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Although improvements have been made, the Consumer Financial Protection Bureau (CFPB) has warned that new compliance requirements may be necessary to bring down credit reporting firms' complaints.
“TransUnion, Equifax, and Experian routinely top the list of complaints submitted by consumers,” said Rohit Chopra, director of the CFPB.
Chopra confirmed that the regulator, which has become one of the most active in the US, is now exploring new rules to ensure that credit firms are following the law rather than “cutting corners to fuel their profit model”.
The CFPB’s intervention comes after it released its annual report on the country’s largest credit reporting companies.
The report details improvements and deficiencies in the credit referencing agencies' responses to consumer complaints transmitted to the CFPB.
It includes considerations for these companies to improve compliance with consumer financial protection laws and, more broadly, to serve consumers better.
In the report, the CFPB recommends that firms consider the consumer burden when introducing automated processes that affect their customers, especially if a change will require them to do more work to exercise their legal rights.
Technology advances also mean that consumers do not necessarily need to write complaints on their own, the CFPB pointed out, adding that communications technologies may ease the writing burden.
Such innovations, including ones that can generate letters for consumers, may create similar-sounding complaints that are, in fact, from unique individuals with independent concerns.
The view from credit reference agencies that similar-sounding letters are from third parties is an increasingly wrong assumption to make, the CFPB said, calling for the firms to recognise that technology is improving for consumers.
The regulator has also called on the credit reference agencies to consider transitioning the market from control and surveillance to consumer participation, indicating that one potential reason there are so many reported inaccuracies in consumer reporting data is that consumers are “several degrees removed” from their own data.
Enabling increased consumer participation on the data side of consumer reporting has the potential to create a fairer market with added benefits for consumers, consumer reporting companies and lenders, the CFPB advised.
Progress made
The annual report does, however, acknowledge some improvements made by these companies.
For example, the CFPB suggests that Equifax, Experian and TransUnion are providing more substantive responses to complaints.
In addition, across all three companies, most responses now describe the outcomes of consumer complaints.
In September 2022, for example, the companies provided a tailored response to more than 50 percent of complaints that were closed with either explanation or relief. Relief will include some form of compensation as part of the resolution.
Greater rates of relief were reported overall too. In 2022, TransUnion reported providing relief in most complaints, while Experian said that it offered relief in nearly half of all complaints.
Equifax, meanwhile, did not submit relief rates, but its written complaint responses suggest that its rates were comparable to the other two companies.
