What We Know

CFPB Monthly Report Turns its Attention to Credit Card Products

November 15, 2015 | by Caren D. Enloe

The CFPB issued its Monthly Report that provides a high-level snapshot of trends in consumer complaints and summarizes the volume of complaints by product category, company, and state.  Additionally, the report highlights a different product type and geographic area each month. This month’s report highlights credit card products and provides some forecasting of where regulators are likely to focus in upcoming examinations.

Each month, the Report breaks down complaint volume by product, looking at a three-month average and comparing the same to the prior year. As has been the case in previous months, the Report continues to indicate the three products yielding the highest volume of complaints are debt collection, mortgage, and credit reporting. If there are any good takeaways, the Report does show that debt collection and credit reporting both saw a significant decrease in the number of complaints in September 2015. Debt collection showed a 10% decrease and credit reporting showed a 15% decrease. Interestingly, the products showing the largest increase in claims when comparing 2014 to 2015 were debt settlement, credit repair, and check cashing. Taking this into account, we are likely to see enforcement actions continue to increase across the debt settlement and credit repair industries.

This month’s focus on credit card products reveals that according to the CFPB Reports, credit card products are one of the most complained about financial service products, fourth only to debt collection, credit reporting, and mortgage. Credit card providers and servicers should pay close attention to this month’s report as it highlights what are likely to be points of emphasis with regulators in upcoming examinations – particularly with regard to the application of payments and billing disputes.

  • The most common complaint involves billing disputes. According to the report, consumers are confused as to how and when late fees can be assessed. Other consumers indicated confusion as to how to properly and timely make a billing error dispute. 16% of all credit card complaints are categorized by the CFPB as involving billing disputes.
  • Another issue highlighted by the CFPB is the concern with credit card accounts being closed without notice due to concerns by the credit card companies as to fraud and identity theft.
  • Consumers also complained about their inability to allocate payments as they desire and expressed confusion where portions of accounts were subject to differing interest rates, promotions, and expiration dates.

Overall, the Report did not contain any surprises. So what can the credit card industry expect to see from regulators in 2016? Based on the current complaint trends, the credit card industry can expect to see a continued focus on their application of credit card payments, as well as the accuracy of their disclosures for 0% balance transfers and other promotions.

Caren Enloe leads Smith Debnam’ s consumer financial services litigation and compliance group. In her practice, she defends consumer financial service providers and members of the collection industry in state and federal court, as well as in regulatory matters involving a variety of consumer protection laws.  Caren also advises fintech companies, law firms, and collection agencies regarding an array of consumer finance issues. An active writer and speaker, Caren currently serves as chair of the Debt Collection Practices and Bankruptcy subcommittee for the American Bar Association’s Consumer Financial Services Committee. She is also a member of the Defense Bar for the National Creditors Bar Association, the North Carolina State Chair for ACA International’s Member Attorney Program and a member of the Bank Counsel Committee of the North Carolina Bankers Association. Most recently, she was elected to the Governing Committee for the Conference on Consumer Finance Law. In 2018, Caren was named one of the “20 Most Powerful Women in Collections” by Collection Advisor, a national trade publication. Caren oversees a blog titled: Consumer Financial Services Litigation and Compliance dedicated to consumer financial services and has been published in a number of publications including the Journal of Taxation and Regulation of Financial Institutions, California State Bar Business Law News, Banking and Financial Services Policy Report and Carolina Banker....LEARN MORE

Shape919.250.2000 Shapemail@smithdebnamlaw.com noun_20940@smithdebnamlaw