Dive Brief:

• As payments and transactions went digital in 2020 due to the pandemic, the Consumer Financial Protection Bureau (CFPB) had a 58% increase in complaints filed, compared to 2019, according to a report published by data analysis firm Stratifyd. Between 2018 and 2019 complaints filed rose 11% year-over-year (YoY).

• Money transfers and digital currency payments had the second biggest rise in complaints filed with a 59% YoY increase. "Monthly complaint volumes doubled starting in April as consumers shifted to more online purchases," the report stated. 

• According to a report, banks have seen spikes in call center volume in the 40% range, overwhelming them with complaints. CFPB Acting Director Dave Uejio says financial institutions should have done more to stop fraudulent activities. 

Dive Insight:

As people flocked to digital payment channels during the pandemic some engaged in fraudulent activities. 

According to The 2021 FinServ Customer Experience Report by Stratifyd, an artificial intelligence-driven data analytics company that serves the financial services sector, consumers said financial institutions didn’t react quickly enough as fraud skyrocketed. 

Stratifyd analyzes vast amounts of data from surveys, texts, emails, calls and mobile and website data to figure out customers’ repeated pain points and help financial institutions resolve them, said Kurt Trauth, senior vice president of customer experience at Stratifyd. Ally Financial and Charles Scwab are two of Stratifyd’s customers.

The company analyzed 436,000 complaints filed with the CFPB last year out of 542,300 to find which sectors were hit the hardest by fraudulent activities.

Credit reporting was the primary driver of CFPB complaints in 2020, registering 64% of all complaints with a rise of 102% YoY, compared to a 10% increase in 2019. Approximately half of these customers’ complaints each month cited finding information that belonged to someone else on their credit report, which they believed to be related to identity theft.

Money transfers and digital currency payments came in second for the biggest jump in complaints filed, with a 59% rise YoY. An increase in digital payments as more consumers shopped online led to more fraudulent transactions, according to the report’s authors.

"There has been a nearly 50% increase in shoppers using digital payments prior to the pandemic which has a direct correlation with an increase in claims of fraud/scams and unauthorized charges through digital payment platforms such as PayPal and Square," the report stated.

Accounts being taken over by scam artists made up 5% of all CFPB complaints in 2020, for a 9% increase YoY, with the majority of complaints related to checking account issues. A typical loss for such account takeovers is about $2,000, according to the Federal Trade Commission. 

Consumers tried reaching out to their respective financial institutions to complain about fraud but financial institutions were overwhelmed by the influx of complaints. "Financial institutions were challenged to be able to handle the influx in the volume of calls and chats," Trauth said. "That's what led to even more complaints; sometimes customers simply couldn't get a hold of their financial institution."

Nearly 27% of the complaints filed were duplicates, suggesting financial institutions weren’t reacting fast enough to consumer concerns. This is an almost 60% increase in the rate of duplicate complaints compared to 2019, the report stated. 

Uejio called out companies that have been slow to address consumers' concerns last month. 

"Elevating the voices of those consumers who are suffering due to the pandemic and from racial inequity is the most important way to ensure that the CFPB is doing the best we can for those who need our help the most at this moment in history," Uejio wrote in a February blog post. "The Bureau must transition from treating consumer input as mere anecdotes or stories to a world in which the experience of our neighbors, our families, and our communities serve as crucial data that drives our policymaking."