Consumer Advocates Call for Action on Credit Bureau Reform

Advocate Andy

CFPB Report Highlights Challenges in Credit Reporting Industry

On the heels of a report released by the Consumer Financial Protection Bureau (CFPB), advocates at the National Consumer Law Center (NCLC) are calling for major reform to the credit reporting industry.

“The CFPB is to be commended for issuing this report and shining a spotlight on the serious problems of the Big Three credit bureaus in responding to credit reporting disputes,” said Chi Chi Wu, staff attorney with NCLC. We appreciate the leadership of Commissioner Chopra and the efforts of the CFPB staffers who worked on the report. We endorse the CFPB’s conclusion that ‘The [credit bureaus’] responses to these complaints raise serious questions about whether they are unable — or unwilling — to comply with the law.’ And quite troubling is CFPB’s highlighting that the credit bureaus reported relief in response to less than 2% of covered complaints.”

In releasing the report, the CFPB noted:

A new analysis by the Consumer Financial Protection Bureau (CFPB) reveals how changes in complaint responses provided by nationwide consumer reporting companies resulted in fewer meaningful responses and less consumer relief. In 2021, Equifax, Experian, and TransUnion together reported relief in response to less than 2% of covered complaints, down from nearly 25% of covered complaints in 2019.

“America’s credit reporting oligopoly has little incentive to treat consumers fairly when their credit reports have errors,” said CFPB Director Rohit Chopra. “Today’s report is further evidence of the serious harms stemming from their faulty financial surveillance business model.”

Calling for Reform for Decades

NCLC says calls for reform have been ignored for decades. Wu added:

“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. We wrote about the perfunctory, biased travesty of justice that is the credit bureaus’ dispute system back in 2009, in Automated Injustice: How a Mechanized Dispute System Frustrates Consumers Seeking to Fix Errors in Their Credit Reports. 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.”

Key findings of the CFPB report include:

Overall, consumers describe a consumer reporting system that is not working for them and the serious consequences that follow when inaccurate information is — and remains — on their consumer reports. Other key findings from today’s report include:

  • Equifax, Experian, and TransUnion relied heavily on template complaint responses instead of providing meaningful and thorough responses to consumers, despite having up to 60 calendar days to respond.
  • Beginning in early 2020, Experian and TransUnion stopped providing substantive responses to consumers’ complaints if they suspected that a third-party was involved in submitting a complaint.
  • In many instances, Equifax and TransUnion promised to investigate but failed to provide the outcomes of their investigations to the CFPB and instead stated that they would forward the complaints to their “dispute channel.”

The problems outlined in the report prompted Wu to call for dramatic reform:

“It is way past time for reform. The CFPB is the supervisor and regulator for the credit bureaus; what other industry would dare refuse to provide meaningful relief in 98% of the consumer complaints referred to them by their supervisor? This level of impunity against its own regulator must be met with swift, assertive, and uncompromising action that fundamentally reforms the credit bureaus in a deep, structural manner.

“Congress should also act, by passing 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 as proposed by Demos.”

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Andy Spears is a middle Tennessee writer and policy advocate. He reports on news around public policy issues - education, health care, consumer protection, and more.

Nashville, TN
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