Major Democrat Wants Credit Reporting Agencies EquifaxAnd the Experian And the TransUnion The investigation for allegedly not responding to consumer complaints during the pandemic.
Representative James Claiburn, chair of the House Select Subcommittee on the Coronavirus Crisis, said the three largest consumer reporting agencies nationwide have “longstanding problems” responding to consumers who raise complaints about credit reporting errors.
“This data also raises concerns about whether [credit rating companies] They meet all of their obligations to consumers and the Consumer Financial Protection Bureau (CFPB) under the Fair Credit Reporting Act (FCRA),” the South Carolina Democrat wrote in a letter dated October 13 to Director of the Consumer Financial Protection Bureau Rohit Chopra.
Claiborne asked the chief executives of Equifax, Experian and TransUnion in May for companies’ responses to consumer complaints in the early days of the pandemic.
The Consumer Protection Bureau reported in 2019 that 4.1% of complaints were resolved in 2021, compared to about 25% of complaints in 2019, before the pandemic.
The majority of credit report disputes have not corrected or removed reported errors from credit reports. The subcommittee found that Equifax did not change more than half of the disputed items each year from 2019 to 2021. Experian corrected about 52% of disputed late payments or other bad data while TransUnion repaired between 49% and 53% of the credit reports during this time.
The subcommittee partly attributed the pause in student loan payments and the increase in identity theft linked to the pandemic to credit reporting errors.
Under the CARES Act, suspended loan payments were supposed to be reported as ongoing, although some lenders may have incorrectly classified them as overdue. Consumer fraud can also lead to false consumer credit reports.
The subcommittee found that consumers were disputing the information in their credit reports on a larger scale than previously known. The CFPB estimated the total number of disputes filed between Equifax, Experian and TransUnion at nearly 8 million in 2021. But data obtained by the subcommittee showed that Equifax, alone, received nearly 14 million complaints that year.
The CFPB also received a “record” number of complaints about credit rating companies from 2020 to 2021 with more than 619,000 in 2021 alone. The subcommittee found that consumers viewed nearly 336 million items, including names, addresses, or credit accounts, on their credit reports from 2019 through 2021.
However, according to the evidence obtained by the subcommittee, credit rating operators ignore millions of disputes annually without investigation. The subcommittee found that at least 13.8 million people were expelled between 2019 and 2021.
Dispute disposal violates fair credit laws if any which are provided directly by consumers to authorized representatives. The subcommittee says the companies’ defense is that disputes are ignored without investigation when they suspect a credit repair service is filing the complaint.
But the subcommittee says each agency uses vague criteria to determine disputes being submitted by an unauthorized third party. Equifax, for example, throws away mail that “tends to use identical language and syntax [and] come from the same zip code.”
Experian considers “envelope properties” and “letter properties”, including “same/similar ink color” and “same/similar font” when choosing which differences to ignore. TransUnion also uses envelope-based standards in its disposal process.
The subcommittee also found that credit rating companies referred more than half of the disputes to data providers for investigation between 2019 and 2021. TransUnion cited 80% to 82%.
Data providers were cited by the CFPB for inadequate investigations. The bureau also cited credit reporting companies for accepting these findings without independent investigation.
“The prevalence of credit reporting errors has been particularly worrying at a time when Americans have needed access to credit in order to weather the difficult economic conditions brought on by the pandemic,” Klipburn wrote in his letter to Chopra. “Errors in credit reports can lower consumers’ credit scores and potentially prevent access to loans, housing, and employment, among other severe consequences.”
The Consumer Data Industry Association, the trade association that represents Equifax, Experian and TransUnion, said all disputes that consumers share directly with three credit manufacturers are handled in accordance with federal requirements.
“Recent reports have highlighted trends including increased activity by some credit repair firms, which can inflate complaint numbers and undermine the legitimate application process,” a representative of the association told CNBC. “The credit reporting industry will continue to collaborate with the CFPB and policy makers to better serve consumers and continue to provide innovative solutions to increase consumer economic opportunities.”
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