Bank accounts and services were the focus of the Consumer Financial Protection Bureau’s (CFPB) August snapshot of consumer complaints.
Each month, the CFPB summarizes recent consumer complaints filed with the Bureau and highlights one particular product or service as well as one geographic location for examination.
In August 2016, the CFPB took a closer look at bank deposit accounts and services. “Deposit accounts are an essential component of millions of consumers’ financial lives,” said CFPB Director Richard Cordray in a statement about the report. “We are concerned that consumers continue to face difficulties accessing and managing this cornerstone financial tool. Consumers who are eligible for a deposit account should be able to get one and use it effectively.”
The category—which includes products offered by banks, credit unions, and nonbank companies—received approximately 94,200 complaints as of August 1, 2016. Checking accounts are the most complained-about product or service in the category, covering 64 percent of the complaints.
A common complaint from consumers: trouble opening an account. In addition to grumbling about credit reporting data used in screening for new accounts, consumers told the CFPB they often learned about negative reporting information for the first time when they tried to open a new deposit account. Trying to address potential errors that prevented opening an account was also the subject of numerous complaints.
For existing accounts, consumers told the CFPB they were unhappy about overdrafts due to “confusion” about the availability of funds in the account or that they were attempting to deposit. “Consumers also regularly complain about the size of overdraft fees when making small dollar purchases,” the CFPB wrote. “Other fees, including insufficient funds fees, extended overdraft fees and monthly maintenance fees are also frequently the subject of complaints.”
In addition, complaints rolled in about bank check holding policies that consumers said delayed the availability of funds for extended periods of time. This area of “major concern” for consumers involved problems with mobile deposit applications, particularly where financial institutions have different funds availability policies for traditional deposits and mobile deposits.
Promotional offers “were the focus of a number of complaints,” according to the report, some having to do with the consumer’s eligibility for the offer and others with whether the consumer met the required terms for an offer.
Another frequent complaint referenced the error resolution procedures at financial institutions, the Bureau reported. For instance, when an unauthorized transaction occurred or a consumer believed he or she was the subject of fraud, the CFPB received complaints about “prolonged” response times and the lack of provisional credit for disputed transactions.
As always, the Bureau provided an overview of consumer complaints across all categories and geographic locations. The total number of complaints handled by the CFPB reached 954,400 as of August 1 with debt collection maintaining the number one spot for complaints. Of the roughly 24,000 complaints filed in July, 6,546 fell into the category of debt collection. Credit reporting (with 5,382 complaints) and mortgages (3,910 complaints) took the second and third spots.
Comparing trends, the CFPB said a year-to-year comparison between the months of May and July last year and this year showed a 64 percent increase in student loan complaints, with a jump from 639 to 1,050 complaints. The states with the greatest year-to-year complaint volume increase were Alaska, Wyoming, and Colorado, up 29, 24, and 20 percent, respectively.
The August snapshot focused its geographic attention on Ohio, where consumers have submitted 29,400 complaints, with 6,500 coming from the Columbus metro area. Similar to the national data, the most complained-about product or service is debt collection (accounting for 30 percent of all complaints) with a slightly lower than average rate of complaints for mortgages.
To read the CFPB’s Monthly Complaint Report for August 2016, click here.
Why it matters
Whether or not these complaints are valid, the industry pays attention to these summaries for good reason: both the CFPB and the plaintiffs’ bar use these reports to study where to attack next. Some of the problems highlighted by the monthly complaint report with regard to bank products and services have been raised by the Bureau before. Earlier this year, the CFPB released a compliance bulletin cautioning banks and credit unions that “failure to meet accuracy obligations when they report negative account histories to credit reporting companies could result in Bureau action” and urging them to offer lower-risk products, such as “no-overdraft” accounts.