And the Financial Institution Most Likely to Be Late Responding to a Consumer Complaint Is . . .

One day last spring, I saw in a Google alert that the Consumer Financial Protection Bureau (CFPB) had announced that it was for the first time making public a consumer complaint database.  At the time, I was teaching a course in Empirical Law & Economics at Yale and decided to call an audible.  I came into class that day and projected the raw data (which you can see for yourself by clicking here) and asked the class how we might make use of the information.

With incredible dispatch, Jeff Lingwall and Sonia Steinway merged the complaint data with other datasets and together we started to put together an initial draft analyzing the complaint information.  When the CFPB made the database public, they actively encouraged “the public, including consumers, analysts, developers, data scientists, civic hackers, and companies that serve consumers, to analyze, augment, and build on the public database to develop ways for consumers to access the complaint data or mash it up with other public data sets.”  This paper is our attempt to respond to the Bureau’s call to action.

One advantage of having outsiders analyze the data is that it might be easier to name names.  The Bureau’s decision to release the names of the companies that consumers complained about was initially controversial: in 2012, lobbying groups like the Consumer Bankers Association launched significant efforts to disallow the Consumer Complaint Database from including firm names implicated in consumer complaints.  It’s easy to see why: the complaints paint a clear picture of which companies are responsive to consumers, including how timely they are in responding and whether their responses are adequate in resolving consumers’ issues.  A contestable marketplace of analysts might be able to come to some consensus about how well or badly particular creditors rank. 

We ranked financial companies on several metrics: timely response to complaints (within the CFPB-mandated number of days), and percentage of responses disputed by consumers.  For timely and disputed responses, we constructed lists of the companies that had proportions that were statistically significantly above the average.  Here are the five worst-performers (of companies with at least 50 complaints):

5 Worst Performers in Percent Untimely and Percent Disputed 

Percent of responses untimely

Percent of responses disputed

Statebridge Company (31%)

Cash Call (40%)

Residential Credit Solutions (18%)

Banco Popular de Puerto Rico (37%)

Regions (17%)

Santander Consumer USA (32%)

Amerisave (16%)

State Farm Bank (32%)

USAA Savings  (14%)

Toyota Motor Credit Corporation (32%)

Note: lists include companies with more than 50 complaints and companies that have a rate that is statistically significantly above the average.  Derived from tables 3 and 4.

We also “mashed up” the complaints with other datasets based on the ZIP code from which the complaint was lodged. We compared the outcomes in the table above to demographic factors like race, income, senior population density, military employment, and college enrollment.  But there are important limits to what can be inferred.  We found, for example, that more responses are disputed in ZIP codes with a higher proportion of senior residents.  The result could be because the complaints of seniors are being ignored or it could be because seniors are more likely to complain in general.  Even with these caveats, we hope the results might help guide follow-up research and potentially even Bureau investigations.

Leave A Comment

Comments are moderated and generally will be posted if they are on-topic and not abusive.

 

COMMENTS: 3

View All Comments »
  1. Matt says:

    Have you considered doing time-based series? For instance, I was shocked to see USAA on your list. When I looked at the raw data, though, their last untimely response was over 16 months ago. I have no idea whether they were doing a poor job and made an effort to improve because of this database, they were temporarily lagging behind for some other reason, or if it’s a possible data error.

    Regardless of that specific case, it would still be useful to see which companies might have improved once these data became public.

    (Disclosure: I’m a happy USAA customer but am not affiliated with them.)

    Well-loved. Like or Dislike: Thumb up 9 Thumb down 0
  2. Eric M. Jones says:

    Doctors who take nearly hopeless cases have very poor cure rates. So I am going out on a limb here to surmise that “Banco Popular de Puerto Rico” might have to deal with a more difficult clientele than Main Street USA Saving and Loan.

    And where are the big Wall Street firms that simply stole $110 from every man, woman and child on Earth and cost me 1/2 my IRA? How did they not make the list?

    Well-loved. Like or Dislike: Thumb up 7 Thumb down 1
  3. Lindsay says:

    I can’t even imagine how bad the service is at these banks and institutions considering my experiences with banks last year. As someone that was executor of an estate with six bank accounts, it is now clear how completely absurd what the big banks get away with. The level of aggravation from BOA, Wells, PNC, Chase and others ranged from bad to horrible to unfathomable. I’m considering leaving a will that is a buried treasure map instead of leaving money in banks, it was just that bad.

    Thumb up 0 Thumb down 0