Due Diligence and Ongoing Monitoring

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  • 1.  Vendor Complaint

    This message was posted by a user wishing to remain anonymous
    Posted 11-07-2022 02:48 PM
    This message was posted by a user wishing to remain anonymous

    Hi everybody,

    When completing your due diligence, what do you considered a high number of complaints.
    Currently, we are looking at a large vendor that provides credit reports and information intelligence for a real estate.
    They have over 500 complaints with CFPB over a 12-month period. 

    How do you decide what is reasonable and what is a RedFlag?


  • 2.  RE: Vendor Complaint

    Posted 11-14-2022 11:08 AM
    A "high number" may challenging to identify, and likely varies across industries. Also, 500 may be a very small percentage of their overall annual delivered services, like consumer credit ratings.

    For this situation, I would personally look into what type of complaints these are. For example, are they quality of service, or are they more towards misconduct. I have not worked with the CFPB, but I would start there to better understand what can be learned. In addition, what does the vendor say about the 500? Do they admit any wrong-doing? Have they improved their process or whatever the issue of complaint was around? Ask for more details and evidence of any improvements they have made. This is where I'd recommend starting, but I'd love to hear other members' thoughts.

  • 3.  RE: Vendor Complaint

    Posted 11-29-2022 02:36 PM



    Here are some suggestions I wanted to share with you regarding assessing number of complaints and identifying red flags:


    1. Industry/volume dependency – The larger the industry, the larger the vendors or players in the marketplace. The larger share of work they handle, the more they expose themselves to feedback, including complaints. That is based on relative presence and space they reside in (industry-wise). 
    2. Investigating a vendor for negative news, including any legal actions or breaches, should assist in determining if the complaints affected customers industry-wide or whether an incident occurred locally, and determine whether a pattern is evident in the news of a repeated issue that is prevalent.  In this way, doing some investigation positions you as a client to make an informed, strategic decision. Check the CFPB and FTC databases, BBB, Google News search, and the social media universe.
    3. Looking at the complaint itself – These are factors that should be considered when a client is determining with whom it chooses to do business:
      • Is it about a core business function the vendor offers? 
      • Is it material to the product or service being offered? While today's vendor online community can offer many resources, it can also be a forum for venting.  If a complaint is logged for a rude interaction by a vendor, then that is something worthwhile for a vendor to research internally, of course, but is not necessarily reflective on a vendor's core services.  Take the example of a paper shredding company.  If a complaint is logged about a vendor's customer service representative for being dismissive, it is not the same as a complaint which is logged for missing SLAs or breaching a contract. 


    I hope you find this helpful, but I'd love to hear what other members are doing as well.