Credit Card Complaints Keep Coming, Says CFPB Report

Consumer Agency Report Details Credit Card Complaints

, The Huffington Post

Even though last year's financial reform was supposed to make credit cards more transparent, consumers are still complaining about interest rates, billing disputes and confusing credit card terms.

A sizable minority of the more than 5,000 complaints about credit cards submitted to the Consumer Financial Protection Bureau between mid-July and mid-October involved issues that were supposedly addressed by the CARD Act, signed into law in February 2010. The law required greater clarity in the language of credit card agreements and gave consumers a longer grace period to pay balances before incurring late fees, among other provisions.

"The CARD Act, which was billed as being the savior for credit card users, was supposed to really do away with any confusion about the interest rate," said John Ulzheimer, president of consumer education at SmartCredit.com. "A pretty significant percentage of complaints had to do with stuff that the CARD Act was supposed to eliminate."

Before the financial crisis, Americans had become more reliant on credit card debt as credit card issuers pushed to sign them up. U.S. households' total revolving debt increased nearly fivefold in the 20 years leading up to 2008. But consumers appear to be pulling back now, as credit card delinquencies hit a 16-year low last quarter, according to the Federal Reserve.

Credit cards are the first financial product about which the new Consumer Financial Protection Bureau is soliciting complaints, but the agency plans soon to take on another area of widespread consumer anger, according to its Nov. 30 report. The bureau's complaint system for mortgages, which could draw criticism from an already skeptical financial industry, will be ready by the end of 2011. By the end of 2012, the bureau aims to be ready to handle consumer complaints about a variety of financial products.

About 24 percent of the credit card complaints discussed in the report concerned APR/interest rates and billing disputes, issues addressed in the CARD Act, according to Ulzheimer. Still, credit card issuers partially or fully resolved 74 percent of consumer complaints, according to the report.

"It's obvious that consumers have complained about fees with credit cards for years. That's why we had some reform," said Lynnette Khalfani-Cox, contributing editor for CardRatings.com. "Even though we've had credit card reform, it's not a dead issue."

The report also highlighted confusion about credit card agreements, mirroring the findings of other studies. Just 35 percent of consumers said they fully understood their credit card terms, according to a J.D. Power and Associates survey released in August.

"When consumers contact us, we get a snapshot of how the consumer finance markets are working," said Raj Date, the Treasury official responsible for the Consumer Financial Protection Bureau, in a statement accompanying the bureau report. "And we are learning that there is a lot of consumer confusion about credit card terms."

The bureau may have focused on consumer confusion because many of the complaints fall into such categories as application processing delays, rewards, and sales of accounts, indicating that consumers are puzzled when their credit card company does something that is technically legal but that they believe is unfair, Khalfani-Cox said.

"They probably highlighted the fact that consumers don't understand because a lot of those complaints were about things that were perfectly legal [and] are actually fully disclosed," Khalfani-Cox said. "It's just in the fine print."

The Nov. 30 report was the first of its kind for the Consumer Financial Protection Bureau, which was created by the Dodd-Frank financial reform legislation and serves as a watchdog on companies that provide financial services to consumers. Once the bureau gathers enough complaint data, it hopes to identify consumer issues that the agency can then address.

One such issue may be identity theft, which accounted for slightly more than 10 percent of the complaints, the third-largest share. "The bureau's credit card complaint center really may be an early warning alert system for identity theft," Khalfani-Cox said. "If you can get regulators involved early, they may be able to better spot patterns."

Along with the report, the bureau announced that it is soliciting public feedback on its proposal to release a public database of complaints, which would withhold confidential personal information but might identify the companies complained about.

The Consumer Financial Protection Bureau has been the subject of much controversy since it was first proposed. Consumer advocates welcomed the bureau, while the financial industry has criticized it as a form of over-regulation.

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James Stein

The CFPB's report from last week revealed that three-quarters of the complaints filed with the bureau were resolved and a good number of them are still pending, which tells me that the process set up by the CFPB is working. Of course, we don't know whether and how many of these consumers had filed a complaint with their card issuers prior to reporting the issue to the CFPB. So we don't know how an issuer's response would differ if a complaint were received directly from the consumer, rather than through the CFPB. That would be a very interesting piece of statistics. http://blog.unibulmerchantservices.com/americans-biggest-credit-card-grievance-billing-disputes

December 05 2011 at 4:50 PM Report abuse rate up rate down Reply
Jesus Loves You

How is it that Credit card companies can charge a full months interst on $404.35 when $400.00 was paid in billing cycle.
Credit card company employees did not know the answer as to why, they jus do it. Is this legal? The credit card is for Walmart which is paid in full on a monthly basis. This is clearly a matter of principle, something Credit cards do not seem to have.

December 05 2011 at 1:42 PM Report abuse rate up rate down Reply
mb1958

Speaking of continuing credit card scams, I saw a disgusting scam yesterday by the evil Bank of America. In their pathetic ad they tell a story how during WWII they loaned money to a Jap - American couple, just before the couple was placed in a camp. We should all be ashamed of putting American citizens in prison for no reason other then hysteria! The pandering scum ******* bank wanting to alter their low image, not their behavior jumped on the fact that someone obviously made a big mistake and loaned the Jap couple some money, How low and grubbing can this bank get. I am waiting for our sleeping and corrupt Justice department to bring FRAUD charges against this terrible bank for the crimes they committed in the years 2006 to 2008. If you have money in this bank please take it out and put it in a credit union where you will be treated fairly and Bank America can not steal your money thru their phoney fees!

December 05 2011 at 10:59 AM Report abuse -1 rate up rate down Reply
sdfdssg87

Just throw C.C. out of the system and no more problems...this plastic don't exist long time ago and we don't have problems paying own bills and interest at all...debit...cash...and that's it...

December 03 2011 at 12:37 AM Report abuse +1 rate up rate down Reply
Morris Cantonitis

Wells Fargo:
Please add $200,000 into our savings account for practicing extortion and we’ll accept your forgiveness.
Our attorneys know that no one told u 2 investigate whatever it is u did. U took that action upon yourself.
The charges for those come out of your pocket and do not get added as debt in any margin trading account.
Your deadline is by Christmas.
If it goes to court, you will end up paying millions for practicing extortion on customers and maybe hundreds of millions.
Thank U
FMC

December 02 2011 at 9:38 AM Report abuse -2 rate up rate down Reply
kernall

The problem with credit cards is that they are charging way more interest than current conditions warrant. Five to six percent interest would be more appropriate in this time of low interest being charged for borrowing money by the banks. Anything more than 10 percent is getting close to usery. This is of course all in my opinion!

December 01 2011 at 11:47 PM Report abuse +4 rate up rate down Reply
3 replies to kernall's comment
craiger10

How does a bank who is getting free money from our tax dollars at the Federal Reserve get to turn around and loan that free tax money to the people who put it in the Federal Reserve and charge 20 times more than they borrowed it for? And then get million dollar bonuses for screwing the people who actually were the original lenders?

December 01 2011 at 9:42 PM Report abuse +3 rate up rate down Reply
2 replies to craiger10's comment
topmind

They get away with it because they contribute generously to funding political Honorables' campaigns. You know... Lobbies?

December 02 2011 at 12:54 PM Report abuse +1 rate up rate down Reply
topmind

They get away with it because they contribute generously to funding political Honorables' campaigns. You know... Lobbies?

December 02 2011 at 12:54 PM Report abuse +1 rate up rate down Reply
Bethy

I"m actually surprised there weren't more than 5,000 complaints. I also heard more credit card companies were supposed to roll out even more clarified terms this fall (around October). Has anyone else heard of this?

December 01 2011 at 8:55 PM Report abuse +1 rate up rate down Reply
1 reply to Bethy's comment
topmind

There are more than 5000 complaints. It is just that bureaucrats are slow at counting. What with earning an average of $150K/year, you don't have to push.

December 02 2011 at 12:56 PM Report abuse rate up rate down Reply
bill

Over regulation of crooks and thieves is a necessary step to prevent coruption. If you weren't corrupt we wouldn't be regulating you. My mother always said the person complaining about regulation is the one to keep your eyes on .

December 01 2011 at 8:41 PM Report abuse +2 rate up rate down Reply
1 reply to bill's comment
spiguyone

Amen your Mom is a smart person.

December 03 2011 at 10:26 AM Report abuse rate up rate down Reply
wgstoll

Whatever they did, the government involvement has been great. I went from a couple of credit card solicitations per day, to none. I've had one American Express card since 1973, my only credit card, and all those apps were terrible.

December 01 2011 at 6:05 PM Report abuse +1 rate up rate down Reply