U.S. Senators Send Letter Urging CFPB to Fix Broken Credit Reporting System

Hand Check

Written By ESR News Blog Editor Thomas Ahearn

On November 10, 2021, U.S. Senators Brian Schatz (D-HI), Sherrod Brown (D-OH), Ron Wyden (D-OR), Elizabeth Warren (D-MA), Jack Reed (D-RI), Chris Van Hollen (D-MD), and Ben Ray Luján (D-NM), sent a letter urging the Consumer Financial Protection Bureau (CFPB) to take concrete steps to reform the credit reporting industry.

Specifically, the senators urged CFPB Director Rohit Chopra to use the CFPB’s existing supervisory, rulemaking, and enforcement authority over the largest nationwide consumer reporting agencies (CRAs) to improve the accuracy of credit reports, streamline the dispute resolution process, and hold CRAs accountable for errors.

“Even a small error rate means tens of millions of people can be denied jobs or housing through no fault of their own. As a result of simple mistakes, consumers may pay more for credit or be denied loans altogether; they might face obstacles applying for a job, getting a mortgage, or renting an apartment,” the senators wrote in their letter.

The Dodd–Frank Wall Street Reform and Consumer Protection Act gave the CFPB supervisory, rulemaking, and enforcement authority over the largest nationwide CRAs that represent the vast majority of the credit reporting market. Accordingly, the senators requested the CFPB introduce accountability into the credit reporting system.

“Specifically, we ask that you evaluate persistent errors in credit reporting and how CRAs consistently fail to resolve these errors, especially by failing to devote sufficient personnel and resources for dispute resolution – a shortcoming the CFPB could use its supervisory authority to remedy,” the senators wrote in their letter.

“CRAs engage in concerning practices that contribute to inaccuracies, including using partial Social Security numbers to match data,” but the senators “were encouraged by CFPB’s recent advisory opinion affirming that the practice of matching consumer records solely through the matching of names is illegal,” they wrote.

“Any additional action the CFPB takes could, with appropriate privacy and security measures, also require nationwide CRAs to instead match all nine digits of a consumer’s Social Security number. We also ask that you consider requiring nationwide CRAs to perform periodic accuracy audits on information furnished,” they wrote.

A 2012 study by the Federal Trade Commission (FTC) found one in five consumers had an error on their credit reports and five percent had errors that were economically damaging. A 2015 follow-up study by the FTC found that nearly 70 percent of the impacted consumers surveyed three years earlier continued to dispute information.

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