The Consumer Financial Protection Bureau (CFPB) began operations in July 2011, and takes complaints about a wide range of financial services including credit cards, mortgages, bank accounts and services, private student loans, auto and other consumer loans, credit reporting, debt collection, payday loans, and money transfers. On July 21, 2014, the CFPB announced that it was extending this list to include complaints from consumers with problems with prepaid cards, debt settlement services, credit repair services, and pawn and title loans. This is an indication that these companies will now face greater scrutiny by the CFPB.
Upon receiving a complaint, the CFPB forwards it to the company in question and works to get a response. The company is then given 15 days to respond to both the customer and the CFPB and it is expected that all but the most complicated complaints should be summarily dealt with within 60 days. Financial institutions should note that complaint data is shared with state and federal agencies who oversee the financial products and services they offer and that the CFPB non-personal complaint information is disseminated through its database so that all members of the public are privy to the kinds of complaints that were received and how companies responded. This strategy is hoped to help consumers in their evaluation of companies when they are shopping around for a bank or other financial service.
Debt Settlement and Credit Repair
A debt settlement service is one that typically promises consumers it can renegotiate, settle, or in some way change the terms of a person’s delinquent debt, by asserting that they can reduce the outstanding balance, interest rates, or fees owed. Credit repair services offer to improve a consumer’s credit reports by contacting credit reporting agencies on the consumer’s behalf and challenging items on the reports. A good credit repair service will, in addition to this, give financial counseling, and teach their client how to improve his credit scores and keep his credit record free of negative influences such as liens, collections, late payments, and repossessions. Many credit repair services accept credit and debit card payments through a credit repair merchant account.
The fees charged by these types of companies are often high and the CFPB has already taken several enforcement actions against debt settlement firms for manipulation of consumers struggling to get their financial affairs in order. Complaint categories against debt settlement and credit repair services include: excessive or unexpected fees; advertising, disclosures, and marketing practices; customer service issues; and frauds or scams. These new categories of complaints, in effect, give consumers a greater voice in these markets, along with a feeling that a watchdog is present to deter shady dealings. It also gives them a place to turn in the event that they encounter problems.
Honest companies will no doubt welcome the new move by the CFPB, since consumers will now be better able to differentiate between those companies out to take advantage of them and those that are working in the consumers’ best interest.
EMB can set you up with a credit repair merchant account in as little as 2 days, contact us today to get started!