July 25, 2014

CFPB to scrutinize nonbank products: prepaid cards, debt settlement, credit repair, and pawn and title loans

Three years after it opened for business, on July 21, 2014, the Consumer Financial Protection Bureau (CFPB) announced it was accepting complaints from consumers with problems with (1) prepaid cards; (2) debt settlement services; (3) credit repair services; and (4) pawn and title loans. This signals that the CFPB will now be subjecting companies in these markets to heightened scrutiny.


The CFPB started taking complaints about credit cards when it opened its doors in July 2011. It also solicits complaints about mortgages, bank accounts and services, private student loans, auto and other consumer loans, credit reporting, debt collection, payday loans, and money transfers. To date, the CFPB has received 400,000 complaints from consumers.

Complaint Process

The CFPB expects companies to respond to complaints within 15 days and describe the steps they have taken or plan to take. The CFPB expects companies to close all but the most complicated complaints within 60 days. Consumers are given a tracking number after submitting a complaint and can check the status of their complaint by logging on to the CFPB website.

Prepaid Cards

Prepaid cards, which include gift cards, benefit cards, and general purpose reloadable cards (GPRCs), generally allow a consumer to access money that has been paid and loaded onto the card upfront. The CFPB and consumer groups believe that some prepaid cards have fewer consumer protections than debit or credit cards. As a result, the CFPB indicates it will issue a proposed rule aimed at increasing federal consumer protections for general purpose reloadable prepaid cards.

Complaint categories include:

Problems managing, opening, or closing an account
Overdraft issues and incorrect or unexpected fees
Frauds, scams, or unauthorized transactions
Advertising, disclosures, and marketing practices
Adding money and savings or rewards features

Debt Settlement and Credit Repair Services

While debt settlement services fall under the jurisdiction of the CFPB, credit repair services don’t clearly do so. Nonetheless, they are now included in the portal.

Complaint categories include:

Excessive or unexpected fees
Advertising, disclosures, and marketing practices
Customer service issues
Frauds or scams

Pawn and Title Loans

According to the CFPB, pawn stores and title loan companies often provide small loans to consumers using personal property or a vehicle title as collateral that are frequently short-term and may have high interest rates.

Complaint categories include:

Unexpected charges or interest fees
Loan application issues
Problems with the lender correctly charging and crediting payments
Issues with the lender repossessing, selling, or damaging the consumer’s property or vehicle
Unable to contact lender

The consumer complaint portal is an integral part of the CFPB’s data gather