Simester said it is now typical in the card industry that complaints coming through a regulator get “a red flag” for quick resolution. He said issuers give the same treatment to all cardholders who complain to a regulator, regardless of how lucrative their business is to the company.
“If somebody complains to CFPB, there is a process that all the agents at the issuer will have to follow,” Simester said in an interview. “And it won’t matter what value they ascribe to their relationship with the customer.”
The complaints to the bureau covered similar topics across all zip codes. Billing and interest rates led the list. For example, 15.7 percent of complaints from zip codes with below- median income involved billing disputes, compared with 14.7 percent from more prosperous areas. Lower-income areas generated marginally more complaints about late fees.
The bureau chose to reveal the names of companies facing complaints despite protests from bank lobbyists that making them public would tarnish respectable brands.
Industry Objections
Nessa Feddis, a senior vice president at the American Bankers Association, said in an interview that the industry still objects to publication of the data because the agency doesn’t first verify whether the complaints are valid.
The bureau puts out the records without indicating that the complaints come from only a fraction of the estimated 500 million active credit-card accounts, Feddis said.
“There’s no context, no way of seeing that these are one in a thousand or something,” she said.
The bureau has sought to use its complaint system to encourage banks to resolve disputes, allowing the firms to establish direct Internet connections to access the records and report on their status.
An informal survey of banks published in July 2012 by the law firm Mayer Brown LLP found that 28 percent had altered complaint-resolution systems in response to the bureau’s system. Also, 22 percent said they created new procedures for evaluating possible consumer harm from their services.