Gov't: Consumers Still Confused By Credit Cards

Wednesday, the Consumer Financial Protection Bureau issued a report on its first three months of collecting credit card complaint data while also asking the public for feedback on a proposed policy for releasing consumer complaint data in the future.

What it found is that consumers are still confused by credit cards, particularly the terms of the card agreements that they enter in to. While the language and layout of credit card statements has been cleaned up some by the government, credit card companies still push the boundaries on fairness with their wording and the arrangement of their deals.

This is where the CFPB comes in to play. Consumers who feel wronged by a credit card company can contact the agency for assistance.

“When consumers contact us, we get a snapshot of how the consumer finance markets are working,” said Raj Date, Special Advisor to the Secretary of the Treasury on the CFPB. “And we are learning that there is a lot of consumer confusion about credit card terms. We will continue to work with consumers, credit card companies, government agencies, and others to improve consumer education and ensure CFPB's regulation, supervision, and enforcement efforts are effective.”

The CFPB's Consumer Response office began with an exclusive focus on credit card inquiries and complaints when it launched on July 21, 2011. Inquiries and complaints come into the Bureau in a variety of ways including by mail, fax, telephone, the Bureau website, the online chat function on the website, and referral from other agencies. The CFPB's U.S.-based call centers handle calls with little or no wait times, provide services for the hearing- and speech-impaired, and have the ability to assist the public in 191 languages.

Though the Consumer Response inquiry and complaint system is still in its early stages, it has received more than 5,000 credit card complaints. Of these complaints, companies reported resolving more than 3,100, with consumers disputing the adequacy of the responses in only 400 cases, or less than 13 percent of the time. The report provides a complete breakdown of complaints by type, as well as by their progress through the complaint handling system. Credit card consumers also contacted the CFPB for reasons other than to submit complaints – more than half of the calls received were general inquires or feedback on credit card issues.

The report makes three observations about the first three months of credit card complaints:

• Consumer Confusion: Many complaints show consumers struggling to understand the terms of credit cards and associated products like debt protection services. These complaints show a mismatch between consumer expectations and the way the product functions.
• Third-Party Fraud: The complaints show some alleged fraudulent credit card charges made by third parties. The CFPB has helped to obtain redress for defrauded consumers in these instances. In some cases, the Bureau has consulted with the appropriate criminal authorities.
• Factual Disputes: There are a large volume of complaints presenting factual disputes between consumer and issuer. The Bureau has generally found that issuers have been willing to resolve these complaints.

Not sticking with just credit cards

The CFPB is using the information learned in the first few months of credit card complaints to help identify problems in the market. After careful analysis, the Bureau will determine how best to address these issues through a variety of means ranging from consumer education and engagement to new regulatory policies. This is not the last step for the consumer agency.

On or about Dec. 1, the Bureau will begin taking complaints and inquiries related to home mortgages. Their experience with the credit card complaints will help steer the agency toward more successful solutions to the problems that emerge when investigating that field.

In conjunction with the report, the CFPB is asking the public to comment on its proposed policy for disclosing certain credit card complaint data. The CFPB is required by statute to provide Congress with semi-annual reports about the complaints that it has handled. The proposed policy would make available to the public a searchable database containing various data fields for each complaint. Individuals and organizations, such as regulated entities and consumer advocacy groups, would be able to analyze this data for patterns and trends.

The CFPB is studying the extent to which it can efficiently and effectively filter confidential personal information from the complaint data. As stated in the proposed policy, the CFPB will exclude from the database any data fields that may contain confidential personal information.

The CFPB is inviting comment on the proposed policy through January 30, 2012.