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Finance, fairness, and facebook: use complaints to protect your bank

Examiners check social media for leads

Long ago, in simpler times, I wrote an Banking Exchange column based on the movie “Network,” in which TV news viewers lean out their windows and shout, “I’m as mad as hell, and I’m not going to take it anymore.” Consumer outrage was rising then, amplified by the new technology of that era--the internet.

In 2012, those days seem almost quaint.

Today, everyone knows that social networks buzz with commentary, both good and bad, about companies of all kinds. What most bankers don’t yet know is that customer complaints, including those posted on social media, are now the gateway to the highest compliance risks that banks face. UDAAP--unfair, deceptive, or abusive acts and practices--has become the top compliance challenge for banks of all sizes, and the top source of UDAAP regulatory problems is complaints.

Examiners review customer comments received by the agencies themselves,  as well as those sent to the bank. (The Consumer Financial Protection Bureau, in particular, is building a powerful engine for the former.) In addition, examiners now mine the rich information swirling around on social media before conducting a compliance exam. Banks need to do the same, finding, analyzing, and addressing the sources of consumer frustration.

Listening in to the stream of dissatisfaction
Googling the term “complaints about banks” produces 55,500,000 links. Increasingly, though, consumers express dissatisfaction not by logging onto specialized websites, but simply by venting in the same channels of easy communication they use for everything else during a routine day.

Most likely they dash off a post on Facebook, tweet something on Twitter, or log a quick review on a site like Yelp. A culture has evolved, especially among young people, of continuously broadcasting personal experiences and opinions in public or semi-public media. This creates voluminous electronic information that is now gathered by third parties and reused in fast-proliferating ways. Consumers then encounter that re-structured information and transmit it back to their personal “audiences” by embedding links in personal posts or by joining social network groups that share their interests.

For bank complaints, this means information that is generated by individuals is constantly being aggregated, and then being re-shared in aggregated forms, in a widening spiral of intertwined communication.

Twitter is especially interesting. Tweets are publicly accessible, and the message cap of 140 characters fosters users’ habits of quick commentary. On the other hand, such concise limits cause problems for banks because postings can be re-tweeted or embedded in other media published to large audiences with very little supporting information. While highly-motivated complainers may eventually post on sites like, Yelp, and the Better Business Bureau, many are likely to complain first on Twitter due to its convenience. Banks that monitor Twitter may be able to head off complaints by contacting the customer to resolve the issue before the person turns to more formal channels.
The customer’s angry voice
Banks need to help shape this social media dialogue by correcting misinformation, offering resources, and projecting a positive presence online. Beyond that, they should use social networks as a way to “listen in” on the authentic, unfiltered, spontaneous voices of their customers, and especially the unhappy ones. How many of your bank’s business line or marketing executives ever hear these voices? The volume of complaining, and its tone, offers valuable business insight, as well as a way to get out ahead of examiner criticism.

Listening in today, I found a cacophony of complaints about banks individually and collectively. [Editor’s note: What Jo Ann found is ugly, but you need to read it to get what’s going on.] Some samples:

• A tweet entitled “(Bank name) wants you to die.” This links to, “a new website dedicated to educating and informing the public about strange or immoral activities of banking institutions. Banking Bad’s first video … spotlights a home loan modification … (and) …. has garnered over 11,000 views in its first week on the new Banking Bad YouTube Channel.”

• I Hate (Bank Name) --“This is a page for every poor American consumer that has had the misfortune of having any relation with this financial institution… the worst collection of crooks and robber barons since the 1920's… .” It gets worse from there.

• “Based on my complaints today, I deserve: (a) free plane tickets to California; (b) (Bank name) to pay my mortgage; and (c) free Mike and Ikes”
Action steps for turning complaints into actionable data
Here are practical steps for mining and using complaint information found on social networks:

• Define what constitutes a UDAAP complaint.

Many customers complain about poor service. Others object to legitimate bank actions that simply cannot and will not be changed. Still others allege violations of specific laws and regulations.

UDAAP complaints generally don’t fit any of these categories (although they may blend with them). Instead, they usually have three characteristics:

1. They involve the bank’s intentional design of a product or practice, not the actions of an individual employee.

2. They typically involve product features or practices that are fully compliant with technical rules.

3. Customers think that the bank’s action is unfair, deceptive, or abusive, despite that technical compliance.

Sifting these UDAAP-type complaints from the full universe of customer input takes some work, but every bank today should overhaul its full complaint system to focus on this subset, and should also search social media for issues that have those three traits.
• Search by both bank name and by issue.

At most banks today, someone is monitoring online mentions of the company’s name. The information collected through that process should be run through the complaint screen described above and then mined for UDAAP exposure. [Editor’s note: See banker Katie Segner’s blog, “How to get your feet wet in social media (without freaking out your compliance department)” for some tips on monitoring the web, if you aren’t already.]

In addition, banks should monitor social networks for consumer fairness controversy, even if the bank’s own name is not linked to it. Almost every institution engages in practices that could be seen as controversial and that could raise UDAAP problems. Some of these practices may not even generate complaints directly to the bank, but are still seen by examiners as red flags. All banks need to understand these emerging risk issues.

Remember, UDAAP is an overlay to the technical regulations, covering many practices that are not barred by any specific rule. When an action is deemed by regulators to be unfair or deceptive, it means the bank’s actions have become retroactively illegal, even though they were previously cleared by the bank’s lawyers and have never been criticized by examiners (who sometimes have observed the very same practice for years).

The only way to manage such UDAAP risk is to flag and address potentially vulnerable practices long before the government bans or regulates them. Monitoring social media is a great way to find them.

For instance, searching on Facebook for “overdraft fees” generates numerous negative statements.  One post says, “Has anyone had overdraft fees from (Bank Name) due to them resequencing the order of things since July 2010? If so, could you please let me know? IMPORTANT and I can help get your money back.”  Overdrafts are clearly a UDAAP hot spot, sparking both litigation and enforcement activity. Every bank should be reviewing overdraft policies to respond to current agency guidelines and to rethink any aspects that are generating consumer anger.
• Pinpoint the specific practices raising complaints.

Within each general area of UDAAP controversy are multiple specific practices or product features that are drawing complaints. Monitoring social media comments can help the bank identify these specific root causes of risk.

For instance, customers may be complaining about a type of penalty fee:

• Are they saying it’s too high for the value received? 

• Are they saying the fee wasn’t explained appropriately? 

• Are they saying they were “trapped” into paying it by unfair terms they couldn’t avoid?

Each of those scenarios involves distinct UDAAP risks and solutions.
• Decide whether--and how—to join the discussion.

Some complaint websites provide specific sections for rebuttals, and all the public ones are open for comment by the bank. Such input should be made in a way that is informative rather than defensive or aggressive. (A recent set of posts complains that a bank has blocked a complaining individual’s Facebook group, while other participants invite the complainers to post comments with them instead.) 
• Reevaluate products and practices. 

Banks should combine what they learn on social media with analysis of the complaints they receive directly. The results will isolate risky practices and product features, which the compliance staff and business lines should then work on, together, to mitigate potential harm to customers and to the bank. Some institutions are exiting controversial products altogether. Others are changing disclosures, sales scripts, sales incentives, pricing structures, or product terms and operations protocols that trigger penalty fees. Anything that is generating customer anger should be revisited, so that the bank can confidently defend all its practices as fair and transparent.
Jo Ann Barefoot

Jo Ann Barefoot, a frequent contributor to, for many years was an ABA Banking Journal contributing editor and is now a member of the Banking Exchange Editorial Advisory Board. She is CEO of Barefoot Innovation Group, Cofounder of Hummingbird Regtech, and Senior Fellow Emerita of the Harvard Kennedy School Center for Business and Government. Barefoot has served on the Consumer Advisory Board of the Consumer Financial Protection Bureau. She has over 35 years of management, strategy, regulatory, and consulting experience focused on consumer financial protection. A former Deputy Comptroller of the Currency—the first woman to serve in that post—and partner at KPMG, she has advised most of America’s largest financial institutions, scores of community banks, and numerous non-profits and government agencies. She is a frequent speaker and media source on financial issues, has authored several books and over 150 articles, and has testified before Congress and other federal bodies. You can see Barefoot's periodic blog here, and follow her on Twitter on @JoAnnBarefoot

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