Legal experts say the placement and wording of the Consumer Financial Protection Bureau's new online form for credit card complaints may put an unwelcome spotlight on issuers' risk management strategies.
What concerns certain industry experts is that the bureau's complaint form asks "a lot of leading questions," Alan Kaplinsky, a partner with the law firm of Ballard Spahr LLP in Philadelphia, says. The agency seems to have designed the questions to gather more information than is needed to enforce existing laws, he says.
Complaint categories include routine topics such as billing disputes, but the form also includes a few questions straying into proprietary card-issuer risk-management strategies, such as consumer credit limits and account access, with the options "credit line increase/decrease" and "closing/cancelling account."
"I think [the bureau] will elicit lots of complaints from cardholders which are not based on actual violations of law," Kaplinsky says.
A bureau representative declined to say how many credit card complaints it has received so far.
So far the bureau's mandate from Congress, as part of the Dodd-Frank Act, is to enforce existing laws by taking over supervisory roles from other agencies. The bureau oversees financial institutions with at least $10 billion in assets, which make up 80% to 90% of the credit card industry.
The bureau cannot create new rules until the Senate confirms and appoints an agency director. President Obama on July 18 nominated Richard Cordray, Ohio's former attorney general, to direct the bureau.
"Issuers should begin analyzing what their own complaint data say and make sure they have an ability to respond in a timely process, as well as noting where a trend might suggest a bigger root cause," says Michael Brauneis, managing director of regulatory risk in the Chicago office of Protiviti Inc., a consulting firm based in Menlo Park, Calif. "Wherever possible, issuers should take steps to address any problems in the consumer-complaint area before examiners get to it."
Issuers should not underestimate the challenges of making credit card disclosures simple, Brauneis says.
"If the mortgage industry is any indication, the bureau will be pushing to simplify and standardize many of the forms the credit card industry uses, which could have the ultimate effect of eliminating differentiating product features and fees," he says.
