(Bloomberg Business) — The U.S. Consumer Financial Protection Bureau started taking complaints about financial products, such as credit cards and mortgages, as soon as it opened in July 2011. Four years later, submissions to the CFPB are surging, and consumers are finding it’s a good way to get companies’ attention.
A record 26,704 complaints were registered in July, up 15 percent from the previous month and up 20 percent from a year ago. The CFPB regulates a wide range of consumer financial products, with the notable exceptions of investments and insurance. Debt collectors inspire the most complaints, followed by problems with credit reports and with mortgages. Rather than once again calling customer service and waiting on hold, people can complain to the CFPB online or over the phone. Within days, those complaints are reviewed and routed to companies electronically. Companies must respond within 60 days.
It’s become a quick way to resolve disputes that otherwise might drag on for months or years. Thomas Mack of Marin County, Calif., says he was harassed for a year by two collection agencies demanding he pay back a $3,000 payday loan in Ohio he never took out. The second company started calling his work and mobile phone three times a day demanding $7,000, including interest. “I was feeling threatened,” Mack says. “These guys just wanted money. They were trying any way they could to extort it.” After complaining to the CFPB in March, Mack got an apology from the payday lender in May along with promises to monitor Mack’s credit and make sure it wasn’t harmed. “It finally got to some point of closure,” he says.
While the CFPB can’t require companies to respond in a particular way, it does demand that customers get something more detailed than a form letter. That, plus a regulatory agency looking over their shoulders, is often enough to get companies finally to take legitimate complaints seriously. “When we ask the questions, sometimes it gets a better response for consumers,” says Darian Dorsey, the CFPB’s chief of staff for consumer response.
The CFPB’s complaint system also gives leverage to people who wouldn’t otherwise have much power in a court of law. John Parkin, a 28-year-old aviation instructor in Danville, Va., knew he’d have trouble making payments on his student loans this summer, when school was out and his income was way down. He called his lender, which told him to pay up or face a collection agency, even though he’d been reliably making payments for five years. “Don’t just ignore me,” he says. “I felt helpless. I felt like they didn’t care.”
A complaint to the CFPB, however, changed the lender’s tone. “They were more willing to work with me,” he says. His monthly payments have temporarily dropped from $1,200 to less than $1,000.
Not every complainer gets what he or she wants. But dissatisfied customers can still agree to make their complaints public on the CFPB’s online database. Complainers aren’t identified, but company names are posted for all to see, along with the customer’s story of what went wrong.