The Consumer Financial Protection Bureau (CFPB) yesterday released a major report detailing how an already broken dispute process in the credit reporting system has gotten even worse, reaffirming the need for every American to have the right to get help navigating this.
The CFPB found that consumers were provided relief on just 2% of complaints in 2020, sharply down from the 25% who received relief in 2019. Furthermore, from January 2020 to September 2021, of the more than 700,000 complaints from consumers about national credit reporting agencies (CRAs) to the CFPB, most were found to have met the criteria for which CRAs were expected to review those complaints. However, in many cases, those reviews never happened. It is clear from the evidence in this and other reports that the dispute process is simply not working for American consumers.
As noted by the CFPB, although some consumers attempt to navigate the dispute process on their own, many consumers “have used or are currently working with third parties, including credit repair companies, to try to improve their credit records.” The process to rectify credit report errors is long, nuanced, and difficult, which is why so millions of Americans rely on credit repair professionals and other consumer advocates for advice and guidance when they have questions about items on their credit reports. The American Association of Consumer Credit Professionals (AACCP) is committed to defending Americans’ right to seek help when discovering and correcting those errors, and the CFPB’s findings provide yet more evidence that it is essential for both consumers and the economy that Americans continue to be able to seek help and advice from consumer advocates with expertise in the laws governing the credit reporting system when they need it.
Here are the four biggest takeaways from CFPB’s major report:
- The CFPB found that America’s credit reporting system is deeply broken, and consumers — while balancing the jobs, children, and life in general — have to invest an unreasonable amount of “time, energy, and money” to fix the issues that exist on their credit reports. “Consumers are caught in an automated system where they are unable to have their problem addressed. Consumers described how they attempted to dispute inaccurate information with the NCRAs but were unsuccessful. […] Consumers described the burden associated with attempting to correct inaccurate information, which can be compounded when they are managing other personal issues. Some consumers reported discovering that debts (such as medical bills) had been reported to their credit report without their knowledge. Consumers described being exasperated by the dispute process and some consumers described paying bills they did not think they owed because of concerns about the effect of the debt on their credit report and credit score.”
- Americans have the fundamental right to get help with this broken system. The CFPB reaffirmed that credit reporting agencies are expected to “substantively respond” to complaints brought to the CFPB on behalf of American consumers by third-parties, such as credit repair organizations. “Other consumers acknowledged that they have used or are currently working with third parties, including credit repair companies, to try to improve their credit records. Within this last group of consumers, experiences differed. Some consumers were aware that the third party submitted a complaint on their behalf. Some said that they were not aware of the complaint itself, but that they had authorized a third party to act on their behalf after reviewing their credit report. The CFPB would expect the NCRA to review and substantively respond to the complaints in all of these scenarios.”
- But the CFPB also found that credit reporting agencies are dramatically under-responding to complaints about inaccurate information in their credit reports or a flawed dispute process. From 2019-2021 — the entirety of the pandemic that has disrupted Americans’ financial lives — they nearly stopped responding to these complaints at all. “In 2021, the NCRAs reported relief in less than 2% of complaints down from nearly 25% complaints in 2019. Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB’s complaint process allows for the submission of complaints by consumers third-party representatives. […] The NCRAs ignore this obligation and, instead, do not respond when they suspect that a third party was involved in the submission of the complaint. The NCRAs rely on speculative criteria in reaching these decisions. The NCRAs’ actions leave many consumers without a response to the issues they raised in their complaints.”
- Credit reporting issues – and the inability to get them resolved – can have life-changing consequences for Americans. “The issues associated with inaccurate information and problems when attempting to correct information do not occur in a vacuum. Consumers encounter issues with credit reports as they navigate their own unique circumstances: seeking new credit, attempting to buy a house, struggling with a pandemic, among many other scenarios. Conversations with consumers further underscore that there can be serious consequences when inaccurate information is—and remains—on a consumer’s credit report.”