Checking In With the CFPB 2020 Consumer Response Annual Report

By Matt Kirkpatrick

The Consumer Financial Protection Bureau provided Congress with its 2020 Consumer Response Annual Report on March 24, 2021.  As one might expect, the Report shows that 2020 was a particularly difficult year for consumers.  Before the pandemic the CFPB received approximately 300,000 consumer complaints each year.  In 2020, more than 540,000 consumers filed complaints, an 80% increase from the pre-pandemic average.  While the Report notes that only 32,100 complaints (about 6%) used words related to the pandemic, this article highlights ways the pandemic impacted consumer complaints to the CFPB last year.

Interestingly, the number of complaints related to debt collection tactics and threats actually decreased last year.  Citing the CFPB’s March 2021 FDCPA annual report, the Report speculates this decline may be related to pandemic-related restrictions states have placed on debt collection activities.  However, debt collection was the second most complained-about issue among servicemembers.  There were complaints from tenants being pursued by debt collectors after vacating their apartments.

It is perhaps unsurprising that many consumers reported issues with online banking and mobile banking applications, given pandemic-related stay-at-home orders and limited access to physical bank branches.  One large provider reported a 200% increase in new mobile banking registrations early in the pandemic.  Complaints included access issues, errors and delays in online bill payments, and deposit discrepancies.

With respect to mortgage-related complaints, the Report notes that CARES Act’s homeowner hardship forbearance provisions and the federal- and state-issued foreclosure moratoriums appear to have had their intended effect.  While mortgage-related complaints increased in spring 2020, they decreased for the rest of the year.  Overall, in 2020, complaints about struggling to make mortgage payments were down 32% from the average for the prior two years.  In contrast, complaints about applying for a mortgage increased 88%, which the Report attributes to increased activity due to low interest rates.

Complaints related to student loans were similarly a mixed bag in 2020.  Such complaints were down 45% overall from the prior two years’ average, probably due in large part to the CARES Act’s borrower relief provisions.  However, complaints were generated by the considerable confusion over pandemic relief measures, including the different treatment of Education Department-owned loans in contrast to, for example, student loans owned by states, commercial lenders, schools, and other private entities, which do not qualify for relief under the Act.  Difficulties enrolling in or recertifying income driven repayment plans also lead to many complaints, including by borrowers whose payments increased after they were incorrectly required to recertify their plans.  Borrowers also continued to complain about the Public Service Loan Forgiveness program, now including servicers incorrectly treating pandemic-related suspended payments as non-qualifying payments, contrary to the CARES Act.

Money services complaints increased significantly in 2020, with complaints about domestic money transfers up 47% compared to the prior two years’ average, digital wallet complaints up 126%, and fraud scam complaints up 41%.  The Report found it notable that delays in fund deliveries exacerbated consumers’ difficulties in responding to the pandemic.

Given that the pandemic’s effects discussed above cut both ways in terms of the volume of consumer complaints, one might ask what drove the overall 80% increase in complaints in 2020.  The answer: consumer reporting agencies.  The CFPB received 319,300 credit or consumer reporting complaints last year.  Already the complaint leader and trending upwards in years past, credit report-related complaints increased 129% in 2020 from the prior two years’ average.  The Report found this increase to be concentrated in complaints about inaccurate information and the “Big Three” credit reporting agencies (“CRAs”)—Equifax, Experian, and TransUnion—a significant portion of which were related to identity theft.  Complaints about incorrect information increased 147% and complaints about investigation problems increased 139%.  The Report further noted that CRAs stopped providing complete and accurate responses to many complaints last year.  It promised to issue a separate report later this year to further analyze the credit reporting complaints and the CRAs’ responses.

It has been a difficult year for most of us, including as consumers.  It will be interesting to see how the trends identified in the CFPB’s 2020 Report translate into new demand for consumer legal services.