Lenders Can’t Ignore Even One Consumer Complaint, Ex-CFPB Attorney Says

canstockphoto1891688It’s tough advice, but lenders nowadays can’t ignore even a single consumer complaint no matter how many millions of satisfied customers they may have, said Gerry Sachs, an attorney for Paul Hastings LLP in Washington.

“Every consumer complaint is important,” he told Auto Finance News in a recent phone interview. Before he joined the firm, he was a senior counsel for policy and strategy with the Office of Enforcement at the Consumer Financial Protection Bureau.

Considering an ongoing increase in complaints, Sachs created a stir when press coverage of his comments at a recent industry conference quoted him saying that even a single complaint could cause the CFPB to take enforcement action.

Later, he told AFN that’s overstating the case — a bit. However, he said a single complaint could be a clue that could motivate the CFPB to keep looking until the bureau finds more, similar complaints. That discovery really could lead to an investigation or even ultimately an enforcement action, he said.

“I don’t think the CFPB would take an enforcement action based on one consumer,” Sachs said. “But every consumer complaint is important because one can lead the CFPB to investigate whether there are other incidents.”

As of Aug. 1, 2015 the CFPB said it had handled over 677,000 complaints across all products, not just auto finance. The bureau launched its Consumer Complaint Database in June 2012.

In the first half of 2015, the bureau said it received 2,776 vehicle finance-related complaints. In context that doesn’t sound like many, but that’s a 22.6% increase from a year ago. By comparison, the volume of auto originations in 2014 increased 10.5% from the prior year, according to Big Wheels Auto Finance data. Over the objections of auto lenders and others, the bureau also recently added the ability for consumers to add “narratives” to their complaints.

In an Aug. 31 letter to the CFPB, the American Financial Services Association complained that information in the CFPB’s Consumer Complaint Database is “not always correct and so is not reliable.”

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