CFPB Bank Complaints Normalized; Such Analysis Eludes Debt Collectors

Some believe that under the Trump Administration, the Consumer Complaint Database maintained by the CFPB will be discontinued, or at least will no longer be published. In anticipation, LendEDU, a marketplace for personal and student loans, refinancing and consolidation, has produced an analysis of bank complaints from 2017 (data was pulled on December 13, 2017).

The analysis includes lists of:

1. Banks with the most CFPB complaints per billions of dollars in deposits (all product/complaint types)
2. Banks with the most banking-related CFPB complaints per billions of dollars in deposits
3. Banks with no CFPB complaints

According to the LendEDU report, they analyzed 223,992 complaints for items 1 and 3, and 18,230 for item 2. All complaints in the study were received by the CFPB between January 1 and December 10, 2017. Deposit data was pulled from Marketwatch, and cross referenced with Yahoo’s Financial Data. 62 financial institutions were included in the analysis.

Item 1 (Banks with most CFPB complaints per billions in deposits) contains 49 entities; Item 2 (Banks with most banking-related complaints per billions in deposits) contains 48 entities. Here are the top 5 from each list. The full lists can be viewed here, on LendEDU.com.

Banks With the Most CFPB Complaints Per Billions of Dollars in Deposits

Banks With the Most Banking-Related CFPB Complaints Per Billions of Dollars in Deposits

insideARM Perspective

From the perspective of the ARM industry, what’s really interesting here is that markets containing an abundance of large public companies have the ability to normalize complaint data. Debt collectors have complained for years about the unfairness of the way complaint data is made public, and in fact the way it is used by regulators to prioritize enforcement investigations. It is not hard to imagine why those with the highest volume might have the most (absolute number of) complaints.

In the spirit of adding context, although these charts represent banks with the most CFPB complaints, the numbers we're talking about represent an incredibly low complaint rate. It's unclear how many accounts are represented by $1 billion -- no doubt this varies by bank based on their average balance; this would require further normalization. But for the sake of argument, let's use an average account balance of $5,000. This means that there would be 200,000 accounts per billion dollars. Six complaints per billion dollars would then translate to a complaint rate of .003%. Pretty low by any standards.

Because the debt collection industry is comprised nearly 100% of small (extremely small, when compared with banks), privately-held companies, there is no readily available data for normalization; say, number or face value of accounts serviced, or revenue collected. This has put many companies at a disadvantage, especially because creditors (potential clients) have used the database as one way to vet current or potential service providers.