Store-card issuers top list of complaints with the CFPB
Purchase issues, unexpected fees or interest are most common card-related gripes
When angry credit card users fire off a complaint, the target is often a store card, according to complaint records published by the U.S. Consumer Financial Protection Bureau.
Consumers filed 22,500 complaints about credit cards with the federal government’s consumer protection bureau in 2017. The published complaint data – minus people’s names and identifying information – provides a window into the performance of big card issuers. Some disputes involve more than $1,000.
Card companies with most, least complaints with CFPB
- The No. 1 target was store-card specialist Alliance Data Card Services, relative to the size of its card business.
- Its complaint rate, 6.35 per $100 million in card balances, was 70 percent higher than the No. 2 complaint getter, Barclaycard, with 3.74.
- Synchrony Financial, another store-card specialist, rounded out the top three complaint targets, with 3.34 complaints per $100 million balances.
Representatives of Alliance Data did not respond to calls and emails seeking comment. The Dallas-based company, which operates through Comenity Bank and Comenity Capital Bank, handles dozens of retail store cards from Abercrombie & Fitch to Z Gallerie.
It was the first full year of complaint data on Alliance Data. Previously, the company’s asset size was below the CFPB’s $10 billion threshold. Its complaint rate in 2017 was more than four times that of Discover Bank and USAA, which had the lowest complaint rates of the group.
Synchrony Financial provided a statement saying that it works to resolve all customer complaints. "Customer satisfaction is extremely important to Synchrony, and we have worked with the CFPB to resolve customer concerns raised through the database since its inception," the emailed statement said.
Credit card complaints filed with the CFPB, at a glanceTop 3 complaint targets:
- Alliance Data Card Services
- Synchrony Financial
- US Bancorp
- Alliance Data Card Services
- Synchrony Financial
- Problem with purchase on statement
- Unexpected fees or interest
- Problem with getting a credit card
Interest and fees main source of complaints
The biggest share of complaints aimed at Alliance Data involved interest and fees, which accounted for 242 of the company’s total 1,167 complaints in 2017.
A Victoria’s Secret cardholder – a store card issued by Comenity Bank – said, for example, they were charged a $28 late fee on an account that had been closed, with the balance paid off.
“My account was supposed to be closed, I should not be charged any fee or minimum amounts or late fees,” the consumer complaint stated. “This is ridiculous!”
That complaint ended happily with a refund for the consumer, according to the complaint record – refunds are also called “monetary relief.”
Source: Consumer Financial Protection Bureau and banks’ financial reports to regulators.
Card issuers that pay refunds the most
While it is a frequent target of complaints, Alliance Data is also open-handed with refunds to its cardholders, the CFPB data show.
- The lender issues refunds or “nonmonetary relief” in 41 percent of CFPB complaints.
- That was topped only by US Bank, at 45 percent.
- The third most generous card issuer was Synchrony, at 39 percent of complaints.
Nonmonetary relief means something of value other than a refund. That could be the correction of information on a credit report, for example, or the restoration of a closed account.
It makes sense that store cards, used exclusively at a single merchant, would be more sensitive to customer complaints than general purpose cards, said Kevin Morrison, senior analyst of retail banking and payments at Aite Group.
“If they’re processing the store credit card, now you have a merchant involved that’s very sensitive about their relationship with the customer,” he said. “If there’s a dispute, the card issuing bank is much more apt to waive the fee.”
On the other hand, the largest card issuers are more likely to depend on automated processes, he said, and have less time for one-on-one hand holding.
“With high volume you probably are a little more rigid,” Morrison said. “You have to be more automated, more policy-driven, with less hands-on complaint resolution.”
Chase, the largest card bank with $137.5 billion in card balances at the end of 2017, was more than seven times the size of Alliance Data’s card business.
That said, sometimes reporting errors by companies can skew the refund data.
In the CFPB data, Capital One seemed to be the last-place granter of refunds or relief in 2017. The company’s 5 percent relief rate represented a steep plunge from the previous year. But spokeswoman Amanda Landers said the bank didn’t tighten its grip on refunds. Rather, the company’s internal reporting inconsistencies caused the apparent drop.
“Capital One’s internal data shows that our relief rate [monetary and nonmonetary] is in line with our historical averages” Landers said in an email.
What problems generate most credit card complaints
The CFPB data also provide a window into the kinds of problems people are having with their credit cards.
The top gripe by far are problems with a purchase shown on the statement. That most often means the cardholder is disputing a purchase, and isn’t happy with the card issuer’s response. Invalid purchases by fraud are reported in a separate category.
A Minnesota couple on vacation in Nevada, for example, used their American Express card to buy $3,900 in anti-aging products during a high-pressure sales pitch. When they tried to cancel the next day, the seller revoked its cancellation policy, they said.
“We have provided a lot of documentation to American Express and strongly feel that we are owed back the disputed charge,” they wrote. “Where is the consumer protection from American Express? We were totally scammed and I don’t know where to turn now.”
The complaint record shows that AmEx closed the complaint with an explanation, no refund.
Fees and interest were the second-largest cause of complaints, followed by problems getting a card – including card denials, fraudulent accounts and closed accounts.
“This company closed my account arbitrarily … soon after I opened it based on their relationship with a family member which they refuse to explain,” one USAA customer from California wrote.
The CFPB revised its categories for credit card problems on April 24, 2017. The new, longer list of problems gives more detail about people’s gripes. However, the changes made it impossible to compare 2017 data to past years.
How to file a credit card complaint
Have a gripe about rewards or another issue customer service can’t fix? The CFPB receives complaints through:
- A web-based complaint form, or
- A toll-free number: 855-411-2372
To file an effective complaint, be prepared:
- Have materials with account numbers, relevant dates and other data handy.
- It generally won’t be possible to make another complaint on the same issue. Make sure yours has full information.
- To back up your case, attach documents such as correspondence with the card issuer and account statements in the web-based complaint form.
Who will oversee your complaint?
- For banks with less than $10 billion in assets, the CFPB refers complaints to:
- Banks with $10 billion or more in assets account for about 80 percent of banking business.
- Check this list to see if your bank is regulated by the CFPB.
The CFPB complaint window can be helpful.
- Complaints about credit cards result in refunds 18 percent of the time, the CFPB’s data show.
- Another 10 percent receive “nonmonetary” relief, such as reinstatement of a closed account.
How the CFPB complaint process works
After the CFPB receives a complaint, the agency contacts the company to verify the customer relationship. A published complaint does not necessarily mean the company has violated the law or its contract with the customer.
People select a reason for their complaint from a menu. They also have the option of writing a description of their problem in their own words.
The CFPB is considering changing how it reports complaint data, which has come under fire from the American Bankers Association and other industry groups.
In a formal Request for Information this month, acting director John M. “Mick” Mulvaney asked for comments from companies as well as consumers and analysts who study the data.
Under the Dodd-Frank Act, the CFPB must collect and respond to consumer complaints and report on its efforts to Congress.
In 2012, the bureau began publishing data on individual complaints on its website – without individual’s names or identifying information. In 2015, the bureau gave consumers the option of adding a description of the problem to the published data.
How we analyzed the complaint records
- CreditCards.com downloaded 2017 and 2016 complaint data from the Consumer Financial Protection Bureau’s website on Feb. 28, 2018.
- Complaints are supposed to appear in the data within 15 days of being filed, so the 2017 data is essentially complete.
- However, a small number of complaints could have been published since the analysis was performed, as incomplete complaints are filled in.
- CreditCards.com then downloaded banks’ financial reports to regulators, in order to determine the size of their U.S. credit card business as of Dec. 31, 2017.
- Computing a ratio of complaints to credit card loans allows comparison of different-size card issuers.
- The card issuers ranked in the charts represent more than 90 percent of U.S. credit card balances. They also represent more than 90 percent of the credit card complaints filed with the CFPB.
See related: Rewards cards draw a surge of complaints to CFPB
- Rising rates, bigger card balances cripple millennials’ home buying ability – A new study shows nearly three quarters of millennials rate homeownership as a "top priority." But rising interest rates and high card balances could keep many of them from making down payments on their first homes ...
- 2018 Credit Card Fee Survey: Fees freeze as rates rise – Cardholders are most likely to pay fees if they pay late, take out a cash advance or carry a balance, according to the 2018 CreditCards.com Credit Card Fee Survey ...
- Fed: Card balances rose $4.8 billion in August – Revolving debt -- chiefly credit card balances -- grew at a 5.6 percent annual rate in the back-to-school shopping month, according to the Federal Reserve ...