CFPB Sues Experian for Conducting Sham Investigations of Consumer Report Errors

WASHINGTON, D.C. - Today, the Consumer Financial Protection Bureau (CFPB) sued Experian, the nationwide consumer reporting agency, for unlawfully failing to properly investigate consumer disputes. The CFPB alleges that Experian does not take sufficient steps to intake, process, investigate, and notify consumers about consumer disputes, resulting in the inclusion of incorrect information on consumer reports. Inaccurate or false information on consumer reports can threaten consumers' access to credit, employment, and housing.

"When consumers disputed errors on their credit reports, Experian conducted sham investigations rather than properly reviewing the disputes as required by federal law," said CFPB Director Rohit Chopra. "Credit reporting errors can have serious consequences for a family's finances, and it is critical that credit reporting giants follow the law."

Experian, based in Costa Mesa, California, is one of the nation's three largest credit reporting conglomerates. Experian is a subsidiary of Experian plc (LSE:EXPN), a global data broker and analytics company headquartered in Ireland. Experian maintains information on most families in America. Experian markets, advertises, sells, offers, and provides credit scores, credit reports, credit monitoring, and other related products to consumers and third parties. Information in consumer reports is provided to Experian by data furnishers, including banks, credit card companies, and debt collectors. The consumer reporting agency sells its consumer reports to creditors and businesses who are evaluating whether to offer a consumer various products, services, and opportunities-such as a loan, employment, or housing.

The Fair Credit Reporting Act (FCRA) requires that consumer reporting agencies take steps to ensure consumer reports are accurate and to conduct investigations of information disputed by consumers. The FCRA provides people multiple ways to dispute inaccurate information on their consumer reports, including by contacting consumer reporting agencies directly. The FCRA also requires that consumer reporting agencies follow certain procedures before reinserting into consumer reports information that has previously been removed as the result of a dispute.

The CFPB alleges that Experian has violated the FCRA's requirements for handling consumer disputes in numerous ways. Specifically, the CFPB alleges that Experian is harming consumers by:

• Conducting sham investigations that fail to properly address consumer disputes: When handling disputes, Experian uses faulty intake procedures and does not accurately convey all relevant information about disputes to the original furnisher. Experian routinely and uncritically accepts the original furnisher's response to the disputed information, even when that response was improbable or illogical on its face, or when Experian has other information available that suggests the furnisher is unreliable. At the conclusion of the investigation, Experian sends consumers notices that fail to inform them of the investigation results, and instead provides information that is confusing, ambiguous, incorrect, or internally inconsistent.
• Improperly reinserting inaccurate information on consumer reports: Experian has failed to implement basic matching tools that prevent or greatly reduce the likelihood of reinsertion by a new furnisher of a previously deleted tradeline. Instead, Experian improperly reinserts inaccurate information into consumer reports because it fails to match newly reported information with records of previously deleted information. Consumers who have disputed the accuracy of an account and thought that their consumer report had been corrected, instead see the same inaccurate information reappear on their consumer report without explanation under the name of a new furnisher.

In addition to alleging violations of the FCRA's requirements, the CFPB alleges that Experian's faulty dispute intake procedures and failure to provide furnishers with consumer-submitted documentation, uncritical deference to furnishers' responses to disputed information, and failure to prevent improper tradeline reinsertions also violate the Consumer Financial Protection Act's prohibition on unfair acts or practices.

Enforcement Action

Under the Consumer Financial Protection Act, the CFPB has the authority to take action against institutions violating consumer financial protection laws, including the FCRA and the prohibitions on unfair, deceptive, or abusive acts or practices in the CFPA. The CFPB's lawsuit seeks to stop the company's unlawful conduct, to provide redress for harmed consumers, and the imposition of a civil money penalty, which would be paid into the CFPB's victims relief fund.

Read today's complaint.

Learn more about credit reports and scores.

Read the CFPB's April 2024 report on violations of credit report accuracy requirements.

Consumers can submit complaints about financial products and services by visiting the CFPB's website or by calling (855) 411-CFPB (2372).

Employees who believe their company has violated federal consumer financial protection laws are encouraged to send information about what they know to [email protected]. To learn more about reporting potential industry misconduct, visit the CFPB's website.