Download This PaperThe Hidden Costs of Financial Services: Consumer Complaints and Financial Restitution
89 Pages Posted: 6 May 2025
Date Written: April 15, 2025
Abstract
Financial disputes are a widespread but understudied feature of consumer financial markets. Using confidential data from the Consumer Financial Protection Bureau (CFPB), we analyze nearly two million consumer complaints filed since 2014, which have led to an average payout of $1,470 per successful complaint. The volume of complaints and total restitution have increased substantially over time, suggesting significant scope for additional compensation. When understanding who secures restitution–and why–we find little evidence that differences across firms systematically drive restitution outcomes. Instead, product complexity and consumer engagement play key roles–consumers with higher income and education (high-SES) are more likely to explicitly request refunds, claim fraud, and submit supporting documentation, making firms more responsive. Leveraging previously unexamined CFPB monitoring reviews, where the agency systematically screens company responses and issues confidential reports highlighting deficiencies, we show that regulatory scrutiny increases restitution but disproportionately benefits high-SES consumers, reinforcing individual-specific mechanisms. Our results highlight the complementary nature of regulatory interventions and suggest that financial sophistication and self-advocacy are critical determinants of consumer redress.
JEL Classification: G20, G28, G40, G50, K20, D12, D18
Suggested Citation: Suggested Citation
