Auto complaints from service members up 150% (Under the Hood)

While credit reporting issues topped service members’ list of complaints in 2023, grievances about vehicle loans and leases grew at the fastest clip. An annual report, published last month by the Consumer Financial Protection Bureau ’s ( CFPB) Office of Servicemember Affairs , highlights trends in complaints submitted by active-duty and retired military personnel, National Guard members, reservists, and veterans and their families. It also identifies emerging risks in consumer finance and provides an update on agency efforts to protect the military community from dubious financial products and practices. Service members lodged 84,594 complaints with the CFPB last year. More than half of those complaints related to credit and consumer reporting issues, and another 14% centered on debt collection practices . Vehicle loans and leases appeared in the bottom third of the list, accounting for 2.5% of complaints. Service members twice as likely to file a complaint Yet service members were more than twice as likely than consumers as a whole to file auto finance complaints last year, at a rate of 2.5-to-1. In 2022, the ratio was 2-to-1, according to the CFPB. The bulk of the service member complaints were lodged by retired and veteran military personnel, and auto finance was no exception. Complaints filed by older veterans outpaced those filed by active-duty and reserve military members at an average rate of 5-to-1. For instance, retired and veteran service members lodged 1,193 auto finance-related complaints, compared with 263 among active-duty and reserve personnel combined. Collectively, complaints from service members grew 27% year over year, while those related to auto finance skyrocketed 150%. Complaints rise fastest for National Guard and Reserves Vehicle loan and lease complaints climbed most quickly among service members in the National Guard and Reserve. Within that group, complaints shot up 98%, more than double the complaint rate within the debt collection space, which recorded the second-fastest uptick in grievances. Meanwhile, vehicle finance complaints lodged by retired and veteran servicemembers increased 47%. By comparison, the second-highest rate of increase within the older service member population was 34% for checking or savings-related concerns. Among active-duty military personnel, vehicle loan and lease complaints fell 5%, the only year-over-year decline recorded in the report. While one of the report’s appendices delineated specific complaint issues for credit reporting, debt collection, checking or savings accounts, credit cards, money transfer and student loans, similar breakdowns for vehicle finance and mortgages were notably absent. Companies' response to complaints Still, the report provided statistics on company responses to complaints about vehicle finance and the other financial sectors. In 2023, the CFPB sent service member complaints to more than 3,400 companies for their review and response. Companies were given 60 days from the date of receipt of a complaint to provide a response to the CFPB and the consumer. When a company cannot act on a complaint, it can provide an administrative response that includes a statement or other evidence supporting its position. Among vehicle loan-and lease-related complaints, 89% were closed with an explanation. Another 4% were granted monetary relief and 6% were settled with non-monetary relief. Fewer than 1% were closed with an administrative response and another 1% failed to receive a timely response. CFPB recommendations Aside from providing complaint statistics by financial product, the CFPB report offered recommendations to student loan servicers and schools that withhold transcripts from service members. In fact, the CFPB devoted a dozen pages of its 48-page report to the student loan sector, which, interestingly, accounted for the smallest percentage — 1.2% — of the complaint tally among service members. Specifically, the CFPB suggested that servicers consider ways to streamline and automatically apply payment options and forgiveness programs for eligible service members and veterans. Additionally, the agency proposed that loan servicers should ensure that online tools are reliably accessible and can meet service members’ customer service needs. Student loan servicers should ensure that online tools such as chat, email portals, access to online information , and call-back services can provide timely responses to support military personnel and their families who are stationed abroad or deployed. While these recommendations were student loan-specific, it stands to reason that the CFPB is suggesting that servicers of other loan types, including auto, adopt similar protocols. Further, given the quick pace at which vehicle finance-related complaints grew last year, industry players will likely find themselves in the CFPB’s crosshairs. Should that pace of complaints continue for the next few years, for example, auto finance-related complaints among service members will top 33,000 by 2026 and 82,000 by 2027. The higher those complaint numbers go, the greater the likelihood that the CFPB takes action against auto financiers.

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