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Consumer protection bureau goes all Yelp
The federal watchdog over consumer finance wants to publish complaints about banks and financial services on its website. If you receive a card offer from Generic Bank, for example, you could look up the company and see what its customers are saying about it.
"Consumers often go online to do their homework before deciding what to buy," Consumer Financial Protection Bureau Director Richard Cordray said Thursday at the outset of a public hearing in El Paso, Texas. Complaints published by other agencies at safercar.gov and saferproducts.gov have become important shopping tools for buyers of cars and cribs, he added.
Banking groups disagree. Unverified customer complaints will "harm industry reputations," the Consumer Bankers Association says. The National Association of Federal Credit Unions says the risks of reputation harm outweigh the benefits.
Oh, come on. People already post their frank views on Yelp or Google Local, or vent their ire on edgier sites. Add "sucks" (or "sux") to the name of almost any largish bank, type it into Google or Twitter, and brace yourself for a squall of unfiltered vituperation.
Online reviews are vulnerable to manipulation not only by people with an agenda, but also by companies willing to pay for an artificially enhanced image.
That's why it is difficult to understand industry's opposition to the CFPB's idea. A moderated complaint forum seems more fair to companies -- and more useful to consumers -- than the vast majority of existing Web screeds and Twitter potshots.
"It's important for consumers to get information about businesses, just like businesses get information about consumers through their credit reports and scores," New Mexico consumer lawyer Robert Greenbaum said at the hearing.
Many companies are already monitoring and responding to complaints on Twitter, treating the social network as a new customer service channel. But the comments are often cryptic, and it can take days just to identify the account involved, said Western Union compliance executive Heather Shull.
The CFPB already operates a limited complaint database on its website. Gripers -- who are not publicly identified -- are verified as customers of the firms they are criticizing. Companies have a chance to review the complaint and respond before it is added to the database. In the jungle of online reviews, the CFPB site is a garden of veracity.
But so far, the database has only data -- no stories. If you look up a credit card issuer, for example, the meat of the complaints has been boiled down to bloodless categories such as "billing disputes," "transaction issue" or simply "other."
"It's not terribly descriptive," said Beth Givens, executive director of the Privacy Rights Clearinghouse. "I think the impact of the narrative will be profound."
Adding people's comments could help consumers pick and choose financial services more wisely. While an isolated problem may be ordinary friction that can occur in any business, a pattern of similar complaints should serve as a warning, consumer advocates said. And the company's response, which will be published alongside the unhappy customer's story, will give consumers a broader picture of the issue, and help them decide who is in the right.
If companies work to protect their reputation by reducing complaints, so much the better, consumer advocates said. Dennis Shaul, CEO of the Community Financial Services Association of America, summed up the potential power of complaints with a comment about the ignition switch scandal at General Motors. "If GM had been more alive to consumer complaints," he said, "they wouldn't be in the predicament they're in today."
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