The secret to getting out of that maze is the Consumer Financial Protection Bureau complaint system.
These twisty situations happen more than you can imagine. Most of us do our banking with enormous institutions that they have thousands of employees across multiple locations. Throughout my career, I've managed many such call centers all over the world. And, as much as you don't like calling the bank, it can be even more frustrating for the people on the receiving end. Those call center employees have to navigate countless computer systems (which often are not user-friendly). No surprise, the customers whom they talk to are often very angry by the time they reach them. And those front-line bank employees have very little autonomy to change whatever caused your problem.
A $2 Billion Deal
The consequences of getting lost in one of these bureaucratic mazes can be severe. Some of the worst stories out there are about people losing their home to foreclosure when they shouldn't have. Ocwen (OCN), the nation's largest non-bank mortgage servicer, has made so many errors that it was forced by the CFPB to provide $2 billion in principal reduction to borrowers.
Customer service incompetence can cost you in other ways, too. You could end up paying money that you don't owe (too much interest or late fees, for example). Or, you your credit score could be hurt, which would cost you thousands of dollars in the future.
For years, your few alternatives included requesting a manager or ranting in chat forums. But one of the true consumer wins to emerge from the 2008 financial crisis is the CFPB complaint team. You can submit a complaint online, and the CFPB will reach out to the financial institution on your behalf. Unfortunately not all complaints are created equally. The daughter of the CEO will always receive better service than a customer without a CEO relationship. But the good news is that you now can have a regulator weigh in on your side, and once that happens, your complaint will be treated differently.
An Industry Insider Has a Sad Personal Story
More than 400,000 people have used the CFPB's complaint service since it was launched. But rather than focusing on big picture, I want to share with you just one story: that of my friend Niral.
Niral used to work for Capital One Financial (COF) (yes, he is a banking veteran), and bought a townhouse in Virginia. When he moved, he kept the home as an investment and has been renting it. He recently refinanced his mortgage with TD Bank (TD), which offered very low interest rates for investor mortgages.
In February, Niral moved again. He called TD Bank and sent it a secure mail via its online system to change his address. (He established a paper trail because, as a former banker, he wanted to be sure he had an abundance of proof that he'd made the request.) For some reason, TD did not change the address.
Meanwhile, Niral's property insurance increased, and the notification was sent to his old address, along with the old statements. Because Niral continued to send the automatic payments at the old, lower payment amount, the bank only counted those payments as partial payments. Further notifications were sent by TD Bank -- to the old address.
Niral wondered why he had not received his statement, so he called the bank. A rep told him that he owed $180 in late fees and that he had been reported to the credit bureau for being late.
A Lot of Silence
Niral sent long, explanatory emails -- along with proof of his address change requests. No one replied.
So, Niral (on my urging) complained via CFPB. It took him less than 10 minutes online, and all he was asked for was his email address, property address, loan number and lender name.
And then the magic happened. Within two weeks, he received a letter (to the correct address -- miracle!) from TD Bank saying it was investigating.
And shortly thereafter he received a letter from TD Bank stating the fees would be reimbursed and his credit report amended.
What You Need to Know
Niral, who has spent his entire career in banking, was unable to navigate the complex maze of a bank's customer complaint system. But the CFPB made it right. And it can do it for you too. But just remember the following:
- Keep a paper trail of any communication with your bank when you complain. Niral, for example, always sent secure emails so that he had a record of his communication.
- Try the CFPB before you hire an expensive lawyer.
- Don't wait. If you are having difficulties with your bank, go to the CFPB sooner rather than later.
- Don't use the CFPB to game the system. The banks will still research the complaint. They do not just write checks to anyone who complains via the CFPB -- you need to have a real case.
- Rather than giving up, wasting time or hiring an expensive lawyer, people use the CFPB. There should be 4,000,000 complaints going through its office, not 400,000.
- The press and websites start to pay more attention to the most complained-about banks. League tables, like the ones produced by MagnifyMoney, should be used to praise those banks with excellent customer service track records. But, equally, it should be used to shame those who don't.
- Senior managers at banks and other financial institutions start worrying about complaint rankings, in the same way that airlines worry about on-time flight statistics.
Nick Clements is the co-founder of MagnifyMoney.com, a website that makes it easy to cut your costs without cutting your lifestyle. He spent nearly 15 years in consumer banking, and most recently he ran the largest credit card business in the U.K.