Using data from the U.S. Census, the bureau examines consumer experiences throughout the credit lifecycle.
The Consumer Financial Protection Bureau released its first in-depth report on Thursday analyzing complaint submission patterns by U.S. Census tracts—small, statistical subdivisions of counties.
The report, “Consumer Complaints Throughout the Credit Life Cycle, by Demographic Characteristics,” found that “consumers from lower income and predominantly Black and Hispanic communities submitted credit reporting and delinquent servicing complaints at a higher rate per resident than consumers from higher-income and predominantly white, non-Hispanic communities, who were more likely to submit complaints related to loan origination and performing servicing,” according to the press release. “Asian American and Pacific Islander communities had higher rates of submitting credit reporting complaints than predominantly white, non-Hispanic communities; however, they also had a lower share of delinquent servicing complaints.”
The findings are based on the nearly 1 million consumer complaints submitted to the CFPB between 2018 and 2020.
“Today’s report confirms that the experiences and concerns of communities, with consumer financial products and services, vary by race and wealth,” said CFPB Acting Director Dave Uejio.
Some of the report’s other findings are:
- Complaints about loan originations increased by nearly 50% over the course of 2020, driven largely by mortgage complaints. This increase was centered in higher-income neighborhoods and neighborhoods with fewer people of color.
- Neighborhoods with the highest share of white, non-Hispanic consumers submit complaints about loan originations at more than twice the rate of neighborhoods with the highest share of Black consumers.
- Consumers from neighborhoods with the highest share of Black residents submit the most complaints per resident. Census tracts with the greatest share of Black residents (95% and over) have estimated complaint rates that are double the rates for tracts with the lowest share (5% and under).
- Lower income census tracts (those at or below 40% of their area’s median income) submit around 30% more complaints per resident than census tracts at around 100% of their area’s median income.
- Lower-income and communities of color are more likely to submit complaints about credit reporting, identity theft and delinquent servicing, while higher-income and majority white, non-Hispanic communities are more likely to submit complaints about origination and performing servicing.
In the CFPB’s Consumer Response Annual Report for 2020, released earlier this year, credit and consumer reporting complaints accounted for approximately 58% of complaints received by the CFPB, followed by debt collection (15%), credit card (7%), checking or savings (6%), and mortgage complaints (5%), ACA International previously reported.
Debt collection complaints had a 97% response rate from companies and companies closed 85% of complaints with an explanation, 9% with nonmonetary relief, and 0.6% with monetary relief.
Consumers also reported identity theft as a cause of having a debt in collection. These complaints have been increasing for several years, according to the report.
Debt collectors continue to help consumers manage their payments, provide resources on hardship programs and offer solutions that fit with their financial situation. Many ACA members report that calls from consumers to the agencies were on the rise throughout the pandemic as consumers sought help managing their finances and exploring hardship options.
ACA also continues to advocate with the CFPB to ensure accurate data about the industry is documented in the complaint database by providing context to the complaints and sound verification processes.