The Educated Customer

Companies across America spend billions of dollars a year to gain an edge to separate themselves from the pack. This includes creating marketing campaigns driven by seasonality, monitoring forecasted changes in trends and using information from data research to remain competitive. In a time where data and social media rule, now more than ever, we must be vigilant with the public’s perception of our brand and company. Reviewing the Consumer Complaint Database, managed by the Consumer Financial Protection Bureau (CFPB), can provide a company with insights into what is important. Companies that review this database periodically, make adjustments, and take the time to educate consumers will have the upper hand on competition and possibly reduce any complaints.

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The database tracks and monitors consumer complaints related to banks, lenders and other financial institutions to ensure fair treatment for all consumers. Complaints logged at https://www.consumerfinance.gov/complaint/ are reviewed and routed to the financial institutions on consumers’ behalf. Companies are given time to work with the consumer and respond to the complaint (often within 15 days). The final step of the process is to publish complaint-related information to the database giving the customer an opportunity to provide feedback, if desired.

These complaints yield valuable insights into consumer behavior and their understanding of our industry’s products and services. Even if a company does not receive multiple complaints, there are still lessons within the data. Here are a couple of examples:

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FACT: 93 percent of all mortgage-related consumer complaints are NOT resolved in favor of the customer.

INSIGHT: The consumer may perceive the lender in a negative light despite not doing anything wrong, un-ethical or with malice.

FACT: Upwards of 90 percent of the complaints are closed with an explanation.

INSIGHT: Improved communication between lenders and customers may lead to a better understanding of mortgage products and services, which in turn will lower the number of complaints considerably.

Tech companies often speak of usability and user experience, especially when referring to websites and apps. When a user tells you they struggled to navigate your site or struggled to find the one thing that took them to your site in the first place, it is important to listen and to see if there is a theme. If someone does not understand what you do, what you sell or why you do it, they often will not buy from you. In fact, you risk losing the customer permanently.

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There is a lesson that mortgage companies can learn from this information that can help them improve their business practices. Escrow accounts, property taxes and mortgages are not simple and are not easily understood by most consumers. With complex federal, state, county and city specific regulations undermining the ability to understand exactly how property taxes are calculated, it is understandable why consumers are confused. Consumer confusion and consumer perception may well be the same thing. If they are confused or frustrated with your product and/or services, their perception of the company will no doubt be negatively affected.

In the beginning of the second quarter of 2017, the CFPB expanded the number of issues tracked from six to 18 under the mortgage product type within the complaints database. With this increased delineation of issues, we will have the ability to see more accurate trends within the industry.

At the beginning of the fourth quarter of 2017, the leading mortgage complaints were payment processing issues, struggles to pay mortgage/loan servicing and escrow account issues. These collectively account for 66 percent of all mortgage-related complaints in 2017.

Though credit reporting and debt collection complaints have soared to the top of the list in 2017, mortgage related complaints still represent a large portion of all complaints logged in 2017.

Effectively addressing the concerns of consumers and educating them on mortgage related issues is no longer an option. It can mean the difference between an educated consumer and a host of consumer complaints.

About The Author

Mike Ponce

Mike Ponce, vice president and manager of business intelligence at LERETA, is a data professional that has spent his entire career disseminating data and telling its story to businesses across multiple industries ranging from public utilities, healthcare and the FinTech industry. Ponce has more than 17 years of experience focused on delivering valuable data insights to business leaders from a seemingly endless sea of datasets.