Johnson Tyler, a longtime legal aid attorney in Brooklyn, often spends his days battling financial companies on behalf of aggrieved low-income clients. Not much has changed in the wake of the Great Recession, despite new federal rules meant to better protect households from financial misconduct, except in one area: When Tyler complains about a large company, the company actually responds.
“It’s the biggest change” Tyler says he has has noticed in the consumer finance industry since the 2007-09 financial crisis. The reason is simple: a government-maintained public database that collects consumers’ complaints, tracks companies’ responses, and records whether consumers ended up satisfied.
The consumer complaint database, created by the federal Consumer Financial Protection Bureau, may be the part of the 2010 Dodd-Frank act that has had the biggest tangible impact on American households, some consumer advocates say.
Among the changes enacted through Dodd-Frank was the creation of the database, which catalogues consumer complaints about financial products and services. The law called for the CFPB to maintain it and provide Congress with annual updates analyzing the complaints.
Reviled by banks, the database is a prime target for a Trump administration that has vowed to rewrite Obama-era financial rules and has suggested it will change the consumer bureau’s approach to policing financial markets. Richard Cordray, the bureau's director, is among the complaint portal's biggest proponents.
“A lot of financial institutions just wear you down by nickel-and-diming you to death,” said Tyler, who has represented Brooklyn consumers since 1989. Since consumers generally don’t file lawsuits over seemingly small errors or losses, and because arbitration can be a time-consuming and ultimately unfulfilling process, “a lot of people give up, because you’re not going to keep fighting these things after a while.”
The complaint database offers consumers an easy way to hold companies accountable, make a claim for restitution, and alert authorities to potential wrongdoing.
Tyler said that when he and his wife had trouble getting a straight answer from their mortgage servicer over several frustrating phone calls, he told the servicer he’d just file a complaint with the consumer bureau. The company responded in two weeks with a detailed letter describing its actions and answering Tyler’s concerns, thanks in part to a requirement that companies generally respond to consumers within 15 days.
The kind of letter Tyler received is common; some 75 percent of complaints lead to detailed explanations from companies addressing consumers’ grievances. An additional 20 percent of complaints result in a refund or what the bureau describes as “non-monetary relief,” such as fulfilling a consumer’s request for help.
Banks say the database is littered with unverified complaints that present an inaccurate picture of how they treat their customers. They’ve been pressing the consumer bureau to stop publishing complaint data and snippets of households’ detailed criticisms of their products and conduct. “Instead of fostering informed and responsible consumer choice, the bureau has become a purveyor of at best unverified, and potentially false, information,” the Consumer Bankers Association and American Bankers Association wrote in September in a joint letter to the consumer bureau.