The Consumer Financial Protection Bureau (CFPB) has launched a lawsuit against Experian, one of the nation’s largest credit reporting agencies, for allegedly conducting “sham investigations” into consumer credit report disputes.
At a Glance
- CFPB sues Experian for failing to properly investigate credit report errors
- Lawsuit alleges violations of Fair Credit Reporting Act and Consumer Financial Protection Act
- Experian denies allegations, calling the lawsuit “without merit”
- CFPB seeks court order to stop alleged unlawful practices and financial compensation for affected consumers
CFPB Takes Legal Action Against Experian
The Consumer Financial Protection Bureau has taken a significant step in its efforts to protect American consumers by filing a lawsuit against Experian, one of the three largest credit reporting agencies in the United States. The CFPB alleges that Experian failed to properly investigate consumer disputes about credit report errors, potentially limiting consumer access to credit, employment, and housing opportunities.
The lawsuit, filed in California, claims that Experian’s inadequate handling of disputes has led to incorrect information on credit reports, affecting consumers’ access to essential financial services. CFPB Director Rohit Chopra emphasized the gravity of the situation, 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.”
Credit reporting giant Experian failed to properly investigate consumer complaints and didn’t ensure the accuracy and completeness of information supplied by consumer data furnishers, the CFPB said in a new lawsuit. https://t.co/XMudgUGyCK
— Bloomberg Law (@BLaw) January 8, 2025
Alleged Violations and Consumer Impact
The CFPB’s complaint outlines several alleged violations of the Fair Credit Reporting Act (FCRA) and the Consumer Financial Protection Act (CFPA). These include Experian’s failure to reasonably reinvestigate disputes, not forwarding relevant information to data furnishers, and providing misleading dispute codes. The bureau claims that these practices have led to ongoing inaccuracies in credit reports, potentially causing lower credit scores and higher interest rates for consumers.
“When a consumer disputes the accuracy or completeness of information in their consumer report, the FCRA requires Experian to conduct a ‘reasonable reinvestigation’ of the disputed information and report the results of the reinvestigation to the consumer, all within certain timelines. At the conclusion of the reinvestigation, Experian must modify or delete any item of information found to be inaccurate or incomplete, or that it could not verify. For any information deleted as a result of a dispute, the FCRA imposes specific obligations on Experian that must be satisfied before that information may be reinserted into a consumer’s file,” the complaint stated.
The CFPB also accuses Experian of failing to inform consumers of dispute outcomes and allowing deleted information to reappear on credit reports. These practices could significantly impact individuals’ ability to secure loans, find employment, or rent housing.
Experian’s Response and Legal Battle Ahead
Experian, headquartered in Dublin, Ireland, with its North American headquarters in Costa Mesa, California, has vehemently denied the allegations.
The company’s spokesperson, Jordan Takeyama, stated, “This lawsuit relates to matters that as an industry we have been collectively discussing with the CFPB. We have operated in good faith with the CFPB throughout. Despite our constructive engagement and long track record of working alongside the CFPB to ensure consumers can easily dispute potentially inaccurate information, the CFPB chose to file a lawsuit with no communication, and no response to our outstanding communications with them.”
Experian further asserted, “The lawsuit is completely without merit. It is contrary to longstanding regulatory and judicial precedent and is another example of irresponsible overreach by the CFPB. Our legal position is strong, we will defend it vigorously and are confident we will prevail. We do not expect this to have any material impact on our business.”
As the legal battle unfolds, consumers are encouraged to stay informed about their rights under the FCRA and to regularly review their credit reports for accuracy.
This is certainly one to watch.
