Dive Brief:
- The three largest credit bureaus — Equifax, Experian and TransUnion — reported relief in response to less than 2% of covered complaints filed in 2021 with the Consumer Financial Protection Bureau (CFPB), the bureau reported Wednesday. That's a steep drop from 25% in 2019.
- Consumers submitted over 700,000 complaints to the CFPB in regards to the top three credit bureaus between January 2020 and September 2021.
- Consumer complaints about Equifax, Experian and TransUnion together made up 50% of the total complaints the CFPB fielded during the time frame.
Dive Insight:
The CFPB, in its annual report to Congress last March found complaints filed with the bureau jumped nearly 54% — to roughly 542,300 in 2020 from 352,400 in 2019.
More than 58% of those complaints pertained to credit and consumer reporting, prompting the CFPB to say it would issue a separate report regarding complaints submitted to Equifax, Experian and TransUnion.
“America’s credit reporting oligopoly has little incentive to treat consumers fairly when their credit reports have errors,” CFPB Director Rohit Chopra said in a press release Wednesday. “Today’s report is further evidence of the serious harms stemming from their faulty financial surveillance business model.”
Wednesday’s findings come two months after another CFPB report indicated consumers in Black and Hispanic neighborhoods, along with younger consumers, are more likely to file credit disputes. Such credit reporting errors can profoundly impact consumers’ lives, particularly when attempting to buy a house or secure a favorable loan.
Democratic senators wrote a letter to the CFPB on Nov. 7, urging the agency to take action to address the deluge of consumer credit complaints. The lawmakers pointed to a 2012 study by the Federal Trade Commission that found one in five consumers had an error in one or more of their credit reports. The senators argued the credit bureaus do not devote “sufficient personnel and resources for dispute resolution.”
The CFPB said the most common issue consumers report is inaccurate information on their credit and consumer reports. The bureau said when consumers describe being the victims of identity theft, credit bureaus often fail to respond appropriately or at all.
Each of the three largest credit bureaus relies heavily on template complaint responses instead of writing thorough, individualized responses to consumers, despite the 60-day window they are allotted, the CFPB said.
Experian and TransUnion in 2020 stopped providing substantiative responses to consumer complaints if the companies suspected a third party was involved in submitting the complaint, even though consumers are permitted to use third parties to submit such complaints.
“Error-ridden credit reports are far too prevalent, and may be undermining an equitable recovery,” Chopra said in November.
The CFPB's previous acting chief, Dave Uejio, last year called out companies that had been slow to address consumer complaints — and said consumer advocates have found disparities in some companies' responses to concerns raised by Black, Brown and indigenous people.
"This is unacceptable," Uejio wrote in a February 2021 blog post. "Elevating the voices of those consumers who are suffering due to the pandemic and from racial inequity is the most important way to ensure that the CFPB is doing the best we can for those who need our help the most at this moment in history."
Uejio said he directed the bureau's consumer response unit to draft a report identifying companies with track records of lagging or disparate follow-up to complaints. "We will be publishing this analysis and the senior leadership of these companies can expect to be hearing from me," he said.
