by Jeff Sovern
Brian posted earlier today about the CFPB's Credit Card Database and included links to reports on the Database. MSNBC's Bob Sullivan has another piece at The Red Tape Chronicles on the Database that includes some complaints by the industry:
"Bureau publication of complaint data alone implies an official endorsement of inferences drawn out of context and suggests reliability about overall issuer customer experience and satisfaction that is not well-founded and that invites untrustworthy analysis that will mislead consumers, said the American Bankers Association in its public comments on the consumer bureau's proposal to publish the data.
And here's a quote from one of the article Brian linked to, in the Washington Post:
“It’s an unlevel playing field,” said Richard Hunt, president of the Consumer Bankers Association, a trade group. “It appears to be a gotcha mentality when it didn’t have to be that way.”
Now think about credit reports. True, credit reports are regulated by the federal Fair Credit Reporting Act. But it appears that those reports nevertheless contain many significant errors. And yes, consumers have the right to insert a statement about credit disputes in their credit reports--but in practice, those statements seem to be widely ignored by lenders. Lenders surely assume that reports of late payments in credit reports, for example, are reliable and well-founded--and so the lenders will be misled when they are not. Does that bother the American Bankers Association as much as the Database? Hunt may be right that this database by itself is an unlevel playing field, but then, so are credit reports. Maybe this helps level the playing field overall. But in truth, I'm not sure how significant this database will be to consumers. Will consumers check the Database before applying for a credit card to see how many complaints have been filed against, say, Citibank and what the resolution of those complaints was? I'm not sure. Maybe a third party will collect the complaints and publish information about them. If so, will consumers use that information? I guess time will tell. This is only the beta version; perhaps later versions will be more useful to consumers.