WASHINGTON–An analysis of the nearly 500,000 complaints in the CFPB’s Consumer Complaint Database has identified one issue more than any other as a source of irritation when it comes to complaints related to financial services.
Complaints related to bank accounts and services make up about 11% of the total number of complaints, according to analysis conducted by Pew Research Trust.
“Nearly one in four of the bank account or service complaints describes issues related to overdraft policies and fees, including the amount and frequency of fees and the reordering of transactions from high to low by dollar amount, which maximizes these fees,” said Pew.
Among the consumer complaints that are part of the database:
- “Charged ($320.00) in overdraft fees because my account was showing I had more money than what was available and the bank said it’s because some items were pending and … often the items go through regardless of the order of the purchases.”
- “I have incurred reoccurring charges on my account for overdraft fees, extended late fees for over thirty-days. The bank claims to have sent letters, which we do not have record of receiving. No phone calls were made to me, nor emails. … [T]oday, they advise me the account will be charged off in eight days, and they refuse to put a no debt hold on the account.”
Pew noted that banks that allow ATM and point-of-sale debit overdrafts reported nearly 400% more revenue from overdraft fees than banks that do not. These banks reported over $2.4 billion in overdraft fee revenue for the first half of 2015.
“The volume of overdraft complaints is not surprising given that, as Pew’s research shows, 87% of overdrafters are somewhat or very concerned about the cost of overdraft service,” said Pew. “Eighty percent believe that overdraft practices and fees should be more closely regulated. And the majority of overdrafters would prefer to have their transactions declined rather than pay a $35 overdraft fee.”
With the CFPB expected to write new rules on overdraft in 2016, Pew is calling on the new rules to:
- Provide accountholders with clear, comprehensive terms, and pricing information for all overdraft options.
- Make overdraft penalty fees reasonable and proportional to the bank’s costs in covering the overdraft.
- Prohibit the practice of reordering transactions to maximize fees, and post deposits and withdrawals in a fully disclosed, objective, and neutral manner.