As the regulator handed out a $100 million penalty to Wells Fargo for activities not related to auto financing, the Consumer Financial Protection Bureau noted that the amount of complaints in its database continues to surge toward 1 million entries.
As of Aug. 1, the bureau reported that it has handled approximately 954,400 total complaints across all products. When SubPrime Auto Finance News dug into the CFPB’s searchable complaint database to get a sense of auto financing status, we found statistics that might give finance company executives some assurance about their performance.
The searchable database — which often contains consumer comments as well as the particular company connected to the complaint — has a total of 627,536 entries dating back to Dec. 1, 2011. When selecting auto as a subcategory, the database shows just 16,886 entries, which include both complaints from consumers who currently have a vehicle installment contract or lease as well as issues associated with debt collections in the auto space.
So after doing some quick arithmetic, the auto finance space constitutes just 2.69 percent of the complaints in the CFPB’s searchable database.
For comparison, the CFPB’s latest complaint database update highlighted the bureau’s data involving bank accounts and services. As of Aug. 1, the bureau said it had handled approximately 94,200 bank account or service complaints. That ratio comes in at 9.87 percent.
The CFPB indicated that what triggers the most complaints from consumers about their bank includes issues such as trouble opening accounts, problems with overdraft fees and availability of funds and frustration about financial institutions’ error resolution procedures.
“Deposit accounts are an essential component of millions of consumers’ financial lives,” CFPB director Richard Cordray said. “We are concerned that consumers continue to face difficulties accessing and managing this cornerstone financial tool.
“Consumers who are eligible for a deposit account should be able to get one and use it effectively,” continued Cordray, who pointed out that Bank of America, JPMorgan Chase, Wells Fargo and Citibank were the four companies about which the CFPB has received the most bank account or service related complaints.
CFPB’s action against Wells Fargo
And speaking of Wells Fargo, this week the CFPB fined the bank $100 million for what the regulator deemed to be “widespread illegal practice of secretly opening unauthorized deposit and credit card accounts.”
Spurred by sales targets and compensation incentives, the bureau said employees boosted sales figures by “covertly” opening accounts and funding them by transferring funds from consumers’ authorized accounts without their knowledge or consent, often racking up fees or other charges.
According to the bank’s own analysis, the CFPB found employees opened more than 2 million deposit and credit card accounts that may not have been authorized by consumers.
Officials said Wells Fargo will pay full restitution to all victims and a $100 million fine to the CFPB’s Civil Penalty Fund. The bank will also pay an additional $35 million penalty to the Office of the Comptroller of the Currency, and another $50 million to the City and County of Los Angeles.
“Wells Fargo employees secretly opened unauthorized accounts to hit sales targets and receive bonuses,” Cordray said. “Because of the severity of these violations, Wells Fargo is paying the largest penalty the CFPB has ever imposed.
“Today’s action should serve notice to the entire industry that financial incentive programs, if not monitored carefully, carry serious risks that can have serious legal consequences,” he added.
In response, Wells Fargo insisted that its commitment to addressing the concerns covered by agreements with regulators included:
—An extensive review by a third party consulting firm going back into 2011, which was completed prior to these settlements. The review included consumer and small business retail banking deposit accounts and unsecured credit cards opened during the period reviewed.
—As a result of this review, $2.6 million has been refunded to customers for any fees associated with products customers received that they may not have requested. The bank said accounts refunded represented a fraction of 1 percent of the accounts reviewed, and refunds averaged $25.
—Disciplinary actions, including terminations of managers and team members who acted counter to values.
—Investments in enhanced team-member training and monitoring and controls.
—Strengthened performance measures that are tied to customer satisfaction, loyalty and ethics.
Sending customers a confirming email within one hour of opening any deposit account, and sending an application acknowledgement and decision status letter after submitting an application for a credit card.
“Wells Fargo reached these agreements consistent with our commitment to customers and in the interest of putting this matter behind us. Wells Fargo is committed to putting our customers’ interests first 100 percent of the time, and we regret and take responsibility for any instances where customers may have received a product that they did not request,” the company said.
“Our entire culture is centered on doing what is right for our customers. However, at Wells Fargo, when we make mistakes, we are open about it, we take responsibility, and we take action. Today’s agreements are consistent with these beliefs,” the company went on to say.
More action on Capitol Hill
As lawmakers get back to work following the annual summer recess, U.S. House Financial Services Committee Chairman Jeb Hensarling, a Texas Republican, announced that the committee will begin meeting on Tuesday to debate the Financial CHOICE Act, consider possible amendments and vote on the legislation.
Earlier this summer, Hensarling unveiled the Financial CHOICE Act, what’s being dubbed the Republican alternative to the Dodd-Frank Act, which created the CFPB.
As highlighted in this previous report from SubPrime Auto Finance News, Hensarling stressed his proposal “will end taxpayer-funded bailouts of large financial institutions, relieve banks that elect to be strongly capitalized from growth-strangling regulation that slows the economy and harms consumers, impose tougher penalties on those who commit financial fraud and demand greater accountability from Washington regulators.”