Under pressure from Senate Banking Committee Chairman Phil Gramm, the Office of the Comptroller of the Currency is urging national banks to address the growing number of credit-card-related complaints.
"When we see a trend or conspicuous problem, even before the next regularly scheduled exam, we will be in contact ... with bank management to flag this," said Julie L. Williams, the OCC's chief counsel.
According to Ms. Williams, the OCC routinely refers individual credit card complaints to banks it supervises, and addresses persistent, systemic problems during regularly scheduled compliance exams.
In recent months, however, the Comptroller's Office has begun to take more decisive action, ordering its examiners to contact the lenders immediately and demand results.
The OCC's stepped-up oversight is partly a response to queries from Sen. Gramm. Recent contact between the two parties included a testy letter to Comptroller John D. Hawke Jr. and follow-up calls from committee staff members.
The Texas Republican first contacted Mr. Hawke in late April, shortly after Dallas-area media outlets began reporting allegations that First USA Bank of Wilmington, Del., was unfairly imposing late fees, finance charges, and penalty rates on some credit card customers. First USA subsequently acknowledged delays at its payment processing facility in Phoenix, refunded fees for some customers, and ended its relationship with that vendor.
"The good news is that through our normal quality-monitoring processes, we discovered this and took a series of steps to address the issue," said Carter Warren, First USA's executive vice president for marketing.
But the OCC was also motivated by the growing volume of credit card-related complaints.
"The senator is raising some perfectly legitimate and very understandable issues about customer concerns," Ms. Williams said. "Coupled with trend information, that does cause us to want ...to ensure that the complaints are resolved and that whatever systemic issue may have given rise to the problem in the first place gets fixed at the bank."
In fact, bank-by-bank statistics on the number of credit card complaints lodged with the OCC may lend some credence to concerns about First USA.
In response to a Freedom of Information Act request, the agency last week revealed the number of credit card complaints associated with each of the 10 largest national credit card banks. The data show that First USA customers lodged 2,793 complaints during the first half of 1999. That is more complaints than the other nine banks combined, which generated a total of 2,536 calls. Chase Manhattan Bank USA was second with 515 complaints.
First USA spokesman David Webster said the bank's complaint record needs to be viewed in the proper context. Though he said "one complaint is too many," he pointed out that the 2,793 complaints is relatively small when compared with the millions of First USA card holders. He also blamed Dallas-area media coverage of an April lawsuit against the company for generating many of the calls, and said the volume of calls has actually decreased since midyear.
Ms. Williams confirmed the recent falloff in complaints about First USA. She also cautioned against equating complaints with violations of the law. "You've definitely got dissatisfied customers," she said. "You do not necessarily have violations."
Despite the OCC's efforts to increase pressure on some credit card banks, Sen. Gramm's spokesman, Larry Neal, said it is not clear yet whether the agency's recent moves will prove sufficient.
"As a practical matter, it's a little too early to assess," he said. "It seems plain that we're going to have to get into the fall before some assessment of that can be attempted."
Underlying the tension between Sen. Gramm and Mr. Hawke is the unresolved issue of Mr. Hawke's tenure. He was nominated to the post in a one-year recess appointment last December. He needs Senate confirmation to earn a full term, but Sen. Gramm has refused to schedule a vote. It is widely believed he is doing so in order to leverage the committee's position on financial reform legislation.
The April lawsuit alleges that First USA has engaged in a "scheme" to boost "lagging profits" by illegally imposing late-payment fees and finance charges on customers. First USA denies the charges.