When the Bank Error is NOT in Your Favor, Call the CFPB

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Have you ever been trapped in a bank's call center maze? Your bank made a mistake, and you called to get it fixed. It took you five minutes just to speak with a human being. But unfortunately that person couldn't help. So, she transferred you to someone else. And then someone else. At the end, the last person told you that there was nothing they could do.

The secret to getting out of that maze is the Consumer Financial Protection Bureau complaint system.

These twisty situations happen more than you can imagine. Most of us do our banking with enormous institutions that they have thousands of employees across multiple locations. Throughout my career, I've managed many such call centers all over the world. And, as much as you don't like calling the bank, it can be even more frustrating for the people on the receiving end. Those call center employees have to navigate countless computer systems (which often are not user-friendly). No surprise, the customers whom they talk to are often very angry by the time they reach them. And those front-line bank employees have very little autonomy to change whatever caused your problem.

A $2 Billion Deal

The consequences of getting lost in one of these bureaucratic mazes can be severe. Some of the worst stories out there are about people losing their home to foreclosure when they shouldn't have. Ocwen (OCN), the nation's largest non-bank mortgage servicer, has made so many errors that it was forced by the CFPB to provide $2 billion in principal reduction to borrowers.

Customer service incompetence can cost you in other ways, too. You could end up paying money that you don't owe (too much interest or late fees, for example). Or, you your credit score could be hurt, which would cost you thousands of dollars in the future.

For years, your few alternatives included requesting a manager or ranting in chat forums. But one of the true consumer wins to emerge from the 2008 financial crisis is the CFPB complaint team. You can submit a complaint online, and the CFPB will reach out to the financial institution on your behalf. Unfortunately not all complaints are created equally. The daughter of the CEO will always receive better service than a customer without a CEO relationship. But the good news is that you now can have a regulator weigh in on your side, and once that happens, your complaint will be treated differently.

An Industry Insider Has a Sad Personal Story

More than 400,000 people have used the CFPB's complaint service since it was launched. But rather than focusing on big picture, I want to share with you just one story: that of my friend Niral.

Niral used to work for Capital One Financial (COF) (yes, he is a banking veteran), and bought a townhouse in Virginia. When he moved, he kept the home as an investment and has been renting it. He recently refinanced his mortgage with TD Bank (TD), which offered very low interest rates for investor mortgages.

In February, Niral moved again. He called TD Bank and sent it a secure mail via its online system to change his address. (He established a paper trail because, as a former banker, he wanted to be sure he had an abundance of proof that he'd made the request.) For some reason, TD did not change the address.

Meanwhile, Niral's property insurance increased, and the notification was sent to his old address, along with the old statements. Because Niral continued to send the automatic payments at the old, lower payment amount, the bank only counted those payments as partial payments. Further notifications were sent by TD Bank -- to the old address.

Niral wondered why he had not received his statement, so he called the bank. A rep told him that he owed $180 in late fees and that he had been reported to the credit bureau for being late.

A Lot of Silence

Niral sent long, explanatory emails -- along with proof of his address change requests. No one replied.

%VIRTUAL-article-sponsoredlinks%He called multiple times, and the only response he could receive was that the bank had no record of the address change. Reps refused to fix his credit report (a missed payment on a mortgage is a big hit to your score) or refund any late fees.

So, Niral (on my urging) complained via CFPB. It took him less than 10 minutes online, and all he was asked for was his email address, property address, loan number and lender name.

And then the magic happened. Within two weeks, he received a letter (to the correct address -- miracle!) from TD Bank saying it was investigating.

And shortly thereafter he received a letter from TD Bank stating the fees would be reimbursed and his credit report amended.

What You Need to Know

Niral, who has spent his entire career in banking, was unable to navigate the complex maze of a bank's customer complaint system. But the CFPB made it right. And it can do it for you too. But just remember the following:
  • Keep a paper trail of any communication with your bank when you complain. Niral, for example, always sent secure emails so that he had a record of his communication.
  • Try the CFPB before you hire an expensive lawyer.
  • Don't wait. If you are having difficulties with your bank, go to the CFPB sooner rather than later.
  • Don't use the CFPB to game the system. The banks will still research the complaint. They do not just write checks to anyone who complains via the CFPB -- you need to have a real case.
CFPB has also created a publicly available database of the complaints. I regularly analyze and publish the results of how the banks compare. And I was thrilled to be invited by the CFPB to El Paso, Texas to testify in a field hearing a few days ago. The CFPB wants to expand that database to include the full narrative of the complaint, rather than just labels like billing disputes. A description of the complaint, provided by the consumer, would be shared (so long as the consumer consents). The bank could write a response. I strongly support the expansion of the database so that stories like Niral's can be shared more widely. And I hope that:
  • Rather than giving up, wasting time or hiring an expensive lawyer, people use the CFPB. There should be 4,000,000 complaints going through its office, not 400,000.
  • The press and websites start to pay more attention to the most complained-about banks. League tables, like the ones produced by MagnifyMoney, should be used to praise those banks with excellent customer service track records. But, equally, it should be used to shame those who don't.
  • Senior managers at banks and other financial institutions start worrying about complaint rankings, in the same way that airlines worry about on-time flight statistics.
Learn from Niral and the other 400,000 people who have used the CFPB when all else seemed lost. You have a friend in the CFPB, and that gives you more power than you realize.

Nick Clements is the co-founder of MagnifyMoney.com, a website that makes it easy to cut your costs without cutting your lifestyle. He spent nearly 15 years in consumer banking, and most recently he ran the largest credit card business in the U.K.

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When the Bank Error is NOT in Your Favor, Call the CFPB

Before launching into review our finances, I kicked off with the same Money Organizer Workbook I have my readers or clients use when reviewing their finances. It broke down steps for me to conquer and review one at a time, and allowed me to see the areas I needed to focus on and where I was good to go.

Creating a plan around your finances without having clearly defined goals in akin to getting into the car to drive somewhere without a destination in mind. There's no room for vagueness. My husband and I had to sit down and determine what we're trying to accomplish (aside from just surviving the change wave that is hitting us). We got detailed and created actionable SMART Goals (Specific, Measurable, Attainable, Relevant and Timely). So, instead of merely saying we'll vacation in Europe, we're now "saving $5,000 for a vacation to Europe next summer."
We all know we're supposed to spend less than we make, but are we? Building a budget is the most important part of getting financially organized. You can't create a plan to meet your goals without knowing where your money is going. Start tracking your spending by paying attention to fixed expenses, debt payments and discretionary (or what I call "fun times") expenses. Pinpoint the areas that are prime for reductions if necessary. In our house, we're willing to cut back on dining out in order to build up our travel fund.
Have you added to or reduced debt since the year began? When it comes to tackling debt, either go after accounts with the highest interest rates first (meaning extra money goes towards this balance only) or use the "snowball" method (targeting lowest balances for payoff first) to build momentum. I have clients and readers use the debt spreadsheet in the Money Organizer Workbook to document creditors, outstanding balances, terms, interest rates and minimum monthly payments and prioritize from there. While we make an effort to pay off our credit cards in full each month, knowing the balances we carry in other debt helps us to understand how much mortgage we can afford when we make the move into a house later this year.

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The max contribution for your Roth and regular 401(k)s is $17,500. That's $2,916.67 a month for the next six months.

As an entrepreneur managing my finances on a variable income, I tackle the funding with ongoing systematic contributions and some lump-sum deposits through the year.

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Schedule a check-in for six months from now to track the progress you've made on goals and to review the list of items you've tackled in the previous months. Celebrate your wins along the way. In our house, we have a list of the things we want to purchase (big or small) on the refrigerator. Each time our savings accounts get to a certain amount, we celebrate by allowing ourselves $100 toward one of the items we wanted to purchase. It's a small way to celebrate success and to curb impulse spending.
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