I think most of you would agree that government transparency is generally a good thing. And a subset of you (who didn’t hate math in high school) would probably also agree that playing with numbers is a fun thing. Combine the two and what do you have? Good times with Microsoft Excel!
I got to tinkering with some metrics after a colleague mentioned that data was freely available online from the CFPB’s (Consumer Financial Protection Bureau) Consumer Complaint Database (http://www.consumerfinance.gov/complaintdatabase/) in a somewhat (zip codes are included) anonymized format. Since this agency is brand new and has caused lots of political debate, I thought it would be fun to poke into the data to see what we could learn.
The politics of the CFPB don’t interest me; this blog entry is all about what the data that they as an agency are collecting tells us – if anything – about consumer complaints having to do with credit cards. There was a big brouhaha about whether the CFPB should have even started publicizing this type of data. As the agency was being born, the debates around how, when, why, and under what circumstances such data could be publicized was in and of itself fascinating. For additional information on that topic, see this PDF document from The Federal Register. (In late March, the CPFB released an additional batch of data; this blog post refers to the original batch and a subsequent post will refer to the more updated information as it grows.)
So back to the data – first of all, across 14 months (December 2011 through January 2013 inclusive), the CFPB lists some 17,969 complaints on their site. Not surprisingly, even though some residents outside the US have US financial services, the overwhelming majority appear of complaints come from the 50 states and the District of Columbia (although note the 70 from Puerto Rico). Based on all of these complaints – there are some specific data elements that I think tell an interesting story and are worth pointing out.
Topic #1: Complaint Types: The types of complaints one can enter on the CFPB website is quite wide, stretching from Privacy, Bankruptcy, Cash Advances, Late Fees, Payoff Processes, Identity Theft, Credit Reporting, Billing Disputes, Awards, and much more. According to the file available from the CFPB site for downloading, 33 different complaint types in fact exist. Yet within these 33 categories, only five of them count for greater than 5% of the overall total, with two of them (“Billing Disputes” and “APR or Interest Rate”) jointly representing a quarter (25.8%) of the nearly 18,000 total complaints. Rounding out the top five are Credit Reporting (7.5%), Identity Theft/Fraud/Embezzlement (6.8%), and Closing/Cancelling Account (6.4%).
These five categories (and the 6th one listed simply as “Other” at 4.9%) account for over half (51.4%) of the complaints, so if we are to measure the impact that the CFPB is having on US consumers, it would probably make sense to focus in on those five areas.
Furthermore, based on what one reads and from US agencies such as the Federal Trade Commission, these results aren’t very surprising. Billing Disputes represent real money to consumers and in an economy which is still dealing with 7.5% – 8% unemployment this should come as no surprise.
The fact that APR/Interest Rate is the second-most complained about topic is also not very surprising as most US consumers are familiar with these rates being used to attract clients over to new cards (although it’s interesting that Balance Transfer is only 20th on the list at a miniscule 1.2% of all complaints). And when you look at #3 (Credit Reporting) and #4 (Identity Theft/Fraud/Embezzlement) on the list, these shouldn’t come as any surprise, either, since they remain real issues for American consumers and continue to be a topic of discussion among personal finance books, blogs, and the like.
Topic #2: Dates That Complaints Were Filed: It’s also interesting to look at trending with regard to when the complaints were filed. Over the course of the 14-month period from December 2011 through January 2013, the average number of complaints filed per month was 1,240, which comes out to roughly 41 per day. Yet the ends of the range are intriguing, with June 2012 (1,698) registering the highest number of complaints in any given month and December 2012 registering the lowest at 874; perhaps everyone was too busy with their Christmas shopping?
What is also interesting to note, however, is that in the first 9 months, the average was 1,351 complaints per month, with not a single month dipping below 1,000 complaints per month. On the other hand, the most recent 5-month period (September 2012 through January 2013), three of the five months were below 1,000 complaints per month and the average dipped to 1,043 complaints per month.
Finally, the correlation which one might have anticipated seeing didn’t appear; the three major fines that the CFPB administered (on July 18, September 24, and October 1, 2012) did not cause a spike in complaints to the CFPB’s database, despite all the press coverage those incidents garnered. In fact, as mentioned above, things dipped in September and haven’t really gone up in any statistically significant way since then.
Perhaps this was more a case of pent-up demand coming out of the US public rather than a direct response to headlines about fines?
Topic #3: How Complaints Were Submitted: Finally, the third area that is fairly intriguing has to do with how the actual complaints were submitted to the CFPB. Only six options are listed in the database (Web, Fax, Phone, Postal Mail, Referral, and E-Mail); here, too, there are insights worth noticing. Apparently despite the fact that the CFPB lists its various email addresses on its website, a mere 0.1% of all complaints came in via email.
The overwhelming majority (56%), not surprisingly, came in via the web portal the CFPB constructed specifically for this purpose. The second leading category (at 27.6% of the total) was “Referral”; I couldn’t find a definition for this on their site but I suspect it has something to do with a complaint erroneously filed with another government agency prevented from handling such consumer complaints. And despite this digital age we live in, 15.3% came in via phone calls (9%) and regular old “snail mail” (6.3%).
So what does all this data tell us? Well,
- On the whole, the US public is not using the CFPB complaint portal to complain about Bad Customer Service, Cash Advances, Privacy, or Balance Transfers. Rather, they use the CFPB portal to complain about tried-and-true issues such as arguments over billing and arguments over APR or Interest Rates.
- There appears to have been pent up demand, as when the agency first launched this effort, it got much larger participation from the American public and that participation (based on monthly averages) has dwindled somewhat. This in and of itself is a trend worth tracking in the coming year.
- Setting up the portal was a smart idea for the CFPB; the portal and the “referrals” jointly comprise over 83% of all consumer complaints. I suspect it is also guiding them on where they are focusing their efforts and their rule-making, but that’s only a hunch.