U.S. Rep. James Clyburn has called on the CFPB to investigate Equifax, Experian, and TransUnion, for a reported reduction in responses to consumer complaints and correcting dispute errors during the pandemic. The CRAs are also asked to provide information on their reported decrease in response to those consumer complaints.
10/19/2022 2:25 P.M.
3.5 minute read
U.S. Rep. James Clyburn, chairman of the Select Subcommittee on the Coronavirus Crisis, is asking the Consumer Financial Protection Bureau to investigate the three largest nationwide credit reporting agencies (CRAs)—Equifax, Experian, and TransUnion—for a reported reduction in responses to consumer complaints and disputes regarding errors in consumer credit reports during the pandemic.
In May, Clyburn requested for the CRAs to provide documentation on their complaint responses during the pandemic, according to a news release from his office.
“The Select Subcommittee on the Coronavirus Crisis is committed to examining the economic impact of the pandemic on individuals, communities, and small businesses. Recent reports indicate that this impact included a significant decrease in [the CRAs’] responsiveness to consumer complaints and disputes regarding errors in consumer credit reports,” Clyburn wrote in the May letter. “The Select Subcommittee seeks documents and information to investigate these reports and gain insight to help ensure that consumers are protected as our nation continues to recover from the crisis.”
Clyburn followed the May letter to the CRAs with a letter to CFPB Director Rohit Chopra in October requesting the bureau use its supervisory authority to further investigate and address these issues.
In its investigation, the subcommittee found that Equifax changed between 43% and 47% of its credit report disputes each year from 2019 through 2021. It also found that Experian corrected about 52% of its disputed late payments or other bad data and TransUnion fixed between 49% and 53% of disputed credit reports during this time, according to a report from CNBC.
While the subcommittee acknowledged the majority of these errors was due in part to “the pause on student loan payments and an increase in pandemic-related identity theft to credit reporting errors,” paused loan payments are supposed to be reported as current under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. However, some paused loan payments may have been incorrectly categorized as late by vendors, which can lead to faulty consumer credit reports, according to the CNBC article.
The subcommittee also found consumers have been disputing information found on their credit reports on a larger scale than previously known. The CFPB estimated the combined number of dispute submissions to the three CRAs was around 8 million in 2011, but the subcommittee found that Equifax alone received nearly 14 million complaints in 2021.
The CFPB also received a “recording-breaking” number of complaints about the CRAs from 2020 to 2021, with more than 619,000 complaints in 2021, and consumers disputed almost 336 million items on their credit reports from 2019 through 2021, citing incorrect names, addresses or credit accounts, among other issues, CNBC reports.
However, the subcommittee uncovered evidence showing the three CRAs discards millions of disputes a year without investigation, finding at least 13.8 million were thrown out between 2019 and 2021. Discarding disputes violates current fair credit laws, including the Fair Credit Reporting Act, among others, and the CRAs’ defense is that disputes are discarded without investigation when they suspect a credit repair service is the one making the complaint.
Nevertheless, the subcommittee claims each agency “uses vague criteria to determine which disputes are submitted by an unauthorized third party.” For example, Equifax tosses out mail that “tends to use identical language and format [and] come from the same zip code.” The report also details envelope-based criteria in the three CRAs’ discard processes, including variations of font, ink color and envelope characteristics.
While this investigation is still ongoing, the CRAs’ representative, the Consumer Data Industry Association (CDIA), said that all disputes the CRAs receive directly from consumers are processed according to federal requirements, according to CNBC.
“Recent reports have highlighted trends including increased activity by certain credit repair companies, which can inflate complaint numbers and undermine the process of addressing legitimate requests,” a representative for CDIA told CNBC. “The credit reporting industry will continue to collaborate with the CFPB and policymakers to better serve consumers and continue to deliver innovative solutions to increase economic opportunities for consumers.”
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