These sort of day-to-day transactions and practices are ultimately what can hurt customers, sap their money, and leave them with little recourse. The CFPB was created explicitly with the intention of fixing that. Gene DeSantis, a now semiretired consumer lawyer, spent much of his career working on shoring up financial protections for people in the state of New York. Many of the issues he worked on, including things like mandatory-arbitration clauses and transparency initiatives, are problems that the bureau now tackles at a federal level. Still, despite his expertise in consumer law, DeSantis says he found himself with a dilemma that only the CFPB could tackle.
When DeSantis’s son went to college, he gave him a credit card from TD Bank to use in case of emergency. His son is really responsible, he told me, so he didn’t worry about him racking up an insane bill on something silly. DeSantis spends about five months every winter in Park City, Utah, where he likes to ski. When he heads out to Park City, he temporarily forwards his mail to ensure that he won’t miss anything while he’s across the country. But while in Utah, he got a call from a debt collector who told him they were calling about an overdue amount on the credit card he’d given his son. After being connected with the bank, he found out his son spent about $150, on car maintenance and gas. “I’d never even gotten a bill,” DeSantis said.
Given his profession, DeSantis was inclined to fight the bank on this. He learned that there was a clause in TD Bank’s credit-card policy that said that it wouldn’t allow credit-card statements to be forwarded, supposedly for his own protection. Because the bank refused to engage in this fairly common practice (which he said all of his other banks provided) a $150 charge had been collecting interest and penalties for months before the debt-collection agency called him. Now the bill was double the amount.
The bank told him he was liable, despite the fact he wasn’t receiving his bills. He wanted to sue, but his credit-card contract also included a mandatory-arbitration clause. “The only place I could turn to was the CFPB,” he said. Within a week, DeSantis says, the bureau had acknowledged his complaint, reached out to the bank, and TD Bank had agreed to accept his payment for the original charges and waive the additional fees and interest. “No matter how much you think you know, and how well versed you are in the law, there come times when even the most savvy or knowledgeable consumer is still going to get burned,” he told me. “That’s what happened to me.”
These sorts of stories—and the amounts of money they represent—may seem a bit small-bore, but together they amount to some $12 billion that banks or other financial institutions took in under terms that were later deemed unfair, and that they had to repay to Americans who would otherwise have been without much hope of recouping lost money. The bureau’s mandate, and relative freedom to pursue it, hasn’t exactly endeared the agency to the financial industry or the politicians who nurture (and benefit from) close ties with Wall Street.