WASHINGTON–The CFPB is alleging the largest credit card companies continue to suppress actual payment data on consumer credit reports, providing three reasons the companies are doing so.
In a blog post, the CFPB’s John McNamara wrote that Bureau data show Americans pay more than $120 billion in interest and fees on credit cards and stated, “It’s critical that consumers can find and switch to credit cards with the lowest and most competitive rates. That’s why we’ve been carefully examining barriers to a fair and competitive credit card market, especially as it relates to the role of consumer credit reporting.”
McNamara reminded that in 2020 the CFPB first noted the largest credit card companies had started to deliberately suppress their customers’ actual payment amounts from the nationwide consumer reporting system, with actual payments reflecting the amount a borrower repays each month, as opposed to the minimum payment or balance.
Fundamental Information ‘Missing’
“Credit card companies’ failure to report actual payment data means that millions of people’s credit reports are missing fundamental information about their credit card repayment behavior that could help many of them receive better financial offers and potentially save billions of dollars in interest expenses,” according to McNamara.
The majority of accounts, or “tradelines,” listed in credit reports are credit and retail cards, which amount to nearly 70% of all tradelines shared (or “furnished”) into the nationwide consumer reporting system, McNamara added.
He further noted that in May 2022 the CFPB sent letters to the biggest card companies asking if they ever furnished actual payment information. For those that suppress actual payment information, the Bureau then asked why they stopped sending complete data, and if they had any plans to change their practice.
Key Learnings
According to McNamara, here is some of what the CFPB learned:
- Major market players made the change to suppress data within a short period of time. “While our analysis didn’t seek to investigate whether entities explicitly colluded, the responses indicated that one large credit card company moved first, and other players suppressed data shortly thereafter,” McNamara wrote. “After the change made by these players, the share of furnished credit card accounts with actual payment information fell by more than half from 88% in late 2013 to only 40% by 2015.”
- Credit card companies didn’t say when they would restart reporting actual payment information. “Although companies generally cited the positive benefits of credit performance data sharing for consumers and the economy, they didn’t specify when they would return to their previous practice of reporting actual payment information,” he stated. “In some cases, companies explicitly stated they did not intend to do so.”
- Companies suppressed data to limit competition. According to McNamara, responses suggested companies withheld information in an attempt to make it harder for competitors to offer their more profitable and less risky customers better rates, products, or services. “A few companies specifically noted they observed other credit card companies had stopped furnishing actual payment information and didn’t want to be at a ‘competitive disadvantage’ by providing data their competitors had chosen to stop sharing,” McNamara stated.
For the full summary of what the CFPB said it learned, go here.
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