The Consumer Financial Protection Bureau is the newest federal regulatory agency. Its mission is to rein in abuses by the financial industry. Over the summer, it announced a refund of $140 million to 2 million Capital One customers who, it determined, had been victims of deceptive marketing of add-on fees.
The bureau has also begun taking complaints from the public about loans, credit cards and other financial products, and releasing the results. If you are the victim of fraud, a billing dispute or any other problem with a bank or credit-card company, you can contact the agency via its website at Consumerfinance.gov. You can also phone toll-free at 855-411-2372 or write to the following address: Consumer Financial Protection Bureau, P.O. Box 4503, Iowa City, IA 52244.
Here are some of the most common problems reported to the bureau in 2011 and the first half of 2012, along with some tips for preventing these problems before they occur.
(1) Billing disputes on credit cards.
Many people don’t know that they have only 60 days to dispute a charge. So review your statement every month. If you see something on your bill that you would like to dispute, write to the address listed on the statement for billing inquiries. Include your name, address, account number and an explanation of the error you would like the company to correct. It’s a good idea to send the letter by certified mail and return receipt requested. The company has 30 days to acknowledge your dispute and 90 days to investigate and resolve it.
(2) Reversing charges.
It can be difficult to get your money back once a charge is authorized or if a merchant has a “no returns” policy, which should be disclosed in the terms of service. Again, watch your statement carefully.
(3) Mystery fees on credit cards.
This is the issue that led the bureau to fine Capital One. When you sign up for a new credit card, watch for the company’s marketers trying to sell you “identity theft protection” or “fraud monitoring.” You don’t need these extra-cost services, so it is wise to decline them. If they show up on your bill, call the number on the back of the card.
(4) Overdraft fees.
Two types of consumer complaints are associated with automatic overdraft protection. The first is simply the amount of the fee, $25 to $35 for each charge made with insufficient funds, plus a charge if the amount is not covered within a few days. Make sure to read the fine print on your agreements. You might be enrolled in overdraft protection on your debit card without realizing it.
(5) Transaction processing and reordering.
The second kind of overdraft complaint comes from a practice called “reordering,” which leads to increased overdraft fees. Let’s say you have $1,900 in your account. You go to the drugstore ($25), pick up some coffee ($3) and pay a parking ticket ($75), before going home and sending in a $2,500 mortgage payment that goes through the day before your paycheck arrives in your account. Many banks will process the large check first, followed by the smaller charges, leading to four separate $30 overdraft fees.
The smartest way to avoid overdraft fees, of course, is to avoid spending more than you have on hand. You might call up and cancel “courtesy” overdraft protection. That means your card will be declined when you have too little money in the account. Or you can link your checking account to a savings account or a line of credit to use as a backup. Finally, it’s a good idea to sign up for automatic low balance alerts, which can come as an email or text message, from your bank or a service like Mint.com. They have saved me several times.