Consumers with complaints flock to CFPB

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WASHINGTON – When Katherine Moody noticed in April that the terms of her student loan had changed, she typed a brief note and filed it through the Consumer Financial Protection Bureau’s online complaint portal.

A day later, a representative from Navient Solutions Inc. called and reinstated the previous terms, removing surprise terms that would have added about $ 7,000 to the overall payments, Ms. Moody said.

“When it comes to dealing with bureaucracy, I have low expectations,” said the 35-year-old librarian at a university in Wisconsin. “But it worked.” A spokeswoman for Navient said a letter explaining the change was not received by Ms Moody before the change occurred.

The CFPB complaints portal has become a favorite place for consumers unhappy with their financial companies. This has strengthened the agency’s consumer advocacy role, while generating controversy with businesses and some lawmakers.

The office began accepting consumer complaints when it opened five years ago this month. Since then, he has handled more than 930,000 consumer complaints on a range of financial services ranging from mortgages and bank accounts to payday loans and virtual currency.

Consumers can choose to go public with their textual complaints, which the CFPB calls stories, without their personal information. All complaints from the public, whether they include stories or not, name the business and the response and note whether it was made in a timely manner.

Some industry officials and Republican lawmakers say the database is full of inaccurate information and does not protect consumer privacy. The effort, some argue, illustrates government overbreadth, increases business spending, and undermines businesses’ own procedures for handling customer complaints.

The discontent escalated last year when the CFPB began publishing accounts of the complaints, a move opponents say Congress did not authorize.

A bill tabled in June would oblige the CFPB to verify all allegations made in the complaints. “Public disclosure of unverified consumer complaint stories raises important consumer privacy issues and risks damaging the reputation of individual companies,” said Virginia O’Neill, senior vice president of the Center for Regulatory Compliance at the American Bankers Association.

CFPB Director Richard Cordray calls the database “part of our DNA”, playing an important role in agency oversight of businesses, enforcement action, rule-making and protection. of consumers. The agency said that while it does not verify the allegations made in the complaints, it does take steps to authenticate all complaints, including checking documentation and verifying the consumer’s business relationship with the company. The agency says the process gives businesses the time and space to respond.

The CFPB handles many more complaints than similar programs run by other federal agencies. It handled around 271,600 in 2015, up 8% from 2014. The Department of Transportation received 20,170 complaints from airline customers last year, and the complaints portal of the Airline Safety Commission. consumer products, SaferProducts.gov, also created in 2011 and often compared to the CFPB system, received 4,482 comments last year on products ranging from cribs to drywall.

The companies added staff to respond quickly to CFPB complaints and began to dig into the database to find out how their products and services stack up against their competitors, according to the companies and lawyers.

Stephen Ross, Fraud Investigation and Dispute Resolution Services Partner at Ernst & Young LLP, describes the database as a “very transparent set of data that is really the responsibility of financial institutions to investigate and respond.” . Ernst & Young is one of a number of companies that advise companies on how to respond to the portal and use its data.

Once the complaint is filed, the CFPB forwards it to the company, which has 15 days to respond to the CFPB. Complaints can be shared with other government agencies. Businesses can resolve cases by providing monetary or non-monetary relief or explanations to the customer. They can also report inaccurate complaints. The CFPB says companies respond to 97% of complaints.

CFPB officials say the agency uses the database to facilitate its inspection, enforcement and rule-making activities.

Navient, based in Wilmington, Del. and derived from SLM Corp.

, also known as Sallie Mae, in 2014, said in her response to Ms Moody, reviewed by the Wall Street Journal, that the change in her loan terms was prompted by a review of the company to fix all clients to the “maximum term permitted by federal regulations. Extending the loan term decreases the client’s monthly payment but increases the total interest paid over the term of the loan.

Earlier, citing some 1,300 complaints sent to the CFPB, the Justice Department in 2014 ordered Navient and Sallie Mae to repay a total of $ 60 million to nearly 78,000 military personnel for allegedly overcharging student loans. In settling the charges, the companies neither admitted nor denied the allegations.

The company reviews customer feedback in the database “to leverage their feedback to improve and improve our service … and to make recommendations to policy makers on legislative and regulatory changes,” said Navient’s spokesperson, Patricia Christel.

Write to Yuka Hayashi at [email protected]

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