Experian has become the latest focus of the Consumer Financial Protection Bureau (CFPB) as the agency intensifies its regulatory and enforcement activity ahead of the impending White House transition.
On Tuesday, the CFPB filed a lawsuit against Experian in a U.S. district court in California, accusing the credit reporting giant of violating the Fair Credit Reporting Act (FCRA) and the Consumer Financial Protection Act (CFPA).
According to the CFPB, Experian failed to properly investigate consumer disputes, remove errors and prevent inaccurate information from being reinserted into credit reports. These lapses reportedly harmed consumers’ access to credit, employment and housing opportunities, it alleged.
“When consumers disputed errors on their credit reports, Experian conducted sham investigations rather than properly reviewing the disputes as required by federal law,” CFPB Director Rohit Chopra said in a statement. “Credit reporting errors can have serious consequences for a family’s finances, and it is critical that credit reporting giants follow the law.”
In a statement provided to HousingWire, Experian said that the lawsuit was filed without any prior communications from the CFPB. The company called the action “completely without merit,” adding that it is “contrary to longstanding regulatory and judicial precedent and is another example of irresponsible overreach by the CFPB.”
“Our legal position is strong, we will defend it vigorously and are confident we will prevail. We do not expect this to have any material impact on our business,” the statement read. “We take our commitment to meeting the needs of consumers and adhering to all our regulatory obligations seriously. We take great steps to ensure we investigate every consumer dispute thoroughly and go above and beyond the requirements of the law. We take strong exception to the substance and the tone of the CFPB’s accusations.”
The CFPB alleges that Experian “routinely and uncritically” accepted responses from banks, credit companies and debt collectors on consumer disputes, even when it was “illogical on its face” or unreliable.
In addition, the consumer watchdog claims Experian withheld consumer-submitted documentation from furnishers that could support dispute claims. Between January 2018 and October 2021, Experian reportedly failed to forward more than 2 million disputes to furnishers within the required five-business-day window, the lawsuit states.
Experian also failed to inform, or simply provided “confusing, ambiguous, incorrect, or internally inconsistent” information to consumers. In some instances, consumers who believed errors had been resolved saw the same inaccuracies reappear on their credit reports, compounding their financial difficulties.
According to the lawsuit, from February 2019 to February 2020, Experian allegedly deleted over 100,000 disputed tradelines instead of completing required reinvestigations within 30 days. Some of this information was later reinserted into consumer reports. Also, Experian allegedly failed to delete over 1,700 incorrect “joint user” statuses despite requests from furnishers to correct the inaccuracies.
The lawsuit against Experian follows one filed by the CFPB against Vanderbilt Mortgage & Finance, part of Warren Buffett’s conglomerate Berkshire Hathaway. Vanderbilt is accused of manipulating underwriting standards and setting borrowers up to fail in manufactured home loans.
In December, the CFPB also sued Rocket Homes, accusing the company of orchestrating a kickback scheme to funnel business to its sister companies, Rocket Mortgage and Amrock. The Jason Mitchell Group was also named in the alleged violations of the Real Estate Settlement Procedures Act (RESPA).
Vanderbilt, Rocket and the Jason Mitchell Group publicly denied the allegations.
Editor’s note: This story was updated with comments from Experian.
