June 20, 2012 / 2:33 AM / 6 years ago

Consumer bureau discloses credit-card complaints

(Reuters) - Consumers shopping for a credit card can see for the first time, starting on Tuesday, how many complaints issuers have received before picking their plastic.

MasterCard and VISA credit cards are seen in this illustrative photograph taken in Hong Kong December 8, 2010. REUTERS/Bobby Yip

The U.S. Consumer Financial Protection Bureau unveiled a complaint database on its web site in one of the agency’s more high-profile moves since it was created under the Dodd-Frank financial reform act.

While the initial release of figures was limited, covering less than a month, it created a ranking among credit card issuers that could leave some uncomfortable. Capital One Financial Corp (COF.N) tallied the most complaints since June 1.

The decision to disclose complaints drew fire from financial industry groups, which said the law does not authorize the agency to release the data publicly, that it is not verified and that complaint rates by zip code are trade secrets that should be kept private.

The CFPB disagreed, saying the law authorized the disclosures and, while it does not verify each complaint, it does check whether the consumer has a relationship with the institution.

“Consumers can look at this data and can fairly draw the conclusion that if they engage in a financial relationship with the company this is what they can expect,” said Scott Pluta, acting assistant director of the Office of Consumer Response of the CFPB, which only opened its doors in July 2011.

The database, available at consumerfinance.gov, is small, showing only 137 complaints collected since June 1. But over the next year, that number is likely to grow substantially.

The agency actually began collecting complaints nearly a year ago and has received more than 16,800 of them. It plans to expand the database to include these complaints in coming months and to add complaints about mortgages and other financial services, Pluta said. The earlier data contained different fields and so was not directly comparable to the data collected since June 1.


The data released on Tuesday shows Capital One received the most complaints, 33, followed by Citigroup Inc (C.N) with 27, JPMorgan Chase & Co (JPM.N) with 24 and Bank of America Corp (BAC.N) with 15.

Capital One topped the list despite being fifth in purchase volumes in 2011, according to rankings compiled by The Nilson Report, an industry publication. American Express Co (AXP.N), which had only six complaints, had the largest market share with 25 percent, followed by JPMorgan, Bank of America and Citigroup.

“We always welcome customer feedback - good and bad - as we’re always focused on continuous improvement and providing a great customer experience,” said Capital One spokeswoman Tatiana Stead.

A Bank of America spokeswoman said the bank’s objective is to work with customers to resolve any issues they have, and Citigroup said it has been actively responding to all customer complaints, including those fielded by the CFPB. JPMorgan declined to comment.

Kenneth Clayton, the American Bankers Association’s executive vice president of legislative affairs and chief counsel, said the banking industry is ready to work with the CFPB to resolve consumer complaints but called the release of the database disappointing and potentially misleading to consumers.

“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 a statement.

Consumers Union, the policy and advocacy division of Consumer Reports, praised the CFPB’s decision to make the database public and said it supported expanding the database to include complaints about other financial products.

“Making credit card complaints public will put added pressure on banks to avoid unfair practices and help consumers make more informed financial decisions,” said Pamela Banks, senior policy counsel for Consumers Union, in a statement.

The credit card companies are required to respond within 15 days and to close the complaint with an action in 60 days, Pluta said. Banks that don’t respond in time are tagged in the database. So far, only one of the 137 complaints had not received a timely response. It involved Bank of America and a request to close or cancel an account.

Pluta said the agency takes steps to stop people from gaming the system. Entries must be complete and must involve a bank the bureau supervises. If the complaint is a duplicate, the agency merges it with the original. And the agency verifies that the complainant has a relationship with the bank in question, although it can’t verify the merits of the complaint. Also, the form takes time to fill out and consumers must attest that the information is true.

The agency is open to working with banks to improve controls to avoid manipulation.

“So far, we’ve been open 11 months and there are no suspected cases of widespread manipulation,” Pluta said.

Additional reporting by Cezary Podkul; Editing by Edmund Klamann

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