With the debut of a new government website, credit card users just got one more tool to help them pick their plastic.
The Consumer Financial Protection Bureau now offers consumers a way to see how many complaints credit card issuers have received, the nature of those complaints and how they were resolved.
Before the website launched in beta (testing) form June 19, these complaints were only shared between the CFPB and banks. Now, consumer’s card complaints against banks and issuers with assets of more than $10 billion appear are available online public scrutiny. That has consumer advocates cheering and the banking industry saying that companies will be unfairly smeared with raw data that don’t tell the whole story.
Unfair to banks?
With the way the website is set up now, “the data is meaningless for purposes of informing consumers and it could very well mislead them,” says Nessa Feddis, a spokeswoman for the American Bankers Association.
Issues consumers have with banks are rarely black-and-white, Feddis says, meaning the accuracy of some complaints may be questionable. Rules can be interpreted in different ways or misunderstood altogether. Moreover, the CFPB data doesn’t put the complaints in the context of how many people used the service and didn’t complain, says Feddis.
“For an agency that’s trying to suggest that the data is more than a gripe session, they should just say that that’s what this is,” Feddis says.
Kenneth Clayton, executive vice president of public affairs for the banker trade group, said in a statement that publishing complaints that haven’t been vetted for accuracy can unfairly tarnish a bank’s reputation. Complaints, after all, are sometimes later ruled to be unfounded.
“Publicizing allegations that may or may not have any basis in fact raises serious questions about the balanced review we expect from our government agencies,” he said.
In the first week of complaints, the data show billing disputes are the biggest category, followed by complaints about interest rates, identity theft, and closing or canceling accounts.
Feddis says publishing the number of billing disputes is a good example of how banks’ reputations will be tarnished by things often out of their control.
“[Billing disputes] have nothing to do with the credit card company,” she says.
More often, she says, they involve complaints like, “the merchant overcharged me or I didn’t get what I was supposed to get,” Feddis says.
She also says that banks with strong internal dispute resolution departments could fare worse under these complaints. If a bank does a great job of settling the reasonable claims, then it’s the unreasonable claims that make their way to the bureau, she says, and that means that that bank’s resolution rates will show up as lower.
The more information, the better?
However, more information (even raw information) might be good for consumers, consumer advocates say.
“We think this is an opportunity for consumers to judge whether the information is valid, and we think the more information that’s provided, the more people can assess,” says Ruth Susswein, deputy director of the advocacy group Consumer Action.
Publishing complaints, Susswein says, might allow the database to become a trend spotter and a way to put pressure on banks to stop unfair practices. If a certain kind of complaint occurs repeatedly with the same card issuer, “that should set off alarms bells for individuals, for the company and the bureau that there’s a harmful trend going on here.”
The database, says Susswein, will help spot troubling patterns before they become a financial crisis.
“If this public database were in place and provided detailed information before the mortgage meltdown, we would have seen in certain communities … that there were just boatloads of complaints about mortgage brokers who promised one thing and delivered another,” Susswein says.
The database can also have an upside for credit card issuers, Susswein notes. The banks that do well will get a leg up on the competition, and consumers will be able to see that.
How to check complaints
First, go to the database website. Click on “all data.” You can check the data by bank, by nature of complaint (such as late fees, bill disputes, interest rates, etc.), by ZIP code and by how a complaint was resolved.
To see all the complaints made against a company, click on the tab at the top of the data set that says “company.” The site will group all the individual complaints under the corresponding companies, which are listed in alphabetical order. Keep in mind that the data set is still small because it contains only reports filed since June 1 of this year — so it’s too early to fairly compare the companies. Moreover, the database is still in beta, so you’ll have to do some digging to compare banks.
So far, the data set doesn’t give much detail about individual complaints. Consumer advocates support going further — having the actual complaints posted with personal information hidden, or at least a summary of the complaints. That would help consumers understand whether the dispute was with the merchant or the card issuer — and whether the complaint centers around a math error or a claim that policy wasn’t followed, Susswein says.
But publishing the whole narrative of the complaint raises concerns of privacy, and it’s a move the CFPB is staying away from for now. Though no personally identifiable information, such as a consumer’s name, credit card number or mailing address would be made available, someone from a small town who had an unusual set of circumstances surrounding the complaint might be identifiable.
How to make a complaint
The CFPB has been taking credit card complaints since last July. Consumers can file complaints with the CFPB via its website. Or they can contact the CFPB by telephone, mail, email, fax and ask that the agency routes the complaint to the appropriate bank or issuer. The bank or issuer then has up to 15 days to respond and 60 days to close a complaint. Consumers get either a refund, an explanation, a correction or change in account terms, or simply have their cases closed.
Complaints are added daily. As of June 26, 2012, there are 376 complaints published, only a fraction of the nearly 17,000 complaints made about credit cards since July 2011. Eventually, data from the past year will be posted, the CFPB says, and the goal is to eventually include mortgages, student loans and other financial products.
There are safeguards against those trying to game the system. The system can detect duplicates, for instance, and your complaint won’t be posted if you’re not on record as having done business with the bank you’re complaining about.
Until July 19, the bureau is collecting opinions on how to make the database more useful. To learn how to send in your comments, check out this guide.