CFPB Sues Experian, Alleging Improper Investigations of Consumer Complaints

The Consumer Financial Protection Bureau (CFPB) sued consumer reporting agency Experian on Tuesday (Jan. 7), alleging that the company unlawfully failed to properly investigate consumer disputes and included incorrect information on credit reports.

In its complaint, the CFPB alleges that the company’s practices violated Fair Credit Reporting Act (FCRA) requirements and the Consumer Financial Protection Act’s prohibition on unfair acts or practices, according to a Tuesday press release.

“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 the release.

Reached by PYMNTS, Experian said in an emailed statement that the lawsuit is without merit and that the company will defend its legal position vigorously.

“We take our commitment to meeting the needs of consumers and adhering to all our regulatory obligations seriously,” the statement said. “We take great steps to ensure we investigate every consumer dispute thoroughly and go above and beyond the requirements of the law. We take strong exception to the substance and the tone of the CFPB’s accusations.”

Experian added in its statement that the industry has been discussing these matters with the CFPB and has operated in good faith with the regulator.

“Despite our constructive engagement and long track record of working alongside the CFPB to ensure consumers can easily dispute potentially inaccurate information, the CFPB chose to file a lawsuit with no communication, and no response to our outstanding communications with them,” the statement said.

The CFPB alleges in its complaint that when the company handled disputes, it often uncritically accepted the original furnisher’s response to the disputed information, even when there was evidence that it was unreliable; conducted “sham” investigations that didn’t properly address consumers’ disputes; and did not inform consumers about the results of its investigation in a clear way, according to the release.

The regulator also alleges that Experian has not taken steps to prevent the reinsertion of inaccurate information on consumer reports, so consumers who thought their report had been corrected later saw the same inaccurate information reappear on their report, per the release.

The CFPB’s lawsuit seeks a stop to Experian’s alleged unlawful conduct, redress for harmed consumers and a civil money penalty that would be paid into the regulator’s victims relief fund, per the release.

“Credit reporting errors can have serious consequences for a family’s finances, and it is critical that credit reporting giants follow the law,” Chopra said in the release.

The CFPB said in October 2022 that consumer reporting agencies have an obligation to screen for and eliminate “junk data” that is obviously false.

When announcing its issuance of a guidance meant to ensure that consumer reporting agencies comply with consumer financial protection law, the regulator said in a press release that detecting and removing inconsistent account information and information that cannot be correct is part of the companies’ legal requirement to follow reasonable procedures to ensure that the information they collect and report is accurate.

In January 2023, the CFPB urged consumer reporting companies to be mindful of users as they implement technology. One suggestion was that the companies should consider ways to allow consumers more participation in the reporting of data to improve accuracy.

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