TransUnion, Equifax, Experian may have violated credit reporting

A key Democrat wants credit reporting agencies Equifax, Experian and TransUnion investigated for allegedly failing to respond to consumer complaints during the pandemic.

Rep. James Clyburn, the chairman of the House Select Subcommittee on the Coronavirus Crisis, said the nation’s three largest nationwide consumer reporting agencies have “longstanding problems” with responding to consumers who raise complaints about credit reporting errors.

“These data also raise concerns about whether the [credit rating companies] are fulfilling all of their obligations to consumers and to the Consumer Financial Protection Bureau (CFPB) under the Fair Credit Reporting Act (FCRA),” the South Carolina Democrat wrote in an Oct. 13 letter to Consumer Financial Protection Bureau Director Rohit Chopra.

Clyburn asked the chief executive officers of Equifax, Experian and TransUnion in May for the companies’ responses to consumer complaints in the early days of the pandemic.

CFPB reported then that 4.1% of complaints were resolved in 2021, compared with nearly 25% of complaints in 2019, before the pandemic.

And the majority of credit report disputes have not resulted in the correction or removal of reported errors from credit reports. The subcommittee found that Equifax didn’t change more than half of the disputed items each year from 2019 through 2021. Experian corrected about 52% of the disputed late payments or other bad data while TransUnion made fixes to between 49% and 53% of credit reports during this time.

The subcommittee partly credited the pause on student loan payments and an increase in pandemic-related identity theft to credit reporting errors.

Under the CARES act, paused loan payments were supposed to be reported as current, though some lenders may have incorrectly categorized them as late. Consumer fraud can also lead to faulty consumer credit reports.

But consumers have been disputing information found in their credit reports on a larger scale than previously known, the subcommittee found. The CFPB estimated the combined number of dispute submissions among Equifax, Experian and TransUnion to be 8 million in 2021. But data obtained by the subcommittee showed Equifax, alone, received nearly 14 million complaints that year.

CFPB also received a “record-breaking” amount of complaints about the credit rating companies from 2020 through 2021 with more than 619,000 in 2021 alone. Consumers disputed nearly 336 million items, including names, addresses or credit accounts, on their credit reports from 2019 through 2021, the subcommittee found.

Yet according to evidence obtained by the subcommittee, the credit raters discard millions of disputes a year without investigation. At least 13.8 million were thrown out between 2019 and 2021, the subcommittee found.

Discarding disputes violates the fair credit laws if any are submitted directly by consumers to authorized representatives. The companies’ defense, says the subcommittee, is that disputes are discarded without…