Many may recall that the Consumer Protection Agency, part of the Dodd-Frank Act, officially began its operations in July, 2011. Since then, it’s accepted hundreds of thousands of consumer credit card complaints. As part of the Act, which was passed in 2010, the agency has the authority to address credit card complaints made by consumers and then act accordingly. To say it’s been a huge success is an understatement. Consumers have overwhelmingly supported the move and say they feel as though they finally have a voice.
Part of the first goals of the CFPB was to ensure better government transparency. It comes as little surprise that many in the financial industry oppose the agency and collectively, it says it has too much authority. On the flip side, many say they fear too much “political influence” on the part of the industry itself that will be used in an effort to “block public access”.
In July, when the agency opened its doors, so to speak, it offered a complaint form that included fields for the credit card issuer, the type of complaint and of course, the customer’s name. There also existed an optional field that customers could use for further explanation. The complaints run the gamut from overly aggressive collection efforts to unfair interest rate hikes.
From there, CFPB forwarded the complaint to the credit card company with a request to review the information submitted by the consumer. The agency then waits to hear back from the credit card company and then contacts the card holder to ensure the resolution was appropriate. Other appropriate actions are taken based on how well the customer feels he or she was treated. This information has been kept confidential – but that could soon change.
Now, the agency is considering putting together a database of these complaints, redacting, of course, any identifiable information. It’s in talks with several companies that could ensure the information is never released. Initially, the narrative fields where the consumers can leave specific information is the biggest brouhaha of the effort; mostly, say those in the know, because some consumers use those fields to provide otherwise-sensitive information. That said, it’s those narratives supplied by consumers that can highlight a common practice by any credit card company that’s unfair or unethical.
As many financial analysts have said, this database would be an invaluable resource for consumers looking to do their due diligence before applying for a new credit card. It would provide insight as to what a company routinely does or does not do to or for its card holders. Too many complaints might suggest to a would-be applicant that this isn’t the right choice for his needs. Too many complaints about interest rates would also signal a potential problem.
Many also believe public access to the complaints would encourage others to submit their own complaints, as well.
Ultimately, the goal is to further increase a “high standard for transparency” while also identifying and eliminating what the agency refers to as abusive practices by any credit card company.
The Credit Card Industry’s Response
Naturally, this isn’t receiving a warm reception with credit card companies; in fact, the National Association of Federal Credit Unions said last year that under no circumstances should consumer complaints be made public and now, news of these new proposals is sure to cause a ruckus in some circles. It may be moot, though.
More than twenty public organizations, along with eleven members of Congress, have sent the agency a letter with strong support for a publicly accessible database.
What are your thoughts? Do you believe a database of credit card complaints could serve the greater good or do you think this would only provide a vehicle for disgruntled consumers to voice unfair criticisms against their credit card company? Either way, you have an opportunity to voice your support or opposition, though time is running out.
For those interested in submitting their own two cents may do so until January 30th, when the public comment period closes. To be sure, there are many arguments that support the database. Still, it’s not decided until the agency has an opportunity to weigh both the pros and cons of such a move.
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