Credit reporting agencies ignored my dispute submission

It’s no secret that consumers have umpteen issues with the credit reporting agencies, and various efforts have been made to reform the credit reporting industry.

Complaint volume

To cap it all, the Consumer Financial Protection Bureau recently reported that in the period ranging from January 2020 through September 2021, it received more than 700,000 complaints about the three national credit reporting bureaus collectively (with more than 225,000 complaints each about TransUnion, Experian and Equifax individually). The complaint volume about these bureaus has been steadily rising since 2017.

In fact, the category of consumer reporting accounted for 59% of consumer complaints received in 2020, far ahead of the second category (debt collection, at 15%). The three national credit reporting bureaus accounted for more than 50% of consumer complaints the CFPB received in 2020, and more than 60% in 2021.

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Changes in credit rating agency procedures

Consumers have the right legally to dispute with the credit reporting agencies information on their credit reports that is inaccurate or incomplete. They also have the right to submit a complaint to the CFPB in case they feel that the credit reporting agency did not address their dispute about the inaccurate or incomplete information, or if the consumer otherwise followed Fair Credit Reporting Act procedures to address the situation with the credit reporting agencies.

The CFPB finds that the major credit rating agencies changed their procedures in 2020 for addressing such “covered” consumer complaints forwarded by the consumer watchdog. According to the CFPB, they are “closing these complaints faster and with fewer instances of relief.” In fact, according to the CFPB analysis, they reported providing relief in less than 2% of cases in 2021, compared to 25% in 2019.

This comes about as the credit reporting agencies started responding to many consumer complaints with the notation that they suspected third-party involvement and so would not be taking any further action on the complaint. About half of the covered complaints were closed out in this manner in April 2020 by these agencies. The change was initiated by the credit rating agencies without notifying the CFPB, the consumer protection agency said.

Ignored Fair Credit Reporting Act obligations

It seems the Dodd-Frank Act actually allows consumers to authorize third parties to submit complaints on their behalf to the CFPB. The third-parties have to disclose their involvement while submitting the complaints. Moreover, the CFPB has procedures to detect unauthorized third-party submissions so that they are disregarded.

The big credit reporting agencies, says the CFPB, have ignored the CFPB’s processes and have not differentiated between third-party complaints that the consumer has indeed authorized and those they did not.

“Instead, the NCRAs use proxies (for example, similarity in narrative text) to identify complaints they suspect, though have not confirmed, were submitted by a third party. The NCRAs then use this speculative assessment to justify not responding to the issue(s) raised in a complaint,” the CFPB reports.

According to the Federal Trade Commission’s guidance, the credit reporting agencies have to review “covered complaints” forwarded to them by the CFPB under the Fair Credit Reporting Act, even if they are submitted by third-parties, provided they are legitimately submitted on the consumer’s behalf.

The Fair and Accurate Credit Transactions Act amended the FCRA to require the CFPB, and the FTC before that, to send “covered complaints” to the national credit reporting agencies. It also requires the latter to review such forwarded complaints so that they have met their legal FCRA obligations to address such complaints.

What to do if credit bureaus ignore your dispute submission

The CFPB advises that if a consumer reporting agency goes against the FCRA, you can hold it liable for any actual damages and attorney fees. In case of a “willful failure” to heed the law, it can be held liable for “punitive damages” as well as actual damages.

Also be aware that there are time limits to heed in filing a legal case in this situation. You should consult an attorney to address your particular case. You could also file a complaint with your state attorney general in case your state offers protections beyond the FCRA. And of course, you could submit a complaint with the CFPB itself.

Bottom line

Consumer complaints against the national credit reporting agencies continued to balloon during the pandemic, according to a CFPB report. The consumer protection agency finds that these agencies are not responding to a vast majority of the “covered” consumer complaints forwarded to them for review by the CFPB.

Ignoring their FCRA obligations, the credit bureaus are dismissing many such complaints as having been submitted by a third-party even though the consumer had authorized the third party. Consumers who feel that a credit rating agency ignored their dispute submission have legal recourse under the FCRA. You could hire an attorney to review your particular situation.

Contact me at pthangavelu@redventures.com with your credit card-related questions.