In May 2022, the CFPB sent letters to the chief executive officers of six major credit card issuers regarding their companies’ payment furnishing practices. On February 16, the CFPB published a blog post about its key findings based on the issuers’ responses to those letters and released the letter it sent to the issuers summarizing its key findings.
The CFPB’s inquiry followed its publication of a report in 2020 about research showing a decline in the share of credit card tradelines containing actual payment data since 2012. “Actual payment” is the amount a borrower repays each month on a credit card account as opposed to the minimum payment or full balance. According to the CFPB, the decline in actual payment data was the result of an effort by the largest card issuers “to deliberately suppress” such information. The CFPB considers actual payment data to be valuable information that can help lenders offer and price credit competitively because consumers who repay their balances in full are generally less risky than those who do not. It has asserted that adding such data would increase the credit scores of millions of consumers by 20 points or more, with lower score consumers benefitting the most frequently from significant increases. The CFPB’s 2020 letters to the card issuers included a series of questions regarding the companies’ practices in furnishing actual payment data, including the companies’ rationales for furnishing or not furnishing actual payment data.
The CFPB’s key findings based on the issuers’ responses were:
- While the CFPB’s analysis did not seek to investigate whether entities explicitly colluded, the responses indicated that after one large issuer stopped reporting actual payment data, the other large issuers stopped reporting shortly thereafter. After this change, the share of furnished credit card accounts with actual payment information fell by more than half from 88 percent in late 2013 to only 40 percent by 2015.
- No issuer specified that it would restart reporting actual payment information and some issuers explicitly stated they did not intend to do so.
- The issuers’ responses suggest that they stopped reporting actual payment data “in an attempt to make it harder for competitors to offer their more profitable and less risky customers better rates, products, or services.”
The CFPB concludes its blog post by stating that it “will continue to monitor and address credit card company practices that impede effective market competition, like actual payment data suppression” and “will also brief the appropriate financial regulators and law enforcement agencies on our findings.” In its 2020 report, the CFPB noted the FCRA requirements concerning furnishing accurate information and for furnishers to establish and implement reasonable written policies and procedures regarding the accuracy and integrity of furnished information. It did not, however, directly suggest in the report that the FCRA requires financial institutions that furnish to consumer reporting agencies to include actual payment data nor has it made that suggestion in its new blog post. While the Interagency Guidelines on accuracy and integrity of information furnished to consumer reporting agencies expressly require issuers to report credit limits, they do not expressly require issuers to report actual payment information. See 12 C.F.R. pt. 1022, App. E.
Instead, the CFPB does appear to be suggesting that “suppression” of actual payment data could face scrutiny as a potential UDAAP violation. More specifically, the CFPB states in the blog post that, “[b]y suppressing actual payment data, the largest credit card companies are making it harder for people to shop for credit and save money” and are not meeting consumers’ reasonable expectations “that their positive credit behaviors—like paying credit card bills in full each month—will be reflected in their consumer credit reports and the credit offers they receive.”