Rising Problems With Digital Money Transfers

With the adoption and scale of digital money transfers and virtual currencies, customer complaints are on the rise. Thanks to the PositivityTech® intelligent platform, financial institutions access early indicators of the frictions that customers face — while their volume is still small — and can make improvements.

Consumers are complaining to the Consumer Financial Protection Bureau (CFPB) about situations when their financial institutions may not be protecting them and their funds.

These situations include sophisticated scams and fraud in electronic fund transfers. While consumers may have “technically” authorized these transactions, they did not realize they were being scammed, and they need support from their financial institutions.

Zelle is one such digital transfer tool that has seen widespread adoption, with consumers and businesses sending almost half a trillion dollars with Zelle in 2021. Yet, according to Zelle’s website, it “does not offer a protection program for any authorized payments made with Zelle.”

In this FrameWork, we will explore:

  • the recent rise in complaints about domestic money transfers and virtual currency,
  • the issues that customers highlight in their complaints,
  • the companies experiencing rising complaints about these issues, and
  • the increase in monetary relief that institutions are providing due to complaints about money transfers or service, or virtual currency.

Complaints about domestic money transfers and virtual currency are on the rise — and are severe

In the visuals below, you can see that complaints about domestic money transfers and virtual currency have increased in 2021. In the last 90 days, domestic money transfers have continued to rise.

As you can see in the chart below, using PositivityTech’s proprietary Severity Score (indicating customers’ frustration), 20% of all domestic money transfer complaints are in the “high severity” range.

Domestic Money Transfers: What’s the issue?

In customer complaints about domestic money transfers, customers predominantly cite issues of fraud, transaction and service problems, and money not available when promised, as can be seen in the first visual below. The second visual shows that complaints about domestic money transfers customers blame on fraud or scams are on the rise.

Domestic Money Transfers: Which institution has the most complaints?

The following visuals show the five companies with the most customer complaints about digital money transfers, and indicate that these complaints to Wells Fargo are especially on the rise. Also, you can see a complaint from a Wells Fargo customer about fraud concerns with a digital money transfer.

Virtual Currency: What’s the issue?

Similar to domestic money transfer issues, customer complaints state that virtual currency issues are predominantly fraud, transaction and service problems, and money not available when promised, as seen in the following visual. In the second visual, you can see the increase of complaints about virtual currency issues that customers ascribe to fraud or scam. 

Virtual Currency: Which institution has the most complaints?

The following visuals show the five companies with the most customer complaints about virtual currency, and indicate that, while Coinbase has the most complaints, complaints to Wells Fargo and Paypal are especially on the rise. These visuals are followed by two customer complaints to Coinbase — one which cites “other transaction problem,” which in one case refers to disparate treatment and in another case refers to a suggested targeted outage.

Monetary relief: A fast-growing resolution showcases risks of a still-small concern

Last year, less than 2% of all complaints submitted to the CFPB were about money transfer or service and virtual currency. In comparison, 11% of complaints resolved with monetary relief were about money transfer or service and virtual currency.

Remove your customers’ growing friction points now

It is critical that we understand and address customers’ friction points with our products and services while it’s still early. Using PositivityTech, you can identify leading indicators of customers’ growing problems — before they become major issues — and you can prevent them.

The Future of Buy Now Pay Later

As Buy Now Pay Later (BNPL) matures and becomes a bigger part of the payment ecosystem, we can expect it to provide increased payment options for consumers, be compared to other payment vehicles, and face similar regulations and standards. Recently, Equifax and TransUnion added BNPL payments to credit reports with Equifax stating that this will give “a fuller picture of people’s financial commitments, like how much they owe on these plans,” and even increase consumers’ credit scores.

The PositivityTech® Intelligent Platform reveals early insights about BNPL based on customer complaints that are critical to developing and adjusting policies and practices to minimize risk and strengthen BNPL. 

What are people complaining about?

In a recent American Banker article by journalist Kate Fitzgerald, I shared that BNPL complaints are on the rise — and have been so since the first quarter of 2021. Below, you can see that customers are complaining about four main issues, with excerpts from such complaints to the Consumer Financial Protection Bureau (CFPB):

  1. BNPL products often carry fees.
  2. Returning merchandise bought with BNPL loans can be complicated.
  3. BNPL loans have fewer protections than credit cards.
  4. BNPL loans’ impact on credit scores isn’t clear.

A look at the issues that BNPL companies are facing

While the CFPB is beginning to highlight BNPL risks, PositivityTech has revealed a steep rise in customer complaints about BNPL to Affirm.

Using PositivityTech’s proprietary tools, we compare customers’ complaints about different companies. 

For example, our Severity Score highlights that the customer narrative to Klarna is more “severe” than other BNPL complaints. Our Debt Collection Model identifies the debt collection issues and their connection and impact on credit decisioning at Affirm.

  • 70% of Affirm’s issues are within three categories: credit reporting, debt collection, and problem while making a payment. The following complaint, identified by PositivityTech’s proprietary Debt Collection Model, reveals the relationship of debt collection to credit reporting.
  • Klarna’s customer complaints show the highest level of frustration, based on PositivityTech’s proprietary Severity Score. 

The future of BNPL

This is just the beginning for BNPL. Becoming a greater part of the payment ecosystem requires standardization, reporting, and monitoring — and benefits both customers and institutions. By monitoring customer complaints about BNPL and identifying early indicators of risk using algorithms based on customer narratives, PositivityTech makes it possible for BNPL companies to pinpoint opportunities and areas for improvement, and to turn negatives into positives.

A Look At Our Impact in 2021 And Beyond

As a corporate intrapreneur turned entrepreneur, I have been fortunate to experience the benefits of deep domain knowledge and an expansive and supportive network. These two advantages have helped my team recognize the value of customer narrative data and demonstrate its impact to our community. This year, PositivityTech®’s capabilities have shown organizations how to extract critical insights from customer frustrations, their perceived bias, and other costly pain points.

I thank my incredible community, which has elevated our efforts — and, of course, our medical professionals, who have helped all of us gain a greater sense of normalcy. This year was challenging for all, which is why our accomplishments are doubly worthy of celebration. Please read on to learn about our 2021 achievements and their ongoing impact.

1. PositivityTech Bias Index gains media and industry attention

In April, American Banker journalist Kate Berry covered PositivityTech in the article, “AI enables banks to spot bias claims in customers’ complaints.” The article describes how our AI-powered platform makes it possible for institutions to analyze customer complaint data in order to identify perceived bias and discrimination. Today, customers are expressing themselves in a more comprehensive way, giving financial institutions the opportunity to listen, recognize what needs to be changed, and improve their products, policies, and outcomes accordingly. 

Looking ahead, the Bias Index is a working example of how PositivityTech combines human insights and advanced technology to uncover issues that will cause financial institutions preventable risk in the future.

2. PositivityTech’s insights into banks’ customer complaint data shed light on regulators’ priorities

In our monthly FrameWork, we shared time-sensitive risks and opportunities for financial institutions, based on PositivityTech data insights, including:

In the spring, PositivityTech was ahead of the curve when it was used to look at customers’ income ranges to understand their impact on customers’ frustration levels and on their perceived discrimination. Four months later, the CFPB published a very similar report about consumer complaint submissions by income and race. As a result, regulators are raising awareness of the need to ensure equality, affordability, and protection when reviewing policies, practices, and outcomes.

Looking ahead with an industry example in mind, what does this mean for the mortgage industry? The mortgage industry continues to be ripe for digital disruption while simultaneously working hard to provide safe and sustainable housing. Insights from customer points of friction are invaluable to solving for both.

Thanks to PositivityTech, we unveiled surprising findings about customer complaints regarding credit bureau reporting, including: (1) While customers complain to credit bureaus about a variety of issues, many of these issues are hidden and cannot be resolved by credit bureaus alone. (2) Severe customer complaints about credit bureaus are concentrated in three complaint topics. (3) The percentage of customers who send duplicate complaints to credit bureaus has risen.

Looking ahead, how are banks and credit bureaus committing to solve the root causes of information disputes and their demographic disparities together? Analyzing insights and risks from their customers’ complaints can guide their investigations and solutions.

3. PositivityTech collaborates with Verisk Financial and introduces its capabilities to industry-leading financial institutions

As an entrepreneur, collaborations and partnerships are critical to success. Through our collaboration with Verisk Financial, we are able to introduce an array of institutions to a whole new perspective on the power of customer narrative data, and together, help them solve the critical systemic challenges that are top of mind. 

4. Marcia Tal and Betty DeVita explore the future of voice data at Voice Global 2021

I was delighted to join forces at Voice Global 2021 with Betty DeVita, FinConecta Chief Business Officer. In our conversation, “Are You Really Listening? The Future of Voice Data,” we explored the application of new technologies, open platforms and open data, and evolving capabilities, such as those surrounding voice and conversations, in financial services.

Looking ahead, Betty’s focus on digital transformation, banking as a service, and open banking complements PositivityTech’s purpose of empowering customers to raise their voices while organizations commit to act on what their customers say.

5. BAI highlights “The scale and power of customer conversation data

In a thought leadership article for BAI, I explored the multi-billion dollar opportunity from analyzing and acting upon customer conversation data, shedding light on the systemic patterns and regulatory risks that companies miss when they don’t realize that customer conversation data is an asset requiring care and investment.

Looking ahead, a positive relationship between banks and their customers begins with listening. In 2022, we will continue to progress our technology and analytic solutions, which enable organizations to focus on their customer narratives in their daily work.

Thank you, as always, for being part of my journey in 2021 and beyond. Exciting things are in the works! I wish you and your families a happy and healthy holiday season. In 2022, may we all turn negatives into positives. 

How Banks and Credit Bureaus Can Resolve Customer Issues Together

Customers complain to credit bureaus about a variety of issues – often not understanding how their issues will be resolved between their banks and the credit bureaus. While some of these complaints can be resolved by credit bureaus, many cannot. And many frustrated customers duplicate their complaints to all three of the credit bureaus, choosing one of the top three issues:

  1. “Incorrect information on your report”
  2. “Problem with a credit bureau agency’s investigation into an existing account”
  3. “Improper use of your report”

Using PositivityTech®’s proprietary topic modeling algorithms, you can unveil hidden issues that cannot be resolved by the credit bureau alone. These issues relate to your customers’ ability to use their banking product and how they are being treated as they seek resolution. 

Using PositivityTech’s proprietary Severity Score combined with topic modeling algorithms, the following three complaint topics to credit bureaus are the issues that frustrate customers most. 

Below you can see examples of customer complaints about these issues:

“I have attempted for almost a year to contact X with no success. The one time I did get in contact with a live representative, they lied and said that I didn’t submit a police report. I did multiple times. My identity was stolen and now irreparable injury has occurred due to the neglect by X to remove the fraudulent accounts from my credit profile. This is my final attempt and notice that I will file a federal lawsuit against them if they will not comply with the laws that govern them.”

“So they basically turned down a payment from me… but I am late … How can that be legal or even fair? I’ve had white friends do the same and they were helped ….I’d hate to think, say, or tell people that this was something racist… [I] wanted to make a payment… [I] even told a representative.”

Inside duplicate complaints to credit bureaus

The percentage of customers who send duplicate complaints to credit bureaus has risen since 2019. These duplicate complaints focus more on bureau products or servicing, such as credit monitoring or credit scores.

These customer complaints also include issues such as threatening to take legal actions, and utilize very specific legal language. This suggests that these complaints are either submitted by consumers’ legal representatives or credit repair companies attempting to have negative credit information removed. Below you can see an example of one such complaint:

“After I submitted [verification of my identity], nothing has been done to remedy my complaint. X continues to report old time barred debt, and old collection accounts that are past… the credit reporting statute of limitations. I have now hired a Consumer Protection Attorney to remedy the situation. If they do their jobs and fix the errors on my report, and remove the judgments, tax lien, and public records, then I will not have to push forward in a lawsuit.”

According to the CFPB, complaints could be deleted if they are submitted by unauthorized third parties. The PositivityTech process identifies complaints which are deleted.

Inside duplicate complaints to both credit bureaus and financial institutions

When customers duplicate their complaints and submit their complaints to both credit bureaus and their financial institution, the complaints include issues related to loan origination as well as servicing.

The graph below shows one bank’s growth in customer complaints about credit bureaus during the last three years. These customers complain both to the bank itself and to the credit bureaus at a rate that is more than twice that of other financial institutions’ customers. Banks and credit bureaus must work together to solve these issues.

Below you can see two such examples of customer complaints:

“[A] hard inquiry and soft inquiry were both documented on my credit report from X. I have not nor did not initiate this inquiry… I was notified of the inquiry through a credit monitoring service, then immediately contacted X. They stated no new accounts were open but failed to respond to why an inquiry would have been done without my initiating it… After 3 attempts with X, they referred me to the credit bureaus and I see the listed inquiry. I need it removed.”

“During the Covid-19 pandemic, I missed payments. I called X and told them I would be late on payments as the pandemic had cost me my job due to a state-mandated shutdown. X’s response was for me to make any payment I possibly could afford, and if no payment was made that I could send a hardship letter at a later date to have negative items removed from my credit report. I complied with X’s request until I contracted the virus in which I was hospitalized and suffered physically for months. Once I recovered, I contacted X and was told my account was delinquent and has been closed for nonpayment. I also discovered that X reported every late payment to all three credit reporting agencies…. Although the account was closed, I have made payments to bring my account current. 5 years of perfect payment history… and due to a pandemic that was out of my control, X deems fit to destroy my credit, all while ignoring government policies.”

The key to resolving customers’ issues

Customers complain to the CFPB because they can’t get their issues resolved. When you are able to analyze financial institution data, credit bureau data, and customer voice data simultaneously, you can improve customer resolution. With PositivityTech’s analysis capabilities, credit bureaus and financial institutions will be able to do just that.

Interested in learning more? Schedule a PositivityTech demo by emailing me at marcia.tal@positivitytech.com. I look forward to helping you uncover — and resolve — your customers’ greatest issues. 

How To Prevent Involuntary Account Closures

“I know we have issues. I just don’t know where to find them.” This is what an executive at a large bank recently told me. Bank executives know they have opportunities to improve the customer experience, better manage their risk, and create new revenue streams. Yet, they don’t always know where to begin.

Artists call this opportunity, white space.

In order to begin filling your white space, you need a framework that considers the internal and external forces that you are experiencing. One of your most undervalued forces is your customer feedback. Understanding your customer feedback is just as critical to evaluating opportunities for growth as is understanding your competitive forces, macroeconomic forces, and regulatory forces.

The PositivityTech® intelligent platform merges these forces, and fills this white space with patterns, forecasts, and priorities, at scale — based on your own customers’ voices. Using artificial intelligence and advanced predictive algorithms, PositivityTech turns your customers’ voices into data, showcasing your risks, opportunities, and competitive advantages.

Let’s see what this growth opportunity might look like when considering financial institutions’ account closures.

See why financial institutions are closing customers’ accounts

Recently, Chime faced criticism for closing customer accounts without warning. In a recent American Banker article, reporter Kate Berry wrote about Senate Banking Committee Chairman Sherrod Brown’s request to the Consumer Financial Protection Bureau (CFPB) to address these issues. In a letter to the CFPB, Brown wrote:

“Chime’s abrupt, involuntary closures of its customers’ accounts — and locking them out of access to their funds — can cause lasting damage to their financial condition… There are a number of consumer risks involving nonbanks, from privacy concerns, fraud, data breaches, and proper disclosure that these companies are not actually banks.”

As you know, the cost of acquiring a new customer greatly exceeds the cost of retaining a current customer. Account closures directly impact the P&L, and many initiatives exist to prevent customers from ending their relationship with their banks. Improved targeting for retention programs is informed by what your customers are telling you. While Chime, a fintech, may be in the media for involuntary account closures, most financial institutions are struggling with this issue, too.

Below are the institutions with the greatest number of complaints to the CFPB about account closures, as seen in PositivityTech:

Here is an example of an actual Chime customer complaint to the CFPB about an involuntary account closure, as seen in PositivityTech:

In the table from PositivityTech below, you can view the number of complaints about issues with closing an account from Chime customers to the CFPB, as compared to other customer complaints from other financial institutions. You can also see that a greater percentage of complaints about opening an account come from Chime customers, too.

Are companies adding enough new accounts to make up for these account closures? How can these account closures be prevented? When you know what your issues are and how to find them, you can begin to solve them, to meet customers’ needs, and to grow your P&L.

Create new revenue streams

We need to pay attention to our customers’ voices. With PositivityTech, customer conversations are integrated into our technologies so that financial institutions can pursue a human-centered approach that truly serves customers. Our customers are sharing their challenges with us and telling us what we need to know.

By listening to customers and using their voices as information sources, you can grow your relationships with your customers through targeted differentiation. You can monitor your progress, be prepared for your customers’ actions, and you can create policies and practices, and grow your business in ways that serve them. You can create new much-needed revenue streams, based on what your customers tell you they need and want.

See what PositivityTech can reveal about your company — and discover your opportunities for growth. Schedule a demo by emailing me at marcia.tal@positivitytech.com. I look forward to giving you the tools you need to fill your white space.