Becky Yerak, Chicago Tribune –
Mira Tanna wanted to lower the interest rate on her credit card, but the customer service representatives weren’t budging.
So the consumer advocate for a Florida legal services agency turned to the Consumer Financial Protection Bureau. On June 19, the U.S. agency had gone live with a publicly searchable credit card complaint database.
“I thought, ‘Why not try submitting a complaint and see what happens?'” said Tanna, whose higher interest rate was triggered after she was late on a credit card payment.
The outcome: Commerce Bank acknowledged that it erred in raising Tanna’s credit card interest rate without telling her. It refunded $1,044 in interest to the Orlando resident and lowered the interest rate on her Visa card from nearly 20 percent to less than 8 percent — lower than she requested.
The resolution illustrates how the complaint database is paying dividends for the nation’s consumers, said Tanna, who filed her complaint three days after the site went live.
“For the first time, I felt the strength of this new watchdog,” she said.
Disputes over billing and unhappiness over interest rates are the most common grievances, according to a Tribune analysis of the database.
They accounted for nearly a third of the more than 13,000 beefs about credit card companies on the bureau’s new site.
Through the site, consumers may let the world know about problems they’re having with their credit card companies. Others may poke around on the database to get the skinny on which card companies are being criticized, for what, and how quickly they’re resolving the problems, including whether monetary relief was given. The database includes consumers’ ZIP codes, but it doesn’t share any names or addresses, and no narrative is provided from consumers or credit providers. Commerce Bank has been the subject of only eight complaints.
Conflicts over the site have arisen between the financial services industry, which says the public database can unfairly besmirch reputations, and consumer advocates, who say it’s a useful tool. But even those sympathetic to the protection bureau said improvements should be made to the searchable database to make it more useful to the public.
Consumer Action, which seeks to promote financial literacy, called the initial database a “bold and smart step.”
“That said, the database needs tweaking to make it a more effective” tool for consumers who are considering credit card providers, said Ruth Susswein, deputy director for the nonprofit. “We’ve recommended to the bureau that the information should include actual complaints so people can judge for themselves whether the complaint is reasonable or whether that person is out to lunch.”
She also said credit card companies’ responses should be made available.
“Right now the information is far too general to be of much help,” Susswein said.
Consumer advocates say that the site, which consists of dryly presented data and text, could be livened up by adding narratives for each complaint, a la Yelp or Amazon.
Still, the database has been attacked by some Republicans and by the financial services industry, including the Consumer Bankers Association. They worry that a public database can unfairly sully reputations. Several have argued, unsuccessfully, that resolved complaints that show no fault by the company, for example, should be excluded from the database.
At a U.S. House financial services committee hearing in September, Rep. Spencer Bachus, R-Ala., told protection bureau Director Richard Cordray that he was concerned about the database’s release of “raw, unverified complaint data to the public.”
His comments have been echoed by the American Bankers Association, which said complaints represent only a fraction of the 383 million credit card accounts nationwide. The bureau itself acknowledged in a Federal Register posting that complaints can be inaccurate.
“It’s conceivable that consumer complaints could contain false or misleading allegations against a particular credit card issuer and that publication of the names of credit card issuers could expose them to unwarranted public criticism and perhaps even a loss of customers. However, such harms can be mitigated through the use of disclaimers warning consumers that the public database contains data reflecting unverified complaints.”
Opponents of the site say human error could also become a factor. Complaints may be filed via the Web, as well as through toll-free phone and fax lines, and by mail. In a recently released report by the Federal Reserve’s Office of Inspector General into how the bureau has handled complaints about credit cards and other financial products, the regulator said the bureau staff had wrongly entered certain contact information for consumers, such as state or ZIP code, in 18 of 85 samples studied from July 2011 to January.
The bureau said “significant progress” has been made to improve the accuracy of data entry.
Advocates such as Consumers Union, however, say the website helps consumers shopping for credit providers. Since its launch, the credit card complaint database has received about 105,000 unique page views.
New regulations on the credit card industry coincide with greater consumer happiness with credit card companies. In August, J.D. Power found consumers’ satisfaction with their credit cards rose for the third straight year. Discover ranked second in overall satisfaction, after American Express.
Here’s how the complaint-handling process works:
After some initial screening, including determining whether it’s a duplicate of a prior complaint, the bureau sends it to the appropriate company. One financial trade group commented that outside parties might artificially inflate complaint counts in the database for future use as fodder in fraud cases for plaintiffs’ lawyers, but the bureau points out that many consumers are required, among other things, to provide verifiable account numbers.
The company then reviews the information and determines what action to take. It reports back to the consumer and the bureau via a secure portal.
The bureau then invites the consumer to review the response. The bureau may review and investigate complaints in which the consumer disputes the response or where companies fail to provide a timely response.
Companies are expected to respond within 15 calendar days, the latest point at which the complaint will be posted online. If a complaint can’t be closed within that time frame, then a company may indicate that its work on the complaint is “in progress” and provide a final response within 60 calendar days.
In January, when the bureau was seeking public feedback about its complaint database at ConsumerFinance.gov, Bill Jirles wrote a letter of support for the idea.
He later also submitted a complaint about a problem that he had with his Bank of America credit card. The Durham, N.C., resident said he was erroneously charged late fees and interest. He was bothered by the fact that it took a couple of months to sort out the problem, so he wrote a letter to the bureau.
“I was a little disappointed,” he said of the database, which seemed to act mainly as an intermediary between him and Bank of America.
“No one ever contacted me to say, ‘This is fishy,'” said the programming analyst, 42. “I had hoped that it would be a little more than it was.”
He said he later learned that, for the bureau to investigate a matter, the customer has to dispute the company’s response. He said the bureau doesn’t make that clear.
He said Bank of America credited his account after a couple of months.
Lisa Donner, executive director of Americans for Financial Reform, said the database is an improvement for consumers who earlier might have found their complaints going into a “bottomless well.”
“In many cases, this not only produces responses to the consumers, but also gets them some money back,” said Donner, whose group is a coalition of more than 250 national, state and local consumer, labor, investor, civil rights, community, small business and senior citizen groups. “We urge the CFPB to take the next step to make the narratives public as well, as that would make the database even more useful.”