Each week, another regulatory issue makes the headlines — from Bank of America’s mishandling of unemployment payments during the pandemic to Goldman Sachs’ problem-ridden platform to service Apple Cards to the widespread pandemic-era fraud. At the root of understanding these issues is customer complaints, which tell financial institutions about the looming, fast-growing problems they need to know before they make the news.

If financial institutions looked at their customer complaints as a data source, they would be equipped to see the rising issues customers are telling them about, address practices and policies that are causing these issues; and prevent massive fines, unhappy customers, and bad media attention.

The good news is that with the PositivityTech^® intelligent platform, financial institutions can proactively monitor their customer complaints and catch issues before they truly rear their ugly heads. Read on to see what this looks like:

Early warning signals can make all the difference

Following Bank of America’s $225 million fine for pandemic-related fraud, PositivityTech found that throughout 2020, Bank of America’s customers submitted complaints to the Consumer Financial Protection Bureau (CFPB) about the issues regulators raised. While the volume, at that time, was still small, the “shape of the curve” was worth noting and tracking.

With PositivityTech’s proactive, ongoing systemic monitoring in place combined with “listening” to customers’ narratives, the outcome for Bank of America and its customers could have been very different.

The power of identifying improvements

Preventing fraud and scams are a number one focus for financial institutions, which is why MoneyGram found itself in hot water earlier this year. The CFPB fined the company for failing to deliver money to recipients and violating rules around remittance transfers.

Yet, while PositivityTech did reveal that complaints about fraud or scams were the number one issue for MoneyGram during the past decade, it also revealed that it has become less and less of an issue during the past year. As we shared,

“MoneyGram’s impressive reduction in complaints about fraud and scams for international money transfers showcases its leadership in this area. By sharing MoneyGram’s best practices with domestic (U.S.) money transfer providers, could the curve of increasing complaints be reversed faster — leading to a win for MoneyGram, the industry, and consumers?”

The media is turning to PositivityTech for the insights that banks need to know

As banks are slammed with regulatory concerns, financial journalists are reaching out to gain PositivityTech’s crucial findings, including:

A showdown is coming over who is liable for P2P payments fraud

With the CFPB’s forthcoming guidance on banks’ liabilities concerning digital payment fraud, American Banker turned to PositivityTech for customer complaint-related insights. PositivityTech shared the following:

What card issuers can learn from CFPB’s buy now/pay later inquiry

When the CFPB began looking into Buy Now Pay Later practices, PositivityTech found that complaints were still small, but that they were steadily increasing.

These findings foreshadowed the many issues that BNPL companies, still very much in their prime, would face only months later.

Truist reckons with customer backlash after integration snags

Following Truist’s recent technology integrations, customers took to the phone, their branches, and social media to voice their complaints. With customer complaint data, PositivityTech revealed how robust the issue really was.

How badly was Bread burned by its online credit card payment glitch?

Following Bread Financial’s recent outage, journalist Kate Fitzgerald turned to PositivityTech to see how customers were impacted. PositivityTech revealed Bread’s customer complaints during this critical time — and pointed to ongoing issues.

Do not ignore your customer complaints

In my experience, customer conversations are largely unused and ignored. Yet, they reveal so many opportunities for action. No financial institution has the luxury of leaving their customer complaints unexplored. With PositivityTech, you can find regulatory problems while they’re still bubbling at the surface — and you can stop them in their tracks. With insights come the ability to predict and prevent issues, and most importantly, keep your customers happy and grow your bottom line.

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Why don’t we act upon early indicators of change? Why do we discount “small volume as noise” when the rate of growth is undeniably significant? And why are we surprised when this rate of growth turns into a scalable problem a year or two later?

Early warning signals extracted from what our customers tell us make it possible for us to identify, understand, predict, and prevent growing customer issues.

When early warning signals could have made a difference

Just last week, federal regulators fined Bank of America $225 million for failing to control widespread fraud in the disbursement of state unemployment benefits.

Throughout 2020, Bank of America’s customers submitted complaints to the Consumer Financial Protection Bureau (CFPB) about the issues regulators raised. While the volume, at that time, was still small, the “shape of the curve” was worth noting and tracking. With proactive, ongoing systemic monitoring in place combined with “listening” to customers’ narratives, could the outcome have improved for Bank of America and its customers?

The power of triggers

What early warning signals are we seeing in today’s customers’ complaints submitted to the CFPB, and what resulting actions might we see in the next year or two?

The PositivityTech® intelligent platform’s proprietary triggers, algorithms that reveal leading indicators of environmental risks, pinpoint timely issues that may require preemptive management actions.

Currently, there are two significant — and different — issues with rising complaints from customers to the credit bureaus.

• What’s causing these issues?
• What are financial institutions doing about them?

Read on to explore these growing issues, and our findings related to them.

Growing Issue #1: “Improper Use of Your Report,” specifically “Reporting Company Used Your Report Improperly”

The PositivityTech visual below shows that complaints about this issue continue to grow exponentially, beginning in early 2022.

Growing Issue #2: “Unable to Get Your Credit Report or Credit Score,” specifically “Other Problem Getting Your Report or Credit Score”

The following PositivityTech visual shows that complaints about this issue grew significantly for more than six consecutive months.

Similar impact across the bureaus

In the past few months, TransUnion, Equifax, and Experian have experienced a similar rise in customer complaints related to these two issues.

Three states have the largest concentration of these complaints

Florida, Georgia, and Texas are seeing the greatest rise in customer complaints about these two issues.

Similar language within many of these complaints

Many submissions to the CFPB focused on the complaint, “Improper Use of Your Report,” use similar language and specifically reference the Fair Credit Reporting Act and codes specific to fair and accurate credit reporting. This may indicate that a large volume of these complaints are being submitted by credit repair companies on customers’ behalf, disputing the accuracy of credit reports.

Unusually high volume of complaints “in progress”

Companies usually respond to customer complaints in a timely manner.

• In looking at the complaint database over the last 10 years, approximately 6% of companies’ responses to consumers are “in progress.”
• In looking at the complaint database over the last year, approximately 15% of companies’ responses to consumers are “in progress.”
• In looking at the complaint database just for those complaints about “Improper Use of Your Report,” approximately 28% of companies’ responses to consumers are “in progress.”

Specifically, the number of “in progress” complaints in the last month is almost 30,000! And approximately one-third of these complaints are about “Improper Use of Your Report.”

What do PositivityTech triggers reveal about your institution?

As we all know, change happens. The important thing is knowing about change as early as possible and taking proactive action. PositivityTech’s triggers reveal changes while they’re still small and automatically send alerts to make sure they’re on your radar. That makes it possible for you to get ahead of issues, monitor and track progress, and raise awareness of potential problems before it’s too late.

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“Your most unhappy customers are your greatest source of learning.” —Bill Gates

Financial institutions are pushing back against the Consumer Financial Protection Bureau’s recent enforcement actions. With data based on their customers’ own narratives, financial institutions can use the PositivityTech® Intelligent Platform to learn where they have room to improve, push back on claims they don’t agree with, and demonstrate their proactive leadership and successes. Read on to see how institutions can do just that with hot issues currently under scrutiny: fraud and money transfers, expanded regulation of nonbanks, and discrimination embedded within all financial products.

Spotlight on Transfers and Fraud

CFPB’s claim

In April, the CFPB filed a lawsuit against MoneyGram for failing to deliver money to recipients and violating rules around remittance transfers.

MoneyGram’s response

MoneyGram issued the following response: “Director Chopra is right to focus on the very real issue of consumer fraud in the financial services industry. MoneyGram cares deeply about this issue, too. Unfortunately, the Director failed to acknowledge the tremendous achievements by MoneyGram to prevent fraud and protect consumers. After investing more than $800 million over the past decade to enhance its compliance program, MoneyGram is now an industry leader in compliance and fraud detection.”

Pushing back with PositivityTech insights

Tackling fraud is not simple. According to a recent article by Kate Fitzgerald, “The latest wave of lawsuits and confusion about liability for P2P fraud also suggest much work is needed to shore up security and accountability around irrevocable account-to-account transfers.”

Yet, an analysis of customer complaints to the CFPB about MoneyGram, which specializes in international money transfers, shows that MoneyGram has succeeded in this area — and that complaints about fraud or scams have decreased significantly.

• Over the past decade, complaints about fraud or scams were the number one issue for MoneyGram.

• Over the past 12 months, complaints about fraud or scams dropped to become the number three issue for MoneyGram.

• Over the last 90 days, complaints about fraud or scams were no longer a top issue for MoneyGram.

Getting ahead with PositivityTech’s insights

MoneyGram’s impressive reduction in complaints about fraud and scams for international money transfers showcases its leadership in this area.

Today, more than 50% of complaints to the CFPB about domestic (U.S.) money transfers are related to fraud or scams. MoneyGram has the opportunity to transfer its successes from international money transfer fraud reduction to institutions facing high numbers of complaints about domestic (U.S.) money transfer fraud or scams.

By sharing MoneyGram’s best practices with domestic (U.S.) money transfer providers, could the curve of increasing complaints be reversed faster – leading to a win for MoneyGram, the industry, and consumers?

Spotlight on Nonbanks

CFPB’s position

Recently, the CFPB invoked its authority to hold nonbanks to the same standards that banks are held to. Yet even before that, customers of nonbanks submitted complaints to the CFPB. These complaints, which have volumes that are comparable to larger financial institutions, provide early indicators of risks that nonbanks must address systematically.

Getting ahead with PositivityTech insights

Nonbanks: Personal Loans

The majority of the 15 companies with the most complaints to the CFPB about installment loans are nonbanks. Affirm currently has the most complaints about installment loans — three to four times more complaints than banks such as Wells Fargo and Truist, and 30% more complaints than OneMain Financial, a leader in offering nonprime customers responsible access to credit.

Affirm customer complaints to the CFPB continue to rise, in contrast to One Main Financial and Lending Club customer complaints. To maintain its competitive position, Affirm can use its customers’ insights to improve its products and practices.

Below is an example of a customer complaint to the CFPB about Affirm.

Nonbanks: Checking Accounts

As a relatively young fintech company that is not a bank, Chime has amassed a large number of customer complaints to the CFPB about checking accounts, putting it alongside major banks. Chime is the only nonbank among the 15 companies with the most complaints to the CFPB about checking accounts.

As you can see in the visual below, Chime’s customer complaints about checking accounts to the CFPB continue to rise.

Below is an example of a customer complaint to the CFPB about Chime.

Knowing where Chime stands in regard to customer complaints to the CFPB can help the nonbank identify, understand, predict, and prevent these issues.

Spotlight on Discrimination

CFPB’s claim

An anti-discrimination policy constitutes a federal violation, stating that discrimination on the basis of age, race, national origin, religion, sex and marital status violates UDAAP (“unfair, deceptive or abusive acts or practices”). Now, the CFPB can look for discrimination across noncredit financial products, like payments, prepaid cards, deposit and checking accounts, remittances and debt collection, and others.

Customer narratives about discrimination

By exploring their customer complaints, financial institutions can understand the perceived discrimination that their customers face. The following customer narratives about noncredit financial products share experiences of perceived racism and elder abuse.

Getting ahead with PositivityTech insights

The following visual shows an increase in complaints in which customers share perceived discrimination when getting a credit card and managing their bank accounts.

The CFPB has made it clear that the quantity of complaints does not matter. One problematic complaint is one complaint too many, and institutions must stay on top of their customer complaints, work to repair practices, and prevent these issues.

What does your customer complaint data reveal?

With PositivityTech, you have the customer complaint data that you need to see where you can improve, where you’re succeeding, and how you can push back.

Interested in learning where you stand — before you hear about regulators’ claims? Please connect with me at marcia.tal@positivitytech.com. I’d be happy to show you how to extract critical insights based on your own customer complaint data.

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Under what circumstances would you “break up” with a customer — and what would that cost you? According to a recent Gartner report, “By 2025, 75% of companies will ‘break up’ with poor-fit customers as the cost of retaining them eclipses good-fit customer acquisition costs.”

These future break ups are problematic for both customers and companies. Customers are not static and their situations may change. As Forbes contributor Steve Andriole writes,  “A poor customer could become a great one tomorrow.” Similarly, companies evolve and their strategies change. Executing upon strategic redirection is complex. How does a company implement change equitably, communicate clearly, and ensure that their customers have other options? What happens if they don’t?

Using the PositivityTech® Intelligent Platform, you can see the risks of breaking up with customers based on data from millions of customer complaints to the Consumer Financial Protection Bureau.

A look at account closures: What happens when you break up with customers?

Since the early stages of the pandemic, a growing number of customers have complained that financial institutions are closing their accounts without warning. When banks close their customers’ accounts to reduce their credit exposure — and do not provide a clear explanation for why they have done so, banks send a message to their customers that they are “poor-fit.” This leads to an uptick in complaints and increased regulatory scrutiny. It also impacts customers’ credit profile, which leads to additional hardships during a period of uncertainty and change. 

Explore two real-life complaints from longtime customers who have experienced involuntary account closures, and a PositivityTech visual that illustrates this issue’s growth:

A look at mergers: What happens when customers are deemed “poor-fit”?

Bank mergers bring sweeping changes — from strategic direction to the banks’ name and brand to technology conversions and more. As a result, errors occur: Customers are often casualties of mergers, and are left feeling frustrated and confused. Customer retention during a merger is crucial, and customers’ complaints impact an organization’s bottom line.

In the following visuals from PositivityTech, you can see the rise of complaints shortly after such mergers, as well as two complaints from customers who experienced issues during mergers.

PNC and BBVA

BB&T and SunTrust (Truist)

How does a “poor-fit” customer strategy align with a company’s ESG strategy?

Today, ESG is core to business’ strategy and their future growth. Below read what two top banks share about their ESG strategies. See how that language compares to Gartner’s wording about a “customer-fit score.”

Not only would an accurate customer-fit score need to quantify customers’ lifetime value and future value in addition to the existing value of their relationship, but the existence of such a score is in conflict with the “S” in ESG. “Poor-fit” customers will be negatively impacted, as will the company’s relationship with its customers and employees.

Below you can see three of the issues that customers complain about, which indicate relationships that lack trust and goodwill:

Turn “poor fit” customers into great customers

Relationships take work and experience ups and downs. As we’ve previously shared, understanding and addressing the root causes of complaints can reduce customer churn and alleviate future customer frustrations — turning “poor-fit” customers into great ones.

Using PositivityTech, you can turn your customer complaints into data; view potential risks and opportunities based on what your customers are telling you; and use those insights to improve your policies, products, and practices. With PositivityTech, you can transform negatives into positives.

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Cryptocurrency has become mainstream, and yet, we haven’t even begun to see its far-reaching potential in the U.S. In countries like Sweden and China, cash is fast becoming obsolete, and countries that include Ecuador, Uruguay, and the Bahamas have rolled out central bank digital currencies, according to Eswar Prasad’s excellent book, The Future of Money: How the Digital Revolution Is Transforming Currencies. Now, the U.S. is exploring a similar path with President Biden recently signing an executive order for the government to respond to cryptocurrency’s growth and discuss the creation of a digital dollar.

This is an exciting time in the world of digital currency – and it’s a time when the U.S. government needs to consider how its regulations will impact consumer protection, financial stability, and national security. At this time, it is critical for financial institutions and the government alike to turn to customer complaints about virtual currency in order to understand growing risks, like fraud and scams.

In fact, in a recent American Banker article by Claire Williams, Commodity Futures Trading Commission Chairman Rostin Behnam “argued for his agency to play a vigorous role in tracking down fraud and manipulation in cryptocurrency markets.”

The PositivityTech® intelligent platform is critical to exploring the future of digital currency, (1) alerting financial institutions to fraud and scams, (2) highlighting virtual currency’s other growing and repeated challenges, and (3) ensuring financial inclusion with equitable distribution to populations who are banked and unbanked.

What are the major issues with virtual currency?

PositivityTech turns customer complaints and narratives into data, showcasing challenges and risks based on their language, severity, bias, and other scores and models. In the visuals below, you can see that while overall complaints about virtual currency are leveling off, customer complaints about fraud and scams are increasing. This is the exact problem that Commodity Futures Trading Commission Chairman Rostin Behnam highlighted above.

Which financial institutions currently receive the most complaints about virtual currency, and fraud and scams?

With these visuals based on intelligence from PositivityTech, you can see that the companies that faced the most complaints about virtual currency, as well as fraud or scams which relate to virtual currency are continuously changing. The companies with the most complaints just last year are different from those in the last 90 days. These insights from PositivityTech provide vital information for financial institutions that want to meet customer needs and get ahead of the competition.

Private sector collaboration is part of the solution

From a technical and servicing standpoint, virtual currency will continue to improve. Yet, it is crucial that institutions tackle these issues of fraud and scam. This is an opportunity for private sector companies, such as banks and cyber specialists, and the government to collaborate in order to deeply understand and address customers’ friction points. With private sector companies’ input, regulatory solutions will become stronger and lead to greater consumer protection, financial stability, and national security.

PositivityTech is critical to this work, highlighting the major challenges and the financial institutions that can be part of the solution.

Today, the U.S. has the opportunity to be a global leader in digital currency — and customer input is key. As Prasad shares in his conclusion, “Technology, after all, is no match for human nature.”

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