CFPB Advises Consumer Reporting Companies to Improve Service

The CFPB is urging consumer reporting companies to be mindful of users as they implement technology. 

In a Tuesday (Jan. 3) press release, the Consumer Financial Protection Bureau (CFPB) summarized its annual report on the companies’ responses to consumer complaints. 

The agency said in the press release that the three major consumer reporting companies — Equifax, Experian and TransUnion — have improved their handling of consumer complaints over the past year. 

It added that they can continue to do so by considering three additional practices. 

First, the CFPB advised the companies to consider the burden placed on the consumer when implementing automated processes. Specifically, it said, they should consider whether any new automated processes will require consumers to do more work to exercise their legal rights. 

Second, the agency suggested that the credit reporting companies recognize that new communication technologies may generate letters for consumers and remember that complaints that sound similar may in fact be from different consumers who have independent concerns. 

“The assumption that similar-sounding letters are from third parties will increasingly be wrong,” the CFPB said in the press release. 

Finally, the agency said the companies should consider ways to allow consumers more participation in the reporting of data in order to improve accuracy. 

“Enabling increased consumer participation on the data side of consumer reporting has the potential to create a fairer market with added benefits for consumers, consumer reporting companies and lenders,” the CFPB said.

In a statement provided to PYMNTS by the Consumer Data Industry Association (CDIA), a trade group that represents Equifax, Experian, TransUnion and others, the group said it is reviewing the CFPB report in detail.

“Consumers, credit reporting agencies, banks and regulators continue to share a common goal when it comes to credit reports: they should be as accurate and reliable as possible,” the statement said. “The nationwide credit reporting agencies (NCRAs) play an important role in the financial lives of consumers and we take that responsibility seriously.”

The CFPB said in the release that its latest annual report on this sector is based on 488,000 consumer complaints it received about the three companies between October 2021 and September 2022. 

The agency added that the three companies have remedied some of the issues identified in the previous annual report by providing more substantive responses to consumer complaints, providing more tailored responses and providing relief in a greater share of their responses to complaints. 

This report comes about three months after the CFPB issued a guidance that said consumer reporting companies have an obligation to screen for and eliminate data that is obviously false. 

When announcing this guidance on Oct. 20, the agency said that examples of such “junk data” include credit reports that say that a child has a mortgage or that someone incurred a debt years before they were born.