The Consumer Financial Protection Bureau has filed a lawsuit against Experian, one of the largest credit bureaus in the U.S., on Tuesday. The agency alleges that Experian mishandled consumer disputes, potentially resulting in decreased credit scores—this is just one of several actions taken by the agency in the closing days of the Biden administration.
According to the federal lawsuit, the firm based in Costa Mesa did not properly investigate disputes made by consumers concerning creditors and violated the Fair Credit Reporting Act, which led to the inclusion of incorrect information in consumer credit reports.
“Experian conducted superficial investigations into consumer disputes instead of properly addressing them as federal law requires,” stated CFPB Director Rohit Chopra. “Mistakes in credit reporting can significantly impact a family’s finances, making it essential for credit reporting companies to comply with the law.”
The lawsuit aims to secure an injunction against any further violations, demand the return of ill-gotten gains, provide restitution to affected consumers, and impose financial penalties. Experian has denied the claims.
“The lawsuit lacks merit, contradicts established regulatory and judicial standards, and is an example of the CFPB’s unreasonable overreach. We are confident in our strong legal position and will defend it vigorously, expecting no significant impact on our business,” the company stated.
Critics, particularly Republicans, have been targeting the agency which has initiated a slew of lawsuits in recent months alleging various breaches of consumer protection laws. The incoming Trump administration may choose not to pursue this litigation.
Just the day before, the agency filed a suit against Vanderbilt Mortgage & Finance, a Warren Buffett-owned company, alleging it set families up for failure when obtaining loans for manufactured homes. Last month, Walmart and another firm faced a lawsuit for reportedly opening deposit accounts without authorization for over a million drivers. Additionally, major banks like JPMorgan Chase, Bank of America, and Wells Fargo were sued for allegedly enabling unchecked fraud through the Zelle payment application, all of which these companies have denied.
Experian is a subsidiary of Experian plc, a Dublin-based data and analytics corporation, and remains one of the top three credit bureaus in the United States alongside Equifax and Transunion. These bureaus gather credit data from financial institutions and then sell it to businesses considering providing services such as jobs, loans, and housing to consumers.
The lawsuit claims that Experian has a flawed intake process, often failing to accurately capture the specifics of consumer disputes and miscommunicating this information to the entities that report negative data. Such data may include reports of late payments or charge-offs.
Additionally, the complaint accuses Experian of uncritically accepting responses from entities that have filed reports, even when those responses seem implausible or contradictory to the bureau’s own information, such as cases involving consumer bankruptcy that freezing the collection of debts.
Experian is also accused of allowing the reintroduction of previously removed negative information on a consumer’s credit report.
In April, the CFPB published the findings of an examination into the credit reporting industry, highlighting issues of accuracy, including credit bureaus’ failure to rectify false or fraudulent details provided to them. Experian responded, claiming that the lawsuit pertains to matters the industry had been actively discussing with the CFPB.
“Despite our ongoing constructive dialogue and our commitment to ensuring that consumers can easily dispute inaccurate information, the CFPB opted to proceed with a lawsuit without prior communication or addressing our ongoing correspondence,” the company remarked.
The National Consumer Law Center praised the lawsuit, asserting that Experian is not the only credit bureau to harm consumers. “It’s essential that credit bureaus are held accountable for establishing biased and inadequate systems for dispute resolution,” remarked Chi Chi Wu, a senior attorney at the consumer advocacy group.
Established in 2011 following the financial crisis, the CFPB has frequently faced criticism from Republicans, who claim that its measures hinder economic growth. During the first Donald Trump administration, efforts were made to revise proposed regulations aimed at restricting payday lenders, which consumer advocates felt were significantly weakened.
Elon Musk, the billionaire spearheading an initiative to streamline federal operations through a proposed Department of Government Efficiency (DOGE), has voiced intentions to dissolve the agency, stating via a November post on X, “Abolish CFPB. There are numerous redundant regulatory bodies.”
Nevertheless, earlier this year, the CFPB celebrated a pivotal win when the Supreme Court dismissed an attempt by a payday lenders’ group to declare the agency’s structure unconstitutional due to its funding mechanism being reliant on bank fees rather than congressional funding.
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