Consumer watchdog crafts new complaint system

One of the most daunting tasks facing the new federal agency charged with protecting Americans’ wallets is also the most basic: answering complaints from consumers.

After it opens for business this summer, the Consumer Financial Protection Bureau will begin to take over many of the tens of thousands of phone calls, e-mails and letters that flood government regulators each week on topics such as aggressive debt collection and credit card interest rates. The system it designs to handle it all — from the time it takes to answer a call to the information it publishes — will help shape the way Americans view the fledging agency.

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“We are really here to be an advocate for the consumer,” said Catherine West, the bureau’s chief operating officer. “We are determined to be a very technology savvy, data-driven bureau. It really is part of our mission.”

West said the agency will roll out its system gradually after it officially launches July 21. It has begun working with the five largest credit card issuers — Chase, American Express, Discover, Capital One and Bank of America — on a process for resolving complaints and tracking how long that takes. The process may require credit card issuers to establish dedicated teams to handle the volume of calls and e-mails, the agency said.

Part of the purpose of the CFPB, which was crafted as part of Congress’s sweeping overhaul of the nation’s financial system last year, is to consolidate the responsibility for protecting consumers that had been spread across seven agencies. Each had its own system for handling complaints — with varying results — which frequently left consumers confused.

“Consumers will only come to the CFPB and provide information about their experiences in the marketplace if consumers generally are satisfied with the results of the complaints process — that is, if their problems are resolved,” wrote a coalition of advocacy groups, led by Consumers Union, in public comments about the new system.

“If they perhaps had listened to the concerns that had been raised, perhaps consumers would have been better protected,” said Pamela Banks, senior policy counsel for Consumers Union. “The buck stops with the CFPB.”

One of the most controversial questions facing the agency is how much of the information it gathers from consumers should be made public. Consumer advocacy groups have pushed for the agency to create a searchable database of complaints for the public to research trends and companies.

But businesses worry that unverified complaints could harm their reputation. In a letter signed by several financial trade groups, including the American Bankers Association, they called on the CFPB to limit access to consumer complaints until after it launches. Then, it should craft formal rules to govern the process — and give businesses plenty of time to comment on the proposals.

“We think there has to be some restraint,” said Richard Hunt, president of the Consumer Bankers Association, a trade group that also signed the letter. “One should not be able to air out their dirty laundry in a public manner when we don’t know how true a story may be.”

The Federal Trade Commission, which receives about 35,000 inquiries — including 16,000 complaints — each week, compiles the information it receives into an annual public report and allows law enforcement officials access to details of individual calls to help them investigate fraud and other crimes. West said the CFPB is using existing standards at the FTC and other regulators as a baseline.

Under federal law, the CFPB is required to produce an annual report to Congress that includes data and analysis of the volume and type of complaints, along with information on resolutions.

“We’re going to be definitely transparent in aggregating information and getting it out,” West said.

It’s not a job that the new agency plans to tackle alone. The FTC outsources most of its consumer complaints to Lockheed Martin Corp., which operates two call centers that employ 80 to 100 people each. Lockheed’s Web site said it handles more than a million fraud complaints and 400,000 identity theft cases each year for the FTC. The agency only handles the most critical cases in-house.

David M. Torok, associate director of planning and information for the FTC, said it is in “extensive discussions” with the new agency. The CFPB is in the midst of reviewing proposals from outside vendors and plans to award a contract in June.

Industry best practices are for hold times of less than five minutes and an abandonment rate — frustrated callers hanging up — of 10 percent or less, said David Butler, who runs the Call Center Research Lab at the University of Southern Mississippi. It also aims to resolve 80 percent to 90 percent of complaints in the first call.

As for that bane of consumer existence — the automated phone system — Butler said callers have limited patience.

“The reality is that after you press two [numbers], consumers either hang up or press zero repeatedly,” he said. “Anything more than two deep, you’re hurting yourself.”

 
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