Many Americans confused by credit-card terms, consumer agency says
Many Americans are confused by credit-card terms, the Consumer Financial Protection Bureau said in releasing information about more than 5,000 complaints the agency received in its first three months of operation.
In a report Wednesday on the credit-card complaints, the agency found that banks and other issuers reported 74% were resolved. About 13% of consumers disputed the way credit-card companies resolved the complaints.
"When consumers contact us, we get a snapshot of how the consumer-finance markets are working," said Raj Date, the special Treasury Department advisor who is running the bureau until the Senate confirms a director. "And we are learning that there is a lot of consumer confusion about credit-card terms."
The agency has made handling complaints a priority. After its formal launch July 21, the agency began taking complaints about credit cards and the report covered those received through Oct. 21.
The agency said it plans to expand its complaint system to cover mortgages and home-equity loans by the end of the year.
"Many complaints show consumers struggling to understand the terms of credit cards and associated products like debt-protection services," the report said. "These complaints show a mismatch between consumer expectations and the way the product functions."
From July 21 to Oct. 21, the agency received 5,074 complaints about credit card. It sent most of them -- about 84% -- to the card issuer to try to resolve them. The rest were either incomplete or the consumer requested the complaint not be sent to the issuer.
Billing disputes were the most common problem, accounting for 13.4% of the complaints, followed by disputes about interest rates at 11% and complaints about identity theft and other fraud issues with 10.8%.
The American Bankers Assn. said that resolving customer complaints was the priority of financial institutions and the data showed the industry is doing a good job.
"There are more than 383 million credit-card accounts in the U.S., and less than one-10th of 1% of those have submitted a complaint to the bureau," said Kenneth Clayton, the trade group's chief counsel.
-- Jim Puzzanghera in Washington
Photo: A MasterCard sticker on a store door in New York. Credit: Associated Press.