If the past year in politics has taught us anything, it’s that many Americans feel that the government is unaccountable, and those within the Washington Beltway are out of touch with the day-to-day lives of everyday people. It’s a shame, then, that House Republicans are pushing forward with a bill that would force the Consumer Financial Protection Bureau (CFPB) to hide evidence that the government is, in fact, listening to Americans.
The Financial CHOICE Act would fulfill the long-time Republican goal of significantly weakening the CFPB, the financial industry watchdog that has won nearly $12 billion for mistreated consumers since the bureau was formed in 2011. One of the many changes is to remove the CFPB’s wildly popular consumer complaints database (1 million complaints and counting) from public view. President Trump has endorsed the bill, his administration citing among his core principles for financial reform a desire to “restor[e] public accountability within Federal financial regulatory agencies.” But that rhetoric doesn’t match reality. Keeping complaints visible to the full American public, and not just to government bureaucrats, represents one of the more innovative mechanisms of accountability to emerge from federal government in recent years.
The debate over whether individual consumer complaints should be made public has mostly revolved around how the database shines a light on the practices of financial firms—including banks, credit bureaus, debt collectors, credit card issuers, auto lenders, and mortgage writers—and whether it does so fairly. Before any information is publicly posted, companies get to tell their side of the story by selecting from a list of options such as “company believes it acted appropriately as authorized by contract or law” or “company believes complaint caused principally by actions of third party outside the control or direction of the company.” These explanations appear alongside consumer complaints in the database. Still, there is the potential for reputational harm. Database proponents say that is exactly the point: companies are incentivized to have the fewest complaints and the fastest turn-around times in addressing them. Database detractors worry that companies might get tagged as bad apples and not be able to recover.
What is overlooked in this back-and-forth is that a public database also shines a light on the CFPB.
The optimists among us like to think that regulators act in the interest of the public they serve, but how do we really know that the CFPB’s agenda is what ordinary Americans would want it to be? Publicly available consumer complaints can offer important clues. In addition to the CFPB’s use of the database to guide enforcement action, consumer groups have analyzed the data to draw attention to particular issues like student loans and medical debt collection, while corporate consultants have harnessed the data to advise firms on how to reduce customer upset. Scholars have also dug into the database, showing, among other things, that some of the people who file complaints are suffering from severe economic distress and could probably use referrals to other forms of help. Regulators may overlook the problems people face, but if they do, a public database helps those problems nonetheless gain attention and for government to be held accountable.
And much as a public database can serve as a way to monitor for regulatory negligence, it can also act as a way to keep an eye out for regulatory overreach. The payday lending industry, for example—which the CFPB has tirelessly been trying to reform—has used the complaints database to argue that the CFPB’s actions have been overly zealous. The CFPB and the payday lending industry may draw different conclusions about the severity of the problem, but with publicly available data, at least they can start from the same facts.
Perhaps the most disheartening argument for keeping consumer complaints from public view is that other federal agencies keep individual complaints confidential, only releasing information in aggregate once a year, and the CFPB is reckless in posting “unverified” comments online. It’s not true that the agency has gone “rogue,” as Republicans have claimed: the Food and Drug Administration, Consumer Product Safety Commission, and National Highway Traffic Safety Administration are among the agencies that maintain continuously updated online databases of consumer complaints.
What is true is that publicly accessible complaints databases are a relatively new phenomenon. Last year the Administrative Conference of the United States, a federal agency charged with improving the efficiency and fairness of government procedures, issued guidelines for such databases, in response to the growing number of agencies interested in trying them out. In other words, what we have on our hands here is innovation that is being replicated and scaled.
Government isn’t always known for finding new and better ways to get the job done, but this is a case of just that. Rather than squelch the exact sort of innovation we would celebrate in the private sector, wouldn’t it be nice if we instead fostered and learned from it? Instead, the Americans who think that government is unaccountable and doesn’t listen are about to be proved right.