The CFPB has issued its July 2016 complaint report which highlights complaints about credit cards and complaints from consumers in Washington and the Seattle metro area. The CFPB began taking credit card complaints on July 21, 2011, the day on which the CFPB officially opened its doors for business. In its first and second biennial reports on the credit card market, the CFPB identified deferred interest products and rewards programs as “areas of concern” for consumers. We previously commented that these “areas of concern” would likely be the subject of heightened CFPB supervisory scrutiny and enforcement activity. As noted below, in the new complaint report, the CFPB describes deferred interest and rewards programs as issues about which consumers “continue” to complain. We expect the CFPB’s continued receipt of complaints about such programs to further fuel its supervisory and enforcement activity directed at such programs.
General findings include the following:
- As of July 1, 2016, the CFPB handled approximately 930,700 complaints nationally, including approximately 24,500 complaints in June 2016. Debt collection continued to be the most-complained-about financial product or service in June 2016, representing about 29 percent of complaints submitted. Debt collection complaints, together with complaints about credit reporting and mortgages, collectively represented about 67 percent of the complaints submitted in June 2016.
- Complaints about student loans showed the greatest percentage increase based on a three-month average, increasing about 62 percent from the same time last year (April to June 2015 compared with April to June 2016). In February 2016, the CFPB began accepting complaints about federal student loans. Previously, such complaints were directed to the Department of Education. As we noted in blog posts about prior complaint reports issued since April 2016, rather than reflecting an increase in the number of borrowers making student loan complaints, the increase most likely reflects the change in where such complaints are sent.
- Payday loan complaints showed the greatest percentage decrease based on a three-month average, decreasing about 15 percent from the same time last year (April to June 2015 compared with April to June 2016). Complaints during those periods decreased from 453 complaints in 2015 to 383 complaints in 2016. In the March, April, May, and June 2016 complaint reports, payday loan complaints also showed the greatest percentage decrease based on a three-month average.
- North Dakota, Alaska, and Wyoming experienced the greatest complaint volume increases from the same time last year (April to June 2015 compared with April to June 2016) with increases of, respectively, 40. 31, and 30 percent.
- Hawaii, Delaware, and Maine experienced the greatest complaint volume decreases from the same time last year (April to June 2015 compared with April to June 2016) with decreases of, respectively, 18, 18, and 14 percent.
Findings regarding credit card complaints include the following:
- The CFPB has handled approximately 97,100 credit card complaints, representing about 10 percent of total complaints. Credit cards are the fourth most-complained-about product or service.
- The most-complained-about issue involved billing disputes.
- “A number of consumers” complained about how their payments were applied to accounts with multiple balances and different expiration periods that resulted from balance transfers, cash advances, or deferred interest purchases, with consumers frequently indicating they were not adequately informed about how their payments would be applied and were surprised that payments were not applied to promotional or deferred interest balances.
- Credit card complaints were the subject of the CFPB’s October 2015 complaint report. In that report, the CFPB included deferred interest programs as the subject of complaints. In the June 2016 report, the CFPB states that such programs “continued to be the subject of complaints.” According to the CFPB, “many” consumers complained that the terms of such programs were not adequately explained to them.
- Although rewards programs were not mentioned in the October 2015 report, the CFPB states in the June 2016 report that consumers “continue to complain about misleading offers” for such programs. According to the CFPB, consumers “often state that they have difficulty receiving promised benefits, or that the terms and conditions of the programs were not clearly explained when they opened the card.”
Findings regarding complaints from Washington consumers include the following:
- As of July 1, 2016, approximately 18,900 complaints were submitted by Washington consumers of which approximately 58 percent(about 11,000) were from Seattle consumers.
- Mortgages were the most-complained-about product, representing 29 percent of the complaints submitted by Washington and Seattle consumers and 25 percent of complaints submitted by consumers nationally.
- The percentage of debt collection complaints submitted by Washington and Seattle consumers, 27 and 28 percent, respectively, was similar to the 27 percent national average.