First Complaints to the CFPB

The Consumer Financial Protection Bureau (CFPB) issued its first report of consumer complaints against credit card issuers for the first three months it was opened from July 21 to October 21, 2011.  It was created to regulate consumer protection in the financial services industry.  The Consumer Financial Protection Bureau was formed to enforce the Dodd-Frank Wall Street Reform and Consumer Protection Act that became effective July 21, 2010. It interfaces with the public and listens and responds to consumer complaints on financial services products.

CFPB

The Consumer Financial Protection Bureau focused solely on credit card complaints and inquiries when it opened, because this industry had the most complaints historically.  It will begin taking complaints and inquiries related to home mortgages in December 2011, and plans to handle complaints on all financial products and services by the end of 2012.The Consumer Financial Protection Bureau is required to provide semi-annual reports to Congress on the consumer complaints it handles. It is also asking for public feedback regarding a searchable complaint database available to the public; consumers have until January 30, 2012 to provide input.

Complaints and inquiries to the Bureau come in by many methods: through their website, online chat through the website, phone, fax, mail, and referrals from other agencies.  The call center, located in the United States, offers services for the hearing- and speech-impaired and can assist people in 191 languages.

Complaint highlights

It received 5,074 credit card complaints in the first three months. The breakdown of the status of them was as follows:

83.8 percent or 4,254 of the complaints were sent to the credit card issuers.

7.8 percent or 394 of the complaints were under review by the Consumer Financial Protection Bureau.

5 percent or 254 of the complaints were incomplete or the consumer didn’t want to send it to the issuer.

3.4 percent or 172 of the complaints were sent back to the consumer for more information.

Complaints sent to issuers

Consumer Financial Protection Bureau sent 4,254 complaints to the credit card issuers to review. Here are the results and status according to the card  issuers:

74 percent or 3,151 of the complaints sent to the issuers had full or partial resolution.

19.8 percent or 845 of the complaints sent to the issuers received no relief.

6.1 percent or 258 of the complaints are still being reviewed by the issuer.

Fully or partially resolved complaints

The consumers reviewed the resolutions reported back by the credit card issuers concerning their complaints.  Here is the status of the 3,151 complaints that the issuers reported as fully or partially resolved:

71 percent or 2,238 of the fully or partially resolved complaints were not disputed by the consumer.

16.3 percent or 513 of the fully or partially resolved complaints were pending the consumers’ review of the issuers’ resolution.

12.7 percent or 400 of the fully or partially resolved complaints were disputed by the consumer.

Top ten credit card complaints by consumers

1. Billing disputes was the top complaint for 13.4 percent (681).

2. Annual Percent Rate (APR) or interest rate was a complaint for 11 percent (556).

3. Identity theft, fraud or embezzlement was a complaint for 10.8 percent (546).

4. Closing or cancelling an account was a complaint for 10.8 percent (546).

5. Credit card payment or debt protection was a complaint for 4.8 percent (242).

6. Other fees, which excluded late or overlimit fees, was a complaint for 4.4 percent (224).

7. Billing statement was a complaint for 4.1 percent (209).

8. Collection practices was a complaint for 4 percent (201).

9. Credit reporting was a complaint for 3.9 percent (197),

10. Advertising and marketing was a complaint for 3.4 percent (173).

Three key observations

The report made three observations about the credit card complaints for the first three months:

1. Consumers had difficulty understanding the terms of credit cards and other products such as debt protection services.

2. There were fraudulent credit card charges made by third parties, such as scams. The Consumer Financial Protection Bureau helped to rectify this for some and contacted appropriate criminal authorities when necessary.

3. There were many factual disputes between the consumer and issuer; the issuers were willing to resolve the complaints.

More than half of the consumers who contacted the Consumer Financial Protection Bureau had inquiries or feedback on credit card issuers, so not all were complaints.  All the information will be used to identify problems and determine how to best address them, either by consumer education or regulation. It will also help them improve the system. It will be interesting to see the report for the next three months.

Credit Damage Expert, John Ulzheimer, is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.  Follow him on Twitter here.

Categorised in: Credit Cards, Credit Report, Money & Identity

This post was written by John Ulzheimer