Consumer Compliance Outlook: Third Quarter 2008

Federal Reserve Consumer Help

In October 2007, the Federal Reserve System implemented Federal Reserve Consumer Help (FRCH) to centralize support for consumers with banking questions or concerns. To simplify the process for consumers, FRCH accepts questions about any financial institution and then forwards the question to the appropriate banking agency for resolution. Complaints about state member banks, which are supervised by the Federal Reserve, are investigated by the regional Reserve Banks.

The Federal Reserve System considers consumer complaints an important facet of its overall consumer compliance program. The information contained in complaints can be used by consumer examiners to scope examinations, to inform rule writing, and to generally understand the problems consumers face when dealing with banks. Information from consumer complaints helped form some of the provisions of the unfair or deceptive acts and practices rules recently proposed by the Board of Governors.*

FRCH provides a single point of entry to help consumers access relevant information or navigate to the appropriate agency if they wish to file a complaint. FRCH staff is accessible via toll-free telephone and fax numbers, TTY for the hearing impaired, e-mail, or an online complaint form. In the first six months of operation, FRCH received inquiries from almost 14,000 consumers.

The FRCH implementation included developing a website that gives consumers easy access to the Federal Reserve for information about consumer protection issues. A key site feature is the frequently asked questions (FAQ) section. Questions are ranked by how often they are accessed by website visitors, and new questions are added to the site based on FRCH's interactions with consumers.

From the standpoint of items to watch, the most frequently accessed questions at present are: "Can a bank really post withdrawals from my account from the largest dollar amount to the smallest?" and "Can a bank really keep adding new fees to my account?"

In the first six months of FRCH operations, the most common questions it received involved credit card and deposit products. Consumer concerns included credit solicitations and adverse action notice counteroffers received from banks pursuant to solicitations. Deposit account concerns largely involved how and why overdraft and insufficient funds fees were assessed. In addition, consumers had questions concerning bank policies for opening and closing both deposit and credit accounts.

FRCH's experience to date reinforces the idea that good customer service must include consumer education. Effectively responding to customers' information needs may prevent confusion on the part of the consumer, confusion that can lead to formal complaints about a bank. Bank staff may find the FAQ on the FRCH website a helpful reference for identifying frequently misunderstood banking practices.

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