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    APRIL 1, 2013 – SEPTEMBER 30, 2013 Semi-Annual Report of the Consumer Financial Protection Bureau


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    Table of Contents Message from Richard Cordray ................................................................................ 5 1. Executive Summary ............................................................................................. 7 1.1 Listening to Consum ers ........................................................................... 8 1.2 Delivering for Am erican Consum ers and Leveling the Playing Field ..... 9 1.3 Building a Great Institution .................................................................... 11 2. Consumer Challenges in Obtaining Financial Products and Services .............................................................................................................. 13 2 .1 Consum er Concerns ................................................................................ 13 2 .2 Shopping Challenges .............................................................................. 38 3. Delivering for American Consumers and Leveling the Playing Field .................................................................................................................... 41 3 .1 Resources for Consum ers ....................................................................... 41 3 .2 Outreach ................................................................................................. 54 3 .3 Partnerships ........................................................................................... 56 4. Regulations and Guidance ................................................................................ 61 4 .1 Im plem enting Statutory Protections ...................................................... 61 4 .2 Interpreting and Stream lining Inherited Regulations; Facilitating Com pliance with New Regulations ........................................................ 64 5. Supervision ........................................................................................................ 67 2 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


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    5 .1 Supervisory Activities .............................................................................. 67 5 .2 Supervisory Guidance ............................................................................ 69 5 .3 Reporting on the Truth in Lending Act and the Electronic Fund Transfer Act ............................................................................................ 70 5 .4 Inform ation Sharing With State Regulators ........................................... 76 5 .5 Exam iner Training and Com m issioning ................................................. 77 5 .6 Technology .............................................................................................. 77 6. Enforcement ....................................................................................................... 79 6 .1 Conducting Investigations ...................................................................... 79 6 .2 Public Supervisory and Enforcem ent Actions ........................................ 79 7. Fair Lending ....................................................................................................... 86 7.1 Fair Lending Supervision and Enforcem ent ......................................... 87 7.2 Interagency Fair Lending Coordination and Outreach ......................... 89 8. Building a Great Institution: Update ................................................................. 92 8 .1 Open Governm ent .................................................................................. 92 9. Budget................................................................................................................. 95 9 .1 How the CFPB is Funded ....................................................................... 95 10. Diversity and Excellence ................................................................................. 105 10 .1 Recruiting and Hiring ........................................................................... 10 5 10 .2 Staff Education, Training and Engagem ent ......................................... 10 7 10 .3 Diversity ............................................................................................... 10 8 Appendix A: ............................................................................................................ 114 More about the CFPB ..................................................................................... 114 Appendix B: ............................................................................................................ 116 3 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


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    Statutory Reporting Requirem ents ............................................................... 116 Appendix C: ............................................................................................................ 118 Significant Rules, Orders, and Initiatives ..................................................... 118 Appendix D: ............................................................................................................ 131 Actions Taken Regarding Rules, Orders, And Supervisory Actions With Respect To Covered Persons Which Are Not Credit Unions Or Depository Institutions ......................................................................... 131 Appendix E:............................................................................................................. 134 Reports ..... ..................................................................................................... 134 Appendix F: ............................................................................................................. 136 Congressional Testim ony............................................................................... 136 Appendix G: ............................................................................................................ 138 Speeches ... ..................................................................................................... 138 Appendix H: ............................................................................................................ 141 Financial and Budget Reports ....................................................................... 141 Appendix I: .............................................................................................................. 143 CFPB Organizational Chart ........................................................................... 143 Appendix J: ............................................................................................................. 144 Defined Term s ................................................................................................ 144 4 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


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    Message from Richard Cordray Director of the CFPB At the Consum er Financial Protection Bureau, we are the nation’s first federal agency whose sole focus is protecting consum ers in the financial m arketplace. Lending and savings products like m ortgages, credit cards, and student loans involve som e of the m ost important financial transactions in Am ericans’ lives. In the Dodd-Frank Act, Congress created the Bureau to stand on the side of Am erican consum ers and ensure they are treated fairly in the consum er financial m arketplace. Since we opened our doors just over two years ago, we have been focused on m aking consum er financial m arkets work better for the Am erican people, and helping them im prove their financial lives. In this fourth Sem i-Annual Report to Congress and the President, we describe the Bureau’s efforts to achieve this vital m ission. Through fair rules, consistent oversight, appropriate enforcem ent of the law, and broad-based consum er engagem ent, the Bureau is helping restore Am erican fam ilies’ trust in consum er financial m arkets, protect Am erican consum ers from im proper conduct, and ensure access to fair, competitive, and transparent m arkets. Through our enforcem ent actions, we have aided in efforts to refund more than $ 750 m illion for consum ers who fell victim to various violations of consum er financial protection laws, and we have deposited over $ 82 m illion into our Civil Penalty Fund, which is used to provide financial education and compensate wronged consum ers. We have enacted a num ber of new rules as we continue toward implem entation of the Dodd- Frank Act, including the Qualified Mortgage rule, which requires mortgage lenders to m ake a good faith, reasonable determ ination that borrowers can afford to pay back their loans. 5 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


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    To prom ote inform ed financial decisionm aking, we have continued providing consum ers with useful tools, including the AskCFPB section of our website, where we have answered over 90 0 of consum ers’ m ost frequently asked questions. The prem ise that lies at the very heart of our mission is that consum ers deserve to be treated fairly and to have som eone on their side when they are not. The Bureau has strengthened its Office of Consum er Response, and to date we have received over 175,0 0 0 consum er com plaints on credit reporting, debt collection, m oney transfers, bank accounts, credit cards, m ortgages, vehicle loans, and student loans. The progress we have m ade in the past two years has been possible thanks to the engagem ent of thousands of Am ericans who have utilized our consum er education tools, subm itted com plaints, participated in rulem akings, and told us their stories through our website and at num erous public m eetings from coast to coast. Our progress has also resulted from the extraordinary work of the Bureau’s employees—dedicated public servants of the highest caliber who are com m itted to prom oting a healthy consum er financial m arketplace. Each day, we work to accomplish the goals of renewing consum ers’ trust in the m arketplace and ensuring that m arkets for consum er financial products and services are fair, transparent, and competitive. These goals not only support consum ers as they clim b the economic ladder of opportunity, but also help responsible businesses compete on a level playing field, and reinforce the stability of our econom y as a whole. In the years to com e, we look forward to continuing to fulfill Congress’s vision of an agency dedicated to cultivating a consum er financial m arketplace based on responsible practices, sound innovation, and excellent custom er service. Sincerely, Richard Cordray 6 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


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    1. Executive Summary The Consum er Financial Protection Bureau (CFPB or Bureau) presents this Sem i-Annual Report to the President, Congress, and the Am erican people, in fulfillm ent of its statutory responsibility and com m itm ent to accountability and transparency. This report provides an update on the Bureau’s m ission, activities, accom plishm ents, and publications since the last Sem i-Annual Report, and provides additional inform ation required by the Dodd-Frank Wall Street Reform 1 and Consum er Protection Act (Dodd-Frank or Dodd-Frank Act). The Dodd-Frank Act created the Bureau as the nation’s first federal agency with a m ission of focusing solely on consum er financial protection and m aking consum er financial m arkets work for Am erican consum ers, responsible businesses, and the econom y as a whole. In the wake of the recent financial crisis, the President and Congress recognized the need to address widespread failures in consum er protection and the rapid growth in irresponsible lending practices that preceded the crisis. To rem edy these failures, the Dodd-Frank Act consolidated m ost Federal consum er financial protection authority in the Bureau. 2 The Dodd-Frank Act charged the Bureau with, am ong other things:  Ensuring that consum ers have tim ely and understandable inform ation to m ake responsible decisions about financial transactions; 1 Appendix B provides a guide to the Bureau’s response to the reporting requirem ents of Section 10 16(c) of the Dodd- Frank Act. The last Sem i-Annual Report was published in March 20 13 and m ay be viewed at: http:/ / files.consum erfinance.gov/ f/ 20 130 3_ CFPB_ Sem iAnn ualReport_ March20 13.pdf. 2 Previously, seven different federal agencies were respon sible for rulem aking, supervision, and enforcem ent relating to consum er financial protection. The agencies which previously adm inistered statutes transferred to the Bureau are the Federal Reserve Board (an d the Federal Reserve Banks), Departm ent of H ousing and Urban Developm ent (HUD), Federal Deposit In surance Corporation (FDIC), Federal Trade Com m ission (FTC), National Credit Union Adm inistration (NCUA), Office of the Com ptroller of the Currency (OCC), and Office of Thrift Supervision (OTS). 7 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


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     Protecting consum ers from unfair, deceptive, or abusive acts and practices, and from discrim ination;  Monitoring compliance with Federal consum er finance law and taking appropriate enforcem ent action to address violations;  Identifying and addressing outdated, unnecessary or unduly burdensom e regulations;  Enforcing Federal consum er financial law consistently in order to promote fair competition;  Ensuring that m arkets for consum er financial products and services operate 3 transparently and efficiently to facilitate access and innovation; and 4  Conducting financial education programs. The Bureau has continued its efforts to listen and respond to consum ers and industry, to be a resource for the Am erican consum er, and to develop into a great institution worthy of the responsibility statutorily given to it by Congress. 1.1 Listening to Consumers Listening and responding to consum ers is central to the Bureau’s m ission. In 20 13, the Bureau has provided consum ers with num erous ways to m ake their voices heard. Consum ers nationwide have engaged with the Bureau through public field hearings, listening events, roundtables, and town halls, and through our website, consum erfinance.gov. Consum er engagem ent strengthens the Bureau’s understanding of current issues in the ever-changing consum er financial m arketplace and inform s every aspect of the Bureau’s work, including research, rule-writing, and enforcem ent. The Bureau has continued to improve and expand the capabilities of its Office of Consum er Response to receive, process, and facilitate responses to consum er complaints. For exam ple, in J uly 20 13, the Bureau added debt collection com plaints to the already wide range of products and services for which it accepts com plaints. Consum er Response has also continued to grow 3 See Dodd-Frank Act, Pub. L. No. 111-20 3, Sec. 10 21(b). 4 See Dodd-Frank Act, Pub. L. No. 111-20 3, Sec. 10 21(c). 8 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


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    and update a robust public Consum er Com plaint Database. The database is live, updates nightly, and is populated by over 140 ,0 0 0 complaints from consum ers about financial products and services from all over the country. 1.2 Delivering for American Consumers and Leveling the Playing Field In 20 13, the Bureau has expanded its efforts to serve as a resource for consum ers. The Bureau seeks to serve as a resource on the m acro level, by writing clear rules of the road and enforcing consum er financial laws in ways that im prove the consum er financial m arketplace, and on the m icro level, by helping individual consum ers resolve their specific issues with financial products and services. While the various divisions of the Bureau play different roles in carrying out the Bureau’s m ission, they all work together to protect and educate consum ers, help level the playing field for participants, and fulfill the Bureau’s statutory obligations under the Dodd- Frank Act. In all of its work, the Bureau strives to act in ways that are fair, reasonable, and transparent. To educate and em power consum ers to m ake better-inform ed financial decisions, our Consum er Education and Engagement Division has developed and im plem ented program s, initiatives and digital experiences, such as the Paying for College Project. This online m odule guides users through each step of the college financing process by helping users find financial aid, choose a loan, compare financial aid offers and college costs, m anage college spending, and repay student debt. The Bureau’s Office of Financial Education has engaged a variety of com m unities and stakeholders through webinars, listening sessions, large consum er events, and collaborations with com m unity leaders and educators. For example, in April 20 13, the Bureau launched an initiative to build the financial capability of young people by training teachers in financial education and fostering inclusion of financial education in K-12 curricula. The Bureau is also conducting special consum er outreach and engagem ent efforts for groups in special need of support with consum er finance issues, including m ilitary servicem embers, veterans, older Am ericans, and students. When federal consum er protection law is violated, the Bureau’s Supervision, Enforcem ent, and Fair Lending Division is com mitted to holding the responsible parties accountable. To date, the Bureau’s enforcem ent efforts have returned over $ 750 m illion to the pockets of wronged consum ers. The Bureau has also continued to develop and refine its supervisory program , 9 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


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    through which financial institutions are exam ined for compliance with federal consum er protection law. Continuing the Bureau’s policy of transparency, the Office of Supervision has released its second edition of Supervisory Highlights. This publication is intended to inform both industry and the public about the developm ent of the Bureau’s supervisory program and to discuss, in a m anner consistent with the confidential nature of the supervisory process, broad trends in exam ination findings in key m arket or product areas. The Bureau has also published new exam ination procedures and supervisory guidance docum ents to help institutions know what to expect and how to becom e, or rem ain, com pliant with the law. Reasonable regulations are essential for protecting consum ers from harm ful practices and ensuring that consum er financial m arkets function in a fair, transparent, and competitive m anner. The Research, Markets, and Regulations Division has focused its efforts on prom oting m arkets in which consum ers can shop effectively for financial products and services. During this reporting period, the Bureau issued, clarified, and finalized a num ber of regulations im plem enting changes made by the Dodd-Frank Act to the laws governing various aspects of the m ortgage m arket. In its first two years, the Bureau has issued or updated several rules under the Dodd-Frank Act, including 23 as of Septem ber 30 , 20 13. For exam ple, on J anuary 10 , 20 13, the Bureau released its Ability-to-Repay and Qualified Mortgage (ATR-QM) rule to help ensure that consum ers are treated m ore fairly in the m ortgage m arket, including rules requiring m ortgage lenders to m ake a reasonable, good-faith determ ination that prospective borrowers have the ability to repay their 5 m ortgages. To support the im plem entation of and industry compliance with these rules, the Bureau has published plain-language com pliance guides and video presentations sum m arizing them , and it has actively engaged in discussions with industry about ways to achieve 6 compliance. The Bureau also continues to stream line, m odernize, and harm onize financial regulations that it inherited from other agencies. In addition to im plem enting the Dodd-Frank Act, the Bureau is exploring other areas where regulations m ay be needed to ensure that m arkets function properly and harm ful practices are 5 http:/ / www.consum erfinan ce.gov/ regulation s/ ability-to-repay-and-qualified-m ortgage-standards-under-the-truth- in-lending-act-regulation-z/ . 6 http:/ / www.consum erfinan ce.gov/ guidance/ # com pliance. 10 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


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    addressed. For exam ple, the Bureau is analyzing whether rules are needed to address concerns that have been raised regarding payday loans and deposit advance products, and with debt collection, which is the focus of m ore consum er com plaints to the federal governm ent than any other financial product or service. Over the next six m onths, the Bureau will continue im plem enting the Dodd-Frank Act and using its regulatory authority to ensure that consum er financial m arkets are fair, transparent, and accessible. 1.3 Building a Great Institution Now just over two years old, the Bureau continues to grow as an institution. As of Septem ber 21, 20 13, the CFPB team consisted of 1,355 employees working to carry out the Bureau’s m ission. It has worked to build a hum an and physical infrastructure that prom otes – and will continue to prom ote – transparency, accountability, fairness, and service to the public. That includes:  Dem onstrating a strong com mitm ent to openness and utilizing the Bureau’s website to share inform ation on its operations;  Recruiting highly-qualified personnel;  Providing training and engagem ent opportunities for CFPB staff to improve skills, increase knowledge, and m aintain excellence; and  Promoting diversity in the CFPB’s workforce and am ong its contractors, including through the Bureau’s Office of Minority and Women Inclusion (OMWI). 11 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


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    CFPB em ployees at an All Han ds Meeting in J uly 20 13. The Bureau recognizes that the best way to serve consum ers is to ensure that its workforce reflects the faces, ideas, backgrounds, and experiences of the Am erican public. OMWI supports the Bureau’s m ission by bringing together em ployees of diverse backgrounds and experiences, fostering broader and better thinking about how to approach m arkets. As tim e m oves forward, we will continue working hard to ensure that the Am erican people are treated fairly in the consum er financial m arketplace. We encourage you to visit consum erfinance.gov for updates. 12 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


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    2. Consumer Challenges in Obtaining Financial Products and Services The challenges consum ers face in obtaining financial products and services are a driving force behind the CFPB’s efforts to m ake consum er financial m arkets work better. Listening and responding to consum ers are integral components of our m ission, and the Bureau provides num erous ways for consum ers to m ake their voices heard. 2.1 Consumer Concerns Financial m arkets are rooted in the daily lives and the financial and credit needs of individual Am ericans. Consum er financial products and services, when understood and appropriately used, can bring broad benefits to consum ers. Checking accounts facilitate everyday transactions. Credit products, such as student loans and m ortgages, help people further their educational objectives and individual aspirations to buy a home and pay over tim e. However, all too often, com plicated term s and features cloud the full costs and risks associated with a financial product or service. This can result in consum er confusion that can have serious adverse consequences. Over the past year, consum ers have shared with the CFPB their experiences – positive and negative – with financial products and services. Consum ers have the opportunity to provide the Bureau with such feedback through a variety of forum s, including the “Tell Your Story” feature on the CFPB’s website, and by participating in roundtables, town halls, and field hearings. This feedback is critical to our efforts to understand the challenges consum ers face in obtaining the financial products and services they need. 13 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


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    The stories consum ers have shared with the Bureau through “Tell Your Story” cover a wide range of financial products and services, and provide snapshots of consum ers' day-to-day experiences in the financial m arketplace. Consumers’ stories are reviewed by CFPB staff and further the Bureau’s understanding of current issues in the consum er financial m arketplace. Many of the stories that consum ers have shared with us over the past year illustrate the fallout – particularly the negative im pact on consum ers’ credit scores – from the use of financial products and services whose full cost and risks were unclear. Som e consum ers have reported:  Private student loans offer lim ited options for borrowers to m ake affordable paym ents, negatively skewing debt-to-incom e ratios and lowering consum ers’ credit scores, despite borrowers’ otherwise positive credit histories; and  Credit card companies decreasing consum ers’ credit lim its so that it appears that consum ers are near or over their credit lim it – even if that was not the case before the lim it was decreased – which lowers consum ers’ credit scores. A lack of clarity about credit-scoring m ethodology, how lenders use credit scores, and the process for disputing inform ation in credit reports presents additional challenges for consum ers that affect their day to day lives, as well as their long-term plans. Som e consum ers report frustration over the following:  Their attem pts to improve their credit scores by paying off credit cards or avoiding debt that have the opposite effect, since paying off or not using credit cards can result in lower credit scores due to a lack of activity;  Applying for credit based on FICO scores they requested, only to learn that the lender uses a different, less favorable credit score; and  Inaccurate inform ation on credit reports that negatively im pacts their credit histories and is difficult to correct across all three m ajor credit reporting agencies. In addition to “Tell Your Story,” consum ers have opportunities to voice concerns and share their experiences in person at field hearings and public m eetings, focused on particular consum er finance issues. Consum ers and advocates have participated in large Bureau-sponsored public events in Seattle, WA; Mountain View, CA; Baltim ore, MD; Atlanta, GA; Des Moines, IA; Los 14 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


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    7 Angeles, CA; Miam i, FL; Portland, ME; and Itta Bena, MS. These events have drawn hundreds of participants, m any of whom have shared their personal experiences with m ortgage servicing, payday loans, student lending, debt collection, and other consum er financial issues. The CFPB’s Office of Com m unity Affairs has also hosted roundtable conversations with leaders of consum er, civil rights, com munity, housing, faith-based, student, and other organizations. The roundtables have provided opportunities for stakeholders to m eet with Director Cordray, Deputy Director Antonakes, and other senior Bureau staff to share their first-hand perspectives on key consum er finance issues that affect their com m unities. Collecting, investigating, and responding to consum er complaints are integral parts of the 8 CFPB’s work, as Congress set forth in the Dodd-Frank Act. Consum er Response hears directly from consum ers about the challenges they face in the m arketplace, brings their concerns to the attention of com panies, and assists in addressing their complaints. consum erfinance.gov/ com plaint The CFPB began Consum er Response operations on J uly 21, 20 11, by accepting consum er complaints about credit cards. Consum er Response now accepts complaints about mortgages, bank accounts and services, private student loans, other consum er loans, credit reporting, and m oney transfers. On J uly 10 , 20 13, the Bureau began handling debt collection com plaints. The CFPB continues to work toward expanding its com plaint-handling capacity and plans to include other products and services, such as payday loans. Consum ers m ay also contact the CFPB with 7 Between October 1, 20 12 and Septem ber 30 , 20 13. 8 See Dodd-Frank Act, Pub. L. No. 111-20 3, Sec. 10 21(c)(2). 15 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


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    questions about other products and services. The Bureau answers questions and refers consum ers to other regulators or additional resources as appropriate. consum erfinance.gov/ com plaintdatabase Inform ation about consum er complaints is available to the public, through the Bureau’s public Consum er Complaint Database, launched on J une 19, 20 12. It was initially populated with credit card complaints, was expanded in October 20 12 to include consum er credit card complaints dating back to Decem ber 1, 20 11, and in March and May of 20 13, was expanded further to include com plaints about additional products and services, dating back to the date the Bureau first began to handle those complaints. Specifically, the CFPB added m ortgage complaints dating back to Decem ber 1, 20 11; bank account and service com plaints, private student loan complaints, and other consum er loan com plaints, all dating back to March 1, 20 12; credit reporting com plaints dating back to October 22, 20 12; and m oney transfer complaints dating back to April 4, 20 13. A com plaint is listed in the database when the company responds to the complaint confirming a com m ercial relationship with the consum er, or after the com pany has 16 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


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    had the complaint for 15 days, whichever com es first. Complaints can be rem oved if they do not m eet all of the publication criteria. The database is live, updates nightly, and contains certain individual complaint-level data collected by the CFPB, including the type of com plaint, the date of subm ission, the consum er’s zip code, and the com pany that the complaint concerns. The database also includes inform ation about the actions taken by a com pany in response to a com plaint – whether the com pany’s response was tim ely, how the company responded, and whether the consum er disputed the company’s response. The database does not include confidential inform ation about consum ers’ identities. Web-based and user-friendly features of the database include the ability to filter data based on specific search criteria, to aggregate data in various ways, such as by complaint type, company, zip code, date, or any com bination of available variables, and to download data. Inform ation from the database has been shared and evaluated on social m edia and using other new applications. The Bureau continues to evaluate, am ong other things, the release of consum er narratives, the potential for norm alization of data to m ake com parisons easier, and the expansion of functionality to im prove user experience. 2.1.1 How the CFPB Handles Complaints In keeping with the CFPB’s statutory responsibility and its com m itm ent to accountability, the following pages provide an overview of the handling and analysis of com plaints received by Consum er Response from J uly 1, 20 12 through J une 30 , 20 13. Consum er Response screens all com plaints subm itted by consum ers based on several criteria, including whether the com plaint falls within the CFPB’s prim ary enforcement authority, whether the com plaint is complete, and whether the complaint is duplicative of a prior subm ission by the sam e consum er. Screened complaints are forwarded via a secure web portal 9 to the appropriate com pany. The company reviews the inform ation, comm unicates with the consum er as needed, and determ ines what action to take in response. The company then reports back to the consum er and the CFPB via the secure com pany portal, and the Bureau invites the 9 If a particular com plaint does not involve a product or m arket that is within the Bureau’s enforcem ent authority, or that is not currently being han dled by the Bureau, Con sum er Response refers it to the appropriate regulator. 17 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


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    consum er to review the response and provide feedback. Consum er Response reviews the feedback consum ers provide about company responses, using this inform ation along with other inform ation such as the tim eliness of the com pany’s response, for exam ple, to help prioritize 10 complaints for investigation. Consum ers who have subm itted complaints to the Bureau through Consum er Response can log onto the secure consum er portal available on the CFPB’s website, or call a toll-free num ber, to receive status updates, provide additional inform ation, and review responses provided to the consum er by the company. Throughout this process, subject-m atter experts help m onitor certain complaints. For exam ple, the Office of Servicem ember Affairs coordinates with Consum er Response on com plaints filed by servicem em bers or their spouses and dependents. Consum er Response continually strives to im prove data quality and protect sensitive inform ation, while increasingly m aking data about the complaints the CFPB receives available through reports to Congress and the public, and by sharing certain data with the public through the Consum er Complaint Database. 10 The CFPB requests that com panies respond to com plaints within 15 calendar days. If a com plaint cannot be closed within 15 calendar days, a com pany m ay indicate that its work on the com plaint is “In progress” and provide a final response within 60 calen dar days. 18 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


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    2.1.2 Complaints Received by the CFPB Between J uly 1, 20 12 and J une 30 , 20 13, the CFPB received approxim ately 122,0 0 0 consum er complaints. Approxim ately 51% of all consum er com plaints were subm itted through the CFPB’s website and 8% via telephone calls. Referrals accounted for 27% of all complaints received, with 11 the rem ainder subm itted by m ail, em ail, and fax. FIGURE 1: CONSUMER COMPLAINTS BY PRODUCT The Dodd-Frank Act created the Office of Servicem em ber Affairs to address the specific challenges faced by servicem em bers, veterans, and their fam ilies (collectively “servicem em bers”). It monitors complaints from servicem em bers in conjunction with Consum er Response. Between J uly 1, 20 12 and J une 30 , 20 13, approxim ately 3,80 0 com plaints were subm itted by servicem em bers. 11 This analysis excludes m ultiple com plaints subm itted by a given consum er on the sam e issue and whistleblower tips. All data are current as of J une 20 13. Since launching Consum er Response operation s on J uly 21, 20 11 through J une 30 , 20 13, the CFPB received approxim ately 176,70 0 consum er com plaints. 19 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


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    FIGURE 2: SERVICEMEMBER COMPLAINTS BY PRODUCT The tables and figures presented below show complaints by type, actions taken, com pany 12 responses, and consum ers’ feedback about com pany responses. 12 Percentages m ay n ot sum to 10 0 % due to roundin g. 20 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


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    CONSUMERS’ CREDIT CARD COMPLAINTS Table 1 shows the m ost com mon types of credit card complaints that the CFPB has received as reported by consum ers. 69% of the approxim ately 17,70 0 credit card complaints fell into these 10 categories. TABLE 1: MOST COMMON CREDIT CARD COMPLAINTS REPORTED BY CONSUMERS Complaint % Billing disputes 17% Annual Percentage Rate (APR) or interest rate 8% Credit reporting 8% Identity theft/Fraud/Embezzlement 7% Closing/Cancelling account 6% Collection practices 6% Other 5% Late fee 5% Credit card protection/Debt protection 4% Collection debt dispute 3% Credit Card Complaints in Top 10 Types 69% As the table illustrates, billing disputes are the m ost com mon type of credit card complaint. Consum ers continue to be confused and frustrated by the process and by their lim ited ability to challenge inaccuracies on their monthly credit card billing statem ents. For exam ple, som e consum ers realize only after their claim has been denied that they needed to notify their credit card companies within 60 days of any billing errors. In other cases, consum ers are not aware that companies typically do not stop a m erchant charge once the cardholder has authorized it, or do not override a m erchant’s “no-return policy.” Other com mon types of credit card complaints 21 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


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    relate to annual percentage rates (APRs), interest rates, credit reporting, identity theft, fraud, or em bezzlem ent. The Bureau generally has relied on the consum er’s characterization of his or her com plaint to identify its nature for analytical purposes. However, the CFPB’s experience to date suggests that consum ers m ay have differing interpretations of what these categories m ean. For exam ple, one consum er m ight choose to categorize a problem as a billing dispute, while another m ight identify the sam e issue as a concern with a provider’s setting or changing of an interest rate. To im prove our reporting on the data we receive, the Bureau is evaluating the use of these categories by consum ers to date and developing a sim plified identification schem e to prom ote m ore consistent categorization of com plaints. 22 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


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    CONSUMERS’ MORTGAGE COMPLAINTS Figure 3 shows the types of m ortgage complaints reported by consum ers for the approxim ately 61,50 0 m ortgage com plaints the CFPB has received. FIGURE 3: TYPES OF MORTGAGE COMPLAINTS REPORTED BY CONSUMERS Complaint % Problems when you are unable to pay (Loan modification, collection, foreclosure) 64% Making payments (Loan servicing, payments, escrow accounts) 22% Applying for the loan (Application, originator, mortgage broker) 7% Signing the agreement (Settlement process and costs) 3% Other 2% Receiving a credit offer (Credit decision/Underwriting) 2% Total Mortgage Complaints 100% 23 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


  • Page 24

    The m ost com mon type of m ortgage complaint involves problem s consum ers face when they are unable to m ake paym ents, such as issues relating to loan modifications, collections, or foreclosures. Consum ers with successfully completed loan m odifications have complained that som e servicers do not am end derogatory credit reporting accrued by consum ers during trial periods – even when docum ents provided to the consum ers by servicers indicated that they would do so. Consum ers facing foreclosure have expressed concern and confusion about fees assessed in connection with the foreclosure process. The fees often seem to represent a substantial barrier to a consum er’s ability to reinstate the loan and avoid foreclosure, as m any servicers will not roll the fees into the loan balance. Consum ers are then required to pay hundreds or thousands of dollars, in addition to the loan reinstatem ent am ount, to avoid foreclosure, and the amount of fees the consum er m ust pay to reinstate the loan can be confusing. Finally, foreclosure fees are som etim es listed as one line-item on a reinstatem ent quote, with no item ization provided unless the consum er specifically requests more inform ation on what fees are being assessed. Other com mon types of m ortgage com plaints address issues related to making paym ents, including loan servicing, paym ents, or escrow accounts. For exam ple, consum ers express concern over difficulties they experience when the servicing of their loans are transferred, including complaints about fees charged by the prior servicer, unexplained escrow deficiencies, issues with the new servicer accepting the previous servicer’s m odification, and com m unication between the old and new servicer, especially when ongoing loss m itigation efforts are ongoing. 24 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


  • Page 25

    CONSUMERS’ BANK ACCOUNT AND SERVICE COMPLAINTS Figure 4 shows types of bank account and service complaints, such as complaints about checking and savings accounts, reported by consum ers for the approxim ately 17,80 0 bank account and service complaints received by the CFPB. FIGURE 4: TYPES OF BANK ACCOUNT AND SERVICE COMPLAINTS REPORTED BY CONSUMERS Complaint % Account opening, closing, or management (Confusing marketing, denial, disclosure, 41% fees, closure, interest, statements, joint accounts) Deposits and withdrawals (Availability of deposits, withdrawal problems and penalties, unauthorized transactions, check cashing, payroll deposit problems, lost 27% or missing funds, transaction holds) Problems caused by my funds being low (Overdraft fees, late fees, bounced checks, 15% credit reporting) Making or receiving payments, sending money to others (Problems with payments by check, card, phone or online, unauthorized or fraudulent transactions, 11% money/wire transfers) Using a debit or ATM card (Disputed transaction, unauthorized card use, ATM or 6% debit card fees, ATM problems) 25 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


  • Page 26

    Total Bank Account and Service Complaints 100% As the table illustrates, the m ost com mon type of bank account and service complaint relates to opening, closing, or m anaging the account. These complaints address issues such as account m aintenance fees, legal processing fees for judgments and levies, changes in account term s, confusing m arketing, early withdrawal penalties for certificates of deposit, and involuntary account closures. Other com mon com plaints relate to deposit and withdrawal issues, such as transaction holds, the com pany's right to offset deposit accounts, and unauthorized debit card charges. In this area, m any consum ers are frustrated by companies’ handling of error disputes and requests to stop paym ent on preauthorized electronic debits. A third com mon type of complaint relates to problem s caused by a consumer’s funds being low, including overdraft fees, bounced checks, charged-off accounts, and negative reporting to credit reporting agencies. In this area, m any consum ers are frustrated by the wide discretion companies have to charge overdraft fees and to m anipulate the order in which deposits and withdrawals are posted to consum ers’ accounts. 26 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


  • Page 27

    CONSUMERS’ STUDENT LOAN COMPLAINTS Figure 5 shows the types of student loan com plaints reported by consum ers for the approxim ately 3,90 0 student loan complaints received by the CFPB. FIGURE 5: TYPES OF STUDENT LOAN COMPLAINTS REPORTED BY CONSUMERS Complaint % Repaying your loan (Fees, billing, deferment, forbearance, fraud, credit reporting) 62% Problems when you are unable to pay (Default, debt collection, bankruptcy) 34% Getting a loan (Confusing terms, rates, denial, confusing advertising or 4% marketing, sales tactics or pressure, financial aid services, recruiting) Total Student Loan Complaints 100% The m ost com mon type of student loan complaint relates to repaying the loan, such as fees, billing, deferm ent, forbearance, fraud, and credit reporting. Consum ers continue to struggle with the lim ited affordable paym ent options permitted in their loan agreem ents. Specifically, consum ers are unable to refinance or restructure the repaym ent terms of their loan, either to lower monthly paym ents during periods of financial hardship, or to im prove existing term s based upon the consum er’s improved credit profile and credit-worthiness. Consum ers also 27 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


  • Page 28

    raised concerns about a range of other servicing problem s, including paym ent processing problem s, challenges obtaining necessary docum entation about their private student loans, difficulty obtaining accurate inform ation about their loan status and repaym ent options, and obstacles to accessing basic account inform ation. Another com mon type of complaint addresses problem s consum ers confront when they are unable to pay, such as issues related to default, debt collection, and bankruptcy. 28 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


  • Page 29

    CONSUMERS’ CONSUMER LOAN COMPLAINTS Figure 6 shows the types of consum er loan complaints, such as com plaints about installm ent loans, vehicle loans and leases, and personal lines of credit reported by consum ers for the approxim ately 4,40 0 consum er loan complaints received by the CFPB. FIGURE 6: TYPES OF CONSUMER LOAN COMPLAINTS REPORTED BY CONSUMERS Complaint % Managing the loan, lease, or line of credit (Billing, late fees, damage or loss, insurance 47% (GAP, credit, etc.), credit reporting, privacy) Problems when you are unable to pay (Debt collection, repossession, set-off from bank 24% account, deficiency, bankruptcy, default) Taking out the loan or lease / Account terms and changes (Term changes (mid-deal changes, changes after closing, rates, fees, etc.), required add-on products, trade-in 20% payoff, fraud) Shopping for a loan, lease, or line of credit (Sales tactics or pressure, credit denial, 9% confusing advertising or marketing) Total Consumer Loan Complaints 100% 29 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


  • Page 30

    The table illustrates that the m ost com mon type of consum er loan com plaint pertains to m anaging the loan, lease, or line of credit. Another com mon type of complaint addresses problem s consum ers have when they are unable to pay, including issues related to debt collection, bankruptcy, and default. 30 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


  • Page 31

    CONSUMERS’ CREDIT REPORTING COMPLAINTS Figure 7 shows the types of credit reporting complaints reported by consum ers for the approxim ately 14,10 0 credit reporting complaints the CFPB has received. 13 FIGURE 7: TYPES OF CREDIT REPORTING COMPLAINTS REPORTED BY CONSUMERS Complaint % Incorrect information on credit report (Information is not mine, Account terms, Account status, 72% Personal information, Public record, Reinserted previously deleted information) Credit reporting company’s investigation (Investigation took too long, Did not get proper notice of investigation status or results, Did not receive adequate help over the phone, Problem with 11% statement of dispute) Unable to get my credit report or credit score (Problem getting free annual report, Problem 9% getting report or credit score) 13 Consum er Response began handling credit reporting com plaints on October 22, 20 12. 31 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


  • Page 32

    Improper use of my credit reporting (Report improperly shared by credit reporting company, Received marketing offers after opting out, Report provided to employer without written 4% authorization) Credit monitoring or identity protection services (Problem cancelling or closing account, Billing dispute, Receiving unwanted marketing or advertising, Account or product terms and 3% changes, Problem with fraud alerts) Other 1% Total Credit Reporting Complaints 100% This table illustrates that the m ost com mon type of credit reporting com plaint is about incorrect inform ation appearing on the consum er’s credit report, such as inform ation that does not belong to the consum er, incorrect account status, and incorrect personal inform ation. Many consum ers face challenges with inaccurate furnisher reporting about previously filed bankruptcies. For instance, there is som e confusion about how long a Chapter 7 or Chapter 13 bankruptcy m ay appear on consum ers’ credit reports. Consum ers also frequently question whether a particular account is correctly reporting the fact that the account was or was not included in the consum er’s bankruptcy. Another com mon type of complaint is regarding issues with credit reporting companies’ investigations of inform ation disputed by consumers. Consum ers som etimes question the depth and validity of the investigations perform ed of their disputes, given the speed with which credit reporting com panies return findings. Consum ers are also som etim es confused regarding the extent to which the credit reporting agencies are obligated to provide the consum ers with validation and docum entation of a debt which appears on the credit report. 32 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


  • Page 33

    CONSUMERS’ MONEY TRANSFER COMPLAINTS Figure 8 shows the types of m oney transfer complaints reported by consum ers for the approxim ately 250 m oney transfer complaints the CFPB has received. 14 FIGURE 8: TYPES OF MONEY TRANSFER COMPLAINTS REPORTED BY CONSUMERS Complaint % Fraud or scam 39% Other transaction issues (Unauthorized transaction, cancellation, refund, 22% etc.) Money was not available when promised 16% Wrong amount charged or received (Transfer amounts, fees, exchange 5% rates, taxes, etc.) 14 Consum er Response began handling m on ey transfer com plaints on April 4, 20 13. 33 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


  • Page 34

    Incorrect/missing disclosures or info 4% Other service issues (Advertising or marketing, pricing, privacy, etc.) 4% Other 10% Total Money Transfer Complaints 100% This table illustrates that the m ost com mon type of m oney transfer complaint is about fraud or scam s. Another com m on type of complaint involves issues with other transactions, such as unauthorized transactions, cancellations, or refunds. HOW COMPANIES RESPOND TO CONSUMER COMPLAINTS Approxim ately 99,60 0 (or 82%) of all complaints received between J uly 1, 20 12 and J une 30 , 15 20 13 were sent by Consum er Response to companies for review and response. Table 2 shows how com panies responded to these com plaints during this tim e period. Company responses include descriptions of steps taken or that will be taken, com munications received from the consum er, any follow-up actions or planned follow-up actions, and categorization of the response. Based on industry com m ents received about disclosure of credit card complaint data, beginning J une 1, 20 12, response category options included “closed with m onetary relief,” “closed with non-m onetary relief,” “closed with explanation,” “closed,” “in progress,” and other adm inistrative options. “Monetary relief” is defined as objective, m easurable, and verifiable m onetary relief to the consum er as a direct result of the steps taken or that will be taken in response to the complaint. “Closed with non-m onetary relief” indicates that the steps taken by the com pany in response to the complaint did not result in m onetary relief to the consum er that is objective, m easurable, and verifiable, but m ay have addressed som e or all of the consum er’s complaint involving non-m onetary requests. Non-monetary relief is defined as other objective and verifiable relief to the consum er as a direct result of the steps 15 The rem aining com plaints have been referred to other regulatory agencies (11%), found to be incom plete (4%), or are pending with the consum er or the CFPB (0 .5% and 3%, respectively). 34 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


  • Page 35

    taken or that will be taken in response to the complaint. “Closed with explanation” indicates that the steps taken by the com pany in response to the complaint included an explanation that was tailored to the individual consum er’s complaint. For exam ple, this category would be used if the explanation substantively m eets the consum er’s desired resolution or explains why no further action will be taken. “Closed” indicates that the com pany closed the complaint without relief – m onetary or non-m onetary – or explanation. Consum ers are given the option to review and dispute all company closure responses. 16 TABLE 2: HOW COMPANIES HAVE RESPONDED TO CONSUMER COMPLAINTS Bank account Student Consumer Credit All Credit card Mortgage and service loan loan reporting N≈ 99,600 14,600 55,700 13,900 2,800 2,700 9,600 Company reported closed with 64% 56% 66% 60% 70% 70% 69% explanation Company reported closed with 9% 25% 3% 25% 7% 8% 1% monetary relief Company reported closed with non- 10% 12% 8% 5% 13% 10% 22% monetary relief Company 2% 1% 2% 1% 2% 1% 6% reviewing Company provided administrative 9% 2% 14% 2% 1% 2% 1% response 16 While com panies’ responses under previous categorizations were m aintained, for operational and reporting purposes, respon ses categorized as “full resolution provided,” “partial resolution provided,” and “closed with relief” are considered a subset of “closed with m onetary relief,” and responses categorized as “no resolution provided” and “closed without relief” are categorized as “closed with explan ation.” “Closed with n on-m onetary relief” and “closed” reflect only those respon ses provided by com panies after J un e 1, 20 12. 35 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


  • Page 36

    Company reported closed (without 2% 1% 3% 4% 2% 5% 0% relief or explanation) Total 100% 100% 100% 100% 100% 100% 100% Complaints Companies have responded to approxim ately 91% of com plaints sent to them and report having 17 closed 86% of the complaints sent to them. Beginning Decem ber 1, 20 11, companies had the option to report an am ount of monetary relief, where applicable. Companies have provided relief am ounts in response to m ore than 9,20 0 complaints. The m edian am ount of relief reported by com panies was $150 ; however, company reports of relief am ounts and m edians vary by product. For the approxim ately 3,70 0 credit card complaints where companies provided a relief am ount, the m edian am ount of relief reported was approxim ately $ 125. For the approxim ately 1,40 0 m ortgage complaints where companies provided a relief am ount, the m edian am ount of relief reported was approxim ately $ 450 . For the m ore than 3,50 0 bank account and service complaints where companies provided a relief am ount, the m edian am ount of relief reported was approxim ately $ 112. For the approxim ately 190 student loan com plaints where companies provided a relief am ount, the m edian am ount of relief reported was approxim ately $ 661. And for the approxim ately 225 consum er loan complaints where companies provided a relief am ount, the m edian am ount of relief reported was approxim ately $ 220 . CONSUMERS’ REVIEWS OF COMPANIES’ RESPONSES Once the company responds, the CFPB provides the company’s response to the consum er for review. Where the com pany responds “closed with m onetary relief,” “closed with non-m onetary relief,” “closed with explanation,” or “closed,” consum ers are given the option to provide feedback on the com pany’s response. Table 3 shows how consum ers responded to the approxim ately 86,0 0 0 com plaints where they were given the option to provide feedback. 17 Approxim ately 8 6,0 0 0 of 96,40 0 . 36 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


  • Page 37

    Consum ers are asked to notify the CFPB within 30 days if they want to provide feedback by disputing a company’s response. Approxim ately 63% of such consum ers did not dispute the responses provided, while approxim ately 21% of consum ers did dispute the response provided. The rest were pending with consum ers at the end of this period. TABLE 3: CONSUMER FEEDBACK ABOUT COMPANY RESPONSES Credit Bank account Student Consumer Credit All card Mortgage and service loan loan reporting Consumer did not dispute company’s 63% 68% 63% 67% 68% 61% 49% response Consumer disputed 21% 20% 22% 20% 20% 23% 17% company’s response Pending consumer review of company’s 16% 12% 15% 13% 12% 16% 34% response Total 100% 100% 100% 100% 100% 100% 100% Complaints 37 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


  • Page 38

    CONSUMER RESPONSE INVESTIGATION AND ANALYSIS After requesting that com panies respond to complaints sent to them for response and giving consum ers the opportunity to review and provide feedback on company responses, Consum er Response prioritizes complaints for investigation based on a review of the complaint, the company’s response, and the consum er’s feedback. Consum er Response seeks to determine why a company failed to provide a tim ely response (if applicable) and whether the consum er’s feedback of the company’s response (if applicable) justifies additional review of the company’s m inim um required actions under the consum er financial protection laws within the CFPB’s authority. In the course of an investigation, Consum er Response m ay ask com panies and consum ers for additional inform ation, and once an investigation is completed, Consum er Response sends the consum er a sum m ary. In some cases, Consum er Response has referred complaints to colleagues in the CFPB’s Division of Supervision, Enforcem ent, and Fair Lending and Equal Opportunity for further action. Listening to consum ers and reviewing and analyzing their complaints is an integral part of the CFPB’s work in understanding issues in the consum er financial m arketplace, and in helping the m arket work better for consum ers. The inform ation shared by consum ers and companies throughout the complaint process inform s the Bureau about business practices that m ay pose risks to consum ers and helps the Bureau supervise com panies, enforce federal consum er financial laws, and write better rules and regulations. 2.2 Shopping Challenges The challenges that consum ers face in the m arketplace highlight the importance of a tenet that is central to the CFPB’s m ission – promoting m arkets in which consum ers can understand and anticipate the terms and costs of financial products and services. When the costs, risks, and other key features of financial products are transparent and understandable, consum ers are better able to compare products and choose the best one for them . Prior Sem i-Annual reports highlighted challenges facing consum ers shopping for a particular lending or deposit product, including the m arkets for mortgages, credit cards, student loans, checking accounts, and sm all-dollar credit. Work completed by the Bureau over the past six m onths sheds further light on certain challenges consum ers face with respect to checking accounts. 38 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


  • Page 39

    2.2.1 Overdraft On J une11, 20 13, the Bureau released a white paper of initial data findings in connection with its ongoing inquiry into overdraft program s. 18 In this paper, the Bureau reported that across a study of large banks – banks representing a substantial portion of total deposits in the United States – overdraft fees and fees for non-sufficient funds (NSF) transactions accounted for 61% of the total fees paid by consum ers on their deposit accounts. In addition, among study banks, at least one in five consum ers incurred overdraft or NSF fees. Overdraft and NSF fees influence and affect the consum er checking account experience. The Bureau’s study found a wide variance in costs incurred by consum ers at various banks covered by the study. For exam ple, the Bureau found that am ong these banks, average overdraft and NSF fees paid by accounts with at least one NSF or overdraft item varied by $ 20 1 between the bank with the lowest fees per account and the bank with the highest fees per account. The Bureau’s report highlights potential drivers of overdraft and NSF costs to consum ers. These include:  The institution’s policy for m aking funds “available” with respect to the various types of deposits that can be m ade into an account;  How the institution calculates a consum er’s available balance;  The institution’s debit and credit posting practices, including when posting occurs (real- tim e, at night, or both), whether transactions are com m ingled or posted in sub-batches by transaction type, and the ordering of transactions within sub-batches;  The institution’s policies for setting overdraft limits, authorizing debit and ATM transactions, and m aking pay/ return decisions during posting; and  The institution’s policies with respect to assessing overdraft fees, including caps on the num ber of fees, fee cushions or waivers on de m inim is transaction amounts or balances, forgiveness periods, and sustained or extended overdraft fees. 18 http:/ / files.consum erfinance.gov/ f/ 20 130 6_ cfpb_ whitepaper_ overdraft-practices.pdf. 39 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


  • Page 40

    The study found that these factors vary from institution to institution and interact in com plex ways, such that the sam e set of consum er behaviors can produce different outcom es for the consum er depending on the policies of the consum er’s bank. Consequently, som e of the related challenges consum ers m ay face in shopping for a checking account include:  Recognizing the potential significance of overdraft and NSF fees to the total cost of a checking account;  Understanding and assessing the significance of overdraft policies and fees, and applying them to their individual situations;  Anticipating their future spending, savings, and transactional behaviors and tim ing, and how their actions m ay results in different costs at different institutions; and  Weighing those factors against other considerations that are relevant to the consum er’s product or service including: m onthly m aintenance fees and balance or other requirem ents; cost and attractiveness of ancillary or alternative products or services that the consum er m ay use; and non-cost factors, such as branch and ATM convenience. The Bureau continues to evaluate its policy options with respect to overdraft program s. 40 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


  • Page 41

    3. Delivering for American Consumers and Leveling the Playing Field The CFPB is authorized to exercise its authorities under Federal consum er financial protection laws to administer, implem ent, and promote compliance with those laws. To this end, the Bureau has worked to expand the resources it m akes available to consum ers and build the infrastructure necessary for m aking consum er financial m arkets work better. 3.1 Resources for Consumers The CFPB has launched a variety of offices, detailed in each subsection below, to provide assistance and inform ation to consum ers. The Bureau strives to provide individualized help to consum ers based on their specific issues with financial products and services, and it works to im prove financial literacy and capability – among the public as a whole, and am ong consum ers who have experienced particular challenges in the financial m arkets. 3.1.1 Consumer Response As detailed in the previous section, Consum er Response receives complaints and inquiries directly from consum ers. The CFPB accepts complaints through its website and by telephone, m ail, em ail, fax, and referral. 41 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


  • Page 42

    Consum ers submit complaints on the CFPB website using complaint form s tailored to specific products, and can also log on to the secure consum er portal to check the status of a com plaint and review a com pany’s response. While on the website, consum ers can chat with a live agent to receive help completing a complaint form . Consum ers can also call the Bureau’s toll-free 19 num ber to ask questions, submit a com plaint, check the status of a com plaint, and m ore. The CFPB’s U.S.-based contact centers handle calls with little-to-no wait tim es, can provide services to consum ers in more than 18 0 languages, and serve hearing- and speech-im paired consum ers via a toll-free telephone num ber. Cutting-edge technology, including the secure com pany and consum er portals, m akes the process efficient and user-friendly for consum ers and com panies. The CFPB also provides secure channels for com panies to com m unicate directly with dedicated staff about technical issues. Director Cordray listens in on a call at the CFPB’s Consum er Response Call Center in Iowa. 19 To find m ore inform ation about subm itting a com plaint, please see Appendix A. 42 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


  • Page 43

    As Consum er Response processes com plaints and responds to inquiries, it continues to seek new ways to im prove existing processes to m ake them as efficient, effective, and easy-to-use as possible. Based on feedback from consum ers and companies, as well as its own observations, Consum er Response identifies new opportunities to improve its processes and im plem ent changes with each product launch. By applying the lessons learned through previous complaint function rollouts, it has continued to improve its intake process, enhance com m unication with companies, and ensure the system ’s ease-of-use and effectiveness for consum ers, while providing services trusted by consum ers and companies alike. 3.1.2 Consumer Education and Engagement The CFPB’s Consum er Education and Engagem ent Division (CEE) is responsible for developing and im plem enting initiatives to educate and em power consum ers to m ake better-inform ed financial decisions. Improving financial literacy and capability encompasses m any short and longer-term efforts, and CEE seeks to engage consum ers by providing inform ation and educational tools designed to provide clear and m eaningful assistance to consum ers when they need it. Reaching out to consum ers is essential to the work of this division. From J anuary 1, 20 13 through August 31, 20 13, the division’s offices engaged with different groups across the country through more than 522 listening sessions, town halls and roundtables, visits to m ilitary installations, and other stakeholder events. These and other opportunities to hear directly from consum ers about their financial needs, aspirations, and experiences help inform all of the Bureau’s work. Through this outreach work, the CFPB has connected to more than 15,850 stakeholder organizations that were involved in these events. As a 21st-century agency, the Bureau has focused on bringing financial decision-m aking tools and inform ation to consum ers through an accessible online form at, and a steadily increasing num ber of consum ers have taken advantage of these offerings. The Bureau’s website received m ore than five m illion unique views in the past year, and the Bureau estim ates that m ore than 3,750 ,0 0 0 of those were to areas of the site providing consum er tools, inform ation, and assistance. 3.1.3 Financial Education The Bureau’s Office of Financial Education (OFE) focuses its efforts on producing inform ation for consum ers on a range of consum er financial topics, engaging in ongoing outreach efforts to 43 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


  • Page 44

    understand the financial education needs of various com m unities, and is developing a research and innovation portfolio to enhance existing approaches to financial education. In the area of outreach, OFE has engaged a variety of com m unities and stakeholders. OFE has continued to prioritize outreach to key stakeholders, including financial educators and com munity leaders, and by com m unicating directly with consum ers through webinars, listening sessions, and large consum er events. Much of OFE’s outreach attempts to resolve com mon financial challenges for consum ers through workplace financial education and K-12 financial education policies and practices. OFE held a number of events around the country to assess needs and establish its priorities in these areas. In its role as Vice-Chair, the Bureau is an active mem ber of the Financial Literacy and Education Com m ission (”Com m ission"). The Com m ission was created with the broad purpose of im proving Am ericans’ financial literacy. It has actively worked to m ake im provem ents in the financial capability of young people by implem enting its strategic focus to help Am ericans start early for financial success. This focus is intended to help young people start early in learning about m oney and building sound habits in order to enable them to be successful throughout their lives. Additionally, it m eans that parents, teachers, com m unity leaders, and others will have the knowledge, resources, and tools available to confidently guide young people in starting early for financial success. The Com m ission hosted a field hearing on youth financial education in Madison, Wisconsin on September 25, 20 13. During the hearing, the Com m ission heard from a range of educators and policy-m akers about the continuing need to promote financial decision m aking for youth. The presentations highlighted the positive trends in providing young people with hands-on experiences in m anaging their money and opportunities to prepare young people for the financial decisions they m ay have to m ake regarding choosing a college as well as those that m ay com e up while attending college. In April 20 13, the Bureau launched an initiative to build the financial capability of young people, the future generation of Am erican consum ers. This initiative seeks to foster inclusion of financial education in the K-12 curriculum and facilitate teacher training in financial education. To launch the initiative, OFE hosted a national conference of financial education experts, teachers, and non-profit and governm ental leaders from local, state, and federal levels involved in K-12 financial education. Recognizing the broad range of work that others already are doing in this field, the initiative seeks to strengthen the im pact and effectiveness of K-12 financial education efforts by fostering the sharing of and building on best practices; facilitating partnerships; and collectively identifying, and seeking to fill, critical gaps. Conference panels addressed defining a shared vision, prom ising practices in integrating financial education in 44 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


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    schools, the use of hands-on approaches, and research and evaluation m ethodologies to m easure the effectiveness of classroom financial education. The Bureau issued a white paper 20 recomm ending strategies to improve the personal financial m anagem ent capability of youth. As part of the K-12 initiative, the Bureau released a Pinterest graphic for parents to use in teaching kids to save and plan for items they want to purchase. And in conjunction with the K-12 initiative, the Offices of Financial Education and Consum er Engagem ent launched a parent education cam paign in April 20 13 to engage parents and guardians in the financial education of their children by encouraging discussion of money m anagem ent topics at hom e and providing tools for parents to have m oney conversations with their children. The Bureau offers a set of Ask CFPB questions and answers especially for parents, and hosted a Twitter chat with Bureau staff and financial experts focused on how to have the “m oney talk” with kids. 21 OFE also conducted a second parents’ cam paign in August of 20 13 to coincide with the Back-to-School season. OFE’s outreach to faith-based comm unities has included face-to-face m eetings and webinars. The Bureau is working to inform these organizations about CFPB resources and plans to offer financial capability training inform ation to them , in an effort to enhance their ability to assist their m embers. In coordination with the Bureau’s Office of Hum an Capital (OHC), OFE has launched an in-house initiative to showcase financial education resources for Bureau em ployees, which the Bureau will share with other federal agencies and interested non-public employers. OFE also continues to advance its research and innovation portfolios by procuring the services of outside experts to develop m etrics for success in financial education and to test solutions for consum ers as they m ake regular, everyday financial decisions. OFE has also produced and developed a range of m aterials for consum er reference. Currently, there are 14 publications available either electronically or in hard copy, in both English and Spanish. Since the publications becam e available in Decem ber 20 12, 222,172 print publications have been ordered and 33,365 publications have been downloaded. Finally, OFE launched a LinkedIn Online Learning Com munity for financial education practioners which shares 20 http:/ / files.consum erfinance.gov/ f/ 20 130 4_ cfpb_ OFE-Policy-White-Paper-Final.pdf. 21 http:/ / www.consum erfinan ce.gov/ askcfpb/ search?q=&selected_ facets=audience_ exact%3AParents. 45 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


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    inform ation on trends, news, and practices in financial education. Engaging consum ers directly on consum er financial education topics always has been, and rem ains, a priority for OFE. 3.1.4 Consumer Engagement The Bureau’s Office of Consum er Engagem ent (CE) continues to encourage the public to participate in the Bureau’s work by developing programs, initiatives, and digital experiences that help consum ers m ake inform ed financial decisions. CE continues to im prove and build out the Bureau’s online presence with innovative, user- focused, and data-driven approaches to social m edia and web developm ent. Through research and user testing, CE has been able to tap into the needs, habits, and interests of consum ers, thus creating opportunities to engage the public in the m om ents when the Bureau’s tools and resources can be m ost useful to them . 22 For exam ple, CE built an online consum er experience through its Paying for College project. This online m odule guides users through the prim ary decision points of the college decision- m aking process and offers tools that help users to:  Find financial aid and choose a loan;  Compare financial aid and college costs;  Manage college m oney; and  Repay student debt. CE has also prioritized making the Bureau’s inform ation more accessible in non-English languages, especially Spanish. According to Census data, 37 m illion people in the U.S. prim arily speak Spanish at hom e. Recognizing that at least som e portion of this population could be well served by Spanish language resources, the Bureau launched CFPB en Español, a Bureau website that provides Spanish-speaking consum ers a central point of access to the Bureau’s resources, in 23 Spanish. The website has four m ajor com ponents: a hom epage that highlights CFPB services, 22 http:/ / www.consum erfinan ce.gov/ paying-for-college/ . 23 http:/ / www.consum erfinan ce.gov/ es/ . 46 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


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    Ask CFPB content in Spanish, a complaints page that highlights the phone num ber consum ers can call to subm it a complaint in Spanish, and an “About Us” page that features a Spanish- language video and introductory content about how the CFPB works to protect consum ers. The website was created using responsive design, m eaning it is optim ized for use on both m obile devices and computers in order to better serve all consum ers. The website launched in May 20 13. 3.1.5 Servicemember Affairs The CFPB’s Office of Servicem ember Affairs (OSA) conducted 116 outreach events from J anuary 1, 20 13 through August 31, 20 13, delivering consum er financial inform ation to m ore than 7,40 0 m ilitary and veteran consum ers to help them m ake better inform ed financial decisions. OSA also delivered consum er financial education inform ation to more than 475,0 0 0 consum ers using electronic comm unications and digital and social m edia channels. More specifically, this figure includes reaching out to servicem em bers where they live and work. OSA visited 18 m ilitary installations/ National Guard units and participated in 15 town halls and 16 roundtable discussions with senior m ilitary leaders during the sam e time period. At these outreach events, the Servicem em ber Affairs team listened to servicem em bers discuss the financial challenges they face, observed financial education training, and provided educational m aterials. In addition to the m ilitary units/ installations visited, OSA participated in over 30 outreach events sponsored by external organizations seeking additional educational inform ation about OSA and the CFPB. OSA continues to utilize Facebook and Twitter accounts specifically to serve the m ilitary and veteran com munities. In J anuary 20 13, OSA began extensive developm ent of a “just enough and just in tim e” financial education experience to equip Delayed Entry Program (DEP) participants with the inform ation and education needed to m ake sound financial decisions in certain target subject areas. DEP participants are individuals who have com m itted to join the m ilitary but have not yet reported to boot camp. Our DEP education program aim s to offer experiential education that engages the interest and caters to the learning style of the recruit demographic. The Bureau and the Departm ent of Defense will work together to m ake course content and materials available across the varied tim elines and geographical locations of future recruits and across the arm ed services. Introducing the Bureau as a resource to recruits through DEP should also set the stage for future financial education efforts. 47 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


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    Collaboration and building upon viable outreach networks was a key focus throughout 20 13. OSA connected with the Departm ents of Defense, Veterans’ Affairs, J ustice, and Labor to raise awareness of the CFPB’s m ission and OSA’s specific efforts on behalf of the m ilitary and veteran com munities. At the state level, efforts have centered on introducing state and local resources to the m ilitary comm unity. Outreach efforts included establishing direct lines of com munication with the State Directors of Veterans’ Affairs. In March 20 13, OSA team ed up with the Office of Students and the Office of Consum er Engagem ent to deliver the Bureau’s first m ilitary-focused virtual financial education forum by m eans of live webcast. The forum reached nearly 30 0 m ilitary financial educators, legal assistance attorneys, and on-base college education counselors. Participants learned about student loan servicing issues for servicem em bers and CFPB resources available to assist them . Content highlights from the event were relayed through social m edia channels with a potential reach of approxim ately 25,0 0 0 individuals. External social m edia partnerships with the Departm ent of Defense and the Military Fam ily Learning Network were used to am plify the m essage to servicem em bers stationed overseas, including individuals at m ilitary bases located from the Middle East (Turkey) to East Asia (Okinawa) and a deployed U.S. Navy unit operating off the coast of West Africa. Subsequent virtual forum s in J uly and September 20 13 covered m ortgage-servicing and debt-collection issues. In May 20 13, OSA extended its reach overseas by traveling to m ilitary installations in J apan and Korea. During the trip, consum er financial education inform ation was delivered to over 2,20 0 servicem em bers and families through more than 30 official events on 10 bases in eight business days. On J une 13, 20 13, OSA began work to determ ine the quality of unique program s and services provided to servicem embers and their fam ilies by the Departm ent of Defense and the United States Coast Guard (USCG). The year-long project, perform ed under an inter-agency agreem ent with the Library of Congress’ Federal Research Division, will engage in a quantitative and qualitative assessm ent using industry-recognized standards and processes. The work will help inform OSA’s future educational initiatives by identifying the effectiveness of delivering personal financial education and counseling services to servicem embers and their fam ilies. 3.1.6 Older Americans The Bureau’s Office for Older Am ericans (OA) has continued its outreach efforts nationwide with its core constituency, key public officials, financial institutions, industry, advocates, and 48 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


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    other stakeholders. OA’s m ission is to facilitate the financial literacy of individuals who are 62 or older on protection from unfair, deceptive, and abusive practices, and on current and future financial choices, including the dissem ination of m aterials on these topics. OA participated in 97 events from J anuary 1, 20 13 through August 31, 20 13, reaching more than 5,740 participants. OA’s outreach work is raising awareness of the critical problem of financial exploitation and unfair, deceptive, or abusive practices targeted at older people. OA is also building on its outreach work to help foster local networks to prevent financial harm directed at older people. Specific exam ples of these outreach efforts include helping coordinate Older Am erican Protection Networks in four states and representing the CFPB on the federal Elder J ustice Coordinating Council, which consists of 11 federal agencies that play a role in addressing elder abuse. On April 18, 20 13, OA released a report to Congress and the U.S. Securities and Exchange Com m ission entitled Senior Designations for Financial Advisers: Reducing Consum er Confusion 24 and Risks. The report describes consum er confusion surrounding the wide variety of designations used by financial advisers to signify expertise in senior financial issues. The report also includes recomm endations to help older consum ers verify credentials, im prove the consistency of standards for acquiring the credentials, im prove the consistency of standards for conduct of designees, and reduce consum er confusion. OA expects to release a consum er guide to help older consum ers understand and verify senior designation and certification titles later in 20 13. The CFPB and the FDIC have developed Money Sm art for Older Adults, a curriculum for the FDIC’s Money Sm art program to provide older consum ers with inform ation on preventing and 25 responding to elder financial exploitation. Money Sm art is a financial education curriculum designed to help low- and m oderate-incom e individuals enhance their financial skills. OA and the FDIC will offer several train-the-trainer webinars on the FDIC’s Money Sm art online 24 http:/ / files.consum erfinance.gov/ f/ 20 130 4_ CFPB_ OlderAm ericans_ Report.pdf. 25 http:/ / files.consum erfinance.gov/ f/ 20 130 6_ cfpb_ m soa-participant-guide.pdf. 49 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013


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    26 training platform . OA will also provide prim ers and train-the-trainer sessions to national non- profit organizations that have expressed interest in becom ing Money Sm art Alliance partners for the distribution of Money Sm art for Older Adults. The program was released in J une 20 13. 27 28 Participant guides are available for download on our website, or for order. Instructor 29 m aterials are available from the FDIC. OA is also working with the Am erican Bar Association Com m ission on Law and Aging to produce user-friendly “how-to” guides for agents acting under powers of attorney, guardians, trustees, Social Security representative payees, Veterans Affairs fiduciaries, and others who m ay handle financial affairs for older Am ericans and other vulnerable adults. Fam ily m em bers and others serving as fiduciaries often have no experience handling som eone else’s m oney. The m aterials will include a set of generic national guides, state-specific guides for six states, and a replication m anual for other states. The guides explain what a fiduciary does, record-keeping and prudent investm ent requirem ents, lim itations on com m ingling funds, and other critical basics for m anaging a vulnerable adult’s money. The guides also cover how to spot financial exploitation and protect assets from scam s. The guides are expected to be released in 20 13. 3.1.7 Students Financial aid offers from colleges and universities often fail to m ake basic inform ation clear, such as how much of a particular aid offer is m ade up of loans that need to be paid back and how m uch com es from grants that do not. The Higher Education Opportunity Act of 20 0 8 required the Secretary of Education to develop a m odel financial aid offer form at to help students and their families m ake inform ed decisions about how to finance postsecondary educational expenses. The Bureau partnered with the Departm ent of Education to develop a “Financial Aid Shopping Sheet” to help students and their fam ilies m ake inform ed decisions about how to 26 http:/ / www.fdic.gov/ consum ers/ con sum er/ m oneysm art/ trainthetrainer.htm l. 27 http:/ / files.consum erfinance.gov/ f/ 20 130 6_ cfpb_ m soa-participant-guide.pdf. 28 http:/ / prom otion s.usa.gov/ cfpbpubs.htm l. 29 http:/ / www.fdic.gov/ consum ers/ con sum er/ m oneysm art/ olderadult.htm l. 50 SEMI-ANNUAL REPORT OF THE CFPB, SEPTEMBER 2013

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