Consumer Bureau Takes Action on Credit Disputes

Regulatory agency issues ruling to protect consumers from bad practices of credit reporting agencies

The Consumer Financial Protection Bureau (CFPB) has issued new guidance to credit reporting agencies - firms like Equifax, TransUnion, and Experian - in order to protect consumers engaged in disputes over errors on credit reports.

The CFPB has found that consumer reporting companies and some furnishers have failed to conduct reasonable investigations of consumer disputes and to spend the time necessary to get to the bottom of inaccuracies. These failures can affect, among other things, people’s eligibility for loans and interest rates, for insurance, and for rental housing and employment.

“One wrong piece of information on a person’s credit report can have destructive consequences that follow a consumer for years,” said CFPB Director Rohit Chopra. “Companies that fail to properly address consumer disputes in accordance with the law may face serious consequences.”

In some cases, the CFPB found consumer reporting companies ignored the results of their investigations and simply deleted disputed tradelines instead of correcting inaccurate information.

The new guidance from the CFPB protects consumers by requiring:

• Consumer reporting companies must promptly provide to the furnisher all relevant information regarding a person’s dispute: After a person disputes the accuracy or completeness of information in their file, the consumer reporting company must notify the entity that originally furnished the information within five business days. In addition, the consumer reporting company must give the furnisher all relevant information provided by the individual.
• Consumer reporting companies and furnishers may not limit a person’s dispute rights: Consumer reporting companies and furnishers must reasonably investigate disputes received directly from individuals. For furnishers, they must reasonably investigate all indirect disputes received from consumer reporting companies. These requirements remain in place even if a person does not include or use the entity’s preferred format, intake forms, or documentation.

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