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Tuesday, September 1, 2015

ABA Urges CFPB to Fix Complaint Database Before Normalizing Data

Any efforts made by the Consumer Financial Protection Bureau to “normalize” data in its consumer complaints database -- that is, weighting it to account for differences that may distort interpretations of the raw data -- would be fruitless to consumers without efforts to ensure the accuracy and integrity of complaint information, ABA said in a comment letter yesterday. Attempting to normalize unverified complaints, such as those in the database currently, may actually further distort the facts should the underlying complaints be partially or wholly untrue, ABA added.

“[T]he Bureau’s decision to publish on its website complaint data and select consumer narratives erodes customer privacy, impairs the confidential nature of the exchange between customer and banker, compromises the supervisory process, and introduces unreliable and misleading information into the market,” ABA said. “Instead of fostering informed and responsible consumer choice, the bureau has become a purveyor of at best unverified, and potentially false, information.”

Responding to a CFPB request for information about “best practices” in normalizing data, ABA added that if the bureau does proceed with normalizing the database as it is currently set up, it should normalize only verifiable data points and work closely with the industry to determine appropriate metrics. For example, measuring against asset size versus transaction volume would generate different results for different kinds of financial institutions.

ABA has advocated aggressively with the bureau about the flaws in its consumer database and has offered suggestions for changes to the database that would improve the accuracy and utility of the information published and mitigate unfair and inaccurate reputational damage to the banking industry.

Read the letter.