CFPB Calls Out Credit Bureaus and Debt Collectors for Abusive Practices
By Consumers Union on Wednesday, May 28th, 2014
Have the credit bureaus and debt collectors been meeting their legal responsibilities to treat consumers fairly?
We’ve long argued that credit bureaus and debt collectors need to be held more accountable for breaking the law and harming consumers. Luckily, the Consumer Financial Protection Bureau (CFPB) has been taking a closer look. In the CFPB’s latest supervision report, which spotlights CFPB supervision activity from November 2013 to February 2014, it points out some of the most troubling practices by credit bureaus, debt collectors, and payday lenders that they spotted on the job.
According to the CFPB, not all of the credit bureaus had been adequately investigating credit reporting errors, among other lapses. The CFPB found that at least one of the credit bureaus hadn’t been properly handling supporting documentation provided by consumers when they disputed an error. When consumers dispute errors on their credit reports, they are allowed to send or upload supporting documentation like cancelled checks. The bureaus should forward those documents to creditors so that they can thoroughly investigate the dispute, but the CFPB found that this didn’t always happen – and issued warnings to credit bureaus that they are expected to comply with its guidance.
The CFPB also caught debt collectors engaging in unfair practices. For example, its investigation uncovered that a creditor to had sold dozens of debts to buyers, even though the debts had been discharged and consumers didn’t owe them anymore. The CFPB also found that debt collectors continued to engage in abusive behavior by making harassing calls to consumers in violation of the Fair Debt Collection Practices Act.
We’ve extensively documented how violations in credit reporting and debt collection affect consumers in our recent policy brief on credit reporting errors and in our 2011 debt collection joint report with the East Bay Community Law Center. For example, our credit reporting policy brief features a story from Tammy, of Fort Myers, Florida, who shared how credit reporting errors make it harder for her to get a job:
“I believe most credit reports are inaccurate. Meaning the credit score will be incorrect as well. In my case, I have been denied job after job because of my credit [report]. This is very serious to me. I have been out of work for seven months now. I have no income and no one to depend on for help.”
Our debt collection report featured stories from consumers like Yvonne, who repaid her debt but was still harassed over it:
“Yvonne knew she owed a debt of $1000, so she paid it, a little each month, from her Social Security check. The debt collector accepted her final check and said it would close her account. Four years later, she was sued on the same account for over $5,000 by a different debt collector that could not produce any documentation proving it owned the debt or that she owed anything.”
Clearly, more oversight of these industries is needed to protect consumers. We urge Congress to pass the Stop Errors in Credit Reporting (SECURE) Act to hold credit bureaus accountable for ensuring credit reports are accurate. And we ask the CFPB to write strong debt collection rules, as outlined in our recent comment letter to the agency.
Have you experienced persistent credit reporting errors because of negligent credit bureaus or abusive behavior from debt collectors? If so, please share your story.