Connect with us

News

In the Pandemic, Complaints Against Financial Institutions Rise – Business – Milford Daily News

Published

on

Consumer complaints to the Consumer Financial Protection Bureau were up 31% in the first five months of 2020, compared with the same period last year, and many of these new

Consumer complaints to the Consumer Financial Protection Bureau were up 31% in the first five months of 2020, compared with the same period last year, and many of these new complaints specifically mention the coronavirus crisis.

The CFPB relays consumer complaints about loans, credit cards, bank accounts and other financial products to financial institutions. For people who are dissatisfied or otherwise frustrated with their direct interaction with a financial company, this complaint process can offer recourse, often within a few weeks. During a nationwide financial crisis, it stands to reason, these frustrations would run high.

On March 4, the CFPB received its first complaint mentioning the COVID-19 pandemic. That first complaint was about canceled travel and the inability to get a refund despite global travel warnings. Over roughly the next three months, through May 31, the cutoff date used in this analysis, the agency received 1,309 complaints mentioning the pandemic.

Our analysis looked at all complaints filed with the CFPB from Jan. 1 through May 31, 2020, and posted to its database by June 1 at 9 a.m. EDT. These complaints are not necessarily representative of consumer experiences as a whole, but they tell interesting stories of hardship in uncharted financial territory.

In the first five months of 2020, the CFPB received 142,782 complaints, 31% more than in the first five months of 2019.

Complaint narratives hint at financial strain causes

When someone files a complaint with the CFPB, they go through a series of multiple-choice selections and enter a narrative describing their gripe. That narrative can be made public, if the complainant consents, giving us the opportunity to mine those narratives for certain words, sentiments and overall trends. If they don’t consent, the complaint basics ” such as financial product, issue and associated company ” are still published, minus the detailed description. Of the complaints filed through May 31, 2020, just 33% were published with a narrative.

By searching those narratives for words including “covid,” “coronavirus” and a handful of related terms, we found 1,309 complaints specifically mentioning the pandemic. Although only a small portion of published complaints included a public narrative, considering the rise in overall complaints, it’s likely many of the others were also related to the financial impacts of the pandemic.

Among all complaints with narratives, those mentioning job loss, unemployment or a related set of synonyms were up 34% when compared with the same period last year.

Mortgage, credit card and credit reporting complaints most common

Having “incorrect information on your credit report” was the most commonly cited complaint issue in the first five months of 2020 and 2019. But among 2020 complaints explicitly mentioning “covid” or related terms, “struggling to pay mortgage” is the top issue ” accounting for 16% of that subset.

Mortgages

Among pandemic-related complaints, more than one-quarter (26%) are tagged with “mortgage” as the primary financial product. In reading through those labeled as mortgage complaints, we found many consumers frustrated with the lack of relief provided by mortgage forbearance offers. Namely, the consumers were unhappy that lenders required full repayments of delayed installments ” known as a balloon payment ” at the conclusion of the forbearance period.

Take action: Borrowers seeking mortgage forbearance may be able to negotiate different terms with their lender if a balloon payment isn’t feasible. Some lenders may allow repayment of the forbearance amount across several months or tack it onto the end of the loan term, though this isn’t always the case. Loan modification is another relief tool. It restructures your mortgage terms entirely.

Credit cards

The second most commonly cited financial product in coronavirus-related complaints are credit or prepaid cards, accounting for 23%. Combing through complaints tagged with credit cards we found many people frustrated by credit card issuers closing inactive accounts with no warning.

Take action: Having a credit card canceled unexpectedly can eliminate one source of emergency funding in tough financial times. Unfortunately, credit card issuers aren’t required to notify account holders before closing an inactive account. Occasionally using a credit card for a tank of gas or a trip to the grocery store can be enough to keep the account open and available when you need it most.

Credit reports

“Credit reporting, credit repair services or other personal consumer reports” is the third most common financial product category complained about in coronavirus-related narratives. Generally, these products are the most commonly complained about throughout the year, and while they account for just 20% of those explicitly citing the pandemic, they are 60% of the total complaints filed so far in 2020.

Reading through the narratives, we found many complaints centered on accounts being reported delinquent to credit bureaus despite being in forbearance or another payment modification program. Delinquent accounts on your credit report can make it more difficult to access new or increased lines of credit. Under the terms of the coronavirus relief package passed by Congress in March, participation in loan forbearances or other creditor hardship programs should not negatively impact the credit of someone whose account is otherwise in good standing.

Take action: When working with financial institutions, it’s important to ask explicitly whether suspended or late payments will be reported to the credit bureaus and to keep an eye on your credit reports for errors in the months afterward. Because of the pandemic, the CFPB has extended the time credit bureaus have to resolve such errors from 30 to 45 days.

METHODOLOGY

Using the statistical programming language R and Google Sheets, we analyzed consumer complaints received by the Consumer Financial Protection Bureau by the date a complaint was received. The full complaint database was downloaded at 9 a.m. EDT on June 1, 2020. Because complaints aren’t published on the database until a company responds (or 15 days after initial receipt, whichever comes first), complaints received before our cutoff date of May 31, 2020, will continue to be added to the database in months to come, so the totals will change.

Single complaint records could be duplicate issues, filed by a single consumer more than once. Because the complaints are anonymized, we did not account for this.

When searching for complaints specifically related to the coronavirus pandemic, we searched for the following terms: “coronavirus,” “covid,” “pandemic” and “quarantine.” When searching for complaints specifically related to job loss, we searched for the following terms: “unemployment,” “unemployed,” “job loss,” “laid off” and “lost job.” All searches ignored letter case.

More From NerdWallet

COVID-19 and Your Money: A Guide Mortgage Relief Programs During the Coronavirus Crisis How to Get Student Loan Relief During the Pandemic and Beyond

Elizabeth Renter is a writer at NerdWallet. Email: elizabeth@nerdwallet.com. Twitter: @elizabethrenter.

Source link

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

News

California’s vague new financial regulation law

Published

on

California Capitol. Photo by Anne Wernikoff for CalMatters

In summary

California has a new financial regulation law but its reach is vague and awaits more definition.

Assembly Bill 1864 didn’t get much media or public attention as it zipped through both houses of the Legislature on the last day of the 2020 session.

Superficially, it appeared merely to reconfigure the state’s financial regulatory agencies into a new entity called the Department of Financial Protection and Innovation.

However, those in California’s vast financial industry were paying lots of attention because the bill creates an entirely new regulatory regime with broad powers, including fines of up to $1 million a day, to police financial players that hitherto have had little oversight.

The official rationale for the legislation is that President Donald Trump’s administration neutered the federal Dodd-Frank Wall Street Consumer Financial Protection Act of 2010, so the state must step in with an equivalent to guard against predatory financial practices that harm consumers.

The new California Consumer Financial Protection Law gives the reconstituted agency authority to go after “abusive practices” whose definition in the law is fairly vague. Thus, the agency itself will define the term as it also decides which businesses will face its scrutiny.

It appears that the new law will affect firms involved in debt settlement, credit repair, check cashing, rent-to-own contracts, payday lending, student loan servicing and financing for retail sales. However, its primary target seems to be financial services offered by non-banks, particularly what are called “fintech companies” that offer bank-like services via the Internet without maintaining physical offices.

Fintechs, many of them based in the San Francisco Bay Area, have blossomed in recent years as part of the digital economy, competing with traditional brick-and-mortar banks. Their disruptive nature is not unlike the challenge that technology-based ride services such as Uber and Lyft pose to taxicabs and buses.

Late-blooming changes in AB 1864 exempted traditional financial firms that are already regulated, such as banks and credit unions, from the new consumer protection law, leading some analysts to conclude that its unstated aim is to help them stave off competition from new kids on the financial block.

The vagueness of the new law was encapsulated in what Gov. Gavin Newsom said during a signing ceremony. The new law and the new department, he said, will “create conditions for innovation to flourish in a way where we can steward that and we can just work against its excesses. So we support risk-taking, not recklessness.”

Newsom also signed two other financial protection measures, one that requires debt collectors to be licensed beginning in 2022 and the other creating a Student Loan Borrower Bill of Rights.

Although the new state law is said to mirror the Dodd-Frank law, it contains at least one significant difference. When federal regulators levy fines for what they consider to be bad conduct, the money goes into the federal treasury. When state regulators impose their fines of up to $1 million a day, the money will be retained by the new agency to finance more activity.

Will that give the new agency a financial incentive to skip over minor consumer issues and go after big companies? It’s a question that only time will answer.

Significantly too, the new investigative and regulatory mechanism contained in AB 1864 specifically does not usurp the authority of the attorney general to also target companies under the state’s equally vague “unfair competition” law.

From its inception a decade ago, Dodd-Frank has attracted criticism from business executives for regulatory overkill. Will California’s new version be less controversial? We won’t know until the new agency puts some definitional meat on its bones.



Source link

Continue Reading

News

California’s vague new financial regulation law – Whittier Daily News

Published

on

Assembly Bill 1864 didn’t get much media or public attention as it zipped through both houses of the Legislature on the last day of the 2020 session.

Superficially, it appeared merely to reconfigure the state’s financial regulatory agencies into a new entity called the Department of Financial Protection and Innovation.

However, those in California’s vast financial industry were paying lots of attention because the bill creates an entirely new regulatory regime with broad powers, including fines of up to $1 million a day, to police financial players that hitherto have had little oversight.

The official rationale for the legislation is that President Donald Trump’s administration neutered the federal Dodd-Frank Wall Street Consumer Financial Protection Act of 2010, so the state must step in with an equivalent to guard against predatory financial practices that harm consumers.

The new California Consumer Financial Protection Law gives the reconstituted agency authority to go after “abusive practices” whose definition in the law is fairly vague. Thus, the agency itself will define the term as it also decides which businesses will face its scrutiny.

It appears that the new law will affect firms involved in debt settlement, credit repair, check cashing, rent-to-own contracts, payday lending, student loan servicing and financing for retail sales. However, its primary target seems to be financial services offered by non-banks, particularly what are called “fintech companies” that offer bank-like services via the Internet without maintaining physical offices.

Fintechs, many of them based in the San Francisco Bay Area, have blossomed in recent years as part of the digital economy, competing with traditional brick-and-mortar banks. Their disruptive nature is not unlike the challenge that technology-based ride services such as Uber and Lyft pose to taxicabs and buses.

Late-blooming changes in AB 1864 exempted traditional financial firms that are already regulated, such as banks and credit unions, from the new consumer protection law, leading some analysts to conclude that its unstated aim is to help them stave off competition from new kids on the financial block.

The vagueness of the new law was encapsulated in what Gov. Gavin Newsom said during a signing ceremony. The new law and the new department, he said, will “create conditions for innovation to flourish in a way where we can steward that and we can just work against its excesses. So we support risk-taking, not recklessness.”

Newsom also signed two other financial protection measures, one that requires debt collectors to be licensed beginning in 2022 and the other creating a Student Loan Borrower Bill of Rights.

Source link

Continue Reading

News

397 people register to vote on deadline day at Duval Supervisor of Elections – 104.5 WOKV

Published

on

JACKSONVILLE, Fla. — Monday, Oct. 5 at midnight, is the deadline to register to vote in Duval County.

But the Supervisor of Elections helped hundreds of people get registered today.

Robert Phillips, the chief elections officer of the Duval Supervisor of Elections, told Action News Jax’s Courtney Cole that 397 people came down to the Supervisor of Elections in downtown Jacksonville to get registered.

Supervisor of Elections staff assembled tents outside to allow people to register to vote without having to go through the COVID-19 prescreening necessary to enter the building.

“Again, 2020 has thrown us some challenges,” Phillips said.

There was even a little rain thrown into the mix today, but it didn’t stop folks from coming out.

“Out here, we have a lot of activity. We’ve been going since first thing this morning,” Phillips told Action News Jax.

There were people of all ages from all walks of life — some even registered for the very first time like Lemark Jamison.

Monday, Oct. 5, is a day he will always remember.

“It feels awesome, you know? It feels awesome,” Jamison told Cole.

Today, Jamison had the opportunity to register to vote for the first time in Florida.

“I’ve worked for voter registration companies. I’ve done advocating for Amendment 4, but I was never able to vote because of my prior background. But now I can,” Jamison said.

Jamison, the owner of a tax and credit repair business, told Cole his prior felony conviction held him back in the past.

In November 2018, more than 60% of Floridians voted to restore voting rights to more than 1 million people who completed their sentences.

But several months later, legislation was passed that required them to pay all financial penalties, which means thousands lost the right as quickly as they gained it.

“I’ve been contributing to society. I’ve been able to have several businesses. And I pay taxes. But I haven’t been able to, when it comes to voting, whether in a local level or any type of legislature — I haven’t been able to vote,” Jamison said.

The 35-year-old told Cole even though his wife helped him fill out his voter registration form — to which he exclaimed, “Thank God for wives, right?” — he told Cole it was pretty easy.

Now, he has this advice to share with other people who may be in his shoes:

“Get out and vote. Take advantage of this opportunity, regardless of who you plan on voting for.”

Here’s a breakdown from the Supervisor of Elections of how the 397 people registered today:

-56% registered as Democrats.

-21% registered as Republicans.

-22% registered as nonparty affiliates.



Source link

Continue Reading

Trending