The Texas state Credit Union Department said it handled 100 written consumer complaints last year, up from 77 the year before, and complaints about overdraft fees were the most common, by far.
Credit union members complained that the fees were too high, were charged too frequently and unfairly, and were charged even when the members had funds in their accounts. Members also complained that their credit union was timing a member’s deposits and withdrawals to generate higher fees.
Texas CU Commissioner Harold Feeney acknowledged that the number of written consumer complaints was small for 207 state chartered credit unions his department supervises, but he wanted to notify the state’s credit unions about trends and areas of concern for consumers.
The state regulator has authority to bring an enforcement action against a credit union if a violation of consumer laws has occurred, he said. "In most cases the member has an erroneous knowledge of what their rights are," Feeney told Credit Union Journal yesterday.
"Certainly the overdraft issue has been one, at least in the last year, that has been more prevalent than others," said Feeney. "In many cases the member just thinks that they’ve been wronged."
Another common complaint concerned the credit union’s placement of collateral protection insurance. Members complained that the insurance was added to the loan unjustifiably and believed that refunds were not fairly calculated.
Members also lodged complaints about customer service or about a credit union’s failure to grant or refinance a loan.
Additionally, members protested their credit union’s use of cross-collateralization clauses. Members failed to understand the effect on interest accrual when they used skip pay or made late payments. Finally, at least one member’s credit card interest rate was increased despite the fact she had no late payments with this creditor. The credit union admitted it had a "universal default" provision in its credit card agreement and had based the increase on a review of the member’s credit report.