Business groups are blasting the Obama administration’s proposal to expand a public database to allow consumers to register their unfiltered complaints about loans, mortgages and other financial products.
The groups say Consumer Financial Protection Bureau Director Richard Cordray’s plan would effectively set up a government-sanctioned version of the Yelp website, where anonymous consumers can post damaging, unverified complaints about their businesses.
The banking and securities industries, including the Financial Services Roundtable and the National Association of Federal Credit Unions, have come out in full force against the proposal, flooding CFPB officials with comment letters attacking it. The deadline to file comments was Monday.
In their letters, several Washington trade associations warn their members won’t be able to defend themselves against disgruntled consumers’ online rants on an official government website.
The 3-year-old bureau’s controversial consumer database has already tallied an estimated 400,000 consumer complaints, according to the agency.
But CFPB officials only make basic identifying information of each complaint public, such as the company involved and general issue.
That would change under Cordray’s plan to make each of the complaints fully searchable online — including the consumer’s unverified narrative of the complaint.
Pignanelli dubbed it “inconceivable ... that unproven, inaccurate or simply wrong information should be allowed on such a website.”
“The government should not abet slanders, whether intentional or inadvertent, against legitimate and highly regulated business,” he wrote.
Several liberal groups, including the Center for American Progress (CAP), Americans for Financial Reform, Demos and the NAACP have sent in comments backing the proposal. They argue it would provide more sunshine for consumers and help businesses address consumer concerns.
“Financial institutions will have an opportunity to respond to each complaint before it is posted, and that response will also be made public alongside the complaint,” CAP noted in its comment letter.
“We’ve long believed that the addition of narratives gives individuals a much richer understanding of the problems reported, and allows the public to assess their validity and draw its own conclusions,” according to another comment letter signed by 49 groups, including the NAACP and Public Citizen.
The CFPB is already a flashpoint for conservatives who have argued it is a “rogue regulator” with little congressional oversight.
Liberals have been quick to defend it; the bureau was the brainchild of liberal rock star Sen. Elizabeth WarrenElizabeth WarrenSchumer: GOP plan to make Warren the face of Dems 'not going to work' A guide to the committees: Senate Ellison holds edge in DNC race survey MORE (D-Mass.), and was created under the 2010 Wall Street Reform law.
CFPB spokeswoman Moira Vahey declined to offer a timetable for the agency’s next steps now that the comment period has closed. Officials had previously extended the comment period from 30 days to 60 days to provide businesses more time to comment.
“We’ll be reviewing and carefully considering the feedback we receive,” Vahey said.
Business groups warn it would be impossible for them to respond to every complaint on a public database.
The Bipartisan Policy Center (BPC) weighed in with comments calling for Cordray to tweak his policy prescription to make the comments more transparent.
“BPC recommends that the CFPB separately publish consumer complaints received in two separate categories: complaint information the CFPB has reviewed and verified to be accurate, and complaint information the CFPB has received but has not reviewed for accuracy,” BPC’s financial policy experts Rick Fischer, Eric Rodriguez and Aaron Klein wrote in their letter.