COVID-related complaints saw uptick over overdraft fees charged for courtesy advances of EIPs

Consumer complaints about federal student loans fell off during the coronavirus crisis, but overdraft fees on checking accounts surged due to financial institutions attempting to help consumers have access to economic impact payments (EIPs), according to the latest complaint bulletin issued by the federal consumer financial protection agency.

The bulletin, issued by the Consumer Financial Protection Bureau (CFPB), looks at consumer complaints related to three actions taken by Congress in response to the coronavirus crisis. Those were: suspension of monthly payments for federal student loans; issuance of EIPs to eligible households; and promulgation of an interim final rule in support of the Center for Disease Control and Prevention’s (CDC) eviction moratorium.

The bulletin said the key takeaways from the bureau’s analysis of these actions showed:

  • Federal student loan complaint volume decreased significantly following suspension of payments; however, borrowers reported issues with customer service and sometimes experienced delays in getting responses to their complaints.
  • The customer service issues in student loan complaints raise concerns about servicers’ preparedness for student loan borrowers resuming payments, particularly borrowers who have experienced a decrease in income.
  • Renters have submitted few complaints about third-party debt collectors, or attorneys, who are attempting to carry out an eviction; more often, renters described issues with collections for past evictions or expressed concerns about negative credit reporting.
  • Consumers reported being charged overdraft fees on their checking accounts when funds advanced by their financial institutions – so consumers could have access to all of their EIP funds – were later reversed.

Regarding the overdraft fees, the bulletin notes that financial institutions, as a courtesy to consumers who had overdrawn deposit accounts, advanced to their customers or members an amount equal to the negative balance so those consumers could reap full advantage of the EIP. However, the bulletin notes, those advances were later reversed, typically 30 days after the advance.

According to the bulletin, a limited number of complaints were received that consumers did not realize that an advance was posted to their account. “Many of these consumers reported learning of the advance only after the funds were debited from their accounts several weeks later,” the bulletin asserts.

Consumers described the advance reversals “as problematic for several reasons,” the bulletin states. “Among the most concerning is consumers being surprised by the reversal, which – at least for some consumers – resulted in overdraft fees for multiple items that posted to their now overdrawn account.

“Some consumers reported that they were more overdrawn after the advance was reversed than they were before the stimulus payment was deposited,” the bulletin states.

Financial institutions reported giving consumers electronic and written notices at the time of the advances, the bulletin  states. However, consumers reported never seeing those and confusion because they did not proactively opt in to overdraft protection programs.

“In response to these complaints, several financial institutions reiterated the intention of the advance was so that consumers could make full use of their stimulus payments,” the bulletin states. “In some limited circumstances, financial institutions refunded overdraft fees charged to the consumers’ accounts, stating they were refunding the fees as a courtesy.”

CFPB Complaint Bulletin: COVID-19 issues described in consumer complaints

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