A new analysis by the Consumer Financial Protection Bureau [1] revealed changes in complaint responses provided by nationwide consumer reporting companies, resulting in fewer meaningful responses and less consumer relief.
In 2021, Equifax [2], Experian [3], and TransUnion [4] 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 [5]. “Today’s report is further evidence of the serious harms stemming from their faulty financial surveillance business model.”
Credit reports play a significant role in consumers' lives and 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.
Consumers submitted more than 700,000 complaints to the CFPB regarding Equifax, Experian and TransUnion from January 2020 through September 2021, which represented more than 50% of all complaints received by the agency for that period.
There are more complaints about inaccurate information on credit and consumer reports than any other problem. Consumers most frequently assert that the inaccurate information belongs to someone else, and often describe being victims of identity theft.
It was found that three companies often failed to provide substantive responses, especially when they alleged the complaints were sent in by third parties. However, consumers can authorize third-party representatives to submit complaints on their behalf.
The Fair Credit Reporting Act [6] 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.
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.
One of the main sources of consumer debt that can lead to consumer reporting inaccuracies and mistakes is medical bills. Consumers find that opaque pricing, the complex system of insurance coverage, and frequent delays in consumers finally receiving bills can make it harder to resolve billing errors. Accordingly, the CFPB’s previous research shows consumers often struggle to even determine whether the debt belongs to them and whether the amount is accurate.
Medical billing is just one example, but it highlights the ease with which errors, mistakes, and inaccuracies can occur, along with the financial consequences that follow. 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.
They also described feelings of frustration and stress when nationwide consumer reporting companies' processes for correcting inaccuracies do not work or when they do not get responses to their concerns.
To read the full report of credit and consumer reporting complaints, click here [7].