How to Complain to the Consumer Financial Protection Bureau (And Get A Check)

by Dan Kelley

Last year, I got in a dispute with a bank.

The story is long and convoluted. I’d like to be able to write a story saying that the bank was entirely at fault. You’d probably believe it too because, according to the American Consumer Satisfaction Index, banks are less popular than canned food (but more popular than newspapers).

Anyway, here’s the story: My wife and I stopped depositing money in a bank account with an eye toward closing it. A scheduled utility payment went through, causing us to be charged an overdraft fee. New legislation had passed that seemed to prohibit overdraft fees, and the bank had called several times to see if I wanted to make them a regular feature of our account. I declined.

I took my sweet time getting to the bank to straighten it out, and — unbeknownst to me — the bank kept charging me because my account was overdrawn. My thinking was this: If they weren’t allowed to charge the fee, they’d simply reverse it when I complained.

The bank wouldn’t reverse the fees. I zeroed out the account with cash and asked them to close the account. A couple months passed, and we received notice of another overdraft. Another payment had gone through — this one a very old check, for a small amount of money, written before we closed the account. Again, the overdraft fees.

To this day, it is unclear to me if the account had ever been closed or if the bank reopened the account when presented with a check — we’ve been told both. Again, I asked to reverse the fees, and the bank declined.

So I complained to the government, arguing that there was inadequate notice of the fees.

I did a lot wrong. I spelled my wife’s name incorrectly, and I even sent the complaint to wrong regulators — the Comptroller of the Currency simply forwarded my complaint to the Consumer Financial Protection Bureau. A couple of weeks passed. I got a letter from the bank and a letter from the bureau. Then the bank sent me a check for about $100.

It really was that simple. It wasn’t everything I’d asked for and I had the option of disputing the bank’s response, but I didn’t. There was plenty of blame to go around and I was willing to pay something of a stupidity tax. The bank, in a letter to me, simply stated that it was entitled to charge the fees. If I had disputed the resolution, the CFPB might have begun an investigation.

I’m not alone in getting a check after complaining to the bureau. The CFPB says it processed about 65,000 complaints between September 2011 and July 2012. About 44,000 of those were resolved at the time the bureau compiled the data, the rest were still under review. The complaints cover a range of financial products — credit cards, student loans, mortgages and good old checking accounts. Consumers received “monetary relief” i.e. money, in about 26 percent of cases.

The bureau says the amount of relief tends to increase with the size of the account. Credit cards, with relatively small balances and small charges, typically offered consumers about $130 for things like billing disputes or phony debt protection charges. Student loan consumers received a whopping $1,597 on average, for issues such as a failure to disclose loan terms, giving customers the run around and mystifying interest rate changes.

The process left me mystified. What was in it for the bank if it believed it was right? Why did complaining to the government get a response when going to two branches couldn’t? Why bother mollifying a customer who wouldn’t be a customer anymore? Why send money before the regulator really got involved?

Put another way: Am I a beneficiary of a brand new government agency? Is this the CFPB effect?

Scott Pluta, the assistant director for consumer response at the CFPB, says it is difficult to know. The CFPB tried to tally the complaints that all of the state and national regulators had ever received. It’s something you would need to know if you wanted to compare the agency’s performance to the situation before the CFPB came into existence. But he said the effort was largely futile — different agencies had different definitions of what a complaint was and when to count it.

“We’re operating under the general principle that there’s vast and untapped demand for the services we offer,” he said.

There’s been a lot of talk about how the CFPB is a tough new regulator on the scene, but that doesn’t tell the whole story. Yes, the banks need permission before making overdraft fees a feature of a checking account, but those only count toward debit card transactions — and not, as I discovered, scheduled online banking payments. And while the bureau has announced some whopping settlements, there aren’t a huge number of new regulations for banks as far as their dealings with consumers are concerned.

Anne Wallace is the senior director for Consumer Financial Services at the Financial Services Roundtable. I asked her if banks have changed their behavior toward regulators now that the CFPB has come on the scene.

“I’m not hearing that from our member companies,” said Anne Wallace. “The CFPB’s existence has not resulted in an increase in complaints.”

Wallace points to a database of credit card complaints the CFPB published last year. Download the data, and you can tell which banks have been the targets of complaints, where those complaints came from and which issues were disputed.

“The numbers are really very, very small when you consider how many millions of credit cards there are,” Wallace said.

The roundtable worries that disgruntled customers might provide false information, that complaints may be duplicative, or that the complaints of a small number of disgruntled customers might skew overall impressions of the industry.

That database is a keystone in the bureau’s goal of getting banks to play nice.

Pluta says that the CFPB is limited in its ability to investigate every complaint, but that many of the issues consumers complain about aren’t necessarily regulatory violations, but customer service complaints.

“We don’t urge the banks to take customer service measures,” Pluta said.

Sometime in March, the bureau is set to announce whether it will expand its publicly available complaints database to include checking accounts and other financial products — not just credit cards.

At that point, customers might be able to evaluate which banks are offering the best service, or consumer groups might be able to develop customer service rankings.

Pluta says that for banks that treat their customers well, the new database is a competitive opportunity.

“I do know for first time ever, we are making individual data available to the public,” Pluta said.

If this data goes public, it’s going to be Christmas for consumer groups, but there are limits to what public information can do.

Banks are going to change the way they behave in response to this data going public, but they may do so in surprising ways. Take me for example: I wasn’t aggrieved because I was charged a fee, but because I didn’t know the bank was allowed to charge the fees. Smart banks are going to get more proactive on disclosure of account terms. Dumb ones are going to figure out how to game the numbers by paying customers off before they complain to the CFPB. Neither are going to stop looking for ways to levy fees. On the other hand, my experience in trying to switch banks cost me a good chunk of money and a lot of aggravation. The risk that consumers will start voting with their feet is real, but probably low.

Should you complain if you think your lender, banker, or credit card is pulling a fast one?

It’s easy to complain, and complaining seems to have gotten results. But the idea that the government has to mediate customer service disputes is a pretty sad commentary on the state of the banking industry.

Dan Kelley lives and writes in Philadelphia. His work has appeared in numerous newspapers.

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