Report: Defend the Consumer Bureau

Older Consumers in the Financial Marketplace

An Analysis of Complaints, and Results, From the CFPB
Released by: Illinois PIRG Education Fund

Older Americans are at risk of harm from predatory financial behavior. An analysis of more than 72,000 financial complaints submitted by older Americans (those 62 years of age and older) to the Consumer Financial Protection Bureau (CFPB) and contained in its Consumer Complaint Database suggests that mistreatment of older Americans by financial companies is widespread.

The stories told in these complaints reinforce the importance of the CFPB’s work to hold financial companies accountable for wrongdoing, to secure relief for mistreated consumers, and to help older Americans avoid mistreatment in the financial marketplace.

The CFPB provides a valuable service to older Americans, along with all consumers. Attempts to weaken or eliminate the CFPB could risk the financial wellbeing of millions of older Americans.

Older Americans face unique challenges and threats in the financial marketplace.

  • Older Americans can make tempting targets for predatory behavior in the financial marketplace. Scammers may look to take advantage of their savings, home equity, or guaranteed income. Older Americans facing a savings shortfall may be harmed by low-balance or overdraft fees at banks, or be tempted to take on credit or use products such as reverse mortgages, whose risks may not be fully understood. Payday lenders offering risky loans have been reported to cluster around senior housing to target seniors that receive Social Security or disability benefits.

  • Many older Americans are at increased risk because of health or living conditions, including cognitive decline, isolation, disability, or the recent loss of a loved one. These conditions can make seniors more appealing targets for scammers, more susceptible to misleading advertising, or more prone to misunderstanding confusing terms or fee schedules. A study from the American Journal of Public Health estimated that each year, 5.4 percent of older Americans are affected by financial scams or fraud.

Mortgages are the leading source of complaints to the CFPB’s Consumer Complaint Database among older Americans.

  • Mortgages account for 31 percent of complaints by older Americans.

  • More than 80 percent of mortgage complaints relate to problems with existing mortgages, rather than applying for or closing on a new mortgage. This percentage is nearly identical to mortgage complaints submitted by the general public.

  • Five percent of mortgage complaints by older Americans relate to reverse mortgages, products solely available to older Americans that allow them to convert a portion of their home equity into cash. The risks of such products are not always fully understood by consumers, and the CFPB has taken action against reverse mortgage companies for misleading consumers about risks.

  • Older consumers report a variety of problems with reverse mortgages, including trouble keeping up with property taxes and other payments, and trouble accessing credit. In one complaint, a consumer alleged that he or she could no longer access a reverse mortgage line of credit, after his or her loan was sold to a new mortgage company that did not provide accurate contact information.   

Older Americans often report inaccurate debt appearing on their credit reports, including medical debt.

  • Credit reports are the second-leading source of complaints by older Americans, accounting for 17 percent of such complaints. Most complaints – 67 percent – relate to incorrect information appearing on reports.

  • Many older Americans report inaccurate information on their reports relating to medical debt, which is a well-known source of inaccurate credit reporting. In one case, a senior asserted that he or she was denied the purchase of a new home (to downsize) after medical bills resulting from an injury erroneously appeared on his or her credit report.

  • Deaths of family members can create complicated financial situations, and some older Americans report being taken advantage of in those situations. In one consumer story, the consumer’s credit history was damaged by the inaccurate appearance of medical debt belonging to a recently deceased spouse.

Most debt collection complaints assert either inaccurate debt, or mistreatment by the debt collector.

  • Debt collection is the third-leading source of complaints by older Americans, accounting for 17 percent of such complaints (only slightly less than credit report complaints).

  • The majority of debt collection complaints – 71 percent – allege one of two issues: either the consumer believes they do not owe the debt, or the consumer feels they have been mistreated by the debt collector.

  • Older Americans report a variety of inappropriate communication tactics used by debt collectors. One consumer reported a string of contacts in which “Sometimes they curse at me and tell me that they know I am that woman and that they will have me thrown in jail.” Another consumer reported being contacted by a debt collector over false debt belonging to the consumer’s deceased husband.

Many of the companies that have received the most complaints from older Americans have been the subject of enforcement actions by the CFPB.

  • Among the 10 most-complained about mortgage companies, three have been the subject of mortgage-related CFPB enforcement actions: Ocwen Loan Servicing, Nationstar Mortgage, and a company that later merged with Ditech, the company that ranks sixth for mortgage complaints among older Americans. In the case of Ocwen, the CFPB alleged that the company “botched basic functions like sending accurate monthly statements, properly crediting payments, and handling taxes and insurance.”

  • All three of the major credit reporting companies, which account for 95 percent of credit report complaints by older Americans, have been the subject of a CFPB enforcement action. Equifax and Transunion were each the subject of an enforcement action for marketing their products as being free, or $1, when downloading the score automatically signed consumers up for an expensive credit monitoring subscription service (they would need to cancel within the trial period of either seven or 30 days to avoid the first payment).

  • The two companies with the most debt collection complaints, Encore Capital Group and Portfolio Recovery Associates, have both been penalized by the CFPB for using deceptive tactics to collect bad debt that was “potentially inaccurate, lacking documentation, or unenforceable.”

  • The CFPB has also taken action against at least 10 companies that engaged in illegal or predatory behavior related to reverse mortgages.

Nevada has the most complaints per older American.

  • The District of Columbia, Nevada, Delaware, Maryland, and Georgia have the most complaints by older Americans, normalized for population over 62.

  • The high per capita volume of complaints from the D.C. area may be a reflection of the region’s familiarity with the CFPB, stemming from a high number of people that work with or alongside the federal government.

The CFPB is a critical ally for older Americans and all consumers. In addition to taking action against bad actors, the CFPB’s Office of Financial Protection for Older Americans produces educational resources, research, and advisories to help older Americans plan their financial future and stay secure in the financial marketplace. The CFPB’s broader consumer protection work has resulted in consumers seeing $12 billion in relief from harmful financial practices. And the CFPB has also handled more than 1 million consumer complaints, providing a valuable resource for consumers facing problems with financial companies.

To protect older Americans and all consumers in the financial marketplace, policymakers must protect the CFPB from attempts to weaken the agency or hinder its independence. In addition, state and federal policymakers should strengthen consumer protections in areas of risk including debt collection, credit reporting, and high-fee bank accounts. The CFPB should also move forward with its new arbitration rule that will make it easier for consumers to file class action lawsuits when harmed by financial companies.

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