The federal consumer watchdog significantly expanded its consumer complaints program to include an array of financial products found outside banks
The U.S. Consumer Financial Protection Bureau announced a major expansion of its complaint window Monday, opening it for millions more U.S. consumers. Prepaid cards — which include gift cards, electronic benefit cards and reloadable cards that can function much like a bank account — are the fastest-growing form of noncash payments, with 9.2 billion transactions in 2012, according to the Federal Reserve.
Meanwhile, alternative lenders, credit repair firms and debt settlement companies are frequently under fire for abusive practices. For example, in a high-profile legal battle the agency is suing debt relief firm Morgan-Drexen, alleging it violated restrictions against charging consumers upfront fees.
By accepting the new categories of complaints, the agency “will be giving people a greater voice in these markets and a place to turn to when they encounter problems,” CFPB Director Richard Cordray said in the announcement.
The CFPB opened its complaint window in 2011 when it started hearing gripes about credit cards. It has since added complaints about debt collectors, checking accounts, mortgages, student loans and other financial products and services. The agency has handled about 395,000 complaints in total, according to a June 30 report, and published data on 264,000 of them on its public database as of Monday afternoon. The remainder were referred to other regulators.
How complaints system works
When a complaint comes in, usually by phone or over the Web, the agency contacts the company for a response. The company may hold its ground or correct the problem, and it might also provide compensation, such as a credit. Consumers may then dispute the company’s resolution and track the process by logging in online. The number of complaints and their resolution is reported on the agency’s website, giving the public a look at companies’ customer service performance.
The widening of the complaint scope comes as the CFPB moves to make its complaint data more useful for consumers to shop for financial services. The agency on June 17 proposed to publish people’s stories of their dealings with companies, in addition to the bare data now available. The individual tales — and company responses — are designed to help consumers evaluate companies when picking a bank or other financial service.
“Good players in the consumer finance space should be thrilled,” consumer law researcher Dalie Jimenez said in a blog post. “More data will allow us to really separate those who are doing right by consumers from those who aren’t.”
To file a complaint
People with a complaint can reach the consumer protection bureau online at consumerfinance.gov/complaint; by phone at 855-411-2372; by fax at 855-237-2392, or by mail at Consumer Financial Protection Bureau, P.O. Box 4503, Iowa City, Iowa 52244.
For prepaid cards, the consumer protection bureau can tackle problems with the management of your account, overdrafts and fees, unauthorized transactions, misleading ads or disclosures, rewards features and suspected fraud.
As for debt settlement companies, which typically promise to negotiate a partial settlement of your overdue debt, the CFPB can hear complaints about high or unexpected fees, advertising, customer service and suspected scams.
Pawnshops and title loan companies provide small loans backed by your valuables or a vehicle as collateral. Consumers may complain about issues including unexpected charges or interest, loan application and disputes over the tracking of repayment, repossession of property or vehicles and difficulty contacting the lender.