Unfair practices in how some banks communicated with consumers about freezes on deposit and prepaid accounts, and limited oversight by financial institutions of medical providers offering payment products, are among concerns recently identified by examiners for the consumer financial protection agency.
The Consumer Financial Protection Bureau (CFPB) also indicated, in its latest issue of Supervisory Highlights, that banks and credit unions have reduced or eliminated fees for their customers and members to attain basic account information – in compliance with the law.
Regarding freezes on accounts, the CFPB said that recent exams have unearthed, for example, that some institutions “failed to affirmatively notify consumers when their accounts were frozen. In other instances, institutions failed to provide clear guidance to affected consumers, and customer service representatives were often inaccessible to those with frozen accounts.”
The bureau noted that banks regularly review deposit and prepaid account activity to identify fraud or other suspicious activity. They sometimes freeze funds as a preventive measure, the agency said. “However, CFPB examiners found unfair practices in how some institutions communicated with consumers about these account freezes,” the CFPB said.
Regarding oversight of medical providers offering payment products, the bureau asserted that its recent exams have found that healthcare providers commonly use sales and marketing materials provided by the financial institutions issuing these payment products. However, the agency said, examiners found a “significant number” of consumer complaints about how dentists and other healthcare providers promoted, offered, and sold medical credit cards to consumers.
“Patients complained about health care providers misrepresenting the specifics of ‘deferred interest’ promotions and that they felt pressured by providers to open a credit card while receiving treatment,” the bureau said. “CFPB examiners will continue to assess financial services companies’ oversight of medical providers and will be monitoring marketing materials and incentives offered to enroll patients.”
In another area, however, the bureau acknowledged that banks and credit unions have lowered or cut out excessive fees for customers seeking basic account information. The agency noted that Section 1034(c) of the Consumer Financial Protection Act (CFPA) prohibits banks and credit unions from creating unreasonable barriers, including large fees, for account information.
“The CFPB issued information requests to select entities regarding their deposit and credit card-related services, and the responses identified some changes in industry practices,” the CFPB said. “Some institutions have eliminated fees for obtaining account information, including charges for printed check images and statements. Others now offer free balance inquiries at third party ATMs.
“The CFPB will continue to gather information about compliance across various financial product types,” the agency said.