The nationwide consumer reporting agencies (NCRAs), including the Big Three—Experian, Equifax, and TransUnion—play an outsized role in Americans’ economic lives. The companies cover more than 1.6 billion credit accounts for over 200 million adults every month. But inaccurate reports can inflate the cost of credit and severely limit opportunities for Americans looking to buy their first home, start a small business, or even reenter the workforce. A recent Consumer Financial Protection Bureau (CFPB) report reveals that the NCRAs are failing to substantively respond to most consumer complaints filed with the CFPB—and harming consumers and businesses in the process.
The report revealed that the NCRAs have largely relied on vague, unhelpful form letters in response to consumer complaints filed with the CFPB. This practice, which surged in 2020, left families and communities vulnerable at the height of an unprecedented global pandemic and economic crisis, all while the NCRAs made more than a billion dollars in profits selling consumer data. That is unacceptable.
By April 2020, the NCRAs responded to more than half of the complaints submitted by consumers against them with form letters. In these form letters, the NCRAs stated that they would take no further action because they suspected that complaints had been submitted by third parties without consumers’ authorization. As the CFPB’s report makes clear, however, the NCRAs are relying on faulty, speculative criteria to decide to not respond to consumers’ complaints.
Take the experience of this small business owner, who we later interviewed. They filed a complaint with the CFPB about the NCRAs’ failure to correct an inaccurate item on their credit report:
[I] have attempted to dispute this erroneous item on my credit report that does not belong to me. … [T]his has already caused damage to me and my business. … If you cannot provide proof please remove this account immediately as this is now my 3rd request over the last 90 days.
The NCRA did not provide a substantive response to this complaint. Instead, based on its own, self-serving criteria, the NCRA sent the consumer a form letter intended for a credit repair company:
This complaint meets the criteria of a credit repair organization. It either has the same email address for multiple consumers, same naming convention or similar narrative in the attachment or it has the same and/or similar narratives as 20+ other complaints within a 45-day period.
This consumer’s experience is not unique. Thousands of consumers have inappropriately received form letter responses just like this one from the NCRAs during the past few years. In fact, last year only one-third of consumers received a substantive response that addressed issues described in their complaints.
And when consumers do authorize third parties to submit complaints on their behalf to the CFPB, the NCRAs should still review and respond appropriately. Instead, they are misinterpreting federal guidance and evading their responsibilities to consumers under the Fair Credit Reporting Act (FCRA) because they suspect the complaint was not filed by the consumer’s authorized representative.
To be clear, the CFPB fully expects Equifax, Experian, and TransUnion to review and respond to consumers’ complaints, regardless of whether the consumer or their authorized representative filed the complaint with the CFPB.
NCRAs often complain about the insertion of credit repair companies and other third parties into the complaint process. And the CFPB has certainly taken action against companies that charge prohibited fees or make deceptive promises to consumers about fixing their credit. But this trend also reflects the failure of our nation’s current credit reporting system to serve consumers who are frustrated by a credit reporting system that is unaccountable to them, where consumers are the product, not the customer.
The NCRAs’ deficient complaint response procedures are not just harmful for consumers. They result in uncorrected errors in credit reports that also harm communities, small businesses, and hold back our economy from a full and equitable recovery.