CFPB Monthly Report Turns its Attention to Credit Card Products

The CFPB issued its Monthly Report this week. The report is a high level snapshot of trends in consumer complaints and provides a summary of the volume of complaints by product category, by company and by state.  Additionally, each month it highlights a product type and a geographic area.  This month’s report highlights credit card products and provides some forecasting of areas regulators are likely to focus on in upcoming examinations.



Each month, the Report breaks down complaint volume by product looking at a three month average and comparing the same to the prior year.  As has been the case in prior months, the Report continues to indicate that the three products yielding the highest volume of complaints are debt collection, mortgage and credit reporting.  If there is good news to be had, the Report indicates that debt collection and credit reporting both showed a significant decrease in complaints in September 2015.  Debt collection showed a 10% decrease and credit reporting showed at 15% decrease.  Interestingly, the products showing the largest increase in claims in a 2014 vs. 2015 comparison were debt settlement, credit repair and check cashing.  Taking this into account, we are likely to see a continued increase in enforcement actions in the debt settlement and credit repair industries.

 

This month’s report focuses on credit card products.  According to the CFPB Reports, credit card products are one of the most complained about financial service products, fourth only to debt collection, credit reporting and mortgage.  Credit card providers and servicers should pay close attention to this month’s report as it highlights what are likely to be points of emphasis with regulators in upcoming examinations – particularly with regard to the application of payments and billing disputes.

 

• The most common complaint involves billing disputes.  According to the report, consumers are confused as to how and when late fees can be assessed.  Other consumers indicated confusion as to how to properly and timely make a billing error dispute.  16% of all credit card complaints are categorized by the CFPB as involving billing disputes.

 

• Another issue highlighted by the CFPB is the concern with credit card accounts being closed without notice due to concerns by the credit card companies as to fraud and identity theft. 

 

• Consumers also complained about their inability to allocate payments as they desire and expressed confusion where portions of accounts were subject to differing interest rates, promotions, and expiration dates.

 

Overall, the Report did not contain any surprises.  So what might the credit card industry expect to see from regulators?  Based upon the current complaint trends, the credit card industry is likely to continue to see a continued focus on to their application of credit card payments, as well as scrutiny as to the accuracy of their disclosures for 0% balance transfers and other promotions.