The Consumer Financial Protection Bureau (CFPB), the consumer protection agency in the US, has hit Equifax with a $15million fine, after it found that the nationwide consumer reporting agency failed to conduct proper investigations of consumer disputes.
The CFPB found Equifax ignored consumer documents and evidence submitted with disputes, allowed previously deleted inaccuracies to be reinserted into credit reports, provided confusing and conflicting letters to consumers about the results of its investigations, and used flawed software code which led to inaccurate consumer credit scores.
“Equifax failed in its basic duty to investigate and resolve consumer disputes about inaccurate information on their credit reports,” explained Rohit Chopra, director at CFPB. “Today’s order requires Equifax to pay a civil penalty and follow federal laws on handling credit reporting disputes.”
Once paid, CFPB will deposit Equifax’s fine into its victim relief fund. Equifax, one of the three major consumer reporting agencies in the US, aggregates data about most adult consumers and sells that data to its customers in the form of consumer reports that are used by lenders, employers, landlords, and others to make important decisions about consumers. Equifax processes approximately 765,000 disputes each month.
After conducting an investigation, CFPB found that Equifax violated the Fair Credit Reporting Act (FCRA), which requires consumer reporting agencies to investigate the accuracy of disputed information and take steps to ensure consumers’ credit reports are accurate.
Failure to comply
In a public release, CFPB outlined that Equifax violated a number of FCRA requirements. It says Equifax failed to consider relevant information submitted by consumers – in some cases, not looking at any information at all.
Coding errors in Equifax’s internal software caused the company to miscalculate and share inaccurate credit scores for several hundred thousand consumers. The company also reported the same credit accounts multiple times for over 50,000 consumers.
Consumers often dispute the accuracy of information on their credit reports with the credit reporting company, such as Experian, Equifax, or TransUnion. In response, the credit reporting company often refers this dispute to the furnisher, which is the business that originally provided the disputed information.
CFPB revealed that, after Equifax forwarded information about a dispute to a furnisher, it did not meaningfully consider whether the furnisher’s response made sense, sometimes ignoring information it had that contradicted the furnisher’s response. In a similar error, the resulting letters Equifax sent to consumers also sometimes contained contradictory statements, such as both ‘this has been verified as accurate’ and ‘this item has been deleted’.
Equifax was also not able to detect information that was previously removed and block that information from again appearing on the consumer’s credit report. Finally, Equifax reported credit information that it should have blocked because the information resulted from identity theft.
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