Experian Conducted ‘Sham Investigations’ Into Errors in Its Credit Reports, CFPB Alleges

Update: This article was updated to include comments received from Experian after it was originally published.

Experian routinely provided inaccurate information on credit reports that help consumers determine whether they are approved for loans, jobs or housing, and failed to properly investigate or correct the errors when consumers disputed the errors, case The Consumer Financial Protection Bureau filed the filing on Tuesday.

CFPB Information Shows that last year the agency received 352,760 complaints from consumers about incorrect information appearing on their Experian credit reports, slightly fewer than the other two major credit bureaus. Consumers sent 361,534 complaints about errors on Equifax reports and 378,538 complaints about errors on TransUnion reports.

“When consumers dispute errors on their credit reports, Experian conducts fraudulent investigations rather than properly reviewing disputes as required by federal law,” CFPB Director Rohit Chopra said in a statement. “Credit reporting errors can have serious consequences for a household’s finances, and it’s important for credit reporting giants to follow the law.”

Veterans spokesman Jordan Takeyama said the company has already contacted the CFPB about how the credit reporting industry handles potential misinformation.

“The lawsuit is completely without merit. This is contrary to long-standing regulatory and judicial precedent and is yet another example of irresponsible overreach by the CFPB,” he wrote in an email. “We take our commitment to serving consumer needs and complying with all of our regulatory obligations seriously. We take great steps to ensure that we thoroughly investigate every consumer dispute and go above and beyond what is required by law. We take strong exception to the substance and tone of the CFPB’s complaint.

When a consumer reports an error on their Experian report, the company sends an Automated Credit Dispute Verification (ACDV) form to the provider of the disputed information, such as a bank, credit card company or debt collector. The form includes a code that’s supposed to identify the reason the consumer disputed the information so the data provider can investigate and respond, but according to the CFPB lawsuit, Experian routinely sends codes that “mistake or fail to disclose information most relevant to the consumer’s dispute.”

In some cases, the CFPB alleges, Experian intentionally used a code for the generic category “claiming inaccurate information. Did not provide specific disputes,” even when the consumer actually provided detailed information about the error.

Compounding these issues, Experian allegedly placed too much weight on the answers it got back from data providers in response to those ACDV forms. The CFPB states that consumers often provide evidence to support their disputes, such as the discharged bankruptcy date and case number or documentation showing that the data provider has previously agreed to delete or correct inaccurate information.

“Nevertheless, Experian routinely gives no weight in resolving disputes to supporting documents and routinely conducts no further investigation of disputes beyond the furnisher’s ACDV response,” according to the suit.

In other cases, the CFPB alleges, Experian already had documents proving the consumer was correct in its own file but the company still failed to investigate the issue beyond sending and receiving an ACDV.

After Experian conducts its investigation, it sends letters to consumers that explain the findings and what information, if any, has been changed. These letters are often “confusing, ambiguous, inaccurate and internally inconsistent,” according to the lawsuit.

The CFPB said Experian’s practices violated the Fair Credit Reporting Act and asked a federal court to enjoin the company from future violations and order Experian to compensate customers harmed by its actions.