the Supreme Court is still figuring out constitutionality, but also because the demands are getting higher and companies are becoming more willing to fight back. There’s more litigation, so you need more lawyers.

Litigation is a different kind of animal than just settling matters. So that is a natural progression, which people should have and could have predicted in the beginning, because in the beginning there was a lot of consent orders and now there is a lot more litigation. But finally my big thing that I’ve seen since I left, is the idea that enforcement goes beyond the Office of Enforcement. This administration has really tried to maximize each tool that Dodd-Frank gave it to the point where we’re going to talk a little bit of maybe the larger participant role that just recently came out, but from the very beginning, the CFPB has said supervision is going to expand over non-banks. We can call out a non-bank, any market, any size that we think has some consumer negative impacts and go through a process there is more rules being put out to gather more jurisdiction, both for supervision and enforcement.

The supervision learning highlights are actually much more detailed. There are FAQs that go out, advisory opinions at a much higher clip. And then there is always the bully pulpit, which has been revived pretty powerfully by this director, which is just making statements, lots of speeches, lots of blogs where Director Chopra is very clear on what his goals are and what he thinks should be happening. And so I think enforcement writ large is something to think about more than just sort of the traditional how many cases are out there. It is easier to just focus on those.

Yeah, I think you mentioned something that’s really important. If you are a chief compliance officer at a bank and you’re looking at the enforcement actions being down, that doesn’t mean that it is time to take your foot off the pedal and you know, that’s not going to come. What you’re saying is that the enforcement power as a whole is actually increased, and we’re seeing that through some of the supervision and different rules that are being announced and things that are outside of the CFPB purview traditionally that now are making their way into the fold. Is that accurate, Melissa?

Yes, and Gary’s old team has a lot more powers and a lot more staff as well. I mean, I’m happy to pitch to him on that because, there is a lot more going on in that side of the house. When we worked together, it was a little less active and perhaps in the way it is now.

Yeah, that’s true. I think there is been staffing up in a number of areas. And part of it is also is interesting in the staffing up is that again, as Melissa said, the agency’s only 12 years old, so you’ve had some people, like I was originally supposed to be a term employee and converted and stayed a few years longer than I ever thought I would. And then you have folks in there, I think, there is always an interest, especially in a fast evolving market, to bring in new folks with new understandings. You know, I would just add that I think we’ve now got two data points with two administration changes, and in both cases there was a kind of a dip early on as they kind of maybe reassessed what was in the pipeline under the prior administration and then kinda refocused resources accordingly to maybe what they saw as their policy agenda.

So I think that dip and then expansion out, may be in some part related to that. What is interesting is that I think every director at the Bureau, regardless of what side of the aisle they come from, has recognized the value in the measurability of enforcement actions. And you talked about the dollars John. I mean a rulemaking quantifying its impact. I mean, they have a lot of economists that can do that, but it is a little less direct versus an enforcement action. We can count off the billions of dollars that have been returned to consumers and I think many directors have made sure that shows up at the bottom of every press release and everything they put out. It is a way to measure their legacy. And I think all the directors, whether they go in with the attitude that we’re going to lean on enforcement, they recognize that over time as it is a great measuring stick.

And then the last thing I’d just say is that Melissa’s job was a lot easier than mine. They would look at very specific facts and circumstances. It is only with one company, it would be a little easier than writing a broad rule that had to apply to the entire market. But all jokes aside, I think there has to be this big picture, perspective held within the Bureau because the other thing that can happen is where there are policymaking agendas and you come across a player in the marketplace that may be, whose actions need to be curtailed. There is consideration given to how would this case implicate or change, for the rule that we’re going out to the broader market and how would that happen? And I think it is kind of interesting as the Bureau starts to put out more rules now, one might think that in the immediate aftermath of a rule implementation we might see more enforcement actions as companies are not yet compliant with those new obligations, but over time the rules should convert the wild west over to a more orderly and consumer friendly market. And we should see, at least in those areas, enforcement actions decline. I don’t know that we have enough data though to prove that out.

Yeah. You bring up an interesting point though, Gary. So we’re in this situation now, and I’m going to ask both of you to take the seat of a chief compliance officer where we’ve seen, or it seems we’re seeing a more strategic CFPB, one that is looking more at rulemaking policy creation, their thinking big picture. Now if you’re a chief compliance officer, you’re coming off a year where high interest rate environment, a lot of companies are having down years, there may have been some layoffs to the compliance team, there may have been some budget cuts to technology. How are you preparing your organization for these rules and policy changes knowing that you may have less staff going into next year, you may have more people wearing multiple hats if you were a chief compliance officer today, how are you tackling that?

It’s funny, I guess if you’re a chief compliance officer, that means you work for an organization that’s already made a commitment to compliance, and that’s good. Because there’s a number that are flying out there, I think, with blinders that haven’t quite made that investment. And we see all over the place where the expectations are becoming more clear in things like the BaaS space and others for what constitutes sufficient oversight in those things. And so there is a lot coming out, not to mention regulatory change management that happens when a new rule rolls out and now you have new obligations that you have to address. It is funny, I’ve talked with companies in the consumer lending space, like-size companies that have massive differences in the number of compliance personnel.

You know, obviously some of them may be more attuned to their obligations than the others, and some of them may have just gone through the pain of an examination or a CID and that’s led them to go there. But it all drives, this is an excellent market for using automation to enhance the ability of organizations to manage all this stuff. It almost proves that if you have to just staff up completely and do everything manually, it would probably break the back of any business that’s trying to operate in here. So in the sense that it is from a tough love standpoint, it probably compels a lot of organizations to look for tools and intelligence that helps them in their surveillance, that helps them in the resolution in the reporting of all of these things.

Melissa, what do you think?

Yeah, so as far as actionable items, I think Gary has all the right advice, initial advice on how to approach it, but really on the nuts and bolts, having done this, the last downturn of the economy when new laws were coming in and we’re in flight and still in in movement, it is always better to plan ahead. So take the opportunity, you are leanly staffed, make a list of all the different things coming down the pike. There’s many resources, there are law firms, there are RegTech, there are consultants. Figure out what are the things that might impact your business and waterfall them. Risk-based approach to how you think you need to tackle and what resources you can put on each thing. There are obviously some deal breakers in some of the rules that are coming out, some real friction for certain parts of certain businesses, but they may be different for each business.

So trying to plan for that beforehand does many things. It helps you plan for continuation, continuity in a new reg environment. It helps you build new products in a way that you won’t break them on day five because something’s changed. And it also allows you to have the idea of what ways you can actually build with your customers around some of the things that might be challenges in the going forward. And so I think, you know, there are some actionable things. There is a stress paralysis piece about compliance that happens, particularly in financial services. And what always worked for me is really trying to make sure that you are taking the steps to have usable bites and there are a lot of resources available to help you with each step, but at some point, whether you use tech or consultants or lawyers, you’re going to have to make decisions about what is going to be most important to you and your company so your team can survive the next generation.

Yeah, I agree with that. We use the term strategic compliance, which is really being proactive and thinking about that. And I think, you’ve been on both sides and can talk to the out-of-pocket costs of having to respond to something after the fact. But there is also, you know, if you’re not doing that right, think about it like, John, you raised a great point. Companies are cutting staff, right? So you’ve got all these product rollouts that you want to build in, now all of a sudden if your eye’s not on the ball of what’s coming down and you have to stop what you’re doing to start implementing regulatory changes, that hurts your revenues. And so you really do have to be forward looking. And I think some of the rules that are in the proposal stage right now, like Section 1033, the open banking rule is a great example. Whether you’re a bank, an aggregator, a data-using fintech, there is a number of adjustments. It doesn’t change necessarily the overall business model, but the recording of consumer authorizations, if you are a data provider and the confirming of those authorizations, or using an industry standard methodology to check security certifications and things like that. All of those things are new and constitute new business practices.

So yeah, it is interesting. We hear from a lot of our customers, we always joke around, there are three times that clients come to a company like PerformLine for automation. Number one is they’re being proactive and they’re thinking about compliance and some cases even more before they really need to. Number two is they’ve hit that point where they just can’t keep scaling with the amount of people they have and they need to go to some automation. And the third one is when it is too late, when they’ve already received a consent order. And what we want to try to avoid is that last one, and I think you both highlighted the way to do it, it’s more strategic planning upfront when it comes to these different areas, being prepared for them as opposed to being caught off guard.

Thanks for listening to this episode of the COMPLY Podcast. I hope you found this discussion as informative as I did. If you like this, just know that we’re just getting started. So be sure to join us for our next podcast. I can’t tell you how excited I am to be your new host. I am also happy to connect outside of the podcast, feel free to connect with me on LinkedIn. 

If you are interested in reading the full 2023 Complaint Risk Signal report, I will drop a link to access your copy in today’s show notes. And to see a more in-depth look into the marketing compliance and enforcement actions that happened at the end of 2023, I will link our newest quarterly review for you. As always, for the latest content on all things marketing compliance, you can head to and for the most up-to-date pieces of industry news, events, and content, be sure to follow PerformLine on LinkedIn. Thanks again for listening and we’ll see you next time.

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

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