Audit Report on the Department of Consumer Affairs’ Controls over Resolving Consumer Complaints

The Department of Consumer Affairs (DCA) is responsible for ensuring that New York City’s consumers and businesses benefit from a fair and vibrant marketplace. DCA achieves this mission through resolving and mediating consumer complaints, licensing 55 industries, and enforcing the City’s landmark Consumer Protection Law and other related City and State laws. One of DCA’s critical objectives is to expedite the resolution of complaints made by consumers against businesses operating in the City. Consumer complaints are handled by DCA’s Consumer Services Division.

According to DCA officials, DCA closed 4,695 complaints during Fiscal Year 2011. This included 281 complaints that were opened during the previous year. According to information reported in the Fiscal Year 2011 Mayor’s Management Report (MMR), DCA opened 4,580 consumer complaint cases during that year (of which 160 remained open in the following year). DCA also reported in the Fiscal Year 2011 MMR that the median processing time for complaints was 15 days and that 56 percent of the complaints were resolved to the satisfaction of businesses and consumers.

Audit Findings and Conclusions

Our review found that DCA needs to strengthen its controls over the complaint resolution process. DCA has established adequate procedures that govern a large portion of the resolution process, and with some exceptions, DCA followed them. However, DCA does not have specific written procedures for supervisors to follow when reviewing the processing of complaints. In the absence of minimum standards that supervisors must follow when overseeing mediators’ handling of complaints, there is an increased risk that mediators may not process complaints properly. As such, DCA may not always be able to identify businesses that participate in unfair business practices, violate consumer protection laws, or conduct unlicensed activities.

We also found that one of the indicators reported in the Fiscal Year 2011 MMR —Complaints Resolved to the Satisfaction of the Business and Consumer — may be inaccurate because DCA’s supervisors do not review the complaints to determine whether the codes are assigned accurately by the mediators, or if, in fact, an agreement was ever reached. In addition, DCA does not measure customer satisfaction nor solicit any feedback from consumers to determine if they are satisfied with the mediation services provided by DCA.

Audit Recommendations

To address these issues, we recommend that DCA should:

• Develop written policies and procedures pertaining to the performance and documentation of supervisory reviews of the complaint files.

• Ensure that mediators recommend site inspections when appropriate and that they make all required attempts to contact unresponsive businesses and consumers.

• Ensure that the critical indicators in the MMR are reported accurately by verifying that all complaints closed with consumer-satisfied codes have a mutual agreement between the consumer and the business.

• Solicit feedback from consumers about their satisfaction with the complaint mediation service provided by DCA.

Agency Response

DCA officials agreed to implement three of the four recommendations in the report, but did not clearly address the recommendation pertaining to developing written policies and procedures for the performance and documentation of supervisory reviews.