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A UDAAP Expansion

The CFPB’s new memo about consumer complaints

Tyna-Minet Anderson
Tyna-Minet Anderson
A UDAAP Expansion

Recently I saw a product on Instagram that grabbed my attention, offering an ingenious solution to a problem I never even realized I had. To my analytic-self’s dismay, my wallet was out within seconds and I was ready to buy. Fortunately, warning-levers were thrown just in time, and I paused to look closer at both the company’s online ratings, and its seemingly too-good-to-be-true product.

As you might expect, the company’s reviews on their own site were all 4 and 5-stars, but curiously, other rating sites had the same company listed much less favorably. One particular site gave them a cumulative ranking of 1.9 out of a possible 5. That’s when I put my wallet away, and I’m left to wonder about how much better my life might’ve been.

It’s a consumer review world

More than ever, today’s consumers turn to online reviews to help them make decisions related to where and how to spend their hard-earned money. The Consumer Financial Protection Bureau (CFPB) has taken notice.

On March 22, 2022, the CFPB released Bulletin 2022-05 which outlines ways in which mortgage companies may be in violation of Unfair and Deceptive Acts or Practices (“UDAP”) related to consumer reviews. This new bulletin, similar to Unfair, Deceptive or Abusive Acts or Practices (UDAAP), is unique in the sense that it specifically targets consumer reviews.

“In America, no corporation should be able to silence a customer from posting an honest review online,” said CFPB Director Rohit Chopra in a press release about the new bulletin. “Corporate disinformation campaigns that suppress legitimate reviews or manufacture fake reviews are not only a threat to free speech and fair competition, they are also illegal.”

Based on the new guidance, there are three areas companies should be aware of to safely avoid violations of the Consumer Financial Protection Act.

First: Get rid of widespread contractual ‘gag’ clauses

Often when settling lawsuits, my firm would insert non-disparagement clauses into resolution agreements. It’s both reasonable and desirable to have agreed-to settlements resolve not just current issues, but also prevent new ones from arising in the future. In situations where parties were already adversarial, these clauses not only helped put emotional issues to rest, but also allowed each party to move on with their lives in peace.

That said, the CFPB has taken issue with these clauses if they are used in boilerplate contracts, meaning they’re designed to be sent to all customers in advance, rather than to be used to resolve a previous conflict.

If your company has included any sort of contractual restriction on negative consumer reviews, they should be removed. If you haven’t recently reviewed your client-facing documents and disclosures, now is a great time to do so.

Keep in mind that even if your company never intends to act on any such clauses, it may still be deemed a violation because these clauses, by their very nature, deter individuals from making truthful negative statements.

Second: Do not create fake reviews (or hire someone else to do so)

Companies that create fake reviews deceive the public about the quality of their products and services.

In the mortgage industry, we understand that our reputations are critical, especially when considering that our businesses are literally built upon our ability to provide the best customer service humanly possible. It may be enticing for some to resort to paying for reviews but be cautious. The $5 fake review that “seemed like a good idea at the time,” may ultimately be what ends up costing you thousands in fines in the long run, not to mention hefty withdrawals of the public’s trust.

Try this instead: Once borrowers get into their homes, they’re usually very happy to provide positive reviews about the individuals and companies that helped them get there. Ask them then! Recognize that it’s far, far better to ask for reviews from new and happy homeowners (and other past clients) than it is to fake it.

Third: Respond to — but don’t hide — those bad reviews

No one likes to receive a bad review, especially after spending hours working for the individual that just threw a dagger at your heart. Take solace in knowing that all service professionals are likely to receive a negative review at one point or another.

The best option in such a scenario is to post a thoughtful response, without disclosing any borrower-specific information. This allows your high-road professionalism to shine through.

It also awards you the opportunity to potentially shift the perspective of new customers by shedding clarifying light on the situation. It might be that the customer was upset about something outside of yours or your company’s control. Without your input, the reader of the negative review is left to wonder.

A UDAAP Expansion 2

The formula works

Customer reviews are a source of pride when your hard work is reflected online. Mortgage Educators, at the time of this writing, has precisely 6,295 reviews on TrustPilot, with a 4.9 out of 5-star rating. Yes, we’re pleased with that number, but I still read every negative review and believe me, even though I would love to make them disappear, they’re all there.

Our company’s answers for negative reviews are the same answers I’ve shared with you; we strive to maximize the opportunity for positive reviews each day, and we address all negative reviews in a professional and insightful manner.

Considering the CFPB’s stance on consumer complaints and reviews since its inception, it comes as no surprise that the bureau is interested in protecting the integrity of each consumer complaint.

Several mortgage companies have discovered through audits that the audit regulators want to know how companies respond to complaints. If you have not done so recently, we highly recommend performing searches online to find any reviews that you may be unaware of. We also recommend performing searches for individual MLOs, and their personal reviews, in order to respond to all reviews that are affiliated with your company. We encourage you to make this a regular practice.

Use negative reviews to build a better, stronger company that your borrowers can trust.

This article was originally published in the Mortgage Women Magazine May 2022 issue.
Tyna-Minet Anderson
Tyna-Minet Anderson

Tyna-Minet Anderson is vice president of Mortgage Educators and Compliance.

Published on
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