By Maureen Mahoney, Consumers Union
The Consumer Financial Protection Bureau (CFPB) – in addition to its equally important regulatory and supervision work – collects and investigates complaints from consumers about financial products and services and regularly reports back to consumers about the most-complained about issues. The CFPB recently released its latest report, which shines a light on complaints about bank accounts. Bank accounts were the fourth-most complained about financial product or service in July (following debt collection, credit reporting, and mortgages).
The CFPB explains that most complaints about bank accounts are related to checking accounts. Consumers expressed concerns about account management, deposits and withdrawal, and sending or receiving payments. The CFPB also flagged a few specific issues:
- An increase in complaints about banks’ use of credit report information in deciding whether or not to open new accounts;
- Complaints about overdrafts, including reordering charges to maximize overdraft fees (more on this below) and high fees for small charges;
- Complaints over the length of time it takes for deposits to be available; and
- Difficulty resolving bank errors.
Consumers Union also frequently receives complaints from consumers about overdrafts. Not only can overdrafts be pricey – the largest banks charge an average of $33.66 per overdraft – but some banks may reorder charges at the end of the day, maximizing the number of overdrafts and catching consumers off-guard. For example, Gabriela from St. Louis, Missouri, explained how re-ordering affected her:
“I am a single mother who works two jobs, is working on my masters and doesn’t receive child support. My family network is from Mexico, so we don’t have a lot of money. I am doing all of this on my own. My bank cashes the largest item first and deliberately causes my checking account to overdraft so they can charge me more in overdraft fees. The most recent situation was when my rent check was sent to be cashed a month after it was written. I had several small debit transactions out for less than $5. Had those debit transactions been paid first, I would have avoided all NSF fees as I most likely would have only been over by a few cents if anything. Instead, the bank cashed the check first and automatically imposed a NSF fee causing several other of the smaller debits to overdraw. So, now I am paying over $100 for being less than $20 over. All this does is keep me from being able to pay my other bills and put food on the table for my son. Without these fees, I would be able to save some money so I could avoid this from happening, but I can’t. It makes my stomach hurt knowing that I am simply being punished for being poor, when I desperately need help.”
The CFPB has increasingly turned its attention toward overdraft issues in recent months. In July, the CFPB fined Santander bank $10 million for deceptively marketing overdraft services – including enrolling consumers in overdraft without their explicit permission. And according to its website, the CFPB is now “engaged in pre-rulemaking activities” as it considers a potential rule relating to overdraft.
Do you have a complaint about overdraft, or any other financial product or service? The CFPB is unique among federal agencies, because they not only collect and make public these complaints, but also investigate them and work with the companies to produce a substantive reply. Consumers can submit complaints here.