A major new CFPB report assails the Big 3 credit bureaus for a series of excuses, “deficiencies” and failures. CFPB found that “Equifax, Experian, and TransUnion routinely failed to fully respond to consumers with errors.”
It’s a carefully argued case, rich with detail on the Big 3’s responsibilities and failures. Its executive summary concludes with these ominous words for the credit bureaus: “The NCRAs’ responses to these complaints raise serious questions about whether they are unable—or unwilling—to comply with the law. (The Big 3 credit bureaus are known under the law as Nationwide Consumer Reporting Agencies. NCRAs have more responsibilities than smaller, or specialized, bureaus.)
For over 30 years now, PIRGs have fought for changes in the private credit reporting system that the Big 3 bureaus dominate. A summary of our own findings is this: The big 3 credit bureaus function as self-appointed gatekeepers to financial and employment opportunity. Their oligopoly has been an epic fail for consumers.
Some background: The Fair Credit Reporting Act (FCRA) was enacted in 1970 after a series of hearings. As I testified to the House Financial Services Committee in 2019:
“The complaints that triggered Congressional interest focused on a variety of deprivations by credit bureaus but a key driver of the hearings was complaints about the Retail Credit Company’s abusive investigations of consumers applying for insurance policies. The Fair Credit Reporting Act was enacted in 1970 and in 1975, Retail Credit Company changed its name to Equifax.”
U.S. PIRG’s first report on credit bureau failures, in 1990, was titled: “Nightmare on Credit Street.” Our third, in 1993, was “Credit Bureaus: Public Enemy #1 at the FTC.” Our most recent reports, released during the pandemic, have documented record numbers of credit reporting complaints to the CFPB. New agency, same problem. The gatekeepers don’t do their job; consumers either pay more for or are denied credit, jobs or housing.
The CFPB agrees, taking off the gloves and using strong language in its report: “the NCRAs’ responses to these complaints raise serious questions about whether they are unable–or unwilling–to comply with the law.”
The report found that, as credit bureau complaint levels soared to record levels during the pandemic, consumers faced a precipitous decline in “relief” by the Big 3.
“In 2020, Equifax, Experian, and TransUnion changed how they respond to complaints transmitted to them by the CFPB. The CFPB’s analysis reveals that the NCRAs are closing these complaints faster and with fewer instances of 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.”
I am sure that the phalanx of well-heeled law firms advising the credit bureaus, banks and debt collectors caught this follow-on zinger:
“Changes to the NCRAs’ complaint responses occurred near in time…The timing of these changes is notable.”
Hmm. See CFPB Report, page 50.
In particular, the CFPB report had harsh words for the bureaus’ refusal to handle complaints that contained “template” or boilerplate language. The CFPB said that the bureaus’ presumption that all the template complaints were generated by credit repair doctors and therefore “frivolous” under FTC guidance was doubly mistaken. The so-called template complaints aren’t all generated by the credit repair industry and, even if they were, the Big 3 cannot ignore them, if sent to them by the CFPB.
The CFPB went on to point out that aggrieved consumers could be using template language based on its own, or the FTC’s, sample complaint letters. But, even were those templates provided by a credit repair doctor, the CFPB pointed to the failed duty “to review complaints transmitted by the CFPB.”
According to CFPB director Rohit Chopra: “America’s credit reporting oligopoly has little incentive to treat consumers fairly when their credit reports have errors. Today’s report is further evidence of the serious harms stemming from their faulty financial surveillance business model.”
The study generally disparaged credit repair doctors, as do most consumer advocates: “These companies purport to help consumers identify and dispute information on their credit reports, but many charge illegal fees, operate in bad faith, mislead consumers, or are outright fraudulent.”
Nevertheless, the CFPB said that the credit bureaus’ failure to investigate complaints could not be blamed on credit repair doctors and summarized key harms:
- Consumers are caught in an automated system where they are unable to have their problem addressed.
- Consumers waste time, energy, and money to try to correct their reports.
- Consumers are caught between furnishers [banks, debt collectors] and the NCRAs [the Big 3].
The report found that medical debt items on consumer reports were a major consumer pain point:
“Consumers find that opaque pricing, the complex system of insurance coverage, and frequent delays in consumers finally receiving bills create an unnavigable quagmire and can make it harder to resolve billing errors.”
The CFPB’s findings that complaints about “both Information belongs to someone else and Personal information incorrect increased significantly,” mirror our own U.S. PIRG findings on calendar 2020 complaints:
“The three most complained about issues were incorrect information on credit reports; problems with a credit bureau’s investigation into a problem on a credit report; and debt collection companies attempting to collect debt not owed.”
The CFPB built a careful case to defend each of its conclusions about the credit bureaus’ failures to comply with the law. It also was blunt in its language to make sure that the often recalcitrant credit bureaus understood the message being sent:
“At least one NCRA testified to Congress that it is responding completely and accurately to complaints transmitted by the CFPB. The CFPB’s complaint analysis concludes otherwise. In what has been a record period for credit or consumer reporting complaint volume, the CFPB’s analysis reveals that the NCRAs are closing complaints faster and with fewer instances of relief. The NCRAs discard most complaints based on unsubstantiated conclusions of suspected third-party involvement and on a flawed application of guidance that does not apply to CFPB complaints.”
And, of course, to amplify the CFPB's key warning message:
“The NCRAs’ responses to these complaints raise serious questions about whether they are unable—or unwilling —to comply with the law. The CFPB will use its authorities to meet its statutory objectives and to ensure that consumers receive quality responses to their complaints.”
My 2019 testimony includes an appendix of key credit reporting milestone dates from the 1960s-2019. Here’s one addendum: “2022: Major CFPB report slams credit bureaus.” It sends a strong signal that the CFPB is here to protect consumers and hold the Big 3, as well as the banks and debt collectors, accountable for their actions and inactions.
Here are some U.S. PIRG tips on avoiding credit repair doctors and protecting your credit, including how to support reform through the Comprehensive CREDIT Act and how to freeze your reports (it’s free) to avoid identity theft. We look forward to the CFPB's next enforcement and regulatory steps. This CFPB report is certainly no one-off; it's a warning.