Using Data To Push Back

“Your most unhappy customers are your greatest source of learning.” —Bill Gates

Financial institutions are pushing back against the Consumer Financial Protection Bureau’s recent enforcement actions. With data based on their customers’ own narratives, financial institutions can use the PositivityTech® Intelligent Platform to learn where they have room to improve, push back on claims they don’t agree with, and demonstrate their proactive leadership and successes. Read on to see how institutions can do just that with hot issues currently under scrutiny: fraud and money transfers, expanded regulation of nonbanks, and discrimination embedded within all financial products.

Spotlight on Transfers and Fraud

CFPB’s claim

In April, the CFPB filed a lawsuit against MoneyGram for failing to deliver money to recipients and violating rules around remittance transfers.

MoneyGram’s response

MoneyGram issued the following response: “Director Chopra is right to focus on the very real issue of consumer fraud in the financial services industry. MoneyGram cares deeply about this issue, too. Unfortunately, the Director failed to acknowledge the tremendous achievements by MoneyGram to prevent fraud and protect consumers. After investing more than $800 million over the past decade to enhance its compliance program, MoneyGram is now an industry leader in compliance and fraud detection.”

Pushing back with PositivityTech insights

Tackling fraud is not simple. According to a recent article by Kate Fitzgerald, “The latest wave of lawsuits and confusion about liability for P2P fraud also suggest much work is needed to shore up security and accountability around irrevocable account-to-account transfers.”

Yet, an analysis of customer complaints to the CFPB about MoneyGram, which specializes in international money transfers, shows that MoneyGram has succeeded in this area — and that complaints about fraud or scams have decreased significantly.

  • Over the past decade, complaints about fraud or scams were the number one issue for MoneyGram.
  • Over the past 12 months, complaints about fraud or scams dropped to become the number three issue for MoneyGram.
  • Over the last 90 days, complaints about fraud or scams were no longer a top issue for MoneyGram.

Getting ahead with PositivityTech’s insights

MoneyGram’s impressive reduction in complaints about fraud and scams for international money transfers showcases its leadership in this area.

Today, more than 50% of complaints to the CFPB about domestic (U.S.) money transfers are related to fraud or scams. MoneyGram has the opportunity to transfer its successes from international money transfer fraud reduction to institutions facing high numbers of complaints about domestic (U.S.) money transfer fraud or scams.

By sharing MoneyGram’s best practices with domestic (U.S.) money transfer providers, could the curve of increasing complaints be reversed faster – leading to a win for MoneyGram, the industry, and consumers?

Spotlight on Nonbanks

CFPB’s position

Recently, the CFPB invoked its authority to hold nonbanks to the same standards that banks are held to. Yet even before that, customers of nonbanks submitted complaints to the CFPB. These complaints, which have volumes that are comparable to larger financial institutions, provide early indicators of risks that nonbanks must address systematically.

Getting ahead with PositivityTech insights

Nonbanks: Personal Loans

The majority of the 15 companies with the most complaints to the CFPB about installment loans are nonbanks. Affirm currently has the most complaints about installment loans — three to four times more complaints than banks such as Wells Fargo and Truist, and 30% more complaints than OneMain Financial, a leader in offering nonprime customers responsible access to credit.

Affirm customer complaints to the CFPB continue to rise, in contrast to One Main Financial and Lending Club customer complaints. To maintain its competitive position, Affirm can use its customers’ insights to improve its products and practices.

Below is an example of a customer complaint to the CFPB about Affirm.

Nonbanks: Checking Accounts

As a relatively young fintech company that is not a bank, Chime has amassed a large number of customer complaints to the CFPB about checking accounts, putting it alongside major banks. Chime is the only nonbank among the 15 companies with the most complaints to the CFPB about checking accounts.

As you can see in the visual below, Chime’s customer complaints about checking accounts to the CFPB continue to rise.

Below is an example of a customer complaint to the CFPB about Chime.

Knowing where Chime stands in regard to customer complaints to the CFPB can help the nonbank identify, understand, predict, and prevent these issues.

Spotlight on Discrimination

CFPB’s claim

An anti-discrimination policy constitutes a federal violation, stating that discrimination on the basis of age, race, national origin, religion, sex and marital status violates UDAAP (“unfair, deceptive or abusive acts or practices”). Now, the CFPB can look for discrimination across noncredit financial products, like payments, prepaid cards, deposit and checking accounts, remittances and debt collection, and others.

Customer narratives about discrimination

By exploring their customer complaints, financial institutions can understand the perceived discrimination that their customers face. The following customer narratives about noncredit financial products share experiences of perceived racism and elder abuse.

Getting ahead with PositivityTech insights

The following visual shows an increase in complaints in which customers share perceived discrimination when getting a credit card and managing their bank accounts.

The CFPB has made it clear that the quantity of complaints does not matter. One problematic complaint is one complaint too many, and institutions must stay on top of their customer complaints, work to repair practices, and prevent these issues.

What does your customer complaint data reveal?

With PositivityTech, you have the customer complaint data that you need to see where you can improve, where you’re succeeding, and how you can push back.

Interested in learning where you stand — before you hear about regulators’ claims? Please connect with me at marcia.tal@positivitytech.com. I’d be happy to show you how to extract critical insights based on your own customer complaint data.