When it Comes to Errors, Cordray Holds CFPB to a Different Standard Than Those He Regulates

Tim Bauer

Two weeks ago I was preparing to participate in the FTC Debt Dialogue in Atlanta. The panel moderator, Tom Kane from the FTC, coordinated several conference calls to brainstorm various topics that could be addressed.  As all good moderators do, Tom made certain we had more than a sufficient number of topics to cover the time allotted.

Leslie Bender, General Counsel and VP of Government Affairs for ARS National, wrote an excellent summary of the Atlanta Debt Dialogue for insideARM. As Leslie noted, the conversation and debate was spirited. Unfortunately, we ran out of time before we got to all of the topics we had on our list.

One of those potential topics was the CFPB complaint portal, which I was prepared to address.  It was a stroke of fortune for me that, the day before, American Banker had published a detailed article on the portal.

The article, Errors Abound in CFPB Complaint Portal, noted that “the complaint database is riddled with errors and distrusted by some of its own [CFPB] employees.” One particularly chilling paragraph stood out for me:

“CFPB employees don’t trust the system,” said one former senior official. “When we were asked to look into a complaint, more than 25% of the time it turned out that the data we were looking at didn’t really pan out or it was just incorrect in the way it was reported.”

25%! That figure is scary. In theory the CFPB is making policy decisions that based upon these complaints.

CFPB Director Cordray responded to the Complaint Portal story in a letter to the editor of American Banker; it was published on November 30^th. In that letter Mr. Cordray noted:

“Just two months ago, the CFPB’s Inspector General published a comprehensive audit report, never mentioned in this story, which found only a ‘relatively small’ number of complaints with inaccuracies. Likewise, the story cites only three purported ‘errors’ out of hundreds of thousands of complaints handled.”

Cordray’s “relatively small number” of inaccuracies comment is inconsistent with the “25%” number mentioned by former CFPB senior official in the American Banker article. I have no idea which number is closer to fact.

However, just yesterday I received an email from an industry colleague, Attorney John Bedard, regarding the Director’s response. It was absolutely perfect. I have to share:

“The irony here is that Cordray is excusing errors in the database on the basis that it’s ‘just a few errors among hundreds of thousands’ of complaints.  This margin of error is no doubt hundreds of times greater than the ‘intolerable’ margin of error experienced by the very industries they regulate!  A few hundred thousand complaints vs. billions of contacts compared to a ‘few errors’ among hundreds of thousands of complaints.“

Amazing isn’t it? No one criticizing the debt collection industry ever wants to talk about the small number of defects leading to complaints relative to the incredibly large number of consumer contacts made every day by members of the ARM industry. Yet, Mr. Cordray wants to make that argument for his agency.

When I went to law school I had a professor that would have quoted Shakespeare when reviewing the situation. He might have said, “Mr. Cordray, when making that argument you might get ‘hoisted on your own petard’ when you pursue complaints against debt collectors in the future.”