CFPB Reports on Consumer Reporting Complaints and Responses
Compared to 2021, nationwide consumer reporting agencies (NCRAs) appear to have made significant improvements regarding their responses to customer complaints in 2022, as found by the Consumer Financial Protection Bureau (CFPB). The CFPB is required by the Fair Credit Reporting Act to submit an annual report to Congress that details certain consumer complaints transmitted by the CFPB to the three largest NCRAs—Equifax, Experian, and TransUnion.[1] According to the data collected from the consumer complaint process as well as focus groups and interviews of low-to-medium income households, all three NCRAs have raised their reported relief to complaints.
NCRAs Recognized Improvements
In 2021, reported relief to customer complaints by the three companies had fallen below 2%, a significant decline from 25% in 2019. In 2020 and 2021, the NCRAs experienced increasing CFPB complaint volumes while two of the companies simultaneously decreased the amount of staff devoted to complaint and dispute handling. As a result, CFPB complaints to all of these companies were being closed faster than in past years. By the end of 2020, CFPB found that most complaints were closed in just a matter of days, much “shorter than the CFPB considered feasible for a full investigation.” The NCRAs have attributed their low stats to policies that target “unmeritorious” complaints, which are complaints containing negative but accurate information. The CFPB found that these policies failed and resulted in harm to customers. The 2022 findings saw a positive change, where 64% of complaint responses took over 30 days.
The nature of the responses to customer complaints has also seen improvement. In 2020 and 2021, the CFPB deemed the majority of complaint responses “problematic.” One of the problematic responses, primarily used by Equifax and TransUnion, was to refer the complaint to its dispute channel without reporting the referral to the CFPB. The second problematic response indicated no response at all from the NCRA due to unsubstantiated claims of suspected third-party involvement. The CFPB found a notable decrease in third-party screening in 2022. The companies have also worked on the content of their responses. Instead of previously used high-volume templates, customers are now receiving more tailored responses. These new replies are more likely to describe the outcome of the complaint filed, even if the NCRA did not provide relief.
CFPB Recommendations for NCRA Processes
Although the NCRAs have made improvements in their processes, the CFPB still found deficiencies to be addressed. The first of these calls for the NCRAs to assess the efficiency of automated responses. The CPFB questions if automated responses are decreasing the burden for companies by shifting them to the customer or creating issues that manifest in such things as high numbers of unsubstantiated rejections to complaints. Because automation is becoming more common for consumers as well, the CPFB is pushing NCRAs to evolve and adapt to new technologies. The report uses the example of software such as ChatGPT, where the consumer produces the unique prompt, but a computer program generates common phrases that may trigger screening. NCRAs will need to “reevaluate their systems to ensure that consumers are afforded their rights provided by the law” in response.
The next recommendation calls for “transitioning the market from surveillance to participation.” Customers have recalled situations beyond their control, such as medical bills or pandemics, threatening to their financial futures. In other cases, they say that NCRAs put more trust in furnishers than customers, causing them to be coerced into paying debts they do not owe or facing the repercussions to their credit. Another controversial aspect is the NCRAs forcing of customers to pay to access and monitor reports that rely on the NCRAs own data, as well as a lack of transparency regarding changes to their own reports.
The changes seen in the NCRAs thus far have been the result of pressure from policymakers, the CFPB, and consumers. In 2022, there was a plethora of beneficial changes, but the companies must continue to progress with the changing nature of technology and customer needs.
[1]https://files.consumerfinance.gov/f/documents/cfpb_fcra-611-e_report_2023-01.pdf