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Watching Your Wallet: Thousands of consumer complaints hidden in federal watchdog database

Major financial institutions escape scrutiny and regulation, according to NerdWallet

By: Rachel DePompa, InvestigateTV & WWBT

Originally Published: March 18, 2019

Washington, D.C. (InvestigateTV) – A federal watchdog agency that was created to protect consumers is keeping complaints about some banks and financial companies hidden from view.

That agency, the Consumer Financial Protection Bureau (CFPB), does not have jurisdiction over some companies that have generated tens of thousands of complaints, and the public is kept in the dark about those potential problems.

According to findings from InvestigateTV partner NerdWallet, two of those companies escaping scrutiny are Green Dot Corp, which sells pre-paid debit cards through more than 100,000 retailers including Walmart and Apple, and Credit One Bank, a leading credit card company.

NerdWallet reporters discovered those two companies are some of the most-complained-about businesses – but those complaints are hidden from the public.

The history of publishing consumer complaints

Looking back, words in 2008 headlines painted a bleak picture: Crisis, disarray, bailout, calamity.

“We were in a really, really bad position,” said Ruth Susswein, the deputy director of national priorities at the advocacy group Consumer Action.

She said, “Foreclosures happening by the tens of thousands… There were so many people who were in so much trouble. They had lost their jobs. They were on the verge of losing their homes.”

Out of the ashes of the great recession of 2008 grew an agency meant to protect consumers.

The CFPB was created in 2011 to promote fairness and transparency in financial markets and to protect Americans from financial harm.

“Consumers are right in the top of their name because that’s who they’re looking out for,” Susswein said.

Susswein’s organization is one of several that fought for the CFPB’s creation.

“You can file a complaint with them, and you will then get a response back from the lender because the CFPB passes that complaint on to the lender,” she said.

The CFPB’s mission is it protects consumers from unfair, deceptive or abusive practices and take enforcement action against financial companies that break the law.

It offers financial advice for anyone looking to get a credit card, mortgage or student loan. The agency also has a one-of-kind database filled with complaints from consumers across the U.S. about financial institutions.

“This is an opportunity for consumers to report to consumers and warn people if there are problems and the CFPB makes it possible for people to access that information,” Susswein said.

Each week thousands of complaints are posted online so consumers can search for a company and see if anyone else is having problems. But thousands are missing.

NerdWallet finds hundreds of thousands of hidden complaints

Over the past 10 years the CFPB has collected roughly a million complaints, but more than 400,000 of them are not on the bureau’s public database.

NerdWallet investigative reporter Brad Wolverton talks to InvestigateTV investigative reporter Rachel DePompa about his findings that the CFPB database leaves out thousands of complaints because the bureau does not have jurisdiction over some companies. (Source: InvestigateTV)

“That means that more than a third of those complaints never made it to the public,” said Brad Wolverton, an investigative reporter for financial website NerdWallet.

Wolverton uncovered the hidden complaints through a records request and shared them with InvestigateTV.

“You go to the CFPB site and you search that company, and many times that company doesn’t have any complaints. So it looks to you as a consumer, ‘that’s a good company. I should do business with them,’” Wolverton said.

InvestigateTV looked into some of the companies that are missing from the CFPB’s data, pulling numerous complaints to state attorneys general in Virginia, Missouri, Ohio and Texas.

The hidden complaints InvestigateTV found through the Virginia Attorney General’s Office included one from a man who said he had a credit card opened without his approval. He said when he asked the bank to close it, the bank did not.

One person complained they asked for a $500 credit card and was turned down. But then, they said they got a bill for annual charges.

Another customer in Virginia wrote to the state asking if a problem he had with a bank is common. But Virginia sent that complaint to the CFPB, which did not have jurisdiction, so the complaint is not in the database.

“The CFPB has oversight over only the largest financial institutions,” Wolverton said. “Many of these complaints don’t get investigated by the CFPB. They get sent to agencies that don’t have the same incentive to investigate.”

The CFPB only regulates companies with more than $10 billion in assets. Wolverton said while some of these financial institutions with hidden complaints do tens of billions of dollars in transactions, they technically don’t fall under the CFPB because their combined assets don’t go over the $10 billion mark.

InvestigateTV examined complaints made to state attorneys general offices. Excerpts show consumer concerns from Virginia. Graphic illustration: InvestigateTV

Looking forward: Add complaints or ditch the database?

“We think all complaints that go to the CFPB should be part of their public database,” Susswein said.

Susswein said whether the CFPB has jurisdiction should not stop the agency from telling consumers about issues.

“This is information the public should have to be able to make wise, informed decisions,” she said.

In Ohio, for example, all complaints sent to the attorney general’s office are public regardless of whether or not the agency has jurisdiction.

Financial industry executives have long argued that the whole system unfairly shames companies and provides them with inadequate opportunities to respond to consumers.

Former budget director Mick Mulvaney, who was appointed by the president to oversee the CFPB, threatened in 2018 to remove the entire database from public view. There is now a new director who is reviewing the situation and has not publicly announced a decision.

On its site, the CFPB acknowledges it does not post every complaint it gets, but it does say, “Every complaint provides insight into problems that people are experiencing, helping us identify inappropriate practices and allowing us to stop them before they become major issues.”

CFPB responds with background information

The CFPB has not responded with answers to questions InvestigateTV asked about the database. A spokesperson sent the following response with background information on the bureau.

The Bureau’s Consumer Response annual reports provide more detailed information about the complaints not published on the database. You can access the reports on our website. To give you more context, in some instances the unpublished complaints are about a company or product that is outside the Bureau’s complaint handling authority. In cases where the company, product or market is outside the Bureau’s complaint handling authority, those complaints are referred to the appropriate regulator.  For example, where appropriate, the Bureau refers complaints about small banks and credit unions to the appropriate prudential federal regulator. In other cases, the complaint may not be about a consumer financial product or service. For example, a complaint from a consumer about the cost of their phone services by their phone company would be referred to the FTC Sentinel Network, a secure online database operated by the FTC and used by law enforcement agencies worldwide, including the FCC.  Our most recent annual report, covering calendar year 2017, provides a product level breakdown of complaints referred to other regulatory agencies.

When a complaint is received, the Bureau sends it to the company for response via a secure, web-based portal. In some cases, the company will notify the Bureau that it does not have a commercial relationship with the consumer. If, after contacting the consumer, the Bureau is unable to locate the correct company, the complaint will be considered incomplete. Companies can also alert the Bureau via administrative response if it receives a complaint that was submitted by an unauthorized third party. Our 2017 annual report, provides more detail on how companies respond to complaints. Also, the Bureau’s publication criteria, which is publicly available, provides more information about what complaints are published in the Bureau’s online database.

The Bureau launched the public database on June 19, 2012 to provide insight into complaints handled by the Bureau since July 21, 2011. All complaints handled by the Bureau, including those sent to other regulators, serve to inform the Bureau in its work to supervise companies, to enforce consumer financial laws, to write better rules and regulations, and to educate and engage consumers.