Details of complaints filed against credit card issuers were made public for the first time June 19 when the federal consumer watchdog agency launched a new database.
Anyone with access to the Web can go online and find out what credit card holders are complaining about using the new consumer complaint database . It's a move applauded by consumer groups that want transparency in banking, but met with trepidation by lenders, who say anyone with a beef -- legitimate or not -- can file baseless complaints that can potentially harm a bank's reputation.
"The database will be timely, understandable and easily searched," says Richard Cordray, director of the Consumer Financial Protection Bureau (CFPB), the federal watchdog agency and custodian of consumer financial complaints. Who will be searching through this information? Consumer groups, policymakers, researchers, credit card issuers, banking industry trade groups, journalists and regular consumers are the most likely users. Cordray called the new database a "major milestone for consumers."
Banking industry unhappy
Ken Clayton, the chief counsel for the American Bankers Association, called the database a "questionable" and "misleading" resource because the details of the complaints are unverified.
"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," Clayton said in a statement . He pointed out that credit card complaints lodged with the bureau are "less than one-hundredth of one percent" of the 383 million credit card accounts in the United States.
The National Association of Federal Credit Unions also criticized the database. "Unfortunately, we fear this new database may open the door to frivolous and unsubstantiated complaints," said Fred Becker, the trade group's president.
Consumer groups applaud
Katherine McFate, president of OMB Watch, a Washington, D.C., advocacy group, said in a statement the new database "will help the public make more informed choices about credit cards and expose unscrupulous industry and company practices."
Adds Ruth Susswein, deputy director of national priorities for the Consumer Action group: "The public database will help prevent others from falling for the same tricks and traps."
In announcing the launch of the database, Cordray released the details of a sampling of consumers who agreed to make their stories public. One such case involved a 67-year-old California woman who got relief from a nearly yearlong battle with her credit card issuer. The woman claimed $2,000 was charged to her credit card for purchases she never made. The credit card company, which was not identified by the CFPB, said the woman was still responsible for the money and eventually sold her account to a debt collection agency. The debt collector took her to court. After the CFPB got involved, the credit card issuer agreed that the woman was not responsible for the fraudulent charges to her card.
"For every consumer who reaches out to us to tell us about their troubles, we know that many others have the same troubles but suffer them in silence," Cordray adds.
Since it is still in its infancy and is in a beta-testing mode, the database only includes complaints filed on or after June 1, 2012. Only 137 complaints appeared initially. As more people file complaints, the listing will grow. The CFPB expects to add existing complaints -- those filed between July 21, 2011, and May 31, 2012 -- to the public database by the end of 2012.
The agency received 45,630 total complaints between the time it began operations on July 21, 2011, and June 1, 2012. Of those, 16,840 involved credit cards. The largest share of complaints focused on mortgages: 19,250. The remaining involved other bank products and services (6,490) and private student loans (1,270).
The CFPB is asking the public to submit comments on how best to improve the credit card database and how complaints about other types of financial products -- mortgages, private student loans and auto loans, for example -- should be added to the public listing. To file a comment, go to the CFPB's website .
None of the information in the new public database will reveal personal facts, such as the names, addresses or Social Security or credit card numbers, of the people filing complaints. "We absolutely respect consumer privacy and confidentiality," Cordray says. Keeping private information private was a key concern for many of the people and groups that submitted comments on the proposed public database policy.
The database will include the following search fields:
- Type of complaint.
- Date of submission.
- Consumer's ZIP code.
- The issue involved (such as billing dispute, APR or interest rate problem, arbitration or debt collection practices).
- Company involved.
- Actions taken regarding complaint.
- Whether the credit card issuer responded in a timely manner.
- Whether the consumer disputed the response.
Once a complaint is received by the CFPB, banks and credit unions have up to 15 days to verify that a complainant is a customer. Once verified, the complaint goes into the public database. Banks have 60 days to close complaints in one of four different ways: closed with monetary relief to the customer; closed without money relief but with some other action (such as correcting an erroneous credit report or choosing a foreclosure alternative), closed with an explanation about the issue, or closed with no comment.
Complaints will also be vetted to ensure they involve lenders within the bureau's jurisdiction. Those regarding national banks with under $10 billion in assets, for instance, will be referred to the Office of the Comptroller of the Currency (OCC), which regulates smaller national banks. The CFPB's authority extends to banks and credit unions with more than $10 billion in assets.
See earlier story: Should credit card complaints be hush-hush or open to all?