CFPB Monthly Report Turns its Attention to Prepaid 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 with debt collection complaints representing 31 % of the complaints submitted in January. In the year to year comparison, Arizona, Delaware and North Carolina experienced the greatest complaint volume increase.

 

This month’s report focuses on prepaid cards which is ironic considering that the Report indicates that prepaid card complaint showed the least month-over-month increase. However, it does confirm our observation that the product highlight is rotating through the various products tracked through the complaint portal. According to the CFPB Reports, prepaid cards make up only a minimal portion of all complaints submitted. Since July of 2011, only 4300 prepaid card complaints have been filed (or 0.5% of the total complaints).  

 

The most common issues identified by consumers are managing, opening or closing an account and unauthorized transactions or other transaction issues. Specifically, 

 

• According to the report, consumers complained that they were unable to access funds loaded on their prepaid cards for an extended period of time;
• Consumers complained about expired prepaid cards where companies refused to reissued cards with remaining balances where the expiration or valid through date was embossed on the cards;
• Consumers also complained about transaction and other fees; and
• Consumers also raised concerns that where they disputed charges, companies freeze the entire balance to prevent further loss while the claim is being reviewed.

 

Another issue worth noting is the CFPB’s observation that scammers are instructed consumers to purchase prepaid cards in order to transfer funds to the fraud perpetrators.