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Marketing Compliance Risks from Consumer Complaints to the CFPB [Data]

marketing compliance risks consumer complaints cfpb data risk signal

recent analysis of consumer complaints submitted to the Consumer Financial Protection Bureau (CFPB) uncovered several key trends presenting regulatory compliance risks for consumer finance organizations.

Here are the top consumer complaint data points from the CFPB’s Consumer Complaint Database that you should know, the compliance risks they present, and how to get out ahead of regulatory scrutiny.

Table of Contents

Consumer complaints are continuing to increase year-over-year

Every year, consumers submit more complaints than they did the last. Since the creation of the CFPB, there has never been an instance where complaint counts decreased from one year to the next.

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Consumers submitted nearly 500,000 complaints in 2021—a 12% increase from 2020 and an 80% increase from 2019.

The volume of complaints submitted on an annual basis has skyrocketed in recent years, with a significant increase in complaints submitted in 2020 compared to 2019, likely due to the impact that the pandemic had on consumers’ financial situations.

What’s the risk? Consumers have a heightened sensitivity and awareness of how they’re being treated by consumer finance organizations. Consumers are also increasingly being empowered by the CFPB to use their voices to let them know what challenges they’re facing in the marketplace.

How to get out ahead: Consumer protection should be at the forefront of your business objectives. Compliance programs should utilize a proactive approach to protect consumers before they face challenges and submit their complaints to the CFPB.

Let us help you: PerformLine’s omni-channel compliance solution allows your organization to be proactive in consumer protection efforts to avoid the complaints that lead to regulatory scrutiny from the CFPB and other regulators. Learn more

2022 consumer complaint volume has already surpassed 2021 volume

2022 is already another year of unprecedented consumer complaints to the CFPB.

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As of October 14th, there are already over 580k consumer complaints in the CFPB’s database—a 49% increase from the same time frame in 2021, and a 17% increase from the total complaints submitted in 2021.

What’s the risk?  Consumer complaints are a guiding factor for the CFPB’s supervisory and enforcement actions. 

The CFPB uses this [complaint] information to monitor risk in financial markets, assess risk at companies, and prioritize agency action. The CFPB makes complaint data and analyses readily available to CFPB staff to support their supervisory, enforcement, and market monitoring activities.
– The CFPB

As the CFPB continues to receive unprecedented numbers of complaints, paired with CFPB Director Rohit Chopra’s aggressive approach to consumer protection, compliance risk increases significantly.

How to get out ahead: By proactively monitoring marketing communications for compliance, your organization can better protect consumers and avoid the complaints that lead to investigations and enforcement actions by the CFPB.

Let us help you: With PerformLine, your organization can get complete compliance coverage of all your marketing materials across channels and partners—discovering placements you may not have even known about. Learn more

For each product, there are generally 3 main issues that make up the majority of complaints

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When looking at each product category in the CFPB’s Consumer Complaint Database, the top 3 issues make up at least half of the total complaints per product.

What’s the risk? Consumers face similar challenges with products across the board. If you fail to monitor for these top issues for the product(s) you offer, you could be exposing your organization to risk.

Consumer complaints can be an indicator of potential risk management weaknesses or other deficiencies, such as violations of laws or regulations. Complaints can reveal a weakness in a particular product, service, function, department, or vendor.

How to get out ahead: By understanding exactly what it is that consumers are complaining about, you can make it a priority to address these issues within your company and ensure you are preventing and/or responding to these issues in order to get ahead of the rest

Let us help you: PerformLine’s omni-channel solution comes with pre-built regulatory compliance rulebooks that include the top issues for your industry and product(s), taking the guesswork out of compliance monitoring across the channels where your organization interacts with consumers. Learn more

Complaints submitted by special groups increased in 2021

Complaints submitted by military servicemembers increased for the first time since 2018

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Consumer complaints submitted by military servicemembers jumped significantly in 2021, up 64% since 2020.

What’s the risk? The CFPB has released several notices and reports highlighting the challenges that servicemembers are facing and specifically called out complaints submitted by this group. 

How to get out ahead: Military servicemembers are particularly vulnerable to financial harm due to their unique circumstances. Military servicemembers and their consumer protection laws should be included as part of your overall compliance program.

Let us help you: PerformLine’s compliance monitoring solution can help monitor for compliance issues specific to military servicemembers and ensure compliance with applicable consumer protection regulations, including the Military Lending Act (MLA), Fair Debt Collection Practices Act (FDCPA), and more. Learn more

Complaints submitted by older consumers increased 43% in 2021

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What’s the risk? The CFPB focuses specifically on the protection of older consumers, especially under the leadership of Director Rohit Chopra.

I have asked the Office [of Financial Protection for Older Americans] to identify cross-cutting consumer protection issues, including when it comes to housing, as many older Americans with substantial financial assets are a target for bad actors. We will be working with you all to find systemic fixes to emerging risks.
– CFPB Director Rohit Chopra

How to get out ahead: Take a proactive approach to protect older consumers by ensuring that marketing materials and communications—especially for products that are common among older consumers, like reverse mortgages—are clear and in compliance with regulations.

Let us help you: With PerformLine’s regulatory compliance monitoring solution, your organization can ensure that communication is clear across all of your marketing channels, from calls to emails. Learn more

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COVID-related complaints have generally been on a decline since 2021, with the exception of credit reporting. The data suggests that as the pandemic continues to slow and society continues to reopen and resume, consumers are facing fewer challenges related to COVID-19 than they were in 2021 (but are still facing challenges nonetheless).

What’s the risk? While complaints are overall on the decline for COVID-related issues, consumers are still facing hardships and the CFPB is still prioritizing those affected.

The COVID-19 pandemic continues to affect the markets the CFPB regulates and the environment in which CFPB staff perform their work. To achieve its strategic goals and objectives, the CFPB must appropriately monitor consumer financial markets to surface the emergent risks facing consumers as the economy recovers and act to address such risks.
– The CFPB

How to get out ahead: Organizations should still be sensitive to ongoing COVID-19 issues and should focus on any challenges or complaints brought forward by consumers to help ease any distress that may still arise.

Let us help you: PerformLine’s compliance rulebook for COVID-19 is still available to use to monitor marketing materials for any potentially fraudulent or deceptive claims or scams that may be associated with your brand and directed at consumers. Learn more

Complaint counts can impact enforcement risk

We’ve analyzed all of the Bureau’s previous public enforcement actions (2012 – 2022) to explore the average complaint count before an enforcement action is taken, the average fine amount, and what percentage of annual revenue that fine could be—all based on annual revenue. 

Use this scale to help your organization determine its risk of enforcement action based on consumer complaints in the CFPB’s database.

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What’s the risk? Consumer complaints impact the CFPB’s enforcement activities. 

Some key observations about the nature of consumer complaints and how they impact enforcement actions include:

  • The higher the annual revenue, the higher the average number of complaints before an enforcement action
  • Higher annual revenues typically warrant a higher fine amount (even though the fine amount is a small percentage of annual revenue compared to smaller revenue groups)
  • Institutions with annual revenue less than $20 million will likely feel the impact of a penalty more, as they can be up to 158% of annual revenue

CFPB Director Rohit Chopra has also made it clear that he intends to increase the use of enforcement as a means of protecting consumers against companies that harm consumers.

Financial products are often very challenging to understand…and what is often going to fix it is to eradicate unlawful actors who really prey on people.
– CFPB Director Rohit Chopra

How to get out ahead: 

To get out ahead of enforcement actions from the CFPB, organizations should

  • Proactively monitor their marketing communications for compliance to better protect consumers and avoid complaints altogether
  • Have a process in place to respond to and resolve consumer complaints in a timely manner
  • Monitor consumer complaints across competitors to identify industry-wide compliance issues and integrate those learnings into their compliance program

Let us help you: PerformLine’s omni-channel compliance solution allows your organization to monitor all of its marketing communications for compliance so that you can proactively prevent the issues that lead to consumer complaints. 

PerformLine’s rulebooks are also fully customizable and can be changed as the business changes or as industry-wide compliance trends change. Your organization can easily update its rulebooks with identified trends and compliance issues, allowing your compliance program to be as agile as the regulatory environment is. Learn more

Mitigate Compliance Risks and Consumer Complaints with PerformLine

Prevent consumer complaints and compliance issues by getting to the root of them—deceptive and unclear marketing communications that cause consumer harm.

With PerformLine, your organization can get out ahead of regulatory scrutiny from the CFPB with:

  • An agile compliance program that adapts as the regulatory environment changes and new risks emerge
  • proactive approach to consumer protection to help prevent consumer complaints that lead to investigations and enforcement actions by the CFPB
  • Ready-to-use but customizable rulebooks to cover existing regulations and guidelines, as well as new compliance risks and issues that arise

Let us help you—schedule a demo with our team of experts today.

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