CFPB September 2016 complaint report highlights money transfer complaints, complaints from Pennsylvania consumers

Ballard Spahr LLP

The CFPB has issued its September 2016 complaint report which highlights complaints about money transfers and complaints from consumers in Pennsylvania and the Philadelphia metro area.  The CFPB began taking money transfer complaints in April 2013.

General findings include the following:

  • As of September 1, 2016, the CFPB handled approximately 982,400 complaints nationally, including approximately 28,700 complaints in August 2016.
  • Debt collection continued to be the most-complained-about financial product or service in August 2016, representing about 34 percent of complaints submitted and showed the greatest month-to-month increase, increasing 50 percent from July 2016.  Debt collection complaints, together with complaints about credit reporting and mortgages, collectively represented about 67 percent of the complaints submitted in August 2016.
  • Complaints about student loans showed the greatest percentage increase based on a three-month average, increasing about 78 percent from the same time last year (June to August 2015 compared with June to August 2016).  In March 2016, the CFPB began accepting complaints about federal student loans.  Previously, such complaints were directed to the Department of Education.  As we noted in blog posts about prior complaint reports issued since March 2016, rather than reflecting an increase in the number of borrowers making student loan complaints, the increase most likely reflects the change in where such complaints are sent.
  • Payday loan complaints showed the greatest percentage decrease based on a three-month average, decreasing about 18 percent from the same time last year (June to August 2015 compared with June to August 2016).  Complaints during those periods decreased from 461 complaints in 2015 to 379 complaints in 2016.  In the complaint reports for March through August 2016, payday loan complaints also showed the greatest percentage decrease based on a three-month average.
  • Wyoming, Alaska, and Colorado experienced the greatest complaint volume increases from the same time last year (June to August 2015 compared with June to August 2016) with increases of, respectively, 29, 26, and 21 percent.
  • Maine, Nebraska, and Idaho experienced the greatest complaint volume decreases from the same time last year (June to August 2015 compared with June to August 2016) with decreases of, respectively, 36, 19, and 15 percent.

Findings regarding money transfer complaints include the following:

  • The CFPB has handled approximately 6,900 money transfer complaints, representing about 0.7 percent of total complaints.
  • Consumers using money transfer services to make purchases commonly report being the victims of fraud or scams, with sellers to whom they send funds not sending the items purchased.
  • Consumers reported that money transfer providers had placed holds on their accounts without providing an explanation.  Money transfer service providers have explained that the holds result from a risk-based model that will hold reserves to cover potential losses arising from reversals or chargebacks.
  • Sellers involved in transactions using an online money transfer service often reported encountering problems with the dispute resolution process.  Sellers describe several scenarios where they do not receive payments after sending the item to the buyer, which often occurs when the seller is told that the buyer’s payment has been accepted but is later cancelled.  Cancellation is either by the buyer directly due to a dispute, or by the buyer’s financial institution due to insufficient funds in the buyer’s account.  Sellers often indicate that money transfer service providers, when deciding a dispute in the buyer’s favor after the item has already been sent, will debit the seller’s account without guaranteeing that the buyer will return the item to the seller.
  • Consumers submitting complaints about international money transfers commonly report delays and restrictions when attempting to make transfers or the absence of an explanation for a denial.  Many of these complaints are the product of company risk-based assessments, review for OFAC compliance, and consumer identification efforts.

Findings regarding complaints from Pennsylvania consumers include the following:

  • As of September 1, 2016, approximately 34,700 complaints were submitted by Pennsylvania consumers of which approximately 69 percent (about 24,100) were from Philadelphia consumers.
  • Debt collection was the most-complained-about product, representing 25 percent of the complaints submitted by Pennsylvania consumers and 27 percent of complaints submitted by consumers nationally.
  • The percentage of mortgage complaints submitted by Pennsylvania consumers, 22 percent, was lower than the 25 percent national average.  However, the percentage of mortgage complaints submitted by Philadelphia consumers, 26 percent, was higher than the national average.
  • Average monthly complaints received from Pennsylvania consumers increased 9 percent from 2014 to 2015, similar to the increase of 8 percent nationally.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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