Compliance Blog

Aloha! My name is Janice and I have joined NAFCU’s Regulatory Compliance team all the way from Hawaii. In my month that I have lived in DC, I have experienced everything being closed due to COVID-19, protests, thunderstorms, and heat advisories. That is a lot for a girl who’s used to “island time.” Now that I have settled into the whirlwind that is DC, it is time for my very first blog post. And what better topic to discuss than COVID-19 pandemic consumer complaints!

March and April were record months for complaint volume at the CFPB, with 36,700 complaints in March and 42,500 complaints in April. The CFPB recently issued a report analyzing the complaints that have been received during the COVID-19 pandemic. The report focuses on the following COVID-19 keywords: COVID, coronavirus, pandemic, or CARES Act.

In March and April, credit reporting continued to be the topic addressed in most complaints. However, when looking only at COVID related complaints, consumer lending specific complaints constituted almost three times as much as credit reporting complaints. Mortgage and credit card complaints each usually make up about 9% of the total complaint volume received by the CFPB. Yet, for complaints specifically mentioning coronavirus keywords, mortgages made up 22% of the complaints and credit cards made up 19% of the complaints.

With the economic downturn caused by the COVID pandemic, it is no surprise that most of the COVID complaints were about consumer lending, specifically mortgages and credit cards. Job loss and furloughs, pay cuts, and business closures left many consumers with uncertainty on how they would be able to pay their bills. Among the COVID related complaints, struggling to pay a bill was a top issue reported by consumers for most loan products. Mortgages had the highest percentage of consumers that identified struggling to pay their mortgage as their COVID issue, at 59%. Similarly, for vehicle loans/leases, personal loans, and title loans, the top COVID issue was struggling to pay the loan - making up 58%, 36%, and 57% respectively of those products complaints.

However, the complaints were not only about the consumers’ own struggles to make payments. Consumers frequently wrote in their complaints about being unable to reach customer service representatives. Additionally, consumers were frustrated by the singular method of contact available to them (via telephone) and were further angered by the prospect of being placed on hold for several hours.  

Once consumers were able to contact their servicer or creditor, consumers tended to focus on attempting to change various loan terms such as interest rates, extending the length of the loan, and postponing payments. In these discussions, consumers often referenced the CARES Act and other COVID specific government programs.  These issues were prevalent for mortgages, credit cards, vehicle loans/leases, student loans, and personal loans.

Consumers were concerned about forbearance repayment, mainly that 90 days was too short a forbearance period and that they would be unable to pay a lump sum amount at the end of 90 days. Others were concerned about the potential impact a forbearance or deferral might have to their credit scores and ability to secure future loans.

The Consumer Complaint Database is free and credit unions can sort by state, product, issue, or keyword to see the top issues possibly facing their members. In Letter to Credit Unions 20-CU-02, the NCUA encouraged credit unions to work with affected borrowers and provided examples of accommodations the credit union could provide to “assist members and communities in responding to challenges associated with COVID-19.” While these examples to assist members are not mandatory, a credit union may want to review the guidance and complaint data to make sure that its COVID-19 efforts are properly addressing members’ hardship in times of need to avoid any potential complaints from members.

NAFCU’s 2020 Credit Union Compliance Roadmap is now available! NAFCU's Credit Union Compliance GPS is now the Credit Union Compliance Roadmap. It has a modern, clean look and includes callouts with links to various resources to supplement your reading.