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New federal credit card complaint system off to a rocky start

Gripes to consumer bureau's system sometimes not getting through

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A new federal complaint system that was supposed to help consumers resolve disputes with credit card issuers is coming under fire for possibly bungling cases.

Banks gripe about new federal consumer credit card complaint system

The snafus may leave some wondering: Where can consumers go to complain about the credit card complaint system?

The problem: Some consumers who filed complaints during the first several weeks of the Consumer Financial Protection Bureau's new complaint system -- which launched July 21, 2011 -- may not have had their concerns promptly forwarded to credit card issuers for resolution. Banks say they have only 10 days to respond to consumer complaints, but if the CFPB doesn't alert them that complaints have been filed, banks can't quickly address consumer concerns.

"We want to resolve all of the complaints from our customers in an expeditious manner," says Richard Hunt, president of the Consumer Bankers Association, a trade group representing 54 banks and credit unions.

Are card complaints falling through the cracks?
"It's a glitch in their system," Hunt says. "It's a brand new government agency and we expected some glitches to happen. We're asking our customers to be patient while the CFPB fixes all the glitches." (See: "Tell us if you've filed a complaint with the CFPB.")

A CFPB spokeswoman confirmed that the agency has had computer system glitches and problems forwarding customer complaints to banks for resolution, but added they are working to fix the problems, many of which have been resolved.

"We anticipated that we would run into the kinds of technical challenges that are inevitable in any launch and set up a rapid response team to address issues as they come up," CFPB spokeswoman Jennifer Howard, said in an e-mailed response. "... Some banks did not initially receive complaints through our secure portal because of browser compatibility issues (i.e., the issuers were using older versions of a browser than the ones for which we had prepared)."

It's a brand new government agency and we expected some glitches to happen. We're asking our customers to be patient while the CFPB fixes all the glitches.

-- Richard Hunt
President, Consumer Bankers Association

She added: "A number of these issues have already been resolved, and we expect that remaining technological issues will be resolved in the very near future. In the meantime, the vast majority of complaints are being correctly routed."

Rocky rollout for new agency
The new system was designed to replace an old complaint process that required credit card holders to contact one of five different regulators if they had complaints about how lenders were handling their accounts or complying with federal laws.

Consumer advocates and others lobbied Congress to create a single agency to look out for consumers' interests in mortgages, credit cards and other financial products. In July 2010, the Wall Street reform law -- also known as the Dodd-Frank Consumer Protection Act -- created the CFPB. That new agency was given broad powers to police financial products, write new laws to bolster consumer protections and go after violators who had deceptive or unfair practices.

The CFPB officially opened for business on July 21, 2011, and launched the new complaint system in beta testing mode. Instead of taking complaints about all types of financial products, the bureau is currently processing only credit card complaints. The agency plans to expand the complaint system in the future to cover mortgages, student loans and other types of financial services. 

From Day 1 of its operations, the agency has been mired in controversy. Because there is no official director, the agency does not have the authority to use all of the powers granted to it by the Dodd-Frank Act. The unofficial leader had been former Harvard law professor Elizabeth Warren, but she resigned Aug. 1, 2011. There is speculation that she will run for a U.S. Senate seat in Massachusetts. Senate confirmation hearings for President Obama's nominee for the director's job -- former Ohio Attorney General Richard Cordray -- are set to begin Sept. 6.

Banks: 'System needed more advance testing'
Nessa Feddis, vice president and senior counsel for the American Bankers Association trade group, said her member banks have documented incidents of duplicate complaints being forwarded to them, getting complaints that weren't related to credit cards and not receiving email alerts when consumers file complaints. These alerts notify banks to log in to the CFPB complaint system to track consumer concerns.

Feddis says the bureau has been flexible and willing to make changes to its system as problems arise. However, she adds it's clear that "they did rush things" before launching the complaint system.

"It might have been helpful to do consumer testing," she says. Several banks were contacted to volunteer for testing of the site, but no one contacted them afterward for follow-up, Feddis says.

Howard says several large banks were consulted beforehand: "The CFPB reached out to the top credit card issuers, seeking their input on the CFPB's complaint intake system, before launching that system. In the weeks leading up to July 21, the CFPB consulted with and previewed the system with a number of issuers as well as with trade associations and consumer groups, and we implemented system changes as a result of the feedback. The CFPB continues to receive and respond to stakeholder feedback."

Feddis also raised concerns about the complaint form, which, among other things, asks consumers if they've been victims of discrimination. "Well, what type of discrimination?" She says the question is too vague and may lead to different interpretations by people filing complaints. Another questionable aspect of the form, according to Feddis, asks consumers how much money they may have lost as a result of the credit card problem. Feddis says this, too, may be too vaguely worded because consumers may not know the amount they've been overcharged on credit card interest.

"It's hard to see what the entire complaint process looks like unless you file a complaint," Feddis says. "Unless you're going to fake a complaint, it's hard to see what exactly is on that form."

In addition to the complaint website, consumers can also call a toll-free hotline (855) 411-CFPB (2372) to log complaints.

Howard said the toll-free call line has been "handling calls with little to no wait times and consumers are getting directly through. We have received feedback from consumers that they are satisfied with our process and the bank's resolution."

One consumer waiting three weeks for action
One consumer, however, isn't so satisfied. Steve Miller, a CreditCards.com reader, said he filed a complaint with the CFPB on Aug. 11 about a problem with his credit card issuer, Merrick Bank. "It's been three weeks since I filed the complaint, and it is still listed on the website as 'received,'" Miller wrote in an email. The CFPB complaint system assigns a tracking number to each complaint filed and allows consumers to create usernames and passwords so that they can periodically check on the status of their complaints.

Said Miller: "At this rate, it will be months before they even notify the bank that I have a complaint. No wonder the banks ignore the laws as nobody is enforcing them."

A Merrick spokeswoman did not return phone calls inquiring about Miller's case. He says the bank closed his account, which still had an outstanding balance, and increased the interest rate without giving him 45 days' advance notice as required by the Credit CARD Act of 2009. Miller says he's now planning to pursue his case in small claims court.

It's difficult to know whether Miller's is an isolated case or an example of the problems facing the CFPB's new system.

CFPB not releasing complaint data
The bureau -- which has promoted itself as a transparent and open agency -- has declined to release information about the number of complaints that it is receiving. Howard, the spokeswoman, said they are not releasing that data until they develop "a comprehensive policy" on complaint data. "It would be premature to release data in advance of this policy," Howard said.

Hunt said banks can't be certain how many consumers may have fallen through the cracks or been impacted by any past or ongoing glitches with the new system.

"We don't know the scale of the problem," he said. "We don't know if it's hundreds or thousands" of people.

See related: New agency arrives with broad powers to police financial products, New financial watchdog accepts credit card complaints, A guide to the Credit CARD Act of 2009

Published: September 2, 2011


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