CFPB Sues Consumer Reporting Agency for Failing to Reinvestigate Disputes

The CFPB sued a consumer reporting agency ("CRA") for failing to conduct reasonable reinvestigations of consumer disputes and for engaging in practices that resulted in the persistence of inaccurate information on consumer reports.

In a Complaint filed in the US District Court for the Central District of California, the CFPB alleged that the CRA failed to fulfill its obligations under the Fair Credit Reporting Act and the Consumer Financial Protection Act. The CFPB claimed the CRA violated its duty to reasonably reinvestigate disputes by (i) failing to forward all relevant information submitted by consumers to furnishers of credit information, (ii) mischaracterizing the basis of consumer disputes by applying inaccurate or generic dispute codes and (iii) disregarding consumer-provided evidence as to the disputes.

The CFPB also alleged that the CRA relied excessively on furnishers' responses to dispute inquiries, even when the responses were inconsistent, illogical, or contradicted by the company's own records. The CFPB highlighted cases where the CRA received evidence, such as bankruptcy filings or settlement agreements, that should have prompted additional investigation but instead deferred to the original furnisher's claims.

The CFPB further detailed the CRA's failure to adequately notify consumers of reinvestigation results, alleging that its communications were ambiguous. Further, the CFPB claimed that the CRA failed to specify whether disputed information had been corrected, updated, or removed. These deficiencies allegedly harmed consumers by leaving inaccurate information on credit reports, leading to denials of credit, higher interest rates and other adverse outcomes.

The CFPB charged the CRA with violating multiple provisions of the FCRA. In its Demand for Relief, the CFPB seeks (i) a permanent injunction against the company's unlawful practices, (ii) restitution for affected consumers, (iii) disgorgement of ill-gotten gains and (iv) civil money penalties.