CFPB Oversight Uncovers And Corrects Credit Reporting Problems | Consumer Financial Protection Bureau (2024)

WASHINGTON, D.C. — Today the Consumer Financial Protection Bureau (CFPB) released a report detailing the problems in the credit reporting industry that the Bureau has uncovered and corrected through its oversight work. Since launching its supervision of the credit reporting market, the CFPB has identified significant issues with the quality of the credit information being provided by furnishers and maintained by credit reporting companies. Today’s report outlines the actions that the CFPB has taken to address these ongoing problems such as fixing data accuracy at credit reporting companies, repairing the broken dispute process, and cleaning up information being reported.

"Since we began our oversight work, the CFPB has been uncovering and correcting problems in the consumer reporting industry," said CFPB Director Richard Cordray. "Because of our work, important improvements are being made. Much more work needs to be done but our corrective actions are leading to positive changes that are benefiting consumers all over the country."

Consumer reporting companies are businesses that track information about a consumer, including credit history, deposit account history, and other consumer transactions. Such companies, which include what are popularly called credit bureaus or credit reporting companies or agencies, play a key role in the consumer financial services marketplace and in the financial lives of consumers. For example, the reports sold by the three largest consumer reporting companies – Equifax, Experian, and TransUnion – are used in determining everything from consumer eligibility for credit to the rates consumers pay for credit. The consumer reporting companies receive their information from furnishers, including both banks and nonbanks. Inaccurate information can lead to inaccurate reports and consumer and market harm.

Consumers continue to complain about the credit reporting industry in high numbers. The Bureau has handled approximately 185,700 credit reporting complaints as of Feb. 1, 2017. Consumers have said that when they dispute an item on their report, nothing changes even though federal law requires the consumer reporting company to conduct a reasonable reinvestigation and update the file to reflect any necessary changes or delete the item. Consumers also frequently complain of debts already paid showing up on their report as unpaid and information that is not theirs being included in their report negatively affecting their credit scores.

In 2012, the CFPB became the first federal agency to supervise all sides of the credit reporting market, which includes the consumer reporting companies and providers of consumer financial products or services, many of whom furnish or use consumer reports. In 2013, the CFPB published a bulletin warning that the agency would hold furnishers accountable for their legal obligation to investigate consumer disputes forwarded by the consumer reporting companies. The bulletin also reminded companies that they must review all relevant information provided with the disputes, including documents submitted by consumers. The CFPB has also made efforts, including in a consumer advisory , to educate the public about the importance of checking their credit reports, what to look for in their reports, and how to dispute mistakes. As outlined in today’s special edition of Supervision Highlights, because of these widespread issues, CFPB supervision has aimed its work at:

  • Fixing data accuracy at consumer reporting companies: Early on, examiners found that one or more of the consumer reporting companies lacked good quality control to check the accuracy of their consumer records. The CFPB directed them to make necessary changes, and they did. In recent exams, examiners have found that quality control programs have been instituted that include tests to identify whether reports are produced for the wrong consumer and whether reports contain mixed-up files. The companies are also taking better corrective actions when mistakes are identified, and making system improvements to prevent the same mistakes from happening again.
  • Repairing broken dispute processes at consumer reporting companies: CFPB examiners discovered that one or more consumer reporting companies were not following federal requirements that said they must send a notice with the results of disputes to consumers. They also found one or more consumer reporting companies failing to consider documentation provided by the consumer on a disputed item. The CFPB directed these companies to improve their dispute investigation systems. Now, continued monitoring has shown that the consumer reporting companies have improved processes for investigating disputes and are improving response letters to consumers.
  • Cleaning up information from furnishers: Through earlier reviews at banks and nonbanks, CFPB examiners found widespread problems with furnishers supplying incorrect information to the consumer reporting companies. The CFPB directed them to take steps to address these problems, such as maintaining evidence that they are accurately handling disputes and conducting reasonable investigations. Since then, several furnishers have dedicated more resources to ensuring the integrity of the information. This effort includes better investigations and handling of disputes, notifying consumers of results, and taking corrective action when inaccurate information has been supplied. Importantly, though, examiners continue to find numerous violations at one or more furnishers, particularly around deposit account information.

The CFPB’s approach when examining the credit reporting activities of supervised entities is just like its approach to examining other activities of supervised entities. Supervision includes a review of compliance systems and procedures, on-site examinations, discussions with relevant personnel, and requirements to produce relevant reports. The Fair Credit Reporting Act governs how companies handle consumers’ information. When examiners find violations of law, they direct the companies to change their conduct and remediate consumers. When appropriate, the CFPB’s supervisory activity also results in enforcement actions, such as the action against the furnisher Wells Fargo Bank for failing to update or correct inaccurate, negative information reported to credit reporting companies about student loans.

Today’s edition of Supervisory Highlights Credit Reporting Special Edition is available at: https://files.consumerfinance.gov/f/documents/201703_cfpb_Supervisory-Highlights-Consumer-Reporting-Special-Edition.pdf

The Consumer Financial Protection Bureau is a 21st century agency that implements and enforces Federal consumer financial law and ensures that markets for consumer financial products are fair, transparent, and competitive. For more information, visit www.consumerfinance.gov.

CFPB Oversight Uncovers And Corrects Credit Reporting Problems | Consumer Financial Protection Bureau (2024)

FAQs

What is the Consumer Financial Protection Bureau (CFPB) responsible for? ›

Our work includes: Rooting out unfair, deceptive, or abusive acts or practices by writing rules, supervising companies, and enforcing the law. Enforcing laws that outlaw discrimination in consumer finance.

What is the federal oversight of the CFPB? ›

The CFPB supervises a range of companies to assess their compliance with federal consumer financial laws. We have supervisory authority over banks, thrifts, and credit unions with assets over $10 billion, as well as their affiliates.

What does the CFPB regulate? ›

The CFPB implements and enforces federal consumer financial laws to ensure that all consumers have access to markets for consumer financial products and services that are fair, transparent, and competitive.

What is the oversight of the credit reporting agencies? ›

The Consumer Financial Protection Bureau (CFPB) helps consumers by providing educational materials and accepting complaints. It supervises banks, lenders, and large non-bank entities, such as credit reporting agencies and debt collection companies.

What is the role of the Consumer Financial Protection Bureau and how does it protect the American people from predatory lending companies? ›

The CFPB enforces consumer protection laws, regulates financial companies and seeks to ensure fair treatment and transparency for citizens. Consumers can submit complaints to the CFPB and seek assistance in dealing with companies or financial practices they believe are acting unfairly.

Is the CFPB a federal regulator? ›

The Consumer Financial Protection Bureau (CFPB) is the principal federal regulator responsible for administering federal consumer financial law, see 12 U.S.C.

Does CFPB have enforcement authority? ›

When a financial institution, individual, or other entity subject to the CFPB's authority breaks the law, the CFPB may take enforcement action against them. In certain cases, the CFPB may partner with other federal, state, or local agencies to investigate the wrongdoing and coordinate the enforcement action.

Is CFPB a federal agency? ›

We're the Consumer Financial Protection Bureau, a U.S. government agency dedicated to making sure you are treated fairly by banks, lenders and other financial institutions.

Does the CFPB respond to consumer complaints? ›

By statute, a primary function of the CFPB is to collect, investigate and respond to consumer complaints.

Does filing a complaint with CFPB do anything? ›

Consistent with applicable law, we securely share complaints with other state and federal agencies to, among other things, facilitate: supervision activities, enforcement activities, and. monitor the market for consumer financial products and services.

Is the CFPB necessary? ›

The CFPB helps ensure the financial market is a level playing field by cracking down on bad financial actors that engage in unfair, deceptive, abusive, and discriminatory practices that harm consumers.

Who regulates consumer credit reports? ›

The Fair Credit Reporting Act (FCRA) regulates the consumer credit reporting industry. In general, the FCRA requires that industry to report your consumer credit information in a fair, timely, and accurate manner. Banks and other lenders use this information to make lending decisions.

What are the three major credit reporting agencies? ›

There are three big nationwide providers of consumer reports: Equifax, TransUnion, and Experian. Their reports contain information about your payment history, how much credit you have and use, and other inquiries and information.

What act regulates credit and consumer reports? ›

The Fair Credit Reporting Act (FCRA) , 15 U.S.C. § 1681 et seq., governs access to consumer credit report records and promotes accuracy, fairness, and the privacy of personal information assembled by Credit Reporting Agencies (CRAs).

What is the Consumer Financial Protection Bureau Quizlet? ›

CFPB was created under Title X of the. Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Charged with overseeing. the federal financial laws that specifically protect consumers who are paying for good and services.

What is the mission of the CFPB Quizlet? ›

c) to protect consumers by regulating financial products and services.

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