Problems with Credit Cards: An Exploration of Consumer Complaining Behaviors
Hogarth, Jeanne M., Hilgert, Marianne A., Kolodinsky, Jane M., Lee, Jinkook, Journal of Consumer Satisfaction, Dissatisfaction and Complaining Behavior
Using data from the Survey of Consumers, this descriptive study attempts to provide a holistic picture of complaining behaviors, problem resolution, and satisfaction with the complaining process. We find less than one out of six households reported a problem; of those, nearly all took some sort of private or public action. About 7% used third parties, 11% took private action and 82% voiced to seller; over half (55%) exited. Consumers seemed to use a cost/benefit approach to complaining; those with more at stake took more assertive actions and spent more time pursuing their complaint. Consumers whose problems were resolved were more satisfied with the outcome and with the complaining process.
Consumer complaining behavior has been studied extensively. We know about the antecedents of complaining, who complains and who doesn't, who people complain to, how and when they complain, which factors are associated with getting a problem resolved, and consumers' satisfaction with the complaining process. However, for the most part, these complaining behaviors have been studied separately in different studies with different data sets. To date, there has been little that could be characterized as a comprehensive, in-depth exploration of complaining behaviors or a holistic picture of how these behaviors are interrelated.
For the past 5 years, credit cards have been the number one complaint received by federal financial regulators (Federal Reserve Board, 2000). In addition, credit and lending complaints are in the top five complaint categories listed by the National Association of Consumer Agency Administrators and the Consumer Federation of America (NACAA, 2000). Also, consumer credit has caught the eye of Congress, both in their deliberation of bankruptcy reform and in ongoing legislative initiatives related to credit and credit cards (LaFalce, 2001). Thus, credit cards seem to be an appropriate subject for a case study on consumer complaining behaviors.
The purpose of this descriptive study is to explore the complaining behaviors of consumers who experienced problems with credit cards. In particular, we investigate the prevalence of problems, the characteristics of consumers with problems (more specifically, those who complain), the types of complaining behaviors consumers exhibit, the complaining processes consumers follow, the resolution or other outcomes of the complaining process, and satisfaction with the complaining process. We also investigate consumers' attitudes and how these relate to complaining behaviors.
BACKGROUND ON CREDIT CARD MARKETS
American consumers are using credit cards more than ever. More than 75% of the adult population in the United States have a credit card (Nilson Report, 2000) with an average of 4.2 cards per cardholder (Nilson Report, 1998). Estimates show that by the year 2015, 80% of the adult population will hold a credit card (Nilson Report, 2000). In 2000, credit card issuers mailed a record of 3.54 billion solicitations with over one billion solicitations in the fourth quarter alone. This corresponds to an average of three credit card offers per month per household (BAI Mail Monitor, 2001). During 1998, a total of 429.2 million VISA and MasterCards were in circulation (Federal Reserve Board, 1999). Between 1991 and 2001, consumers' outstanding revolving credit grew from $247 billion to $669 billion (Federal Reserve Board, 2001).
Currently, over 6,800 depository institutions issue VISA and MasterCard credit cards and independently set the terms and conditions of their plans (Consumer Reports 1998; Federal Reserve Board 1999). However, competition has changed credit card issuers' pricing strategy (Federal Reserve Board 1999). Credit card issuers are competing by waiving annual fees, providing enhancements, and since the early 1990's, lowering interest rates. In the past, credit card issuers offered programs with a single-- interest rate, but more recently many of them have offered a broad range of card plans with differing interest rates depending on consumers' credit risk and usage patterns. …