August 28, 2015

NAFCU: CFPB should address reputational, privacy issues in database

NAFCU shared its concerns with CFPB on Friday regarding the bureau's Consumer Complaint Narrative Database, saying existing "reputational and consumer privacy issues" within the current system should be addressed first before adding functionality tools to the database.

CFPB requested industry feedback on ways the database can be amended to create usable metrics and tools for consumers to compare products and services.

"Through the current system, there remain serious concerns that personal information may be inadvertently released jeopardizing an individual's secure financial information," NAFCU Regulatory Affairs Counsel Kavitha Subramanian wrote. She recalled CFPB's June release of nearly 8,000 consumer complaints in which some were not properly cleared of personal information before they were published.

Subramanian also noted in the letter that the database is not an efficient way to resolve consumer complaints. She commented on credit unions inability to deal directly with a member who shared a complaint with CFPB because the complaint information is anonymized, leaving credit unions in a "no-win situation."

She also noted the additional and unnecessary costs to financial services providers in the current database system, as credit unions have to coordinate their complaint resolutions with CFPB, state regulators and NCUA. The CFPB's duplicative requirements on financial institutions when they receive an internal complaint are also an issue she recommended CFPB eliminate.

Subramanian concluded by saying the bureau's data normalization efforts and consumer trend analysis are ineffective tools because "there is no true mechanism of data normalization that would be able to capture differences among types of financial institutions, asset sizes and geographic areas."