Errors in consumer credit reports have plagued American families for years and a new analysis finds that major credit bureaus are still failing to correct their procedures.
In 2021, Equifax, Experian, and TransUnion together reported relief in response to less than 2% – that's two percent – of covered complaints, down from nearly 25% of covered complaints in 2019, according to the new analysis by the Consumer Financial Protection Bureau (CFPB).
“America’s credit reporting oligopoly has little incentive to treat consumers fairly when their credit reports have errors,” said CFPB Director Rohit Chopra. “[This] report is further evidence of the serious harms stemming from their faulty financial surveillance business model.”
Credit reporting plays a critical role in consumers’ lives and has an enormous reach beyond consumer financial services. More than 200 million Americans have credit files, and lenders rely on this information to decide whether to approve loans and on what terms. Consumer reporting also informs decisions about employment, insurance, housing, and even essential utilities.
For consumers, inaccuracies on credit reports drive up the cost of credit and severely limit opportunities, such as starting a small business or buying a new home.
Companies fail to respond to complaints
Consumers submitted more than 700,000 complaints to the CFPB regarding Equifax, Experian and TransUnion from January 2020 through September 2021.
Consumers submit more complaints about inaccurate information on their credit and consumer reports than about any other problem, most frequently saying that the the inaccurate information belongs to someone else. Consumers often describe being victims of identity theft.
The CFPB found the three companies often failed to provide substantive responses, especially when they alleged the complaints were sent in by third parties even though consumers have the right to authorize third-party representatives to submit complaints on their behalf.
Congress needs to act
"The CFPB report provides ample evidence that the credit bureaus have failed to comply with the Fair Credit Reporting Act (FCRA)’s dispute investigation requirements; however, this failure has been ongoing for decades, ever since the FCRA was passed in 1970," said Chi Chi Wu, staff attorney for the National Consumer Law Center.
"We wrote about the perfunctory, biased travesty of justice that is the credit bureaus’ dispute system back in 2009. Ten years later, in our report Automated Injustice Redux, we noted that, despite the best efforts of the CFPB and state Attorneys General, the credit bureaus continued these practices," she said.
Wu said Congress should pass "the type of omnibus, head-to-toe reform legislation (H.R. 4120) that the House of Representatives already passed once in January 2020. Or better yet, by scrapping the system and starting over with a public credit registry."
Companies obligated to respond
The Fair Credit Reporting Act (FCRA) requires Equifax, Experian, and TransUnion to conduct a review of complaints sent to them through the CFPB where consumers allege there is incomplete or inaccurate information in their consumer reports and the consumer appears to have previously attempted to fix the problem with the company.
The companies must then report their determinations and actions for these covered complaints to the CFPB. But the latest report shows:
- Equifax most often promised to open investigations and send the results to the consumers at later dates, but it would fail to provide the CFPB with the outcomes of the investigations.
- TransUnion made similar promises and frequently failed to provide the outcomes of investigations to the CFPB. It often stated it would take no action on complaints because it believed the complaints were submitted by third parties.
- For many complaints, Experian frequently stated it would take no action because it believed the complaints were submitted by third parties, however, it did respond to the remaining complaints with substantive responses.
Consumers having an issue with a consumer financial product or service can submit a complaint with the CFPB online or by calling (855) 411-CFPB (2372).