Regulatory compliance is tricky, ignoring it is costly

If you issue a card in the United States, your company falls under the regulatory guidelines established by the CFPB. The CFPB received over 9,000 complaints from April 2017 to April 2021 regarding a pattern of issues with digital wallets, including problems with fraud and unauthorized transactions. More than two-thirds of these complaints focused on three leading companies: PayPal, Block (formally known as Square), and Coinbase. Modern card issuance enables any platform, brand, or fintech to issue cards. While these evolving digital platforms diverge from the conventional banking sector, it is essential to note that federal governmental regulations still apply.

Suppose one of Digital Bank A’s credit-card holders discovers an unauthorized transaction on their account. In that case, they will most likely contact Digital Bank A’s customer service, expecting to file a dispute for this charge rather than contacting the merchant. Financial institutions are solely responsible for managing the fraud and dispute investigation process and the regulations that follow. However, Digital Bank A is a non-bank issuer, focusing on non-traditional banking practices and chargeback management may not be the top priority for the company. Financial institutions that deviate from the traditional banking sector may not have a fraud and dispute management process to handle the consequences of issuing cards. Quavo experts help to serve underequipped organizations that do not have a chargeback management process in place, let alone a fraud and dispute management team. Non-bank issuers can completely outsource the all-encompassing fraud and dispute management process with Quavo’s innovative Disputes as a Service^TM offering. Our cloud-based SaaS solutions can be white-labeled and integrated without lengthy or costly implementation. Our experts provide continued support after onboarding, while our solutions are automatically kept up to date with the latest network mandates and regulatory requirements.

1,433 complaints were filed to the CFPB regarding cryptocurrency companies year-to-date as of December 2021. Of these complaints, 1,009 targeted Coinbase, the largest crypto exchange, identifying complaints detailing the lack of customer service provided.  It is essential to note that imitated techniques such as making a debit and credit card transaction or using an ATM come with responsibilities aligned under the conventional banking sector.

Lauren Saunders, associate director at the National Consumer Law Center, addressed the lack of consumer protection in the mobile wallets and payments technology division. “When fintech companies streamline their services, customer service representatives are often the first to go, so consumers who have a complaint can have difficulty getting an issue resolved and might make a complaint to the CFPB.”

That said, organizations that do not have an exact chargeback management process in place are using their customer service team to handle complaints. With the loss of customer service representatives, complaints are now going to the CFPB. A rise in CFPB complaints will inevitably lead to increased audits.

Financial institutions must realize the importance of consumer protection and customer service. At Quavo Fraud and Disputes, our clients’ consumer protection, customer service, and regulatory compliance are top concerns.

Visit us online to learn more about Quavo’s Disputes as a Service^TM offering.