To the editor:
In the recent American Banker article, "Surge in credit report lawsuits has banks, credit agencies scrambling," several industry representatives claim that the spike in complaints and lawsuits against the credit bureaus, as well as the banks and debt collectors that supply them with information, are the result of illegitimate credit repair. But that claim has been refuted, including by the Consumer Financial Protection Bureau. For example, the CFPB noted that, in 2019, less than 3% of credit reporting complaints filed with that agency were flagged by the responding company as being submitted by an unauthorized third party. And a January 2022 CFPB report criticized the credit bureaus for relying on "speculative criteria" in treating complaints as illegitimately submitted by third parties, leading the companies to fail to provide relief 98% of the time.
The complaints and lawsuits over credit reporting are actually the consequence of the industry's own well-documented biases and dysfunctions. In 2012, the Federal Trade Commission found that one fifth of consumers (or over 40 million) had verified errors in their credit reports, with one in 20 (or over 10 million) having errors so serious they would be rejected for credit or need to pay more. More recent studies by Consumer Reports in 2021 and this year show similar percentages. With millions of consumers with errors in their credit reports, just a small uptick in the fraction filing complaints or lawsuits would generate huge spikes.
Claiming it's all illegitimate credit repair also minimizes the pain and frustration of millions of consumers who've been unfairly burdened with credit reporting errors. The fact that thousands of them are filing federal lawsuits without an attorney is more a reflection of their desperation than anything else. To file a federal lawsuit is not easy, requiring time and effort to navigate a complex process. The idea that thousands of pro se litigants do so without a legitimate basis does not make sense.
For over 50 years, American consumers have been harmed by the credit bureaus, who sell our data for profit, have policies that favor creditors and debt collectors over consumers and fail to conduct meaningful investigations when consumers file disputes. Now that consumers have the tools to hold them accountable, credit bureaus are pointing the finger at credit repair. Don't buy it.
