The Consumer Financial Protection Bureau (CFPB) released the results of its monthly consumer complaints snapshot yesterday (Aug. 25), offering a breakdown of the thousands upon thousands of complaints the bureau has heard. Debt collection reigned supreme for the 23rd consecutive month, with the 8,224 complaints in that sector representing 31 percent of all complaints submitted in July 2015.
Credit reporting (6,696 complaints) and mortgage complaints (4,498 complaints) trailed behind debt collection grievances to represent the Top 3 sectors of consumer dismay. Credit reporting complaints spiked by 56 percent between June and July of this year. Compared to a year prior, the number of credit reporting complaints recorded between May 2015 and July 2015 increased by 45 percent.
According to the report, many of the issues consumers reported experiencing with credit reporting came in the form of problems with incorrect information on the reports themselves. This month’s report also included information about trends in the complaints coming from the Los Angeles, California metro area.
“Whether a consumer is trying to get a mortgage, apply for a student loan, or buy a car, credit reports are fundamentally important in allowing people to access their financial goals,” CFPB Director Richard Cordray said in a press release highlighting the snapshot results. “As we see a rise in the number of consumers complaining about this issue, the Bureau will continue to work to ensure that credit reports are fair, accurate, and readily available to all consumers."
The CFPB confirmed it has handled over 677,000 complaints across all products as of Aug. 1. Launched in 2012, the CFPB’s Consumer Complaint Database provides a platform to air grievances about consumer financial products and services and is the nation’s largest public collection of consumer financial complaints.
With a consumer’s permission, a complaint can also be shared publicly.
Since it began handling credit reporting complaints in October 2012, the bureau confirmed it has handled approximately 105,000 complaints on the topic.
More than three-fourths of these types of complaints (77 percent) were related to inaccurate information on credit reports negatively impacting credit scores, such as paid debts or debts not yet due showing as outstanding or overdue.
Consumers also complained of rigorous identity authentication questions when attempting to access their credit reports online, which made accessing reports more difficult. When unable to access this information online, consumers were instead forced to send copies of sensitive information through the mail. The report results showed consumers criticized this process for not only being potentially unsecure, but also time-consuming.
CFPB’s report also broke down the Top 10 most complained about companies, with the section’s data being based on complaints filed between March-May 2015, as to reflect the 60 days companies have to respond to complaints. A whopping 97 percent of consumers’ complaints involved three of the nations ‘big three’ credit reporting agencies: Equifax (991 complaints), Experian (926 complaints) and TransUnion (732 complaints).
Earlier this year, the three biggest companies that collect and disseminate credit information on American consumers vowed to improve their ways, specifically when it came to addressing errors on user reports.
But based on the recent consumer complaints, it seems the changes have not come soon enough.
In May, Equifax, Experian and TransUnion agreed to a settlement with 31 state attorneys general to pay $6 million and change certain practices related to disputes and data collection over the next three years. Several of the business practice changes echo terms of the assistance plan, which was rolled out in March by the agencies.
The mandated settlement terms included limits to the info that can be added to a report, such as fines, or debt tied to medical treatments. The agencies must also improve consumer education and resolve disputes more quickly, especially in cases involving identity theft.
The CFPB additionally tracked a total of 858 complaints about Bank of America, which landed the company in third place for complaint volume, though grievances were divvied up between various product categories. Mortgage products were responsible for the bulk of the company’s complaints.
The mortgage sector as a whole saw the greatest month-over-month decrease, with a 4 percent drop in complaints.
CFPB May Sue Student Loan Giant Navient
In other news surrounding the CFPB, the regulatory agency is mulling over whether or not it may take action against Navient, the largest student loan enterprise, on the grounds that the company has cheated borrowers.
As reported Tuesday (Aug. 25) by The Huffington Post, moving ahead with a suit would be an outgrowth of a two-year investigation, which in turn culminated in a letter from CFPB to Navient stating that there is enough evidence on hand to allege violations of consumer protection laws. The letter itself was publicly disclosed by Navient in an Aug. 24 filing with the Securities and Exchange Commission. The ball to go to court is now in CFPB’s court, and its senior officials are still in the process of deciding whether to take legal action.
The legal rumblings against the student loan industry are nothing new, as the CFPB had sent similar missives to Corinithian Colleges, among others.
Nor is the CFPB the only agency with Navient (perhaps) in its sights, as the Justice Department accused the company last year of cheating military personnel on their student loans over a period covering roughly the preceding 10 years.
Among the key complaints against Navient: unfair collection tactics against distressed debtors. Though a suit has yet to become reality, Navient said in its aforementioned SEC filing that any such legal action, thus far with no dollar figures attached, may in fact harm the lender financially.
In settlements reached last year, Navient and its predecessor company Sallie Mae, ponied up nearly $37 million in fines and damages after the Financial Deposit Insurance Corp. pushed ahead with allegations that Navient boosted its late fee income while at the same time “misleading” borrowers on how indeed they could skirt late fees (there’s been a largely completed additional $42 million payout by the company tied solely to the late fee practices).