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CBA Comment Letter on DoE Complaint System
February 8, 2016
Director of the Information Collection Clearance Division
Department of Education
400 Maryland Avenue SW., LBJ, Room 2E10
Washington, DC 20202–4537
Via electronic submission
RE: Comment Request; Enterprise Complaint System Docket ID number ED–2015–ICCD–0138
The Consumer Bankers Association (“CBA”)1 appreciates the opportunity to respond to the Department of Education’s (“the Department”) request for comment, pursuant to the Paperwork Reduction Act (“PRA”)2, regarding the proposed Enterprise Complaint System. We hope to be a resource as the Department determines the best model to “give students and borrowers a simple and straightforward way to file complaints and provide feedback about federal student loan lenders, servicers, collection agencies, and institutions of higher education.”3
Lessons Learned from the Consumer Financial Protection Bureau’s Database
Through feedback from our members and working with the Consumer Financial Protection Bureau (“CFPB”), we have gained extensive experience with the CFPB’s Complaint Database (“CFPB Database”) and believe we can offer unique insight and industry perspective as the Department creates its own complaint portal. This experience is the foundation for the following suggestions on “how might the Department enhance the quality, utility, and clarity of the information to be collected.”4
When constructing the Enterprise Complaint System, we suggest the Department follow the Federal Trade Commission (“FTC”) model where complaints “are entered in [the FTC’s] secure online database, which is used by many local, state, federal, and international law enforcement agencies.”5 Using this format, the FTC is able to keep consumers’ sensitive information private, while still providing law enforcement agencies with information necessary to pursue and resolve investigations. Using this approach, the Department would not jeopardize individual records and would still be able to publish overall conclusions gleaned from the database in the annual report mandated by the White House’s Student Aid Bill of Rights Presidential Memorandum.6
If the Department chooses instead to release the information publicly, we respectfully ask the Department to promote the utility of the Enterprise Complaint System by:
- Protecting confidential consumer information;
- Validating the facts of the complaint (or establishing an appeal process);
- Contextualizing the information; and
- Adopting informed disclosures to promote transparency.
Neglecting to institute these precautions may lead to the release of sensitive consumer information and the creation of inaccurate conclusions drawn from the information. Out of context, unverified data does not provide insight into the education system and potentially may lead consumers away from potentially beneficial institutions – whether educational or financial.
I. Protect confidential consumer information
It is absolutely essential the Department establish robust scrubbing standards that filter out any confidential information contained in the published complaint. Matters of education and finance are of the utmost sensitivity in nature and the federal government has a duty to protect such information. We look forward to learning more about the scrubbing process the Department proposes to make sure it adequately protects the private information entrusted it by American consumers.
II. Validate the facts of the complaint
We urge the Department to follow the lead of many other government agencies by verifying complaints and establishing an appeals process. In conformance with regulation, the Consumer Product Safety Commission (“CPSC”) established an appeals process to identify and eliminate materially inaccurate information that would “affect a reasonable consumer's decision making about the product.”7 Before publishing the complaint, if the CPSC determines the information is materially inaccurate, the CPSC: 1. Will not add the information to the database; 2. Correct the materially inaccurate information; or 3. Add information to correct the inaccuracy.8 After publication, if the CPSC determines the information is materially inaccurate, within seven days of the determination, the CPSC will: 1. Remove the information; 2. Correct the materially inaccurate information; or 3. Add information to correct any inaccuracies.9 The CPSC’s process reduces the risk of misinformation that may have a negative impact on consumers’ decision-making process.
To enhance the utility of the information, we recommend the Department establish an appeals process similar to that of the CPSC. Specifically, we recommend the Department create a mechanism for lenders, servicers, collection agencies, and institutions of higher education to flag communications that do not amount to complaints or contain materially inaccurate information, and thus should be eliminated from the Enterprise Complaint System.
III. Contextualize complaint information
Since the inception of the CFPB Database, news articles have used the complaint data as “evidence” of which institutions are the “Top Ten Most Hated Banks.”10 Because the CFPB does not contextualize or normalize the information when it is released, the institutions with the largest number of complaints are also typically the largest institutions. Clearly, those with the most customers are statistically likely to have the most complaints; however, the news stories often miss this important consideration. In fact, the largest institutions are often the most preferred. A recent J.D. Power survey, as described in a recent American Banker article, confirms this. According to the article, “the nation's six largest depository institutions scored higher than their smaller peers in overall customer satisfaction. Those six banks are Bank of America, Citigroup, JPMorgan Chase, PNC Financial, U.S. Bancorp and Wells Fargo.”11
As indicated in CBA’s response to the CFPB’s Request for Information on Normalization (“Normalization RFI”),12 we support contextualizing the complaint data, but assert there are many challenges associated with normalization. Varying business models, customer demographics, and product offerings can distort complaint numbers. As an example, a company that decides to pursue a robust subprime lending portfolio may, as a result, have more loans in default. This would lead to greater need for debt collection communications and, subsequently, more consumers complaining about debt collection. We suggest the Department may have an even greater difficulty comparing “apples to apples” since the proposed Enterprise Complaint System is expected to encompass complaints regarding an array of entities across the higher education and student lending industries. The intended complaint subjects – federal student lenders, servicers, collection agencies, and institutions of higher education – offer a variety of different products and services that do not directly compare.
For this reason, we again suggest the FTC model that only relays consumer complaints to the parties necessary for resolution. Otherwise, the out of context data may create confusion and lead to false conclusions. When the CFPB started publishing its Monthly Complaint Report with “Top Most Complained about Companies,”13 consumers understandably may have developed a negative impression of the companies on the list. As the J.D. Power survey shows, this impression is not only unsupported, but also might be inaccurate.
IV. Adopt informed disclosures to promote transparency
We are concerned about a variety of issues currently diminishing the CFPB Database’s utility and, worse, potentially misinforming consumers. As the Department builds a new Enterprise Complaint System from scratch, there are bound to be issues affecting the reliability of the data. For this reason, we urge the Department to adequately and visibly publish proper disclosures. After meeting with our members this past fall, the CFPB added the following disclosure to the database website and Monthly Reports: “Company-level information should be considered in context of company size and/or market share.”14 We applaud the CFPB for working with industry and making this common sense improvement.
Other agencies have also included disclosures to enhance the transparency of the data.The CPSC discloses on its complaint website that the information is unverified by stating: “CPSC does not guarantee the accuracy, completeness, or adequacy of the contents of the Publicly Available Consumer Product Safety Information Database on SaferProducts.gov, particularly with respect to information submitted by people outside of CPSC.”15 This disclosure helps to mitigate inherent government endorsement of the complaint, which may result from being posted on a governmental website.
Further, we suggest the Department encourage a collaborative – not adversarial – relationship between customers and their institutions. The Federal Communications Commission (“FCC”) takes this approach by publishing the following statement on their complaint website: “You should always try to resolve the problem first with the company whose products, services or billing are at issue. However, if that does not succeed, you may file a complaint with the FCC.”16 We ask the Department to follow these good examples to promote transparency and collaboration between the consumer and the educational, governmental, or financial institution.
Collection and Coordination in the Complex Student Lending Market
In addition to representing the lenders holding a majority of the more than $91 billion fully private student loan market, CBA membership includes several current and former participants in the Federal Family Education Loan Program (“FFELP"). CBA member banks devote extensive time and resources to complaint resolution, including FFELP servicing issues, and continuously strive to ensure the success of their student borrowers. To this aim, we offer the following insights as the Department evaluates the role and structure of its Enterprise Complaint System.
I. Limit Compliant Enterprise System to Complaints about Federal Loans
The Presidential Memorandum on the Student Aid Bill of Rights17 limited the complaint intake function to those related to federal student loans. We urge the Department to follow this directive and confine the intake to only federal student loans. With the CFPB already collecting complaints on private student loans, the Department must clearly define the federal student loans under its jurisdiction and eliminate the possibility of duplicating the collection private student loan complaints. Currently, the CFPB separates federal and private student loan complaints and immediately routes those identified by customers as relating to federal student loans to the Federal Student Aid (“FSA”) Ombudsman. We suggest the Department follow that example and immediately route complaints that include any concerns about private loans to the CFPB for its sole handling with respect to such concerns, in order to avoid double counting and uncertainty about who should respond to the consumer.
II. Create Complaint Triage Procedure and Promote Inter-Agency Coordination
With the CFPB Database, the FSA Ombudsman, and the FTC’s Consumer Sentinel Network, there are already multiple avenues for student loan borrowers, both private and federal, to file a complaint and seek resolution. The CFPB collects and publishes unverified complaints on private student loans through its Database. The resulting data is then often featured in the CFPB’s press releases and reports as noted above. The FSA Ombudsman seeks to resolve disputes related to Direct Loans, FFEL Program loans, Guaranteed Student Loans, and Perkins Loans. By verifying complaints and engaging both parties, the FSA Ombudsman works to find a resolution without choosing to publicly disclose such complaints – and risking the release of sensitive information. Furthermore, the FTC Consumer Sentinel Network is a venue borrowers can use for debt collection matters. With such resources already available to consumers, the Department must define the role of its Enterprise Complaint System to avoid creating duplicative complaint mechanisms.
III. Differentiate lenders, servicers, guarantors, and debt collectors
Before launching the Enterprise Complaint System, the Department should clarify how it plans to ensure complaints properly correspond to the borrower’s problems in various aspects of the life cycle of the loan. Borrowers in delinquency and/or default are likely to have contact with multiple companies (lenders, guarantors, servicers, debt collection agencies, etc.) throughout the process. The proposed Enterprise Complaint System must clearly delineate the entity at the source of the compliant to better inform consumers and aid dispute resolution.
CBA member institutions are committed to helping borrowers stay current on their loans. This unyielding commitment is why our members maintain extensive education and robust servicing programs to assist borrowers throughout the life of the loan to meet their obligations. We appreciate the opportunity to convey our concerns and hope to be a resource as the Department creates the Enterprise Complaint System. To discuss further, please contact Kate Larson at 202-552-6366 and Kristen Fallon at 202-552-6367.
Vice President, Congressional Affairs