CFPB Issues Semiannual Report, State-Level Snapshot of Complaints
By Charles E. Washburn Jr., Partner, Financial Services Group | Richard Gottlieb, Partner, Financial Services Group
Two new Consumer Financial Protection Bureau (CFPB) reports provide important insights into the CFPB’s and state regulators’ latest activities and enforcement targets.
What happened
The CFPB’s 11th semiannual report to the president and Congress reveals that supervisory actions—covering Oct. 1, 2016, through March 31, 2017—resulted in providers of covered consumer financial products paying more than $6.2 million in redress to more than 16,549 consumers. During the same time frame, the CFPB announced orders through enforcement actions that totaled approximately $200 million in relief for consumers plus $43 million in civil money penalties.
The CFPB ties these actions to alleged violations of various consumer protection laws as well as the Dodd-Frank Wall Street Reform and Consumer Protection Act’s prohibition on unfair, deceptive, or abusive acts or practices, ranging in targets from a prepaid card service that suffered a breakdown to reverse mortgage companies that allegedly used deceptive advertising to credit reporting agencies that in the CFPB’s view deceived consumers about the usefulness and cost of credit scores sold to consumers.
On the regulatory front, the CFPB notes that it issued final rules on Regulation E (addressing prepaid accounts under the Electronic Fund Transfer Act and electronic fund transfers) as well as Fair Credit Reporting Act disclosures.
What the CFPB characterizes as “listening to consumers” (that is, the CFPB complaint portal) remains a top priority for the CFPB, which had received 748,400 complaints from consumers as of March 31, 2017, with about 146,400 narratives. The monthly consumer complaint reports over the last six months have focused on prepaid cards, debt collection, mortgage, credit reporting and credit cards, the 178-page report stated. Although the industry has asserted that many complaints do not involve actual violations, the complaints received through the portal continue to be the focus of the CFPB’s regulatory efforts.
The CFPB report also noted then-pending efforts with regard to rules for payday loans, auto title loans, installment loans, arbitration agreements and overdraft programs. (Since the period covered by the report, the CFPB has of course taken action on arbitration clauses.)
For the June edition of its monthly complaint report, the CFPB elected to provide a state-level snapshot of consumer complaints. For each state and Washington, D.C., the agency detailed total complaints received, changes in the volume of complaints submitted, the products and services generating the most complaints, and company response rates, further highlighting complaints from servicemembers and older Americans.
Take California, for example. Since 2011, the CFPB claims to have processed 159,158 complaints from the state (7,974 from servicemembers and 14,933 from older consumers), with an increase of 7 percent from 2015 to 2016 in the number of complaints. While the products and services complained about in the state track the national trends, Californians have increased their gripes about student loans, credit reporting and prepaid services over the last quarter (up 150 percent, 32 percent and 27 percent, respectively), while complaints about bank accounts or services and payday loans have dropped 16 percent and 14 percent, respectively.
On a nationwide basis, the CFPB has received more than 1,218,600 complaints as of June 1, 2017 with a rise in overall complaint volume of 7 percent between 2015 and 2016 (from 271,600 to 291,400). Debt collection and mortgage complaints account for half of the total complaints submitted—with 316,810 and 272,153 complaints, respectively—followed by credit reporting, credit cards, and bank accounts or services.
On the good news side, covered companies provided a timely response to fully 97 percent of the complaints, said the CFPB, responding to consumers within 15 or fewer days of their complaint. While good news, this response rate has remained consistent since the CFPB began accepting complaints in July 2011. Roughly half (52 percent) of the consumers who submit complaints elect to provide a narrative, an option the CFPB began offering in July 2015.
To read the semiannual report, click here.
To read the monthly complaint report, click here.
Why it matters
Both reports provide insight into the CFPB’s activities and where the CFPB focuses its efforts. In a statement, CFPB Director Richard Cordray noted that consumer complaints drive its work, “help[ing] us prioritize our work to protect others against similar problems,” he explained.