The Consumer Financial Protection Bureau (CFPB) has had a busy few weeks, releasing the latest monthly snapshot of consumer complaints, publishing its Supervisory Highlights newsletter to reveal the Bureau has recovered $14.3 million for consumers, and announcing that it will begin to accept complaints about online marketplace lenders.
In the latest edition of the CFPB's monthly snapshot, the Bureau highlighted consumer complaints about prepaid products and focused its geographical attention on Texas and the Houston metro area.
Consumer complaints about prepaid products—one of the fastest-growing types of consumer financial products in the country—"spiked" in recent months, the Bureau reported, with consumers griping about being frozen out of an account, including a "large number" related to an incident with market leader RushCard.
Other problems relayed to the CFPB by consumers were concerns with managing, opening or closing an account (the most common issue, constituting 33 percent of the complaints), unauthorized transactions or other transaction issues (with 29 percent of the complaints), and account access problems when disputing particular charges. Consumers said that when they contacted the company about an issue, the entire balance on their card would be frozen while the claim was under review. A variety of fees related to prepaid cards were also the subject of complaints, from monthly and inactivity fees to balance inquiry and overdraft fees, the CFPB said.
As of February 1, 2016, the CFPB has handled roughly 4,300 prepaid product complaints since the Bureau began accepting complaints about the product in July 2014, or 0.5 percent of the total complaints received.
Turning its geographic spotlight on Texas and the Houston metro area, the Bureau reported that Texas consumers have submitted 63,200 of the 811,700 total complaints received, with the Houston metro area contributing 15,700 of those complaints. In the region, debt collection is the most complained-about financial area (with a slightly higher rate of complaints compared to the national numbers) while the state has a lower-than-national-average rate of complaints related to mortgages (just 16 percent in Texas, down from the 26 percent national rate).
Reviewing the complaints on a national basis, debt collection maintained its hold on the first-place position as the most popular financial product to complain about, according to the CFPB, followed by mortgages and credit reporting. The top three products account for two-thirds of the complaints submitted.
The Bureau also published its quarterly Supervisory Highlights this month, announcing that nonpublic supervisory actions of covered entities resulted in the remediation of $14.3 million to approximately 228,000 consumers.
Covering the last few months of 2015, the report touched upon violations found by the CFPB in the student loan market, international money transfer companies not following the new remittance rules, banks providing inaccurate information to credit reporting companies about customer checking accounts, and illegal contact of consumers by debt collectors.
The 10th edition of Supervisory Highlights was the first to report on exams of banks and nonbanks in the remittance market. Overall, examiners found that remittance transfer providers have made the necessary changes to achieve compliance with the CFPB's rule, the Bureau said, but did find some problems. At least one provider gave incomplete and sometimes inaccurate disclosures to consumers while another failed to cancel transactions within the required time frame and at least one provider failed to promptly credit consumers' accounts when errors occurred.
Also highlighted in the CFPB's report: illegal inaccuracies with deposit account information provided to credit reporting companies. Some banks or credit unions failed to update the change in a consumer's status when he or she paid charged-off accounts in full and provide that information to the credit reporting companies. Not updating an account to "paid in full" status "could negatively affect a consumer's attempt to open a new checking account," the CFPB said.
The Bureau reported at least one debt collector that failed to comply with the Fair Debt Collection Practices Act (FDCPA) requirement to stop contact with a consumer who provides a written request to cease communications. The failure resulted from system errors, the CFPB said.
Finally, the Bureau continued to expand its complaint database, announcing that it will accept consumer complaints related to online marketplace lenders. The relatively new kind of lending channel involves a lender or platform using an online interface to connect consumers or businesses seeking to borrow money with investors willing to buy or invest in the loan, the CFPB explained.
"All lenders, from online startups to large banks, must follow consumer financial protection laws," Bureau Director Richard Cordray said. "By accepting these consumer complaints, we are giving people a greater voice in these markets and a place to turn to when they encounter problems."
The Bureau now accepts complaints on a broad spectrum of consumer financial products, including mortgages, bank accounts and services, credit cards, student loans, auto and other consumer loans, credit reporting, debt collection, and payday loans. Because marketplace lenders offer several types of consumer loans, a consumer submitting a complaint will select between different categories for the product that best applies to his or her situation, the CFPB said, such as "mortgage" or "student loan."
Why it matters
Prepaid products have been on the CFPB's radar for some time, with the Bureau proposing rules to regulate the industry in November 2014. "Prepaid products provide a crucial financial lifeline to many unbanked and under-banked households," CFPB Director Richard Cordray said in a statement about the monthly snapshot report. "It is important that consumers who rely on this important financial product can do so safely and efficiently, without undue hassles and runarounds." Final rules on prepaid products are expected to be published later this year. As for the addition of online marketplace lending to the CFPB's complaint roster, the announcement serves as a notice that the Bureau is now paying attention to the industry, which has only recently begun to draw regulatory attention.
To read the CFPB's Monthly Complaint Report, click here.
To read the Supervisory Highlights report, click here.
To read the Bureau's press release regarding accepting complaints about online marketplace lenders, click here.