In March 2021, the Consumer Financial Protection Bureau (CFPB) published its annual complaint report, showing that credit and consumer reporting complaints accounted for more than 58% of the complaints received in 2020. More recently, the CFPB examined the demographic patterns of these submissions. And while we agree that even one complaint is too many, the report omits much needed context.
The truth is that most of the complaints submitted through the CFPB portal aren’t considered true complaints. A complaint is defined as a consumer expressing dissatisfaction about an action a credit reporting agency has taken, problems with contacting a credit reporting agency or a problem with a product. However, third-party analysis from the research firm Oliver Wyman shows that most “complaints”—86% submitted through the CFPB portal in 2020—are actually consumers or companies, on behalf of consumers, disputing specific credit report information that was delivered from data furnishers to the credit reporting agencies. This is an important distinction because these companies that are supposedly acting on behalf of consumers by disputing the information are indicative of unscrupulous credit repair companies that jam the dispute process with frivolous claims.
The consumer credit reporting industry is unique because we have a clearly defined process designed to handle disputes of credit report information, and the Oliver Wyman analysis shows that only 13% of the submissions are classified as disputes by the CFPB resulting in any change to a consumer’s credit report.
But quite frankly, what’s more troubling than the lack of context around the definition of complaints in the CFPB’s report, is the Oliver Wyman analysis also found that 45% of these submissions appear to leverage some sort of template, an indication that credit repair companies are driving much of the increase in complaint activity.
Unfortunately, this is an ongoing issue. Some credit repair companies take advantage of consumers and mislead them into believing they can remove accurate, albeit negative, information from their credit reports. To be clear, no one can remove accurate information from consumers’ credit reports without falsifying information to lenders or credit reporting agencies. Many of these credit repair companies misrepresent their ability to help consumers through unfair, deceptive, and abusive practices, and can cost consumers hundreds of dollars for services not rendered. But these scams do not just impact individual consumers, they impact thousands of consumers whose legitimate inquiries into their credit file are delayed by false, bulk claims made by bad actors in the industry.
We strongly encourage the CFPB and the Federal Trade Commission (FTC) to take extensive enforcement action against predatory credit repair companies. These companies, that do not follow the Credit Repair Organizations Act statutes, are ripping off consumers using waves of templated submissions.
Rather than working with some of these unscrupulous credit repair companies, we recommend consumers work directly with the national credit bureaus to dispute potentially inaccurate information. Each of the national credit bureaus make it easy and free for consumers to submit disputes. In addition, Equifax, Experian and TransUnion have all extended the ability for consumers to check their credit report weekly, free of charge, through April 2022.
Getting credit reports right for consumers is our most important job, and that’s reflected by our industry’s commitment to accuracy. We don’t believe the complaints in the CFPB database are an accurate reflection of consumers’ experience with credit reporting companies; the industry has consistently put consumers first. While there is always room for improvement, the lack of context paints a picture of an inaccurate credit reporting ecosystem and sweeps the unethical practices of some credit repair companies under the rug. We need to shine the light on these issues, otherwise it’s simply a disservice to consumers and the larger credit economy.