CFPB Monthly Complaint Report — January 2016

CFPB_Complaints_Jan_2016The CFPB’s January 2016 Consumer Complaints report was released yesterday for data gathered in December (and prior) 2015. In the report, the CFPB lays out complaints by product/service, by state/district and by company.

The report is comprised of three main sections:

Section 1 – Complaint Volume (by product, state, and company)
Section 2 – Product Spotlight (a different product profiled each month)
Section 3 – Geographic Spotlight (a different state profiled each month)

Our review will focus on the first section of the January 2016 report. Note that the CFPB uses different time periods for different metrics. To avoid confusion, we’ll point out the month(s) being reported in chart titles and captions. Also, when practical we will provide a comparison to the June 2015 report (the first report in the series).

Section 1 – Complaint Volume

Complaints by Product/Service
The top three products/services complained about in December 2015 were Student Loans, Debt Collection and Mortgages comprising 32%, 19% and 17% of total complaints, respectively. These top three products/services are the same as in the June 2015 report where Student Loans, Debt Collection and Mortgages comprised 32%, 20% and 19% of total complaints, respectively.

CFPB-Jan-2016-Rept-Dec-2015-Complaints-by-Product
CFPB Jan 2016 Report, Dec 2015 Complaints by Product/Service © 2016 StratAgree™

The bottom three products/services complained about in December 2015 were Bank Account or Services, Money Transfer and Other Financial Services comprising 1% of total complaints, each.

These bottom three products/services are the same as in the June 2015 report where Bank Account or Services, Money Transfer and Other Financial Services each comprised 1% of total complaints.

Complaints by State/District
Because populations vary widely from state to state, we’ll use normalized data–complaints per 100,000 population. Note that complaints volumes are rising slowly as consumer become more aware that they can file complaints with the CFPB.

The top three states/districts for complaints in December 2015 were Washington DC, Delaware and Maryland with 689, 444 and 401 complaints per 100,000 population, respectively.

CFPB-Jan-2016-Map-Dec-2015-Data
CFPB Jan 2016 Report, Dec 2015 Complaints per 100,000 Population, by State © 2016 StratAgree™

These top three states/districts are the same as in the June 2015 report (the first CFPB report) where Washington DC, Delaware and Maryland had 577, 371 and 333 complaints per 100,000 population, respectively.

The bottom three states/districts for complaints in December 2015 were North Dakota, Iowa and West Virginia with 102, 116 and 120 complaints per 100,000 population, respectively. These bottom three states/districts are the same as in the June 2015 report (the first CFPB report) where North Dakota, Iowa and West Virginia had 81, 96 and 97 complaints per 100,000 population, respectively.

The regions with the highest per-capita complaints are the District of Columbia and two of its neighboring states–Delaware and Maryland. This would suggest that awareness of the CFPB is highest in the regions with the highest concentration of federal government and CFPB employees as well as their friends and families. We’ll watch to see if this disturbing anomaly subsides over time.

Monthly Complaints for Top Ten Most Complained About Companies
The data for complaints by company is provided as a rolling average of 3 months’ complaints. The most current data is from the period August – October, 2015. Apart from the age of the data, there are two big problems with the complaints by company data. First, it doesn’t factor in the size of the company. And second, it does not account for industry differences (credit reporting vs. consumer banking vs. credit card companies, etc.). As pointed out in previous reports, larger companies will obviously have more complaints than smaller companies. Here are the numbers in graphical form.

CFPB-Jan-2016-Rept-Aug-Oct-2015-Complaints-by-Company
CFPB Jan 2016 Report, Aug-Oct 2015 Average Monthly Complaints, by Company © 2016 StratAgree™

Let’s look more closely at the four banks listed in the “Top Ten Most Complained About…” list–they happen to be the largest four banks in the country. For context, here is a pie chart showing the 2015 market shares of Bank of America, Wells Fargo, JP Morgan Chase, Citibank and all others:

Bank Market Shares 1Q 2015
Bank Market Shares 1Q 2015 © 2016 StratAgree™

Considering their large size, we can expect the number of complaints about these banks to be large as well. In fact, we could assume that complaints about each of these banks should roughly equal their market share. But, before we can make that comparison, we need to strip out non-bank product complaints from the CFPB data so we can compare apples-to-apples. Here’s a chart showing the breakout of complaints about the largest banks as a percent of total bank product complaints (credit reporting and alternative financial services complaints have been removed):

CFPB-Jan-2016-Rept-Aug-Oct-2015-Share-of-Complaints
CFPB Jan 2016 Rept, Aug-Oct 2015 % Bank Product Complaints, by Bank © 2016 StratAgree™

Breaking the data this way, we see that the four banks that have 54% of the consumer banking market are the target of 60% of consumer bank product complaints. More interesting is the fact that Bank of America and Wells Fargo appear to have more complaints than their market share would indicate while Chase and Citibank appear to have fewer complaints than we would expect. That observation makes it just wrong for the CFPB to label them as part of the “Ten Most Complained About Companies”

Only time will tell if the CFPB data quality will improve, but for now we can’t determine with certainty whether the biggest banks are better or worse than other banks.

Summary

The vast number of consumer complaints to the CFPB relate to credit issues–75% of complaints appear to be about credit products and credit reporting and 19% are regarding debt collection. Other financial services (money transfer, etc.) account for 2% of total complaints while complaints about checking and savings accounts were just 1% of the total.

Complaints about checking and savings accounts were just 1% of the CFPB total.

Geographically, the highest complaining regions were Washington DC, Delaware and Maryland with complaints per 100,000 population of 689, 444 and 401, respectively. Complaints for the rest of the country averaged 202 per 100,000 population. It would appear that CFPB employees, their families and friends continue to drive artificially high complaint volume.

Again, the CFPB’s Top Ten Most Complained About Companies data doesn’t tell us much because it doesn’t consider company size or other differences (banks are lumped in with credit reporting agencies, mono-line credit card companies, mortgage servicers and alternative financial services providers like payday lenders and money transfer businesses).

Even with the flaws, it is helpful to see which products are being complained about and which regions generate the most complaints. StratAgree will continue to monitor future CFPB monthly complaint reports and strive to draw meaningful conclusions from them.