Credit Bureaus in the Crosshairs of Consumer Complaints

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Consumer complaints about credit reporting more than doubled to record levels last year,  a new analysis of Consumer Financial Protection Bureau (CFPB) data shows. 

Key Takeaways

  • Consumer complaints about credit reporting agencies have more than doubled during the pandemic, an advocacy group’s analysis of CFPB data shows. 
  • The pressures of the pandemic and a hands-off approach to regulations under a business-friendly Trump administration have contributed to the angst, consumer advocates say.
  • The deluge of complaints helps make the case for Biden’s proposal to establish a public credit reporting agency within the CFPB.

Of the 444,551 consumer complaints received by the CFPB in 2020, 63%, or 282,000, were about credit reporting, compared with 136,000 in 2019, according to an analysis by the U.S. Public Interest Research Group (U.S. PIRG) Education Fund. The 282,000 credit complaints eclipsed the total number of complaints logged by the CFPB in 2019—277,366—which was a record at the time, the independent consumer advocacy organization said. The majority of the credit reporting complaints involved incorrect information, and more than one in five mentioned identity theft. 

This deluge of credit reporting complaints, which were overwhelmingly aimed at the three major credit bureaus, comes as the administration of President Joe Biden moves to make the CFPB a fiercer defender of consumers’ rights than it had been under the business-friendly Trump administration. The report also gives ammunition to supporters of Biden’s plan to create a national credit reporting bureau within the CFPB to compete with or even replace Experian, Transunion, and Equifax.

“I think it’s time to fire the credit bureaus,” said Ed Mierzwinski, senior director of the U.S. PIRG’s Federal Consumer Program. “The problem with the credit bureaus is that they have the wrong incentives. Consumers are not the credit bureaus’ customers; we are their product.”

Spokespeople for the three credit bureaus did not immediately respond to a request for comment, nor did a spokesperson for the CFPB. 

Credit Report Errors

Because credit bureaus make their money selling credit reports to businesses that want to assess the creditworthiness of potential borrowers, they tend to “go cheap” on fixing mistakes that crop up in customers’ credit reports, leading to complaints, Mierzwinski said. These errors became especially troublesome during the pandemic’s economic downturn. 

“People who don’t have as much money as they used to are extremely worried about whether they can qualify for loans, or whether they can qualify for a job,” Mierzwinski said. “The pandemic not only scares people that they are going to get sick, they are scared about being able to feed their families, and they want to make sure their credit reports are accurate.” 

The large number of complaints were also symptomatic of the Trump administration giving credit bureaus a “free pass” on handling consumer disputes, according to U.S. PIRG.

“That hands-off approach couldn’t have happened at a worse time. It exacerbated family finance problems during a pandemic that had already left many consumers teetering on the edge of financial ruin,” said Lucy Baker, consumer program fellow at U.S. PIRG, in a press release.

While U.S. PIRG does not have historical data on identity theft complaints to compare it to, the prevalence of identity theft complaints in the CFPB data indicates that it’s a serious problem, as criminals not only steal personal information from consumers to apply for loans, but increasingly to steal government benefits such as unemployment payments.  

Mierzwinski has high hopes for the CFPB under Biden, and the director Biden has nominated, Rohit Chopra, to attack these problems more aggressively and be less influenced by the credit bureaus and the debt collection industry. 

“It’s very important that the CFPB get back on its feet, get rid of its ‘stakeholders,’ the debt collectors and the credit bureaus, and return to its one job of protecting consumers,” Mierzwinski said.