The nation's largest banks and debt collectors are worried that if you learn what people are saying about them, you might like them less. And that wouldn't be fair, they say.
The financial sector is fighting a Consumer Financial Protection Bureau proposal that would have the agency publish complaints submitted by people who feel they have been mistreated by a lender, debt collector or other financial institution. As it now stands, the agency publishes some small amount of information about the more than 290,000 complaints it has received from aggrieved consumers, but has refused to release the full narratives -- essentially, the details.
Under the new policy, consumer names would be redacted and banks and other financial institutions would have a chance to publicly respond to or refute any allegations. People who file a complaint would have to opt in to having their narrative published on the CFPB's website.
"This is what consumers want," said Susan Grant, the director of consumer protection at the Consumer Federation of America, a nonprofit. "It gives them better ability to make decisions about what financial institution to choose."
Yet the banks and other financial groups opposing disclosure argue that the CFPB approach would unleash a dangerous flood of misinformation that might promote the faulty sense that somehow they are not good corporate citizens. Consumers would also be confused by all the un-vetted information, they assert.
The Financial Services Roundtable, a trade group that represents the banking industry, has gone so far as to set up an entire website to fight the CFPB's proposal, called "CFPB rumors."
Making complaints public "will expose providers of consumer financial services to reputational and financial risk through which there is no effective method of mitigation," the group says in an open letter published on the website. Narratives are "unlikely to help other consumers make better or more informed financial choices," the trade group asserts. Instead, the release will simply serve to "confuse" consumers, who are better off just talking to their financial institution.
"Our members are in constant communication with customers through multiple channels," the Financial Services Roundtable's letter says.
On these points, a vast number of actual customers would assuredly disagree. The financial industry has engaged in abusive behavior since pretty much forever -- refusing to lend in minority communities (a practice known as redlining), issuing high-cost and illegal payday loans and wrecking the entire economy by issuing mountains of mortgage debt to people they knew couldn't afford it. The nation's largest banks have in recent years agreed to more than $100 billion worth of legal settlements and fines in order to resolve allegations such as failing to communicate with borrowers whose homes were in imminent danger of foreclosure.
"Financial institutions have proven they cannot be trusted, nor shamed into admitting their mistakes," wrote Mike Trieschman, one of a handful of people not associated with a financial institution or a consumer group to write to the CFPB about its proposed rule. (The comment period has ended.)
Trieschman said in his letter that he had a bad experience with Bank of America on two occasions: once when his mortgage insurance was inexplicably cancelled, and again when he discovered a $700 fee added to his final loan payout.
If the financial services industry has its way, the CFPB would continue to withhold details like those shared by Trieschman from public scrutiny. According to the CFPB database, consumers have filed more than 28,000 mortgage-related complaints concerning Bank of America.
Bank of America did not directly comment on the CFPB proposal and did not respond to a request for comment. According to Bloomberg News, Bank of America, Citigroup and JPMorgan Chase -- three of the biggest banks in the U.S. -- complained to the Financial Services Roundtable about the lobbying campaign to convince the CFPB to drop the proposed rule because they were worried about antagonizing a key regulator. The Bloomberg story says that Tim Pawlenty, the former Minnesota governor and head of the bank trade group, agreed to stop the campaign. But the "CFPB rumors" website was still active as of Tuesday morning, and there is no indication that the organization has withdrawn any of its letters in opposition to the rule. (The Financial Services Roundtable did not respond to inquiries made about the lobbying effort by The Huffington Post.)
Disclosure is also opposed by the debt collection industry. In one letter to the CFPB, Sheryl Wright, a senior vice president at Encore Capital Group, wrote that the publication of complaint narratives would "foster misinformation" and "false perspectives" about her company.
Knowledge of what others are saying would be "information overload for consumers," she said.
Encore is the most complained-about debt collection company in the U.S., according to the CFPB's database. In 2012, the West Virginia's attorney general sued Encore for allegedly "robo-signing" affidavits in order to collect on default judgements.
One of the company's divisions, Midland Funding, has flooded the courts with tens of thousands of lawsuits backed by flimsy documentation, the Washington Post recently reported.
Some individual banks, including Wells Fargo, have also submitted letters in opposition to the proposed new rule.
As it currently stands, the CFPB limits consumer complaint data to a handful of bare facts, including the zip code of the filer, an outline of the complaint (such as "frequent or repeated calls") and whether the target company has responded. This policy, which the banking industry hopes to preserve, contrasts with that of other federal agencies, such as the Federal Trade Commission, which will make name-redacted narratives available upon request. Consumer complaints can also be found online in dozens of places -- at websites like ripoffreport.com and on social media.
The CFPB is expected to decide on whether to publish consumer complaint narratives sometime in the coming months.
"Banks and the financial industry are a powerful force in an individual's life, but consumers do not have voice," said Elizabeth Lynch, a senior attorney at MFY Legal, a nonprofit that has written the CFPB in support of the proposal. "Disclosure would help shine a light on behavior that shouldn't be happening, especially in communities that have been repeatedly victimized by predatory behavior."