WASHINGTON—The CFPB, in its second action announced on Tuesday, has sued Experian for “unlawfully” failing to properly investigate consumer disputes.
The CFPB said it alleges Experian does not take sufficient steps to intake, process, investigate, and notify consumers about consumer disputes, resulting in the inclusion of incorrect information on consumer reports.
“Inaccurate or false information on consumer reports can threaten consumers’ access to credit, employment, and housing,” the agency said.
“When consumers disputed errors on their credit reports, Experian conducted sham investigations rather than properly reviewing the disputes as required by federal law,” said CFPB Director Rohit Chopra. “Credit reporting errors can have serious consequences for a family’s finances, and it is critical that credit reporting giants follow the law.”
Experian, based in Costa Mesa, Calif., is one of the nation’s three largest credit reporting conglomerates.
The Fair Credit Reporting Act (FCRA) requires that consumer reporting agencies take steps to ensure consumer reports are accurate and to conduct investigations of information disputed by consumers, the CFPB explained.
“The FCRA provides people multiple ways to dispute inaccurate information on their consumer reports, including by contacting consumer reporting agencies directly. The FCRA also requires that consumer reporting agencies follow certain procedures before reinserting into consumer reports information that has previously been removed as the result of a dispute,” the CFPB said.
The CFPB said it alleges Experian has violated the FCRA’s requirements for handling consumer disputes in numerous ways. The CFPB said it alleges Experian is harming consumers by:
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Conducting sham investigations that fail to properly address consumer disputes: “When handling disputes, Experian uses faulty intake procedures and does not accurately convey all relevant information about disputes to the original furnisher. Experian routinely and uncritically accepts the original furnisher’s response to the disputed information, even when that response was improbable or illogical on its face, or when Experian has other information available that suggests the furnisher is unreliable. At the conclusion of the investigation, Experian sends consumers notices that fail to inform them of the investigation results, and instead provides information that is confusing, ambiguous, incorrect, or internally inconsistent,” the CFPB said.
- Improperly reinserting inaccurate information on consumer reports: “Experian has failed to implement basic matching tools that prevent or greatly reduce the likelihood of reinsertion by a new furnisher of a previously deleted tradeline. Instead, Experian improperly reinserts inaccurate information into consumer reports because it fails to match newly reported information with records of previously deleted information. Consumers who have disputed the accuracy of an account and thought that their consumer report had been corrected, instead see the same inaccurate information reappear on their consumer report without explanation under the name of a new furnisher,” the agency said.
In addition to alleging violations of the FCRA’s requirements, the CFPB said it alleges that Experian’s faulty dispute intake procedures and failure to provide furnishers with consumer-submitted documentation, uncritical deference to furnishers’ responses to disputed information, and failure to prevent improper tradeline reinsertions also violate the Consumer Financial Protection Act’s prohibition on unfair acts or practices.
The CFPB’s lawsuit seeks to stop the company’s “unlawful” conduct, to provide redress for harmed consumers, and the imposition of a civil money penalty, which would be paid into the CFPB’s victims relief fund, the CFPB said