Bit by bit: improving consumer complaint processes in crypto

On May 30, 2024, the New York State Department of Financial Services ("NYSDFS" or the "Department") issued guidance to all virtual currency businesses licensed or chartered with the Department ("VCEs"), including those licensed under New York's Bitlicense regime (23 NYCRR Part 200), regarding the handling, monitoring, and reporting of customer service requests and complaints (the "Guidance").

The Guidance—which becomes effective as of November 1, 2024—emphasizes NYSDFS’ expectations that VCEs address and resolve customer service requests and complaints “timely and in a fair manner” and outlines NYSDFS’ expectations regarding a VCE’s policies and procedures with regard to customer service requests and complaints. In the release of the Guidance, NYSDFS Superintendent Adrienne Harris stated that “[c]onsumers have a right to a transparent and timely process for resolving complaints and answering questions, irrespective of the company or product in question” and that the Guidance “outlines clear expectations for a positive customer experience, which benefits both consumers and business.” 

Overview of the Guidance

The Guidance sets forth NYSDFS’ expectations for VCEs in three primary areas, emphasizing that a VCE’s customer service and complaint policies and procedures are “unlikely to be sufficient” unless they effectively address and incorporate the following elements:

1. Customer Service Mechanisms: Customers must be allowed to make customer service requests or complaints by either a phone call or an electronic text communication (such as chat or email). 

Phone calls must be answered by human customer services representatives (“HCSRs”) during normal business hours, not receive a busy signal, and provide an expected hold time if the call cannot be answered immediately. 

Alternatively, the chat function must be easy to use and monitored by an HCSR during normal business hours, while emails must confirm receipt of the message, provide an estimated time to respond, and provide a tracking or reference number for the customer.

The VCE should provide regular updates to the customer regarding the status of their request.

If a VCE utilizes artificial intelligence (“AI”) at any point, clear and conspicuous disclosure to the consumer around the extent and use of the AI must be made known at the beginning of the process. VCEs must also ensure that customers can escalate issues from AI to HCSRs.

The Guidance also requires VCEs to publish an FAQ or similar communication (without requiring a customer account to log in) that includes information on business hours, methods for making customer service requests and complaints, and directions on how to submit complaints directly to NYSDFS.

2. Response and Resolution Monitoring: Each VCE must track customer service requests and complaints. Each VCE must provide a method for customers to provide feedback and general customer satisfaction and, once such feedback is received, analyze the data maintained to identify any instances where its policies and procedures may be lacking. If a VCE discovers any inadequacy or inefficiency, such as noncompliance with the Guidance or ineffective procedures, then it must develop a plan to remedy such issues.

3. Reporting: VCEs will be required to provide, both during examinations and at the request of NYSDFS, (a) a quarterly tabulation (starting in Q3 2024) of the number of requests and complaints received via each customer service mechanism and within each request or complaint topic, and the average time for request or complaint resolution, and (b) customer service and complaint policies and procedures reflecting the Guidance.

Key Takeaways

While not exhaustive, the Guidance outlines important steps VCEs must take to improve the customer service experience by setting clear standards and compliance expectations. This includes addressing and resolving consumer requests or complaints in a timely and fair manner.

Further, the Guidance provides valuable insight into what a financial services regulator might expect from a licensee’s customer service and complaints policies and procedures. While the Guidance specifically applies to VCEs, it establishes a benchmark for other regulated entities—including licensed money transmitters in New York and other states—to assess the reasonableness and appropriateness of their processes and practices with respect to customer service, complaints handling, responses and resolutions, and reporting and monitoring.

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