CFPB’s Latest News on the Complaints Database

This is a direct communication from the CFPB Press Releases– see CFPB’s website for more!

“FOR IMMEDIATE RELEASE:
September 18, 2019

MEDIA CONTACT:
Office of Communications
Tel: (202) 435-7170

CONSUMER FINANCIAL PROTECTION BUREAU TO ENHANCE CONSUMER COMPLAINT DATABASE

WASHINGTON, D.C. – Today the Consumer Financial Protection Bureau (CFPB) announced that it will continue the publication of consumer complaints, data fields and narrative descriptions through the Bureau’s Consumer Complaint Database while making several enhancements to the information available to users of the database. The enhancements include: modified disclaimers to provide better context to the published data; integrating financial information and resources into the complaint process to help address questions and better inform consumers before they submit a complaint; and information to assist consumers who wish to contact the financial company to get answers to their specific questions. Additionally, the Bureau will work to provide enhanced features for the database that include dynamic visualization tools on recent complaint data.

“Since its inception, the Consumer Complaint Database has not been without controversy. When the Bureau asked for feedback in 2018, we received nearly 26,000 comments from a wide array of stakeholders including government officials, consumer groups, companies, academics, and individual consumers. After carefully examining and considering all stakeholder and public input, we are announcing the continued publication of complaints with enhanced data and context that will benefit consumers and users of the database while addressing many of the concerns raised,” said CFPB Director Kathleen L. Kraninger. “The continued publication of the database, along with the enhancements, empowers consumers and informs the public.”

The Bureau is making changes to its website to provide disclosures on the nature of complaints as well as resources to consumers, including:

  • More prominently display disclosures making it clear that the Consumer Complaint Database is not a statistical sample of consumers’ experiences in the marketplace;
  • Highlighting the availability of answers to common financial questions for consumers to help inform them before they submit a complaint; and
  • Highlighting consumers ability to contact the financial company directly to get answers to their specific questions.

The Bureau will continue to publish all previously disclosed fields, including consumers’ narrative descriptions of their complaints. To further enhance the database in the coming months, the Bureau will:

  • Build and launch dynamic visualization tools including geospatial and trend views based on recent complaint data to help users of the database understand current and recent marketplace conditions;
  • Emphasize features for aggregation and analysis while continuing to make all the underlying data available for analysis;
  • Explore expansion of a company’s ability to respond publically to individual complaints listed in the database; and
  • Continue to explore ways to put the complaint data in context of other data, such as by incorporating product or service market share and company size.

To date, the Bureau has handled more than 1.9 million complaints. More than 5,000 financial companies have responded through this process, providing timely responses to 97 percent of the more than 1.3 million complaints sent to them for response.

The Consumer Complaint Database is available at: https://www.consumerfinance.gov/data-research/consumer-complaints/

The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by regularly identifying and addressing outdated, unnecessary, or unduly burdensome regulations, by making rules more effective, by consistently enforcing federal consumer financial law, and by empowering consumers to take more control over their economic lives. For more information, visit consumerfinance.gov.”

Bankruptcy: Costs, Credit Scores, and Life After Discharge in Missouri

Bankruptcy is a court-supervised process where a debtor in files papers with the federal courthouse. This blog post answers three frequently asked questions about bankruptcy: (1) How much does a bankruptcy lawyer cost? (2) How bad will filing for bankruptcy hurt my credit score? (3) How quickly after bankruptcy will my credit score begin to improve? The answers are all specific to bankruptcies filed in Missouri only.

Bankruptcy is a tool used to halt your creditors in their tracks; as soon as one files the appropriate papers with the federal court, creditors must stop all collection attempts. This gives debtors something extremely valuable: breathing room. There are two federal court systems in Missouri: the Western District of Missouri and the Eastern District of Missouri. You file bankruptcy in one of those two districts depending on where you live. Additionally, there are two types of bankruptcy that debtors can file. Chapter 7 bankruptcy is the fastest option (approximately 3-6 months from beginning to end), whereas Chapter 13 bankruptcy lasts between 3-5 years before the court gives you a fresh start. Most debtors hire an attorney to consult and assist them throughout the bankruptcy process.

Frequent Question #1: “How much does a bankruptcy lawyer cost in Missouri?”

The Answer: it depends. Each bankruptcy lawyer will agree to a unique price with each client, and several factors go into this final price. I spoke with one lawyer who uses a flat-fee method. He will file a Chapter 7 bankruptcy for his clients on the western side of Missouri for $2,000. The same lawyer charges $1,300 for his clients on the eastern side of Missouri. If a client wants to pursue Chapter 13 bankruptcy, this lawyer charges a flat fee of $3,600 for clients in the western half of Missouri and $2,800 for clients in the eastern half. He requires that his clients pay $300 up front to cover certain expenses he will incur on the client’s behalf (doing a credit check, paying for the pre-filing credit counseling, etc.).  The full amount of the bill must be paid prior to the end of bankruptcy.

Another lawyer, located in Jefferson City, Missouri, will file a Chapter 7 bankruptcy for as low as $675. However, this is not a flat fee; the price may go up depending on the complexity of the case and how many debts a client will discharge.

Frequent Question #2: “How bad will filing for bankruptcy hurt my credit score in Missouri?”

The Answer: it depends. One lawyer I spoke with told me that his clients usually take a 250 point hit to their credit score. Other research shows debtors who file bankruptcy experience a decline in their credit score between 180-260 points. Bankruptcy affects every debtor differently, but it will most likely result in a debtor having a “poor” credit score (a poor credit score is usually anything below 600 points). The hit to your credit score will appear once you file for bankruptcy. Filing for Chapter 7 bankruptcy will stay on someone’s credit score for 10 years, and fling or Chapter 13 bankruptcy stays on a credit score for 7 years. Discharged debts that disappear after bankruptcy will still remain on a credit report for 7 years. This is because while a bankruptcy court can wipe away your debts, it will still show up as a debt that was not paid in full.

Frequent Question #3: “How quickly after bankruptcy will my credit score begin to improve in Missouri?”

The Answer: it depends, but it can begin healing almost immediately. Filing for bankruptcy can be viewed as dropping a bomb on your credit score; it will be damaged for a while. But, like a forest fire, sometimes scorched earth can reveal new life underneath. One Missouri bankruptcy lawyer told me that he had a client who filed for Chapter 7 bankruptcy in the summer of 2017, she received her discharge (non-secured debts were wiped away forever) at the end of 2017, and a car dealership gave her a new car loan in January of 2018. While this result is specific to that particular debtor, the take away is that your credit will rebuild if you make it a priority.

Additionally, in the world of home loans (mortgages), most banks will begin to loan to someone 24 months after their bankruptcy discharge is issued. While most lenders will not extend credit (a loan) in the immediate months after bankruptcy, a person who works hard to improve their credit (by paying bills on time, for example) will eventually be back on their feet.

Disputing a Fraudulent Transaction on a Credit Card

It is not uncommon to hear that a family member, friend, or a colleague was a victim of credit card fraud. In 2017, the Federal Trade Commission received more than one million fraud reports.[1]The report separates individuals by age groups.  Individuals between the age of 20-29 account for 40% of fraud reports while individuals between 60-69 account for 20 % of fraud reports. While these percentages account for reported frauds, there are many that go unreported. One possible explanation for higher report rates in the 20-29 age group is the digitalization of banking resources. These resources include notifications of suspicious bank activity and so on. These positive aspects of the digitalization of banking are a step towards consumer empowerment. However, digital trends resonate more heavily with newer generations than that of previous generations.

Under the Fair Credit Billing Act (FCBA), a fraudulent transaction that appears on the account can be disputed. What qualifies as a fraudulent transaction?  A transaction is fraudulent if the card holder had no knowledge of the transaction and did not approve the charge. For instance, a transaction that appears on the account that was not authorized by the card holder is fraudulent. The FCBA grants consumers various protections: (1) If the card was lost or stolen and reported before any unauthorized charges were made, the liability is $0; (2) Within 2 business days after you learn about the loss or theft, the liability might be $50; (3) More than 2 business days after you learn about the loss or theft, but less than 60 calendar days after your statement is sent to you, the liability might be $500; or, (4) More than 60 calendar days after your statement is sent to you all the money taken from your ATM/debit card account, and possibly more; for example, money in accounts linked to your debit account.[2]

It is important to know that if you are victim of fraud you have rights. It is also important to note that time is critical to limit your liability. Once you discover the fraudulent transaction, contact your bank immediately. While banks and credit card companies might expand a customer’s rights, you are provided basic protection under the FCBA.

For further information about disputing fraudulent credit card transactions, please visit https://www.consumer.ftc.gov/articles/0219-disputing-credit-card-charges

[1]https://www.ftc.gov/policy/reports/policy-reports/commission-staff-reports/consumer-sentinel-network-data-book-2017/fraud-by-amount-lost

[2]https://www.consumer.ftc.gov/articles/0213-lost-or-stolen-credit-atm-and-debit-cards

Consumer Law Professors Join Forces to Protect the Complaints Database

Professor Amy J. Schmitz joined forces with other consumer law experts Prof. Pamela Foohey of Indiana University Maurer School of Law and Prof. Angela Littwin of University of Texas School of Law to serve as the primary drafters of a response to the Consumer Financial Protection Bureau (CFPB)’s request for information regarding the CFPB’s reporting practices of consumer complaint information. The response explains how publicly releasing information about consumer complaints is essential to the CFPB’s primary purpose of ensuring that “markets for financial products and services are fair, transparent, and competitive.” The response primarily focuses on the benefits of the CFPB’s public consumer complaint database. The response also details the benefits of adding more data to the database, of continuing to publish reports based on complaint data, of publishing more tailored reports based on the complaint data, and of evaluating the design of the online interfaces through which consumers lodge complaints and access the database. These improvements will further enhance the operation of a fair, transparent, and efficient marketplace. The response has been submitted to the CFPB, but is also available to the public at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3190797.”

Cash Back Credit Cards

Recently, I was asked by WalletHub to comment on cash back credit cards.  The post should be forthcoming on the WalletHub site.  Nonetheless, I am also sharing my insights here:

•    Should everyone have at least one cash back credit card?

Not necessarily.  For starters, consumers should always “shop around” and compare credit cards, and be sure to understand what they are getting themselves into before signing up.  One resource consumers my find helpful is on the CFPB credit card agreement webpage. Furthermore, cash back may not be the most important feature for all consumers.  Consumers need to consider their own situations and interests.  Once again, the CFPB provides excellent resources on credit card features. Consumers also may not all qualify for the same types of credit cards, and should be sure that they are in a position to pay off credit card debt in a timely and prudent manner.  Anyone interested in finding out more about credit scores should check out CFPB’s “How do I get and keep a good credit score?”

•    What are the biggest mistakes that people make when shopping for a cash back credit card?

First, some consumers may take on another credit card without truly considering whether they should open themselves up to greater spending power, and falling behind on bills.  Second, credit card offers may be confusing with respect to annual fees.  For example, some credit card offers include a waiver of the annual fee for the first year, thus lulling consumers into ignoring that fee in their decision-making.  However, consumers are usually dismayed when the fee kicks in and dissipates any benefit of “cash back.”  At the same time, consumers may not be able to cancel the card at that time due to the debt they have incurred or the “hit” they would take on their credit scores for canceling a card so quickly.  Third, consumers often fail to read the rules and restrictions on earning cash back.  For example, some cards offer elevated cash back for certain categories of purchases, but then restrict what qualifies for that category. Take the example of “3% cash back on fuel purchases” – with the caveat that fuel purchases from stations that are linked to grocery stores do not qualify (a very common restriction).  Similarly, “big box” and “warehouse” stores may not qualify for elevated cash back on “grocery” purchases.  Again, it is important to read the fine print of any credit card agreement.  Fourth, credit card offers may restrict consumers’ redemptions.  Does the offer allow consumers to redeem cash back at any time and in any amount, or does the offer require that consumers wait until they have accumulated a certain cash back sum?  Does the offer allow consumers to get a check in the mail, or only a statement credit?  These are just some of the questions to ask and consider.

•    Why don’t all rewards credit cards offer cash back?

“Rewards” mean different things to different consumers.  Some consumers prefer to get travel points or other perks.  Some consumers do not qualify for cash back cards, or may focus on low interest rates over any rewards.  Again, consumers must always consider their own situations and interests.  Cash back cards are not right for everyone, and the credit card market has responded.

CFPB is Fighting the Good Fight

The Consumer Financial Protection Bureau (CFPB) today announced that its recent work resulted in $14 million in relief to more than 104,000 harmed consumers from January through June 2017. The Press release read in part:

“Today’s report, the 16th edition of Supervisory Highlights, covers CFPB supervision activities from January through June 2017, and shares observations in the areas of auto loan servicing, credit card account management, debt collection, deposits, mortgage origination, mortgage servicing, remittances, service providers, short-term small-dollar lending, and fair lending. Among the findings:

  • Banks deceived consumers about checking account fees and overdraft coverage: One or more institutions deceived consumers by inaccurately describing when checking account service fees would be waived. One institution told consumers it would waive the fee if the customer met certain qualifications, including making 10 or more payments from the checking account during a statement cycle. In fact, only debit card purchases and debit card payments qualified toward the fee waiver. One or more institutions also misrepresented opt-in deposit overdraft services as extending to consumer payments by check, electronic funds transfers through the Automated Clearing House payment network, or recurring payments, when those transactions were not actually covered.
  • Credit card companies deceived consumers about the cost and availability of pay-by-phone options: The Bureau’s examiners found that customer service representatives of at least one credit card company disclosed only costly pay-by-phone fees while omitting mention of much cheaper payment options. Failing to disclose less costly options can result in consumers being charged for services they don’t need.
  • Auto lenders wrongly repossessed borrowers’ vehicles: Many auto loan servicers give borrowers options to avoid repossession of their vehicle if a loan is delinquent or in default. But the CFPB’s examiners found that one or more companies were repossessing vehicles after the repossession was supposed to be cancelled. Some lenders wrongfully listed the account as delinquent. In other instances, customer service representatives did not cancel the repossession order when feasible after borrowers made sufficient payments. Also, some repossession agents did not check the documentation beforehand to see if the repossession had been cancelled.
  • Debt collectors improperly communicated about debt: Generally, debt collectors must get consent of the person owing the debt before discussing it with other parties. The Bureau’s examiners found that one or more third-party collectors did not confirm they had contacted the right person before starting collections, or wrongly attempted to collect from consumers who were not responsible for the debt. Also, one or more payday lenders, in collecting a debt, repeatedly called third parties, including personal and work references listed on the borrowers’ loan application. In some instances, even after being told to stop, these collectors called borrowers at work or asked third parties to relay messages to them. Such calls can lead to negative job consequences for the borrower, and risk improperly disclosing the default or delinquency to third parties.
  • Mortgage companies failed to follow Know Before You Owe mortgage disclosure rules: CFPB examiners found that one or more companies overcharged closing fees to consumers and one or more companies wrongly charged application fees before consumers had agreed to the mortgage transaction. Examiners did find that in general, both banks and nonbanks were able to effectively implement and comply with the Know Before You Owe mortgage disclosure rule changes.
  • Mortgage servicers failed to follow the Bureau’s servicing rules: Servicers are responsible for reviewing borrowers’ initial loss mitigation applications to determine what documents are missing. They must then tell borrowers what documents are missing, so that consumers can get a full evaluation of options they have available. One or more mortgage servicers offered a forbearance option to consumers to help them prevent foreclosure, but did not let the borrower know of their right to complete an application to be considered for other options. In addition, they did not exercise reasonable diligence in collecting information needed to complete the borrower’s application. Additionally, one or more servicers, through a vendor, also provided borrowers mortgage statements that failed to specifically list fees charged.

Today’s report shares information that companies can use to comply with federal consumer financial law. When CFPB examiners find problems, they alert the company and outline necessary remedies. These steps may include paying refunds or restitution, or taking actions to stop illegal practices and assure future compliance such as implementing new policies, or improving training or monitoring. When appropriate, the CFPB opens investigations for potential enforcement actions.”

For more information, see: today’s edition of Supervisory Highlights is available at: http://files.consumerfinance.gov/f/documents/201709_cfpb_Supervisory-Highlights_Issue-16.pdf

CFPB warnings regarding college-sponsored accounts

Notably, some of the nation’s largest colleges and universities continue to maintain deals with large banks that allow for the marketing of products that may not be in the best financial interests of their students and that contain costly features.  Key findings from the Bureau’s report and analysis of college marketing deals for prepaid and debit accounts include:

  • Dozens of bank deals with colleges fail to limit costly fees:  The Bureau found that dozens of deals with banks for school-sponsored accounts, including deals at some of the nation’s largest colleges and universities, do not place limits on account fees, such as overdraft fees, out-of-network ATM fees, or other common charges. These costly fees remain a concern at dozens of campuses, even as safer and more affordable alternatives are widely available at many other schools across the county.
  • Some students may pay hundreds of dollars per year in overdraft fees: College students may pay hundreds per year in overdraft fees when using student banking products. This is particularly concerning given that a growing body of evidence suggests that small financial shocks—such as a few hundred dollars— can cause significant financial hardship for students and even deter college completion. Further, the Bureau’s analysis found that fees associated with school-sponsored accounts can collectively cost a college student body hundreds of thousands of dollars per year.
  • Deals provide financial benefits for banks and schools but offer few, if any, financial benefits for students: The Bureau found marketing agreements between colleges and banks often contain extensive details about how the school and the bank can profit. Contracts frequently include details on revenue sharing and other payments made in exchange for exclusive marketing access to colleges’ student population. At the same time, many of these agreements do not require banks to offer safe and affordable accounts—and may drive students to high-cost products.
  • Some schools fail to disclose key details of marketing deals with banks: Most colleges were required by the Department of Education to publicly disclose marketing contracts by Sept. 1, 2016. However, the CFPB found that some agreements publicly announced by banks or colleges were not included in the Department of Education’s public database of agreements, suggesting that some schools did not submit their agreements to the Department before the agency’s disclosure website launched.

This is a good time to remind readers that the CFPB published a Safe Student Account Toolkit to help colleges evaluate whether to co-sponsor a prepaid or checking account with a financial institution. The Safe Student Account Toolkit is available at: http://files.consumerfinance.gov/f/201512_cfpb_safe-student-account-toolkit.pdf 

Understanding Credit Cards

Credit cards work on the basis of borrowing money. When a consumer is issued a credit card the credit card company attaches a certain amount of credit to the card. When a consumer uses the credit card to make a purchase the consumer is borrowing money from the card issuer in order to pay for their purchase. Then, at a later date the consumer must pay back the card issuer. If the consumer pays back the card issuer past the statement due date the consumer will typically be required to pay back the money borrowed plus a specified amount of interest.

Credit cards will always require a credit card agreement which describes the features of the card as well as the relationship between the credit card company and the consumer. These agreements are usually dense and complex and anyone interested in understanding these agreements better should check the CFPB credit card agreement webpage. As stated above credit cards work by borrowing money from the card issuer and then paying the card issuer back for all of the authorized charges plus any interest or fees. Once again the CFPB provides excellent resources for the consumer posting a survey of credit card features. This is particularly helpful for consumers who need to find credit cards with features to meet their needs and available in their state.

If a credit card consumer consistently pays their credit card bills on time then the credit card consumer begins to build their credit score, a number used to predict how likely you are to pay back a loan on time, higher. (Anyone interested in finding out more about credit scores should check out CFPB’s “How do I get and keep a good credit score?”). If a credit card consumer is unable to pay their credit card company back the consumer may get hit with extra fees and increased interest rates increasing the consumer’s credit card debt. Unfortunately, once a consumer starts falling behind on payments it becomes more difficult to pay the increasing debt.

One of the main dangers of a credit card are that the consumer can lose track of their spending and spend more than they are able to pay. It is important that a consumer keep track and budget their use of a credit card. Not only will this help a consumer build their credit score and keep their debt low but also notice and report unauthorized charges on the card.

How to Dispute an Online Order That Was Never Delivered

According to the latest reports from the U.S. Dept. of Commerce, roughly $3.4 Billion of retail sales occurred online just last year alone. Consumers are becoming increasingly more comfortable with making their purchases online. Fortunately, the vast majority of these sales occur without any problems, but what happens when those shoes you purchased online do not show up? What are your rights when the seller delays delivery? Even worse, what happens when you get the credit card bill in the mail a few weeks later with the charge for the shoes still on it?

Two federal laws- the Mail, Internet or Telephone Order Merchandise Rule and the Fair Credit Billing Act offer protections and procedures, so you don’t have to pay for merchandise that you ordered, but never received.

Your Rights When Shopping Online, Phone, or by Mail

The Mail, Internet, or Telephone Order Merchandise Rule is a federal regulation that is administered by the Federal Trade Commission and applies to most goods you order by mail, phone, fax, or online. Essentially, this rule requires sellers to have a reasonable basis for claiming they can ship an order within a certain time. The rule also tells sellers what to do whenever there is a delay in an expected shipment.

By law, a seller should ship your order within the timeframe stated in its ads or over the phone. In cases where a delivery date is not promised, then the default rule is that you can expect the seller to ship the goods within 30 days of your order. The timer begins as soon as the seller receives a completed order with your Name, Address, and Payment.

If the seller is unable to ship your product within the promised time, the rule requires that they must notify you, provide you with a revised shipping date, and give you an option for either a full refund or to accept the new delivery date. If you do not respond, and the delay is 30 days or less, then it is assumed that you accept the delay and are willing to wait for the merchandise, If, however, you do not respond, and the delay is more than 30 days, the seller must cancel the order by the 30th day and issue you a full refund promptly.

Hopefully, the seller has delivered your order within the revised delivery schedule. But, if there is yet another delay, then the Rule requires the seller to contact you again and give you a revised delivery date, or the option cancel the order for a full refund. If you do not respond to the second notice, the seller should assume that you are not willing to wait, cancel your order, and issue a full refund.

How to Dispute Your Charges for Non-Delivery:

Below is a quick summary of steps to take to get either your money back or the charge removed from your credit card bill:

Step One: Contact the seller

Reach out to the seller and try to resolve the problem with them directly first. Larger websites such as Amazon have great consumer dispute resolution processes to either get a new product reshipped quickly, or a refund issued. In general, most businesses want to keep the consumer happy so you’ll keep coming back with them. Hopefully, this should be the only step you need to take, but if you get pushback from the business, you still have options!

Step Two: File a Dispute with your Credit Card Company (Unless you paid via Paypal, then jump down to the PayPal Dispute section below)

The Fair Credit Billing Act allows you to file a dispute with your credit card company for undelivered merchandise, so long as you inform the credit card company within 60 days of the first bill that has the disputed charge on it. To take advantage of this right:

  • Write to the credit card issuer at the address given for “billing inquiries,” not the address where you send your payments. Make sure to include your name, address, account number, and a description of the billing error- in this case nondelivery of your goods.
  • Include copies of sales slips or any other documents that support your position.
  • It’s recommended to send this letter via certified mail, so you have proof of what the credit card issuer received.

After you have filed your complaint, the credit card company must acknowledge your complaint, in writing, within 30 days after receiving it. The credit card company then must resolve the dispute within two billing cycles after getting your letter. During this time that the company investigates your dispute, you may withhold your payment on the disputed amount. Keep in mind this is only for the disputed amount, so make sure you continue to pay for all other charges on that card. Also, during this time, the credit card company may not take any legal or other action to collect on the disputed amount and related charges (including finance charges).

Paypal Dispute:

If you paid for your online order with your credit card and used Paypal as the payment processor, it’s recommended that you file your complaint with Paypal due to their expanded line of protection. The Paypal Purchase Protection policy gives you 180 days to file a complaint, and will provide you with a full refund of your purchase price and shipping costs if:

1) You were charged for something you didn’t purchase, or

2) Your order never arrived, or

3) Your order arrives, but it is significantly different than how it was described. 

There are a variety of scenarios that meet this condition, for instance:

  • You received a completely different item.
    Example: You purchased a book, but received a DVD.
  • The item is missing parts or features, and this was not disclosed.
    Example: The listing said batteries included, but they weren’t.
  • You purchased a specific quantity of an item but received the wrong amount.
    Example: You purchased five pairs of fuzzy dice and only received four.
  • The item was damaged en route to its destination.
    Example: You bought a beautiful antique lamp, and it arrived in pieces.
  • You received a counterfeit version of the item.
    Example: You purchased a Rolex, but received a Faux-Lex.

Summary:

Hopefully utilizing the above steps should quickly put the law on your side and help get you a refund for your order, or the charge removed from your credit card statement! When shopping online, always try to stick with using larger retail stores since many of them have policies in place to quickly resolve these sorts of issues. It also helps to use a payment processor such as Paypal whenever you get the chance so that you can take advantage of the Purchase Protection policy.