Consumer Finance Insights
September 6, 2016

CFPB Monthly Complaint Snapshot Brings Bank Accounts into Focus

On August 31, 2016, the Consumer Financial Protection Bureau (CFPB) released its Monthly Complaint Report for August 2016, this month focusing on complaints concerning bank accounts and related services.  The report, which compiles data from the CFPB’s complaint database to compare consumer complaints by subject, geography, and company on a year-over-year basis, identifies trends that can aid institutions in anticipating what issues or geographies may need additional attention.

This month’s report shows that the CFPB received about 24,000 consumer complaints in July 2016, down slightly from July 2015.  The areas with the biggest increase in complaints compared with this time last year were complaints involving student loans (64% increase), bank accounts and services (26% increase), and prepaid cards (18% increase).  The areas with the greatest decrease in complaints compared with last year were payday loans (19% decrease) and money transfers (14% decrease).   As has been the case in past months, debt collection, credit reporting, and mortgages were the three most common subjects of complaints overall, making up 66% of all consumer complaints for July 2016.

The report’s “product spotlight” on bank accounts and services reveals several trends that may be of interest to industry:

  • Problematic Products and Services.  The most complained-about product was checking accounts (constituting 64% of the product-related complaints), and the most complained-about services were account management (45% of service-related complaints) and deposits and withdrawals (25% of service-related complaints).
  • Account Screening.  Consumers also complained that their credit reporting data were used to screen them when they applied to open a new bank account, a problem that was especially frustrating to consumers because they also had trouble addressing errors in their reports.
  • Overdrafts.  The CFPB received numerous complaints about overdrafts occurring because of confusion about transaction ordering and the availability of funds.  Consumers also complained that overdraft fees were disproportionately large compared with small-dollar overdrafts.
  • Availability of Funds Deposited Via Check.  A frequent complaint from consumers related to the amount of time it took for checks to clear and funds to become available.  The CFPB reports that this was a problem particularly in conjunction with mobile deposit applications – that consumers either had trouble using the applications or found that banks had different funds availability policies for mobile deposits.
  • Eligibility for Promotional Offers.  Consumers also submitted complaints about promotional offers when opening new accounts, reporting that they were dismayed to find that they were not eligible for the promotional offer connected with the new account.
  • Error Resolution Procedures.  Numerous complaints were submitted relating to error resolution for deposit accounts, including complaints that banks’ error resolution procedures were too slow and did not provide provisional credit for disputed transactions.

Though the CFPB’s Monthly Complaint Reports are relatively brief and high-level, they can be useful to financial institutions in many ways.  The complaint categories identified in the reports can help institutions anticipate what issues may arise in connection with their own customers so that institutions can try to address those problems in advance.  They also may help signal what issues the CFPB will be looking for during examinations and investigations.  And they might also provide institutions with insight into how best to proactively serve existing and potential customers.  For instance, an institution seeking to expand its customer base through the availability of its mobile banking application might note the common complaints about depositing checks via mobile applications and devote additional resources to resolving similar problems with its mobile banking application.  The Monthly Reports thus serve as a tool to help financial institutions to stay up-to-date on consumers’ concerns, and offer one more way for institutions to adapt to the constantly evolving consumer financial market.