CFPB Monthly Complaint Report Focuses on Credit Card Accounts

The CFPB issued its monthly report on consumer complaints this week. The report is a high level snapshot of trends in consumer complaints. The Report provides a summary of the volume of complaints by product category, by company and by state. Additionally, it highlights a product type. The product “spotlight” rotates monthly. This month’s report highlights credit card account complaints which was last in the “spotlight” in October 2015.

 Complaint Volume by Product

• The three products which yield the highest volume of complaints on a three month average remain debt collection, mortgage and credit reporting;
• A trend worth noting is that the number of debt collection complaints remains almost flat;
• Student loans indicated the highest increase in change from last year– a 62% increase when compared to 2015; and
• Payday loan complaints showed the greatest decrease from last year – a 15% decrease when compared to 2015.

Highlighted Product: Credit Card Accounts

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 fair lending concerns, application of payments and assessment of fees and adequate explanation of terms. 

• As was the case when credit cards were last in the spotlight, the most common complaint involves billing disputes. Consumers remain confused as to how and when late fees can be assessed. 16% of all credit card complaints are categorized by the CFPB as involving billing disputes. Specifically:
• According to the Report, consumers complain about how payments are being applied, particularly to accounts where there are multiple balances because of balance transfers, cash advances and deferred interest purchases. The majority of these complaints appear to emanate from confusion about the terms of use.
• Consumers also complain about the application of fees and additional costs associated with their credit cards, particularly the application of late fees.

• The Report also highlights complaints about credit decisions. Both initial credit decisions and servicing changes are frequent subjects of complaints. Specifically, the Report observes concerns with adverse actions and the negative impact that negative items in credit reports have on consumer’s creditworthiness;
• Deferred interest programs also are a source of complaints with consumers stating that the terms of the programs are not adequately explained;
• 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.

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 regarding special promotions. It would also not be surprising to see examiners scrutinize credit card products in their fair lending examinations based upon the volume of complaints concerning credit decisions.