Experian conducted “false investigations” into errors in its credit reports, the CFPB alleges

to update: This article has been updated to include comments from Experian after it was originally published.

Experian routinely provided inaccurate information on credit reports that help determine whether consumers were approved for loans, jobs or housing and failed to properly investigate or correct errors when consumers disputed the errors, according to lawsuit Filed Tuesday by the Consumer Financial Protection Bureau.

CFPB Data It shows that last year the agency received 352,760 complaints from consumers about incorrect information appearing on their Experian credit reports, slightly fewer than the other two major credit bureaus. Consumers sent the agency 361,534 complaints about errors in Equifax reports and 378,538 complaints about errors in TransUnion reports.

“When consumers disputed errors in their credit reports, Experian conducted sham investigations instead of properly reviewing the disputes as required by federal law,” CFPB Director Rohit Chopra said in a statement. “Credit reporting errors can have serious consequences on a family’s finances, and it is crucial that credit reporting giants follow the law.”

Experian spokesman Jordan Takeyama said the company has already been in contact with the CFPB about how the credit reporting industry handles potentially inaccurate information.

“The lawsuit is completely baseless. It flies in the face of long-standing regulatory and judicial precedent and is yet another example of irresponsible overreach by the CFPB,” he wrote in an email, adding, “We take our commitment to meeting the needs of consumers and adhering to all of our regulatory obligations very seriously.” “We take significant steps to ensure that we thoroughly investigate every consumer dispute and go above and beyond the requirements of the law. We strongly dispute the substance and tone of the CFPB’s charges.

When a consumer reports an error on their Experian report, the company sends an automated credit dispute verification (ACDV) form to the supplier of the disputed information, such as a bank, credit card company, or debt collector. The form includes a code that is supposed to identify why the consumer disputes the information so the data provider can investigate and respond, but according to the CFPB lawsuit, Experian routinely sends codes that “mischaracterize or fail to convey highly relevant information.” Consumer disputes.”

In some cases, the CFPB alleges that Experian intentionally uses a generic category code that “claims inaccurate information. You have not provided a specific dispute,” even when the consumer actually provided detailed information about the error.

Compounding these issues, Experian places significant weight on the answers it receives from data suppliers in response to ACDV models. The CFPB says consumers often provide evidence to support their disputes, Such as the date and number of the bankruptcy case or documents showing that the data supplier has previously agreed to delete or correct incorrect information.

“However, Experian does not regularly give any weight to supporting documents in resolving the dispute and does not routinely conduct any additional reinvestigation of the dispute beyond the supplier’s ACDV response,” according to the lawsuit.

In other cases, the CFPB alleges that Experian actually has documents proving the consumer was right in its own files, but the company still failed to investigate the issue beyond sending and receiving ACDV.

After Experian conducts its investigation, it sends consumers letters that are supposed to explain the finding and what information has been changed, if any. These messages are often “confusing, ambiguous, incorrect, and internally inconsistent,” according to the lawsuit.

The CFPB says Experian’s practices violate the Fair Credit Reporting Act and has asked a federal court to bar the company from committing future violations and order Experian to pay restitution to consumers harmed by its actions.