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The Consumer Financial Protection Bureau issued a bulletin Thursday raising concerns that specialty consumer reporting agencies are not easily releasing free information to consumers.
November 29 -
Experian is feeling the heat in the wake of a hacking at Abilene Telco Federal Credit Union that wound up exposing data at the credit reporting agency, leading Experian to defend its security protocols.
November 1 -
The CFPB said Monday it is now accepting complaints related to consumer reporting agencies, a.k.a. credit bureaus.
October 22 -
A final rule places credit reporting agencies under the bureau's nonbank supervision program as part of its "larger participant" powers.
July 16
WASHINGTON — The Consumer Financial Protection Bureau said Thursday it has issued warning letters to six specialty reporting agencies for making it too difficult for consumers to find their free annual reports.
The move marked the first time the CFPB has threatened to take action against such agencies, which collect information on checking account activity, gambling debts, employment history and medical bills. They are required by law to give consumers a free report annually through a "streamlined process."
But the CFPB said many firms are not doing so. The agency conducted a review of 18 nationwide specialty consumer reporting companies by looking on websites, calling phone numbers and even requesting the entity to run an individual report.
In some cases when asking for a free report, "we encountered entities where that was a puzzling question for them," said Kent Markus, the CFPB's assistant director for enforcement, in a conference call with reporters. "They were not familiar with or accustomed to providing it."
There are roughly 400 consumer reporting agencies nationwide including the three main agencies: Equifax Information Services LLC, Experian Information Solutions Inc. and TransUnion LLC. Their information is most often purchased by potential employers or companies such as banks when opening an account.
The reports "can impact whether the consumer gets a checking account, an apartment or even a job," Markus said. "Thus, the accuracy of the report is critical."
The CFPB sent warnings letters to six companies, asking each to respond with steps it has or will take to stay in compliance with the law; or explain why the law does not apply to them, Markus said. This is the first step the agency will take against practices that have long been used among some specialty consumer reporting entities, observers said.
"The CFPB, by design, is addressing practices in all aspects of consumer finance that to this point, have gone largely unchecked," said Greg McBride, senior financial analyst at Bankrate.com.
The Federal Trade Commission also serves as a consumer protection agency but observers said it does not have the breadth and scope that the CFPB has been given when it was created by the Dodd-Frank Act. In October, the CFPB began accepting complaints on consumer reporting agencies which fell under the agency's supervision in July.
"The CFPB is up and running and they've shown throughout various aspects of credit and finance that the watch dog is on duty," McBride said.
The agency also released a bulletin to all consumer reporting agencies warning them of their obligations under the law. "Today, the CFPB is reminding these companies that they must follow the law and provide consumers with easy access to their free annual report," CFPB Director Richard Cordray said in a press release. "If we have reason to believe that companies are not following the law, we will take action."
The message served another purpose, too, by drawing consumers' attention to their right to request a free report. Most consumers are not aware of the report until a separate company takes issues with something contained in the report and brings it to their customer's attention.
"Part of the reason why the process of obtaining a free report is not as transparent as it could be is because [the reporting agencies] don't want to cannibalize their sales," McBride said.
Markus said during the call that the CFPB's notice is "a separate opportunity for people to proactively seek that information."
McBride predicted that the CFPB's announcement on Thursday was just the first step in actions it might take against consumer reporting agencies. He pointed to lingering issues for all entities that are marketing to and charging consumers for reports that should be free. He also noted situations in which consumers struggle to dispute incorrect information on a report with a particular agency.
"Those issues go hand-in-hand," he said. "For people to make a discrepancy and get the information removed, they first have to know that it's there."
