On March 28, 2017, the Consumer Financial Protection Bureau (CFPB) released Volume 21 of its Monthly Complaint Report (the “Report”). The purpose of the Report is, in part, to educate consumers and financial institutions on major consumer issues—which it does by providing a high-level analysis of trends in consumer complaints, focusing on one or two product areas each month. The analysis is based on complaints deceived by the CFPB in its Consumer Complaint Database, which tracks complaints filed by consumers through the CFPB and also has a search functionality allowing users to quantify complaint trends. It behooves financial companies to keep apprised of these trends, as they signal areas that may undergo increased scrutiny by the CFPB. The Report details its findings primarily by establishing a three-month rolling average—in this case, December 2016 through February 2017—and comparing it with the same period in the prior year (the “Comparison Period”).
Trends in Complaint Volume by Product
The Report demonstrates that debt collection has been a staple issue for consumers:
- Across the Comparison Period, debt collection consistently received the most complaints, comprising approximately 29% of complaints in the months of December 2016 through February 2017—and accumulating 11% more complaints over the December 2015 through February 2016 period.
- Monthly debt collection complaints have also grown significantly from when the CFPB first began receiving them; February 2017 continued this growth in the form of a 1% increase over January 2017 and a near 12% increase over the total average of all monthly debt collection complaints.
- Debt collection, credit reporting, and mortgages were the top three most-complained about consumer financial products and services, collectively representing about 62% of complaints submitted in February 2017.
The Report suggests that one significant change in consumer complaint trends was the number of complaints submitted regarding student loans, which increased a whopping 429% across the Comparison Period: from an average of 551 complaints per month (approximately 2.6% of complaints) to an average of 2,913 complaints per month (approximately 11.2% of complaints). But this apparent trend may not be quite as meaningful as the initial data suggest; the Report acknowledges that this year-to-year increase can be attributed to the CFPB updating its student loan intake form to accept complaints about Federal student loan servicing in late February 2016 and the fact that the CFPB took a major enforcement action against a student loan servicer in January 2017. In fact, tellingly, the student loan complaint volume actually decreased by more than 50% from January 2017 to February 2017, suggesting that this spike can be mostly attributed to the January 2017 enforcement action.
Product Spotlight: Credit Cards
For this month’s report, the CFPB chose to spotlight consumer credit cards. Although credit cards are not the most-complained about product, as the fourth most-complained about, they are still the subject of a significant number of complaints (representing 10% of all consumer complaints received since July 21, 2011). The CFPB reported that among the top credit card complaints include both billing disputes (17% of complaints) and identity theft/fraud/embezzlement (10% of complaints).
The CFPB’s analysis of customer complaints revealed the following consumer complaint trends:
- Consumers complained about the resolution process of handling disputes of fraudulent charges, including inadequate guidance, failures to remove the charges, and even re-billing of the charges after initial removal.
- Consumers complained about the difficulty of taking advantage of reward programs and the sometimes contradictory information received from customer representatives versus what consumers were able to find online.
- Consumers complained about late fees and other account servicing costs, including that companies assessed late fees when payments were made on the due date or due to companies’ own failures to timely process payments.
- Finally, consumers complained about issues related to the issuance of credit cards, including unsolicited credit cards, premature credit card cancellations, the conversion of portfolios across lenders, and the issuance of chip-enabled cards.
Whether or not the findings in this Report will lead to any specific rule-making or enforcement action by the CFPB remains to be seen. But the Report offers companies in the debt collection and credit card industries the opportunity to review common problems that consumers experience and to take steps to proactively address any such issues in their own businesses.