The CFPB’s new annual report of credit and consumer reporting complaints, required by Section 611(e) of the FCRA, criticizes the three largest nationwide consumer reporting agencies (NCRAs) for allegedly failing to meet their FCRA obligations to it and for engaging in practices that have led to a significant increase in the volume of consumer complaints it received about the NCRAs.

Historically, the CFPB has satisfied its FCRA obligation to provide the annual report by including the relevant information in its Consumer Response Annual Report.  However, in last year’s Report, the CFPB expressed concerns about what it characterized as (a) a substantial increase in complaints about the reporting of inaccurate information by the NCRAs, complaints it then forwarded to the NCRAs to address in accordance with Section 611(e), and (b) the failure on the part of the NCRAs to provide it with complete and accurate responses to those complaints, as required by Section 611(e).  The CFPB then promised to issue a separate report to provide a more robust analysis of the situation, which it now appears to have done.  The report it just released covers complaints from January 2020 through September 2021.  The CFPB reiterated that the increased complaint volume and changes made by the NCRAs in responding to complaints led the Bureau to publish an independent report.

The report discusses the experiences of consumers described in their complaints involving failed attempts to correct incomplete and inaccurate information on their credit reports.  The CFPB found that in 2020, the NCRAs significantly changed how they responded to complaints forwarded by the CFPB and that, subsequent to such changes, an increasing share of complaints were not fully addressed by the NCRAs.  According to the CFPB, a large share of complaints received a response in which the NCRA indicated either a suspicion of third-party involvement and that no further action would be taken or that the NCRA had forwarded the complaint to its dispute channel.  These responses were typically provided using a third-party template or a referred to dispute channel template.  According to the CFPB, these templates did not contain sufficient information to meet the CFPB’s expectation that companies provide complete, accurate, and timely responses to complaints.  The CFPB also reported that, consistent with the increased use of templates, the time NCRAs took to close complaints decreased significantly and there was a significant decrease in the number of complaints for which the NCRAs reported that relief was provided.  The CFPB commented that “the NCRAs’ responses to these complaints raise serious questions about whether they are unable–or unwilling–to comply with the law.”

With regard to the large share of complaints discarded by the NCRAs based on suspected third-party involvement, the CFPB pointed to “a flawed application of guidance that does not apply to CFPB complaints” as a contributing factor.  More specifically, the CFPB asserted that in not responding to complaints they suspected were submitted by third parties, the NCRAs “inappropriately conflate different obligations.”  The CFPB observed that under existing FTC guidance (and some case law), NCRAs do not need to investigate disputes submitted by third parties, such as credit repair organizations.  However, the CFPB noted that this guidance concerns consumer disputes submitted directly by a consumer to a NCRA and not to the duty of a NCRA to review complaints submitted by the CFPB.  The CFPB indicated that it “expects that companies, including the NCRAs, should reasonably review and respond to complaints legitimately submitted by a third party on behalf of a consumer, and there is no guidance or caselaw precedent to the contrary.”

While the CFPB’s report takes aim at the NCRAs, it should also serve as a cautionary note to furnishers who have independent obligations under the FCRA that include compliance with specific timelines and notification requirements when investigating a dispute.  Given the CFPB’s focus on accurate consumer credit reporting and highlighting of the consequences to consumers of inaccurate credit report information, furnishers should be prepared to face scrutiny from the CFPB of their handling of the dispute process.