Consumer Reporting Agency Settles CFPB Charges for Dispute Resolution Failures

A nationwide consumer reporting agency settled CFPB charges for "failure to conduct proper investigations of consumer disputes."   

According to the CFPB Consent Order, the reporting agency (i) relied heavily on responses from information furnishers (entities providing data to the agency) without independently verifying accuracy; (ii) ignored or rejected consumer-provided evidence without sufficient review; (iii) failed to consider inconsistent or illogical responses from furnishers; and (iv) conducted limited manual reviews, relying instead on automated processes prone to errors. The CFPB also found that the reporting agency sent consumers vague or misleading results about dispute outcomes, failed to address repeated disputes about the same issues and failed to explain how disputed items were resolved. 

The CFPB determined that the agency's technical and procedural failures resulted in incorrect credit information being reported to lenders and other users of credit reports. These failures included (i) coding errors in the agency's scoring system which caused credit scores for over 600,000 consumers to be incorrectly calculated (some scores were lowered by 10–25 points or more); and (ii) coding errors that caused certain collection accounts to appear twice in some consumer credit files.

The CFPB found that the agency violated provisions of the Fair Credit Reporting Act and the Consumer Financial Protection Act.

To settle the charges, the agency agreed to (i) pay a civil money penalty of $15 million; (ii) implement a comprehensive compliance plan to address procedural deficiencies; (iii) enhance policies for dispute resolution and reinvestigations, including audits, training and system improvements; (iv) improved consumer communication templates and dispute handling processes; and (v) monitor consumer testing of systems and reporting requirements.