During the last two weeks, the Consumer Financial Protection Bureau (Bureau) announced two new policies that will significantly expand the agency’s reach. First, on July 16, the Bureau proposed a new policy that would allow consumers to publish detailed narratives of their complaints on the Bureau’s online consumer complaint database. Then on July 21, the Bureau began accepting complaints related to prepaid cards and several nonbank financial products, including debt settlement services, credit repair services, and pawn and title loans. Bankers and nonbankers who provide financial services should be aware of the increased legal and reputational risks that these new Bureau policies bring.
New Types of Complaints Accepted
The addition of prepaid cards and certain nonbank financial services expands the list of consumer complaints the Bureau already handles. The existing list includes complaints related to credit cards, mortgages, bank accounts and services, private student loans, auto and other consumer loans, credit reporting, debt collection, payday loans, and money transfers.
When consumers file a complaint with the Bureau, the Bureau forwards the complaint to the relevant company, and requests that the company respond within 15 days. The company’s response should include a description of the actions the company has taken or plans to take to address the complaint. The Bureau expects companies to close all but the most complicated complaints within 60 days. Consumers are given a tracking number that they can use to check the status of their complaint by logging on to the Bureau’s website.
The Bureau will now accept complaints for prepaid gift cards, employee benefit cards, and “general purpose reloadable cards,” which customers often use in lieu of traditional checking accounts. In the coming months, the Bureau also plans to issue a proposed rule that would increase federal consumer protections for general purpose reloadable prepaid cards. Consumers can now submit prepaid card complaints to the Bureau about problems with:
managing customer accounts
- overdrafts, incorrect or unexpected fees
- frauds, scams or unauthorized transactions
- advertising, disclosures, and marketing practices
- adding money and savings or rewards features.
Debt Settlement and Credit Repair Services
The Bureau has already taken a number of enforcement actions against debt settlement and credit repair services companies for engaging in deceptive practices and charging illegal up-front fees. Consumers can now submit complaints about these types of companies for problems related to:
Excessive, unexpected or unjustified fees
- Advertising and marketing practices
- Customer service
- Frauds or scams
Pawn and Title Loans
Consumers can now submit complaints about pawn and title loan services for problems such as:
Unexpected charges or interest fees
- Loan application problems
- Incorrect charging and crediting payments by the lender
- Damages from the lender repossessing, selling, or damaging the consumer’s property or vehicle
- Inability to contact lender
Detailed Consumer Narratives to Appear on Website
As the Bureau expands the types of complaints it accepts, it is also moving to increase the amount of information consumers can share on its customer complaint database. Under a new policy proposed by the Bureau on July 16, consumers will be able to publish detailed narratives of their complaints on the database. Until now, the Bureau’s database has included only a more limited set of information about consumer complaints, including the date of submission, the consumer’s zip code, the company’s name, the product type, the general category of problem the consumer is complaining about, and the company’s response.
Under the proposed policy, consumers will be given the option of sharing a first-hand account of how they believe they were harmed by a company. The Bureau argues that by making detailed customer narratives publicly accessible, consumers will be able to make more informed decisions when selecting a financial product. The Consumer Product Safety Commission’s saferproducts.govand the National Highway Traffic Safety Administration’s safercar.gov are two models that the Bureau says already provide this type of valuable consumer information.
Members of the financial services industry have expressed concern about the lack of safeguards in place to verify the truth of these publicly accessible complaints. In its proposed policy, the Bureau acknowledged the risk that factually incorrect information published on its database could harm both consumers and companies. To help mitigate this risk, the Bureau will allow companies to publish their response to a consumer complaint. Companies may request that their response be printed next to the consumer’s complaint, if the response is sent within the 15-day response period mentioned above. Both the customer complaint and the company’s response would delete any references to personal identifying information about the customer.
The Bureau has invited public comments to its proposed policy, a copy of which is available here.