Experian conducted ‘mock investigations’ into errors in its credit reports, CFPB says

Experian routinely provided inaccurate information in credit reports that help determine whether consumers are approved for loans, jobs or housing and failed to properly investigate or correct errors when consumers disputed the mistakes, according to a process filed Tuesday by the Consumer Financial Protection Bureau.

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

“When consumers disputed errors on their credit reports, Experian conducted 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 family’s finances, and it is critical that the credit reporting giants follow the law.”

Experian did not immediately respond to a request for comment.

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 a debt collector. The form includes a code that should identify the reason the consumer is disputing the information so the data provider can investigate and respond, but according to the CFPB lawsuit, Experian routinely sends codes that “mischaracterize or fail to convey highly relevant information on consumer disputes”.

In some cases, the CFPB alleges, Experian uses a code for the intentionally generic category “Claims inaccurate information. Did not provide a specific dispute,” even when the consumer has in fact provided detailed information about the error.

Compounding those problems, Experian allegedly places too much weight on the responses it receives from data providers in response to those ACDV forms. The CFPB says that consumers often provide evidence to support their disputes, such as the date and case number for a released bankruptcy or documentation showing that the data provider has previously agreed to delete or correct incorrect information.

“Yet, Experian routinely gives supporting documents no weight in dispute resolution and routinely conducts no further investigation of the dispute beyond the provider’s ACDV response,” according to the lawsuit.

In other cases, the CFPB alleges, Experian already has documents that prove that the consumer is right in their own files, but the company still fails to investigate the problem beyond sending and receiving an ACDV.

After Experian has conducted its investigations, it sends consumers letters that are supposed to explain the result and what information, if any, has been changed. Those letters are often “confusing, ambiguous, incorrect, and internally inconsistent,” according to the lawsuit.

The CFPB says Experian’s practices violate the Fair Credit Reporting Act and has asked a federal court to enjoin the company from committing future violations and order Experian to pay redress to consumers harmed by its actions.