Significant progress has been made toward making it easier for consumers to dispute inaccurate information. The best path forward is through company initiatives and ongoing CFPB examination.
Transparency and consumer participation are fundamental aspects of the US credit reporting system. Consumers play an important role in ensuring the accuracy of credit report data reported by their own creditor to the credit bureaus, but their participation depends upon knowing and exercising their rights. When they do, credit bureaus are expected to make the consumer dispute process easy and seamless.
Today, consumers receive multiple notifications that remind them to check their credit reports. Adverse action and risk-based pricing notices, scores on statements and free credit monitoring enable consumers to review their credit reports and seek corrections if necessary.
CFPB, FTC and Attorneys General have broad powers over CRAs
Congress gave the CFPB broad powers in the Dodd-Frank Act of 2010 to enforce the Fair Credit Reporting Act (FCRA) and the Bureau has been supervising and examining credit bureaus since 2012. The FTC and State Attorneys General also have power to enforce the FCRA and have established memoranda of understanding with the CFPB to coordinate their activities.
The CFPB began an ongoing supervision and examination program of national CRAs in 2012, setting in motion a new process of continuous change and innovation to the consumer dispute process. These changes continue to transform the consumer experience. The supervision process is well suited to enabling ongoing, system-wide changes to reform the consumer dispute process. The Compliance Management Systems required of all supervised entities enables continuous improvement of quality control. As issues are identified with the handling of disputes, possible solutions can be developed and deployed, the results analyzed, and revised solutions can be developed. This iterative process of continuous improvement is overseen and advanced by the ongoing examination process.
CFPB supervision and examination of the credit bureaus and lenders that furnish data to them have resulted in many changes in the dispute process. Enhancements to the dispute process also resulted from a 2015 agreement between the three nationwide CRAs and a group of Attorneys General. This agreement resulted in the National Consumer Assistance Plan (NCAP).
Substantial Progress has been made
Between CFPB supervision, NCAP initiatives, Congressional action and industry initiatives, many changes have been made to enhance the consumer dispute process. These include:
- Requiring online dispute portals where consumers can upload proof documents (implemented September 2013);
- Eliminating any requirement for consumers to obtain a credit report before filing a dispute (implemented Spring 2014);
- Escalating difficult disputes related to fraud, identity theft or mixed files to specially-trained teams (implemented June 2016);
- Enhancing www.annualcreditreport.com with new educational materials (implemented June 2016);
- Providing more information about the dispute process to consumers in dispute response letters (implemented September 2017);
- Providing an additional free credit report to consumers who successfully dispute information (implemented September 2017); and
- Providing free credit freezes for all consumers and their minor children (implemented September 2018).
During 2019, CRAs will begin offering free credit monitoring services to active duty military personnel, implement procedures for recognizing consumers who have rehabilitated their student loan defaults and remove medical debts related to the Veterans Choice Act.
Initiatives driven by the CRAs themselves, Congress, CFPB supervision and the NCAP programs have resulted in meaningful strides in making the consumer dispute process easier for consumers. The current system of oversight, examination and continual improvement through compliance management and company innovations is the best way to advance progress in the consumer dispute process.
Through ongoing supervision and examination, CRAs can establish accuracy benchmarks and employ technology and process improvements to determine the most effective solutions. The process is much more nimble, adaptive and responsive to market conditions than rulemaking or legislation. There are no “silver bullet” legislative solutions to improving the consumer dispute process. Congress has already mandated a system of supervision and examination that remains the best path forward.