Experian has routinely provided inaccurate information in credit reports that help determine whether consumers are approved for loans, jobs, or housing and failed to properly investigate or correct errors when consumers disputed the mistakes, according to a lawsuit filed Tuesday by the Consumer Financial Protection Bureau.
CFPB data shows that last year the agency received 352,760 complaints from consumers about incorrect information appearing on their Experian credit reports, slightly less than the other two major credit bureaus. Consumers sent the agency 361,534 complaints about errors in Equifax reports and 378,538 complaints about errors in TransUnion reports.
“When consumers disputed errors on their credit reports, Experian conducted sham investigations rather than properly reviewing the disputes as required by federal law,” CFPB Director Rohit Chopra said in a statement. “Credit reporting errors can have serious consequences for a family’s finances, and it is critical that credit reporting giants follow the law.”
Experian did not immediately respond to a request for comment.
When a consumer reports an error on their Experian report, the company sends an Automated Credit Dispute Verification (ACDV) form to the supplier of the disputed information, such as a bank, credit card company, or debt collector. The form includes a code that is supposed to identify the reason the consumer is disputing the information so that the data supplier can investigate and respond, but according to the CFPB lawsuit, Experian routinely sends codes that “mischaracterize or fail to convey highly relevant information about consumers’ disputes.”
In some cases, the CFPB alleges, Experian uses a code for the intentionally generic category “Claims inaccurate information. Did not provide specific dispute,” even when the consumer has in fact provided detailed information about the error.
Compounding those problems, Experian allegedly places too much weight on the answers it receives back from data suppliers in response to those ACDV forms. The CFPB says consumers often provide evidence to support their disputes, such as the date and case number for a discharged bankruptcy or documentation showing that the data supplier has previously agreed to delete or correct the wrong information.
“Yet, Experian regularly gives the supporting documents no weight in resolving the dispute and routinely conducts no further reinvestigation of the dispute beyond the furnisher’s ACDV response,” according to the lawsuit.
In other cases, the CFPB alleges, Experian already possesses documents that prove the consumer is right in its own files but the company still fails to investigate the issue beyond sending and receiving an ACDV.
After Experian conducts its investigations, it sends consumers letters that are supposed to explain the outcome and what information, if any, was changed. Those letters are often “confusing, ambiguous, incorrect, and internally inconsistent,” according to the lawsuit.
The CFPB says Experian’s practices violate the Fair Credit Reporting Act and has asked a federal court to enjoin the company from committing future violations and order Experian to pay redress to consumers damaged by its actions.
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