Businesshala News Exclusive | Lawmakers Scrutinize Credit-Reporting Companies’ Handling of Consumer Complaints

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Democrats investigating how Equifax, Experian, TransUnion dealt with complaints about credit-report errors during pandemic

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In letters, lawmakers said payment-deferment programs and the rise in identity theft during the pandemic created new ways of linking errors to credit reports. The letter, signed by South Carolina Democrat James Clyburn, the chairman of the subcommittee, asks companies to provide documents on how they handle responses to complaints.

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Representatives for Equifax, Experian and TransUnion did not comment.

The credit-reporting industry is “committed to helping consumers resolve discrepancies on their credit reports,” said a spokesperson for the Consumer Data Industry Association, which represents credit-reporting firms. “We are working diligently across the financial ecosystem to ensure that the data on consumer credit reports is accurate and comprehensive.”

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Industry representatives have said that errors are often the result of misinformation provided by lenders. He has said that many complaints come from people trying to remove legitimate negative information, such as payments that were actually missed.

In the early days of the pandemic, lenders launched extensive deferment and forbearance programs for struggling borrowers. A provision in Congress’s first coronavirus stimulus package barred lenders that offered such options from late filing missed payments.

Errors can lower consumers’ credit scores and make it difficult for them to get approved for financing or obtain affordable loans. Landlords also look at credit reports when reviewing rental applications.

The letters said that credit-reporting companies “changed their complaint response procedures at the onset of the crisis, resulting in a significant reduction in accountability.” This included using automated reviews to identify complaints submitted by a third party, and using this as a reason to dismiss complaints according to the letters.

The Consumer Financial Protection Bureau is investigating separately how Equifax, Experian and TransUnion handle consumer disputes, as the Journal previously reported.

According to the regulator, consumers submitted more than 700,000 complaints to the CFPB regarding Equifax, Experian and TransUnion between January 2020 and September 2021. This accounts for more than half of all complaints the agency received during that period.

Credit-reporting companies are closing consumer complaints faster and offering less relief, the CFPB said in a January report based on a review of its complaints database. Credit-reporting companies told the CFPB that they provided relief on less than 2% of complaints consumers sent to the regulator in 2021 about incomplete or incorrect information on their credit reports.
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The CFPB said it was down from around 25% in 2019.

Write Annamaria andriotis [email protected] . Feather

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