In response to the CFPB’s Request for Information seeking “best practices for normalizing relevant data” in the CFPB’s Consumer Complaint Database, the American Bankers Association has submitted a comment letter in which it asserts that normalization will not remedy the significant flaws inherent in the CFPB’s public disclosure of consumer complaint data.  The ABA takes the position that the CFPB should not undertake normalization until it remedies the unreliability of the underlying data.  According to the ABA, normalization is not such a remedy and instead may suggest the data has an undeserved legitimacy.

In its letter, the ABA makes the following additional key points:

  • Normalization should only be used for elements of a complaint that constitute data, or measurable, verifiable facts that can be normalized and readily compared.  The ABA believes that the only complaint elements in the Database that currently meet this description are elements that reflect upon a financial institution’s response to a customer complaint, including (1) the status of the financial institution’s response to the consumer; (2) whether the institution responded in a timely manner; and (3) whether the consumer disputed the institution’s response.
  • In considering whether to normalize complaint information, the CFPB should give priority to selection of the proper metrics.  The ABA observes that normalization is not a “one size fits all” process.  As examples, the ABA indicates that complaint data could be normalized by the number of customer accounts at the financial institution that is subject to the complaint, the number of transactions conducted by the institution, the number of customer interactions involving the institution, asset size of the institution, or composition of the institution’s customer base.
    It also notes that (1) “certain metrics will be appropriate for the normalization of complaints about certain financial products, while other metrics will be needed to normalize complaints about other types of products, based on differing markets (including demographics of customers), differing product designs among competitors offering the same (or similar) product, and customer uses of the product, among other factors,” and (2) “[i]n many—if not most—instances, multiple metrics will need to be applied simultaneously to provide a reliable basis for comparison.” (emphasis supplied).  The ABA warns that use of one metric or set of metrics to normalize complaint data when another set of metrics arguably would have produced more meaningful results will risk misinforming consumers and interfering with competition.  It urges the CFPB, in selecting and implementing normalization metrics, to consult extensively with financial institutions, on an on-going basis, “to ensure that the most informative metrics are selected for each category of complaints and to ensure that the substantive and technical aspects of normalization are done properly.”  The ABA also recommends that the CFPB take an incremental approach to normalization and begin with complaint data regarding a single product or service, instead of attempting to normalize simultaneously complaint information regarding the full range of products and services currently reported on in the Database.  In the ABA’s view, this approach would allow the CFPB “to focus its energies on identifying and applying appropriate metrics for one product” and “to consider the utility to consumers of the resulting contextual information.”
  • The ABA states that proper normalization may require the CFPB to have “new, confidential, and (in many instances) proprietary information” from financial institutions.  It asserts that before collecting such information, the CFPB must show that the complaint data will “usefully inform consumer decisions.”  According to the ABA, the CFPB has so far “failed to provide any meaningful evidence that the complaints contained [in the Database] provide any utility to consumers,” and to the ABA’s knowledge, “has not conducted surveys or focus groups or otherwise sought evidence that the publication of consumer complaints assists consumers with making financial decisions.” (emphasis supplied).