A Report on Credit Reporting Agencies
A few days ago, Representative Jim Clyburn, Chairman of the Select Subcommittee on the Coronavirus Crisis, sent a LETTER to Rohit Chopra, the Director of the Consumer Financial Protection Bureau, requesting the CFPB review the three main bureaus for possible violations of the FCRA.
Chairman Clyburn’s
letter alleges, “Information obtained by the Select Subcommittee indicates that
there are longstanding problems with the Nationwide Consumer Reporting
Agencies’ practices for responding to consumers who challenge credit reporting
errors.” In case you missed it, the three credit bureaus, Equifax, TransUnion,
and Experian, of possible violations of the Fair Credit Reporting Act. The
chairman is asking for a thorough investigation into the failure of the said
companies to respond to and resolve consumer credit errors raised during the
lockdown.
According to the Select Subcommittee...
The Bureaus are
Disregarding Millions of Disputes Based on Speculative or Overly Broad
Criteria: Over 13 million dispute submissions were discarded by the bureaus
without any investigation in 2019–2022. Wow! This is really absurd, but it
looks like a direct attack on consumer integrity and knowing that they rely on
the bureaus to fix their credit inadequacies. However, the CFPB was quick to
note that a failure to investigate these disputes was a violation of the Fair
Credit Reporting Act.
Some of the reasons
for discarding the claims were silly. For example, Experian did not attend to
dispute claims because envelopes or letters had similar colors, fonts, or
verbiage. TransUnion also did not. And Equifax disregarded dispute complaints
due to language and zip code. The committee termed this action speculative and
vague.
The Bureaus Overly
Rely on Data Furnishers to Investigate Disputes: it noted that between 2019 and
2021, the three credit bureaus referred more than half of the disputes to
furnishers. TransUnion referred 80–82%, followed by Equifax with 62% and
Experian with 54–56%, respectively.
This was especially
worrisome as furnishers were inefficient and never conducted satisfactory
investigations, as cited by the CFPB and other stakeholders. Furthermore, the
bureaus do not bother to conduct further investigations to verify if the
furnishers’ reports were in order.
The Majority of Disputes Do Not Result in Relief for Consumers:
According to the
letter, most of the disputes did not do anything for the consumer as the problems
still lingered even after reports were made. The bureau indicated that staff
shortage was why many disputes were not adequately investigated. Furthermore,
during the pandemic period (2019 to 2021), the three bureaus made no changes
that brought any relief to consumers. By percentage, Equifax has the highest
with 53%– 57%, Experian following with 48%, and TransUnion with 47 to 51% in
the three years reviewed by the bureau.
According to the
CFPB, this lackadaisical attitude led to severe financial difficulty, stress,
and mental breakdown for consumers due to unresolved and incorrect errors in
their credit reports. It also noted that some customers lost their jobs,
housing, and access loans because of this mistake.
Millions of credit
customers understand what the subcommittee chairman is saying, as you might
have noticed a lack of response, no response at all, or stalled letters from
the bureaus. This is great, as consumers are happy that these bureaus are
getting called out to face the music. Furthermore, consumers are getting
compensated to weather the aftermath of the pandemic and the harsh economic
situation in the country.
So how did this all
start?
The select
subcommittee received a report from the CFPB that dispute processing dropped
during the pandemic as consumers noticed error correction or removal on their
credit reports stalled. The CFPB believes the dispute is more than the number
stated at over 336 million between the three credit bureaus. The CFPB noted
that Equifax has nearly 14 million in 2021, as their office has received a
record-breaking 619,000 credit complaints from consumers in 2021 alone.
If proven, these
alleged practices will have had an impact on your business and will have
confirmed longheld suspicions of deliberate and coordinated Bureau Stall
Tactics.
But how
If the report is
accurate, then it means the credit bureaus are intentionally subjecting many
Americans to difficult economic times as incorrect credit scores could
potentially prevent them from essential opportunities, including housing,
loans, and employment, among so many other things. The chairman urged the CFPB
to use its power to investigate these claims and address the issues, which
would bring relief to millions of Americans. In conclusion, we are just happy
that the “big credit boys” are under the microscope and, finally, our voices
are heard by the necessary authorities.
Credit reporting
and information are critical pillars in stabilizing the financial sector as
their reports determine the capacity and capability of the consumer to collect
and repay loans or access other benefits. If credit reporting bureaus stall or
intentionally refuse to respond to complaints caused by their inadequacies, we
all suffer.
Remember, fixing
the damage caused by Equifax, Experian, and TransUnion will not be done
overnight, but with a vote of confidence from Congress; change is definitely on
the way.
We must remember
that these companies are in business with one goal – profit. They do not care
about your problems, but without you, they lose.
So this is the time to take a stand and fight the good fight. Stay with
us as the story unfolds and the CFPB investigation takes flight as many details
are still unknown.
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