Working paper
Fallible Firms: The Economics of Consumer Redress
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.
Keywords: consumer complaints, CFPB, financial restitution, consumer redress, financial sophistication, regulatory supervision, consumer protection.
In brief
Who gets money back after complaining about a financial company depends heavily on who is complaining.
Using confidential Consumer Financial Protection Bureau (CFPB) data on nearly two million complaints filed since 2014, the paper finds that successful complaints pay out $1,470 on average and that total restitution has grown substantially over time. Differences across firms explain little; instead, higher-income and more educated consumers are more likely to request refunds, allege fraud, and submit documentation, and firms respond to them more. CFPB monitoring raises restitution but disproportionately benefits these higher-socioeconomic-status consumers.
| Panel A. Design | ||
|---|---|---|
| Question | Who secures restitution after a complaint about a financial company, and why? | |
| Setting | Consumer complaints filed with the Consumer Financial Protection Bureau since 2014 | |
| Data | Confidential CFPB data on nearly two million complaints, including CFPB monitoring reviews of company responses | |
| Method | Restitution outcomes across firms, products, and consumer characteristics; effects of CFPB monitoring reviews | |
| Panel B. Main findings | ||
| Average payout per successful complaint | $1,470 | |
| Differences across firms | Explain little of who gets restitution | |
| Higher-income, more educated consumers | More likely to request refunds, claim fraud, and document complaints | |
| CFPB monitoring reviews | Raise restitution, disproportionately for higher-income, more educated consumers | |
Summarized from the paper. See the paper for exact estimates and specifications.
Read and cite
- Working paper, SSRN
Haendler, Charlotte, and Rawley Z. Heimer. “Fallible Firms: The Economics of Consumer Redress.” Working paper.
@unpublished{heimer2025fallible,
author = {Haendler, Charlotte and Heimer, Rawley Z.},
title = {Fallible Firms: The Economics of Consumer Redress},
note = {Working paper},
year = {2025},
url = {https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5218602}
}
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- Topics
- Consumer protection and financial regulation; Consumer credit and debt
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