The CFPB recently issued its monthly report of consumer complaint trends for August. The report spotlights complaints regarding bank accounts and account services, noting that issues related to checking accounts are among the most common complaint (64%). Specifically, the report highlights consumer complaints about the increasing use of credit reporting data to screen customers prior to account opening, with consumers often complaining that they learn of negative reporting information for the first time when trying to open an account and that they have difficulty addressing potential reporting errors. The report also describes consumer frustration with overdraft fees, including when such fees are incurred for small-dollar purchases. Consumers also expressed confusion over eligibility requirements for promotional offers when opening new accounts, and submitted complaints involving “disputes over whether the consumer had met the required terms for a promotional offer.” In addition, the report noted concerns about financial institutions’ error resolution processes, including concerns with drawn-out response times for disputed transactions. Read more…
On September 6, the Community Financial Services Association of America (CFSA) released a 2,000-plus page document containing testimonials submitted to the CFPB regarding consumers’ positive experiences with the payday loan industry. A CFSA representative uncovered the allegedly “buried” stories through a Freedom of Information Act (FOIA) request filed December 31, 2015. According to the CFSA, of the newly discovered 12,546 consumer comments regarding to the payday loan industry, 12,308 “praised the industry and its products and services, or otherwise indicated positive experiences.” Among other things, the CFSA further noted that (i) since the CFPB implemented its consumer complaint portal in 2011, approximately 1.5% of all complaints received related to the payday loan industry; (ii) in an FTC 2015 summary of consumer complaints, the “FTC found that just 0.003% of more than three million complaints related to payday lending”; and (iii) at least two customer surveys reveal that payday loan borrowers are overwhelmingly satisfied with the product. Regarding the CFPB’s proposed rules to address the short-term lending industry, CFSA CEO Dennis Shaul commented, “[i]t is clear that millions of consumers are satisfied with the payday loan product and services, and do not want the federal government to take this valued credit option away from them.”
On August 18, the CFPB published a report to provide a midyear update on student loan complaints, focusing on “problems for borrowers who submit an application to enroll in or recertify income and family size under an income-driven-repayment (IDR) plan.” The report analyzes student borrower complaints related to IDR plans and offers recommendations to “address the challenges identified in [those] complaints.” The report analyzes complaints submitted from October 1, 2015 through May 31, 2016 and finds that “borrowers encounter obstacles when submitting applications for IDR plans, including poor customer service, unexpected delays, lost paperwork, and inconsistent or inaccurate application processing.” The CFPB recommends that student loan servicers take “immediate action” to address challenges with IDR processing, highlighting the policy guidance recently issued by the Department of Education as a “roadmap to strengthen practices related to the handling of IDR applications” and releasing an IDR Application Fix It Form (Fix It Form). Developed by the CFPB, the Fix It Form is a prototype that can be adopted by servicers seeking to adopt the recommendations in the report and is designed to “document any deficiencies with borrowers’ IDR applications and communicates to borrowers about how to address the deficiencies and get their applications back on track.”
On August 1, the CFPB published a Notice and Request for Comment on its new information collection, “Consumer Response Company Response Survey” in the Federal Register. According to the Federal Register notice, the “purpose of [the] information collection is to incorporate a short survey into the complaint closing process.” The survey would replace the current “dispute” option, and is designed to give consumers an opportunity to provide feedback on how a company responded to and handled their complaints. Consumers would have the opportunity to rate the company on a scale of one to five, and provide a narrative description in support of the rating. The CFPB has released a survey mock up, which includes an opt-in option for consumers to consent to the CFPB publishing their feedback on the agency website. The CFPB intends to share survey results with the companies. Written responses to the CFPB’s Request for Comment are due by September 30, 2016.
On July 26, the CFPB released its most recent monthly complaint report, which provides a high-level snapshot of consumer complaint trends. The current report highlights credit card complaints. According to the report, between July 21, 2011 and July 1, 2016, the CFPB handled approximately 97,100 credit card-related complaints, making credit cards the fourth most complained about product. The report identifies billing disputes, identity theft/fraud/embezzlement, and “other” complaints as the three most common types of credit card-related complaints. The report states that, with respect to complaints related to credit decisions, consumers frequently complain about difficulty in understanding initial application decisions and servicing changes (such as interest rate adjustments and credit limit reductions). Credit card complaints described in the report also include (i) confusion over payment allocation relating to promotional and deferred interest balances; (ii) frustration with late fees and additional costs; and (iii) difficulty understanding the terms and conditions of rewards and obtaining benefits.
With respect to consumer complaints generally, the report’s “Geographic spotlight” section focuses on Washington and the Seattle metro area. The report notes that, as of July 1, Washington consumers have submitted 18,900 complaints, with approximately 11,000 of those from Seattle consumers. At 29%, mortgage loans are the most-complained-about product in Washington, with debt collection and credit reporting trailing at 27% and 15%, respectively. Across all products and throughout the nation, the CFPB has handled approximately 930,800 complaints.