Consumer complaints are playing a big role in the federal government's identification of and investigations into violations of consumer protection laws. The Federal Trade Commission ("FTC") recently released its 2012 annual report of consumer complaints, which revealed that consumer fraud complaints make up over half of all the 2012 complaints received by the FTC.

The FTC enters complaints into the Consumer Sentinel Network ("CSN"), which is a secure online database of consumer complaints that is available only to law enforcement. The CSN contains consumer complaints received by the FTC, the Consumer Financial Protection Bureau ("Bureau"), the Federal Bureau of Investigation's Internet Crime Complaint Center, the Council of Better Business Bureaus, state law enforcement organizations, and a number of other state and federal entities.

According to the report, the CSN contains over 8 million complaints, including those about credit reports, debt collection, mortgages, lending, and other consumer topics. The FTC entered 2 million complaints into the CSN during 2012 alone.

The FTC's annual report indicates that fifty-two percent of the 2012 complaints were fraud-related, including the following types of complaints that impact the consumer financial services industry:

  • Worthless credit card loss protection and insurance programs;
  • Promise that accurate negative information could be removed from a consumer's credit file for a fee;
  • Promise of a loan or credit card that requires the consumer to pay a fee first;
  • Deceptive or predatory mortgage lending practices;
  • Problems with modification of mortgage terms;
  • Customer service and account issues with bank products, including fees and overdraft charges;
  • Account or billing issues with credit cards
  • Problems with interest rate changes, late fees, credit disputes, and overcharges with credit cards;
  • Debt collectors falsely representing the amount or status of debt;
  • False promises by mortgage lenders or brokers to save consumers' homes from foreclosure;
  • Credit organizations charging excessive fees; and
  • False promises to provide free services.

The FTC and other federal agencies, including the Bureau, rely on these types of complaints in their mission to prevent and detect deceptive and unfair business practices.

Consumer financial services companies should carefully review this list, their own acts and practices, and consumer complaints they receive directly to ensure that they are not running afoul of the laws protecting consumers in consumer financial services transactions.

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