In a major legal development, the Consumer Financial Protection Bureau (CFPB) has initiated a lawsuit against Experian, one of the largest credit reporting agencies in the United States. The lawsuit, filed on January 7, 2025, accuses Experian of improperly handling consumer disputes, which allegedly violates the Fair Credit Reporting Act (FCRA). The CFPB claims that the company did not conduct sufficient investigations into disputes, resulting in the presence of inaccurate information on consumer credit reports.
The allegations suggest that the company did not send consumer disputes to the correct furnishers within the mandated five-day period and failed to perform adequate reinvestigations. Additionally, Experian is said to allegedly have neglected to provide all pertinent consumer information to furnishers and improperly relied on erroneous responses from them. Other claims include the reintroduction of previously removed information and the failure to eliminate inaccurate or unverified data. The CFPB contends that Experian’s practices are unjust and have caused significant harm to consumers. As a result, the Bureau is pursuing consumer compensation, civil fines, and a court order to stop any future violations.
Experian, headquartered in Costa Mesa, California, is a prominent global data analytics firm that oversees credit information for millions of Americans. According to the CFPB, Experian’s actions have caused significant harm to consumers, potentially leading to denials of credit, housing, and job opportunities due to flawed credit reports.
The FCRA grants consumers the right to challenge incorrect information on their credit reports. It mandates that consumer reporting agencies, such as Experian, perform comprehensive investigations into these disputes and rectify or eliminate any inaccurate, incomplete, or unverifiable information. However, the CFPB contends that Experian has not fulfilled these obligations in several critical areas.
The Bureau’s complaint outlines multiple violations by Experian, including:
- Sham Investigations: The lawsuit claims that Experian conducted inadequate investigations of consumer disputes, often failing to convey all relevant information to the original data furnishers (such as banks or credit card companies). In many cases, Experian is accused of uncritically accepting responses from furnishers, even when those responses were illogical or unreliable.
- Improper Reinsertions: Experian allegedly allowed previously deleted information to reappear on consumer credit reports due to insufficient safeguards against the reinsertion of inaccurate data. This reappearance often occurred when a new furnisher reported the same erroneous information.
- Failure to Provide Clear Notifications: Consumers who disputed incorrect information reportedly received confusing or inconsistent notices about the results of their disputes, leaving them uncertain about the accuracy of their credit reports.
CFPB Director Rohit Chopra criticized Experian’s practices, stating, “When consumers disputed errors on their credit reports, Experian conducted sham investigations rather than properly reviewing the disputes as required by federal law. Credit reporting errors can have serious consequences for a family’s finances, and it is critical that credit reporting giants follow the law.”
According to a summery of the complaint, Experian does not allegedly, effectively communicate all pertinent information to furnishers during its dispute resolution process. When consumers spot inaccuracies in their Experian reports, they can file disputes with supporting documents, like bank statements, through mail, phone, or online. However, Experian often misrepresents or fails to deliver complete information in the dispute codes sent to furnishers, particularly for disputes lodged via the Online Dispute Center. The platform restricts the available dispute categories, leading to misclassification, such as mistaking “account paid in full” for “account closed.” Furthermore, Experian frequently employs vague or incorrect dispute codes that do not accurately capture the specific issues faced by consumers, and at times, it neglects to include submitted documentation that could facilitate the dispute process. These shortcomings compromise the accuracy of the reinvestigation process and hinder furnishers from obtaining the comprehensive details needed to address disputes, which may allow erroneous information to persist in consumers’ records.
The lawsuit filed by the CFPB aims to hold Experian responsible for the alleged infractions, insisting that the company implement corrective measures, compensate impacted consumers, and contribute civil penalties to the Bureau’s victims relief fund.
Experian, a subsidiary of Experian plc and one of the largest data brokers globally, specializes in collecting and organizing financial information to create credit reports utilized by creditors, employers, and landlords. These reports are essential in determining an individual’s eligibility for various financial products and services.
Consumers who suspect they have been impacted by similar issues with Experian or other credit reporting agencies are urged to submit complaints to the CFPB, contributing to the ongoing efforts to uphold consumer protection regulations.
