CFPB: Annual Report on Credit Reporting Companies Cites ‘Ongoing Challenges’

The Consumer Financial Protection Bureau on Tuesday issued its annual report on the industry’s three largest credit reporting companies, based on nearly a half-million complaints it received about TransUnion, Equifax and Experian.

The report details improvements and deficiencies in the nationwide consumer reporting companies’ responses to consumer complaints transmitted by the CFPB. It also includes considerations to improve compliance with consumer financial protection laws and to better serve consumers.

“TransUnion, Equifax and Experian routinely top the list of complaints submitted by consumers,” said CFPB Director Rohit Chopra. “We will be exploring new rules to ensure that they are following the law, rather than cutting corners to fuel their profit model.”

The report, mandated under the Fair Credit Reporting Act, is based on 488,000 consumer complaints the CFPB transmitted to Equifax, Experian, and TransUnion from October 2021 through September 2022. The findings follow last year’s report that detailed “failures by the nationwide companies when responding to consumer complaints” submitted to the CFPB.

The report noted Equifax, Experian and TransUnion have since acted to remedy issues identified in last year’s report. Specifically, the CFPB found they have:

• Changed how they respond to complaints: Equifax, Experian, and TransUnion use of problematic response types described in last year’s report has declined. Most complaints now receive more substantive responses.
• Provided more tailored complaint responses: Across all three companies, most responses now describe the outcomes of consumers’ complaints. In September, the nationwide companies provided a tailored response to more than 50% of complaints that were closed with an explanation or relief.
• Reported greater rates of relief in response to complaints: In 2022, TransUnion reported providing relief in most complaints. Experian reported providing relief in nearly half of complaints. Equifax reported that it did not provide relief, but its written complaint responses suggest that its rates of relief are comparable to the other two companies.

The report said the Bureau expects the companies to continue improving how they serve consumers. To that end, the CFPB recommends that Equifax, Experian and TransUnion:

• Consider consumer burden when implementing automated processes: When companies consider introducing automated processes that will affect their customers, particularly those that relate to a legal right, they should consider consumer burden, especially whether a change will require consumers to do more work to exercise their legal rights.
• Recognize that technology is also improving for consumers: Advances in communications technologies mean consumers do not necessarily need to write complaints on their own. Instead, communications technologies may ease the writing burden. Such innovations, including ones that can generate letters for consumers, may create similar-sounding complaints that are, in fact, from unique individuals with independent concerns. The assumption that similar-sounding letters are from third parties will increasingly be wrong.
• Consider how to transition the market from control and surveillance to consumer participation: One potential reason there are so many reported inaccuracies in consumer reporting data is that consumers are several degrees removed from their own data. 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.