Does publishing consumer complaint data harm or heal the auto finance industry?

The Bureau of Consumer Financial Protection’s database of consumer complaints could vanish from public view, and a coalition of state attorneys general wants to prevent that from happening. Could shielding consumer gripes from the public benefit the auto finance marketplace? Depends on whom you ask.

Discussion of the bureau discontinuing public access to consumer complaints has followed April 24 remarks by Acting Director Mick Mulvaney to the American Bankers Association conference. Reading from the Dodd-Frank Act, which created the bureau, Mulvaney said by law the bureau must collect and track complaints in a manner that must include a single, toll-free telephone number, a website and a database. But retaining a public database that is “not completely vetted,” Mulvaney said, may not be consistent with the bureau’s mission.

“I don’t see anything in here that I have to run a Yelp for financial services sponsored by the federal government,” Mulvaney said. “I don’t see anything in here that says that I have to make it all public.”

Attorneys general from 13 states — California, Delaware, Hawaii, Illinois, Iowa, Maryland, Massachusetts, Minnesota, North Carolina, Oregon, Pennsylvania, Vermont and Washington — and the Hawaii Office of Consumer Protection argue that the database enables consumers to educate themselves on the cautionary tales of their peers. The June 4 letter also says the visibility of the database gives companies an incentive to treat customers fairly.

But making the data private could work in auto dealers’ favor, giving them less to worry about, said Terry O’Loughlin, director of compliance for the documents unit of Reynolds and Reynolds.

Automotive financing is complicated, and a one-sided view into a transaction sets dealers and lenders up for public shaming, O’Loughlin said.

“This has been a long simmering problem going back to when this all started,” he said. “I think there is some giving a business a bad name without providing them an opportunity to explain.”

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