The Top Complaints About Financial Services. One Complaint Type Grew 325 Percent

After encountering unresolved issues with financial services, many consumers file complaints with the Consumer Financial Protection Bureau (CFPB). After each complain, the CFP works hard to get each consumer a reply within 15 days. This process allows the CFPB to track which issues affect most consumers, and to identify emerging problems.

According to its April Monthly Complaint Report, debt collection issues generated the most complaints on average, and complaints about student loans grew the fastest:

"As of April 1, 2017, the CFPB has handled approximately 1,163,200 complaints, including approximately 28,000 complaints in March 2017... Student loan complaints showed the greatest percentage increase from January - March 2016 (773 complaints) to January - March 2017 (3,284 complaints), representing about a 325 percent increase. Part of this year-to-year increase can be attributed to the CFPB updating its student loan complaint form to accept complaints about Federal student loan servicing in late February 2016. The CFPB also initiated an enforcement action against a student loan servicer during this time period."

The top five categories of complaints about during March, 2017:

1. Debt collection: 8,711
2. Credit reporting: 5,498
3. Mortgages: 3,965
4. Credit cards: 2,522
5. Bank account or service: 2,476

Also during March: debt collection complaints represented about 31 percent of complaints; debt collection, credit reporting and mortgage were the top three most-complained-about consumer financial products and services. Together, these three categories represented 65 percent of complaints during March.

The top five categories of complaints since the CFPB began:

1. Debt collection: 316,810
2. Mortgages: 272,153
3. Credit reporting: 195,826
4. Credit cards: 118,732
5. Bank account or service: 115,055

The CFPB began accepting complaints for different products and services at different times:

• July 21, 2011: credit card complaints
• December 1, 2011: mortgage complaints
• March 1, 2012: bank accounts and services, private student loans, and consumer loans
• October 22, 2012: credit reporting
• April 4, 2013: money transfers
• July 10, 2013: debt collection
• November 6, 2013: payday loans
• July 19, 2014: prepaid cards, credit repair, debt settlement, and pawn and title loans
• August 11, 2014: virtual currency
• February 26, 2016: Federal student loan servicing

There were regional differences in complaint volume:

"Montana (54 percent), Georgia (46 percent), and Wyoming (45 percent) experienced the greatest complaint volume percentage increase from January - March 2016 to January - March 2017. New Mexico (-20 percent), Iowa (-5 percent), and Kansas (-0.7 percent) experienced the greatest complaint volume percentage decrease... Of the five most populated states, Texas (35 percent) experienced the greatest complaint volume percentage increase and Florida (8 percent) experienced the least complaint volume percentage increase from January - March 2016 to January - March 2017."

The report also tracks complaints by company:

The CFPB reported additional details about student loan complaints:

"Approximately 32,700 (or 74 percent) of all student loan complaints handled by the CFPB from July 21, 2011 through March 31, 2017 were sent by the CFPB to companies for review and response. The remaining complaints have been found to be incomplete (7 percent), referred to other regulatory agencies (19 percent), or are pending with the CFPB or the consumer (0.5 percent and 0.4 percent, respectively)... The most common issues identified by consumers are problems dealing with their lenders or servicers (64 percent) and being unable to repay their loans (33 percent)."

"Federal student loan borrowers reported that when contacting their loan servicers regarding financial distress, servicers provided them with information on hardship forbearance or deferment, instead of potentially more beneficial repayment options like income-driven repayment plans... loan borrowers complained of difficulty enrolling in income-driven repayment plans. Borrowers reported lost documentation, extended application processing times, and unclear guidance when seeking to switch from one income-driven repayment plan to another."

Federal student loan borrowers described their experiences when trying to obtain guidance in completing annual income recertification for their income-driven repayment plan. Borrowers reported receiving insufficient information from their servicers to meet recertification deadlines and lengthy processing times. Some federal student loan borrowers stated their payments were misapplied. Borrowers reported overpayments were not applied to specified accounts but rather applied to all accounts managed by the servicer. Additionally, some borrowers’ overpayments—intended to reduce principal balance—were credited to the account as an early payment, resulting in their ac count reflecting a paid ahead status..."

To read more, download the full "April 2017: CFPB Monthly Complaint Report: Vol. 22" (Adobe PDF).