Lawmakers Scrutinize Credit-Reporting Companies’ Handling of Consumer Complaints

Lawmakers are probing how Equifax Inc.,

EFX 2.14%

Experian EXPGY 0.73%

PLC and TRU TransUnion 0.55%

handled consumer complaints about errors on their credit reports during the pandemic.

Democrats on the House Select Committee on the Coronavirus Crisis notified the companies of the investigation Wednesday morning, according to letters seen by The Wall Street Journal.

In the letters, the lawmakers said payment deferral programs and an increase in identity theft during the pandemic have created new ways for errors to be added to credit reports. The letters, signed by James Clyburn, a South Carolina Democrat who chairs the subcommittee, ask the companies to provide documentation on how they handle responses to complaints.

Representatives for Equifax, Experian and TransUnion were not immediately available for comment.

Industry representatives say the errors are often the result of inaccurate information provided by lenders. They say many of the complaints come from people trying to legitimately remove negative information, such as payments they actually missed.

Lenders rolled out extensive deferral and immunity programs for struggling borrowers in the early days of the pandemic. A provision in Congress’s first coronavirus stimulus package barred lenders offering such options from recording late missed payments.

Mistakes can lower a consumer’s credit score and make it harder for them to get approved for financing or get loans that are affordable. Landlords also consider credit reports when reviewing rental applications.

Credit reporting companies made “changes to their claims response processes early in the crisis that could have resulted in a significant reduction in responsiveness,” the letters read. That includes using automated review to identify claims that are suspected to have been submitted by a third party and using this as a reason to dismiss the claim, according to the letters.

The magazine previously reported that the Consumer Financial Protection Bureau is separately investigating how Equifax, Experian, and TransUnion handle consumer disputes.

Consumers submitted more than 700,000 complaints to the CFPB related to Equifax, Experian and TransUnion between January 2020 and September 2021, according to the regulator. That’s more than half of all complaints the agency received during that time period.

The CFPB says credit reporting companies are dealing with consumer complaints faster and with more relief, the CFPB said in a January report based on a review of its claims database. Credit reporting companies told the CFPB they resolved less than 2% of consumer complaints to regulators in 2021 about incomplete or erroneous information on credit reports. their. This is down from nearly 25% in 2019, the CFPB said.

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Appears on May 26, 2022, print edition ‘Lawmakers set out to scrutinize credit reporting companies.’ Lawmakers Scrutinize Credit-Reporting Companies’ Handling of Consumer Complaints

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