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Financial Services Law Insights and Observations

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  • CFPB Releases Supervisory Highlights Focused on Credit Reporting

    Consumer Finance

    On March 2, the CFPB released its Supervisory Highlights for winter 2017 that outlines supervisory and oversight actions the Bureau has taken to address issues in the credit reporting market. According to the CFPB’s February Monthly Complaint Report, the Bureau has handled approximately 185,700 credit reporting complaints since the Bureau’s inception. Examples of these complaints include that no action happens when consumers dispute items on their reports, that paid debts often show up as “unpaid,” and that consumers’ files are not updated to reflect changes or deletions which negatively affect their credit scores.

    The new Supervisory Highlights outlines the actions the Bureau has taken to address concerns, including the following:

    • Fixing data accuracy at consumer reporting companies, including instituting quality control programs and tests to identify mix-ups as well as improving corrective actions and preventative measures.
    • Directing consumer reporting companies to improve dispute investigation systems.
    • Directing furnishers supplying data to consumer reporting companies to ensure the integrity of the information, an effort that “includes better investigations and handling of disputes, notifying consumers of results, and taking corrective action when inaccurate information has been supplied.”

    As further explained, the CFPB uses the same supervision approach for credit reporting activities that it uses for other activities of supervised entities, which “includes a review of compliance systems and procedures, on-site examinations, discussions with relevant personnel, and requirements to produce relevant reports . . . [and, if violations are discovered], enforcement actions.” In addition, on the same day, the Bureau posted to its blog a guide to help consumers learn ways to monitor their credit history, including a list of several companies that claim to offer existing customers free access to credit scores.

    Consumer Finance Consumer Complaints CFPB Consumer Reporting

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  • CFPB’s Monthly Complaint Report Focuses on Mortgages

    Consumer Finance

    On February 8, the CFPB released its monthly complaint report for December 2016. The report focused on complaints about mortgages. Along with debt collection and credit reporting, the report stated that mortgages are consistently among the three products and services generating the most complaints to the CFPB, and that since July 21, 2011, mortgages have been the second-most-complained-about product, representing 24 percent of all complaints. The most common issues raised by consumers are problems that arise when they are unable to pay their mortgage, such as issues related to loan modifications, collection, and foreclosure. Such issues were raised in 49 percent of complaints about mortgages. Other common issues raised in consumer complaints relating to mortgages include making payments (such as the misapplication of payments (33 percent)), applying for a mortgage (9 percent), signing the agreement (5 percent), and getting an offer of credit (3 percent).

    The Report also noted that student loans showed the greatest increase in complaints year-over-year of any product or service—a 109 percent jump. The CFPB believes the increase may be due, at least in part, to the result of a February 2016 update to its student loan intake form allowing the submission of complaints about Federal student loan servicing. During the same period, complaints about prepaid products, payday loans, and mortgages declined by 59 percent, 23 percent, and 5 percent respectively—continuing a trend also observed in the Bureau’s last complaint report.

    Consumer Finance Lending CFPB Consumer Complaints Debt Collection Mortgages

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  • CFPB Monthly Complaint Report Spotlights Prepaid Complaints

    Federal Issues

    On October 25, the CFPB released its latest monthly report of consumer complaint trends. This month’s report highlights prepaid complaints, noting that since July 21, 2011, the CFPB has received approximately 6,000 prepaid complaints. According to the report, the “most common issues identified by consumers are problems with managing, opening or closing an account (32 percent) and unauthorized transactions or other transaction issues (30 percent).” Additional prepaid complaints highlighted in the report include: (i) consumers experiencing delays in receiving a replacement card after having notified a company of fraudulent or unauthorized charges to their prepaid cards; (ii) difficulty using a prepaid card after having purchased one; (iii) assessing dormancy fees that depleted the card’s balance; and (iv) balance discrepancies. Consistent with past reports, this month’s issue lists the top ten most-complained-about companies across all financial products, as well as the top seven most-complained about companies for prepaid-related issues. Finally, the report identifies North Carolina as its geographical spotlight, observing that, as of October 1, 2016, the CFPB has received about 27,600 complaints from North Carolina consumers.

    Federal Issues CFPB Prepaid Cards Payments Consumer Complaints

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  • CFSA Releases Positive Payday Loan Testimonials Submitted to the CFPB

    Consumer Finance

    On September 6, the Community Financial Services Association of America (CFSA) released a 2,000-plus page document containing testimonials submitted to the CFPB regarding consumers’ positive experiences with the payday loan industry. A CFSA representative uncovered the allegedly “buried” stories through a Freedom of Information Act (FOIA) request filed December 31, 2015. According to the CFSA, of the newly discovered 12,546 consumer comments regarding to the payday loan industry, 12,308 “praised the industry and its products and services, or otherwise indicated positive experiences.” Among other things, the CFSA further noted that (i) since the CFPB implemented its consumer complaint portal in 2011, approximately 1.5% of all complaints received related to the payday loan industry; (ii) in an FTC 2015 summary of consumer complaints, the “FTC found that just 0.003% of more than three million complaints related to payday lending”; and (iii) at least two customer surveys reveal that payday loan borrowers are overwhelmingly satisfied with the product. Regarding the CFPB’s proposed rules to address the short-term lending industry, CFSA CEO Dennis Shaul commented, “[i]t is clear that millions of consumers are satisfied with the payday loan product and services, and do not want the federal government to take this valued credit option away from them.”

    CFPB FTC Payday Lending Consumer Complaints

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  • CFPB Monthly Complaint Report Highlights Bank Account and Service Complaints

    Consumer Finance

    The CFPB recently issued its monthly report of consumer complaint trends for August. The report spotlights complaints regarding bank accounts and account services, noting that issues related to checking accounts are among the most common complaint (64%). Specifically, the report highlights consumer complaints about the increasing use of credit reporting data to screen customers prior to account opening, with consumers often complaining that they learn of negative reporting information for the first time when trying to open an account and that they have difficulty addressing potential reporting errors. The report also describes consumer frustration with overdraft fees, including when such fees are incurred for small-dollar purchases. Consumers also expressed confusion over eligibility requirements for promotional offers when opening new accounts, and submitted complaints involving “disputes over whether the consumer had met the required terms for a promotional offer.” In addition, the report noted concerns about financial institutions’ error resolution processes, including concerns with drawn-out response times for disputed transactions. 

    As usual, the August report features a geographic spotlight, this time focusing on complaint trends in Ohio generally and the Columbus metro area specifically. The report noted that 29,400 of the 954,000 complaints received as of August 1, 2016 came from Ohio-based consumers, and that consistent with the national trend, Ohio consumers most often submit complaints about debt collection (28%). Mortgage-related and credit reporting complaints follow as the second and third most-complained-about products, respectively, in both Ohio and Columbus.

    CFPB Consumer Complaints

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  • CFPB Publishes Report on Student Loan Complaints, Issues Income-Driven Repayment Fix It Form

    Consumer Finance

    On August 18, the CFPB published a report to provide a midyear update on student loan complaints, focusing on “problems for borrowers who submit an application to enroll in or recertify income and family size under an income-driven-repayment (IDR) plan.” The report analyzes student borrower complaints related to IDR plans and offers recommendations to “address the challenges identified in [those] complaints.” The report analyzes complaints submitted from October 1, 2015 through May 31, 2016 and finds that “borrowers encounter obstacles when submitting applications for IDR plans, including poor customer service, unexpected delays, lost paperwork, and inconsistent or inaccurate application processing.” The CFPB recommends that student loan servicers take “immediate action” to address challenges with IDR processing, highlighting the policy guidance recently issued by the Department of Education as a “roadmap to strengthen practices related to the handling of IDR applications” and releasing an IDR Application Fix It Form (Fix It Form). Developed by the CFPB, the Fix It Form is a prototype that can be adopted by servicers seeking to adopt the recommendations in the report and is designed to “document[] any deficiencies with borrowers’ IDR applications and communicates to borrowers about how to address the deficiencies and get their applications back on track.”

    CFPB Student Lending Consumer Complaints

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  • CFPB Seeks Comments on Changes to Complaint Database

    Consumer Finance

    On August 1, the CFPB published a Notice and Request for Comment on its new information collection, “Consumer Response Company Response Survey” in the Federal Register. According to the Federal Register notice, the “purpose of [the] information collection is to incorporate a short survey into the complaint closing process.” The survey would replace the current “dispute” option, and is designed to give consumers an opportunity to provide feedback on how a company responded to and handled their complaints. Consumers would have the opportunity to rate the company on a scale of one to five, and provide a narrative description in support of the rating. The CFPB has released a survey mock up, which includes an opt-in option for consumers to consent to the CFPB publishing their feedback on the agency website. The CFPB intends to share survey results with the companies. Written responses to the CFPB’s Request for Comment are due by September 30, 2016.

    CFPB Consumer Complaints

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  • CFPB Monthly Complaint Snapshot Highlights Credit Card Issues

    Consumer Finance

    On July 26, the CFPB released its most recent monthly complaint report, which provides a high-level snapshot of consumer complaint trends. The current report highlights credit card complaints. According to the report, between July 21, 2011 and July 1, 2016, the CFPB handled approximately 97,100 credit card-related complaints, making credit cards the fourth most complained about product. The report identifies billing disputes, identity theft/fraud/embezzlement, and “other” complaints as the three most common types of credit card-related complaints. The report states that, with respect to complaints related to credit decisions, consumers frequently complain about difficulty in understanding initial application decisions and servicing changes (such as interest rate adjustments and credit limit reductions). Credit card complaints described in the report also include (i) confusion over payment allocation relating to promotional and deferred interest balances; (ii) frustration with late fees and additional costs; and (iii) difficulty understanding the terms and conditions of rewards and obtaining benefits.

    With respect to consumer complaints generally, the report’s “Geographic spotlight” section focuses on Washington and the Seattle metro area. The report notes that, as of July 1, Washington consumers have submitted 18,900 complaints, with approximately 11,000 of those from Seattle consumers. At 29%, mortgage loans are the most-complained-about product in Washington, with debt collection and credit reporting trailing at 27% and 15%, respectively. Across all products and throughout the nation, the CFPB has handled approximately 930,800 complaints.

    Credit Cards CFPB Consumer Complaints

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  • CFPB Provides Five Year Overview of Consumer Complaints

    Consumer Finance

    On July 20, the CFPB published an overview of the consumer complaints it handled between July 2011 and July 2016. According to the overview, the CFPB has handled almost one million consumer complaints, the majority of which relate to either mortgages or debt collection. The CFPB has also handled a significant number of complaints related to the following: (i) bank accounts and services, most commonly about opening, closing, or managing bank accounts; (ii) credit cards, in particular billing disputes; and (iii) credit reporting, most often involving reporting errors in credit reports.

    CFPB Debt Collection Consumer Complaints

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  • CFPB Publishes Ninth Semi-Annual Report to Congress

    Consumer Finance

    On June 30, the CFPB published its ninth Semi-Annual Report to Congress covering supervisory and enforcement actions, rulemaking activities, newly designed consumer tools, and published reports from October 1, 2015 through March 31, 2016. The Semi-Annual Report provides an overview of relevant topics addressed in previous CFPB reports and bulletins, including monthly Consumer Complaint reports, Supervisory Highlights, and the February 2016 compliance bulletin regarding Regulation V. The report outlines, among other things, the CFPB’s (i) efforts to monitor the effectiveness of the SAFE Act; (ii) fair lending activities, including its risk-based fair lending prioritization process and recent public enforcement actions; and (iii) ongoing efforts to define larger participants in markets for consumer financial services and products which are subject to the Bureau’s supervisory authority. According to the report, the Bureau’s supervisory actions during the six month period covered in the report provided over $44 million in compensation to over 177,000 consumers, while enforcement actions in the same time period resulted in “approximately $200 million in total relief for consumers who fell victim to various violations of consumer financial protection laws, along with over $70 million in civil money penalties.”

    CFPB Fair Lending Enforcement Consumer Complaints SAFE Act

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