Released: April 24, 2020

Americans need stronger consumer protections during COVID-19 crisis

Advocates call on the CFPB to strengthen its consumer complaint tool

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WASHINGTON, DC — The Student Borrower Protection Center (SBPC), the U.S. Public Interest Research Group (U.S. PIRG), and Consumer Action released recommendations on Friday for the Consumer Financial Protection Bureau (CFPB) to enhance its consumer complaint tool to protect borrowers during the coronavirus (COVID-19) pandemic. The organizations outlined key steps for the Bureau to take, including requiring businesses to respond faster to complaints, sharing secure complaint information with cities, and allowing consumers to tag urgent, pandemic-related problems for escalated response. Advocates also called for the Bureau to leverage consumer complaints to support the federal government’s oversight of its response to the coronavirus pandemic.

“It's time the CFPB gets back to the reason it was created after the last financial crisis -- standing up for consumers,” said SBPC Executive Director Seth Frotman. “This begins with expanding and enhancing its consumer complaint tool to provide relief and answers to millions of struggling Americans. The Bureau must also use complaints to increase transparency and accountability around how consumers are treated by the financial companies receiving trillions through federal recovery efforts.”

As millions of consumers across the country face layoffs, furloughs and economic distress stemming from the coronavirus pandemic, consumers desperately need help from their lenders and servicers to defer payments or get counsel if they fall prey to a scam. Consumers also need to be able to get assistance from the federal government if things go wrong.

“The CFPB is one of very few places consumers can turn to receive direct assistance with unresolved financial complaints,” said Consumer Action’s Ruth Susswein. “Consumers must be able to rely on the Consumer Bureau to hold financial firms accountable when they resort to unfair and deceptive tactics. During the pandemic, it is crucial that consumers can get a full picture of how lenders and other financial firms treat borrowers.”

The issue brief can be found here: https://protectborrowers.org/wp-content/uploads/2020/04/Issue-Brief_CFPB-Complaints_April-2020.pdf

The recommendations issued today are intended to ensure the CFPB can effectively oversee a financial services marketplace straining under the stress of the global pandemic and which has also been tasked with delivering hundreds of billions of dollars in emergency aid to businesses and consumers.

"Our series of PIRG reports based on CFPB database complaints have helped shine a light on the ways that unfair financial marketplace practices harm consumers,” said Ed Mierzwinski, U.S. PIRG Education Fund’s senior director of federal consumer program. “Now that consumers are at increased risk of financial abuses, we need to make changes so both the bureau, and outside researchers, can dig deeper and more quickly.”

The groups outline steps the CFPB should take to enhance its consumer complaint tool:

• Ensure quicker assistance for consumers when they need help;

• Hold companies accountable for providing timely and responsive assistance;
• Provide recovery effort oversight bodies with access to consumer complaints and reporting; and

• Expand and enhance the consumer complaint tool intake and resolution process.

Other recommendations include allowing consumers to directly tag coronavirus-related complaints; broadening cities’ access to real-time complaint data; publishing consumer narratives in real-time during the national emergency; and expanding outreach to boost awareness of the complaint tool.

The organizations also are releasing a snapshot of consumer complaints related to the COVID-19 pandemic. These complaints indicate that alarming practices are emerging across the consumer financial market and include reports of undelivered promises from financial companies claiming to offer assistance.

The snapshot can be found at: https://protectborrowers.org/wp-content/uploads/2020/04/Consumer-Voices-vF.pdf

Background

The CFPB was created in the wake of the Great Recession to protect consumers. One of the agency’s chief tools is its complaint handling system, which includes a public database of consumer complaints, complete with consumer narratives that give a more complete picture of the complaint. Launched in 2011, the CFPB complaint tool empowers consumers to report problems related to financial products and services and to get timely responses from companies. To date, the Bureau has handled more than two million consumer complaints.

Unfortunately, under the Trump Administration, the CFPB has weakened protections for consumers and continually put the interests of companies over those of millions of Americans.

For instance, during the coronavirus crisis, Bureau leadership has failed to pause industry friendly rulemakings that roll back key consumer protection regulations, refused to prioritize crisis-related work, and continued to relax other important protections for consumers and reporting requirements for financial companies.

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Consumer Action has been a champion of underrepresented consumers nationwide since 1971. A non-profit 501(c)(3) organization, Consumer Action focuses on consumer education that empowers low- and moderate-income and limited-English-speaking consumers to financially prosper. It also advocates for consumers in the media and before lawmakers to advance consumer rights and promote industry-wide change. www.consumer-action.org

The Student Borrower Protection Center (www.protectborrowers.org) is a nonprofit organization focused on alleviating the burden of student debt for millions of Americans. SBPC engages in advocacy, policymaking, and litigation strategy to rein in industry abuses, protect borrowers’ rights, and advance economic opportunity for the next generation of students. Led by the team of former federal regulators that directed oversight of the student loan market at the Consumer Financial Protection Bureau, SBPC exposes harmful and illegal practices in the student loan industry, drives impact litigation, advocates on behalf of student loan borrowers in Washington and in state capitals, and promotes progressive policy change. SBPC accomplishes these goals by partnering with leaders at all levels of government and throughout the nonprofit sector.

U.S. PIRG Education Fund is an independent non-partisan group that works for consumers and the public interest. Through research, public education and outreach, we serve as counterweights to the influence of powerful special interests that threaten our health, safety or well-being. We regularly study the consumer database and, so far, have released 14 reports in a series derived from CFPB complaints. U.S. PIRG Education Fund is part of The Public Interest Network, which operates and supports organizations committed to a shared vision of a better world and a strategic approach to getting things done.