Consumer complaints against credit-reporting agencies double during pandemic
A bad mark on a credit report can wreak havoc on Americans trying to get a loan
(InvestigateTV) - One out of every 20 Americans has a serious error on their credit reports, according to the Federal Trade Commission.
James Casula believes he’s among that group.
Last summer, Casula became concerned when he and his wife Jill were denied a loan to refinance their Delaware home.
“We’ve never had an issue with our credit,” Mr. Casula said.
The 73-year-old said he discovered a $40,000 delinquent account on his credit report.
“It was a shocker,” he said. “I thought it was a scam.”
In 2015, Mr. Casula suffered from a brain aneurism and was flown by a medical helicopter to the hospital.
“I was petrified that he was not going to make it,” Mrs. Casula said.
But her husband did survive that near-death experience. Then the couple received a bill from the medical transport company for $50,000 in 2016.
“We’re talking a 15 or 20-minute helicopter ride,” Mr. Casula said.
The Casulas said their insurance company paid $9,600 to the company, and they believed the bill was paid in full.
But it wasn’t. In 2018, they later learned, the debt turned up on their credit report without their knowledge.
They found out about the account when the bank pulled their credit report last year.
The Casulas said they contacted the medical transport company which told them that they had turned the account over to a debt collection agency. The Casulas said they never heard from the debt collection agency, which reported the account delinquent two years earlier.
The Fair Debt Collection Practices Act requires third-party debt collectors to send consumers a written notice of what is owed and the name of the original creditor.
Casula and his wife, 65, disputed the debt to Experian, which is one of the three national agencies that collect financial information on millions of Americans and rate their credit worthiness.
The couple received a response from Experian almost immediately.
“They didn’t even have it two or three days and they sent it back rejected. Now, it’s valid. There’s no way they could’ve researched that,” Mrs. Casula said.
The Casulas are among hundreds of thousands of consumers disputing incorrect information on their credit report during the pandemic.
In April, the federal Consumer Financial Protection Bureau told credit-reporting agencies that they can be “flexible” in responding to consumers disputing a problem with their credit report because of the pandemic.
Consumer advocates including former CFPB director Richard Cordray were highly critical of this directive that essentially gave Experian, Equifax and TransUnion a pass to ignore issues that harm Americans.
“That guidance is harmful to consumers and should be rescinded immediately,” Cordray and two other advocates wrote in a white paper to the CFBP in April. “On the contrary, as more consumers fall behind on their debts, it will become all the more crucial that the information in their credit files be kept accurately—and if they dispute errors, they can get them fixed on a timely basis.”
Mistakes on credit reports can inflict widespread damage. They can deny consumers the chance to buy a home or car, take out a loan for college, rent an apartment, land a job, join the Armed Forces or even open a checking account.
Yet, the CFPB has been looking the other way as an uncounted number of Americans are harmed because of erroneously bad marks on their credit reports.
The big three credit-reporting agencies - Equifax, Experian and TransUnion - have long been criticized for their lack of investigation of consumer complaints.
In 2015, the agencies signed a settlement agreement with attorneys general in 31 states over their business practices. The agencies agreed to, among other provisions, conducting thorough investigations into consumers’ disputes.
Simply asking a debt collector or credit card company to “confirm” the balance shown on a credit report does not meet the requirements of the settlement agreement.
The credit-reporting agency provided no evidence to the Casulas that proved the amount of medical transport debt was accurate.
“We have contacted the company reporting the information you disputed, supplied them with all relevant information and any documents you gave us with your dispute and instructed them to review all information we provide them about your dispute; verify the accuracy of the information; provide us a response,” Experian wrote in a letter to the Casulas. “The company that reported the information has certified to Experian that the information is accurate.”
Problems with credit reports have long been among the top complaints that consumers have filed with attorneys general, the Federal Trade Commission and the CFPB.
The CFPB publishes complaints it receives from consumers.
An InvestigateTV analysis of the CFPB data shows that complaints more than doubled between 2019 and 2020.
In fact, the 213,575 complaints received since the beginning of the pandemic – March 1 – were almost double all of 2019.
Nearly 70% of the complaints filed since March involved incorrect information on the consumer’s credit report.
More than three quarters of them said that information belonging to someone else was on their credit report.
Nearly a quarter of the consumers complained about that the credit-reporting agencies’ investigation of their dispute.
Basically, more than 90% of all the complaints dealt with incorrect information on a credit report or the consumers inability to have an error corrected through the credit-reporting agencies dispute process.
For the vast majority, the outcome of their complaints is unknown through the CFPB data because the credit-reporting agencies did not respond, or they chose to make the outcome of the case secret.
Consumer rights attorney Craig Thor Kimmel is representing the Casulas.
“At no time was Mr. Casula provided an opportunity to dispute the debt until he became aware it was now on his credit report,” Kimmel said. “Normally, a debt collector will send you letters, make phone calls, maybe even sue you before you become aware of a problem. In this case Mr. Casula, had no reason to know any of those things happened.”
The database shows that many consumers share the same frustrations as the Casulas:
- A couple in New Jersey wrote that they have been unable to refinance their home because the forbearance they entered during the first couple of months of the pandemic continues to show on their credit report even though they have exited the program and are current on their mortgage payments.
- An elderly woman in North Carolina wrote that she has been unable to get a home equity loan because Equifax reported her as dead and has been unwilling to correct the error. When the consumer called the company, they “could not give me any information regarding where they had received the information regarding ‘my death.’”
- A consumer in California complained about the lack of response from the credit-reporting agencies. “I hope you can help me with this problem. I have been filing dispute (sic) with all - the credit bureau (sic) and I’m getting no-where. With COVID going on, I understand that things are taking longer but this is not right. I’m trying to clean up my credit and I’m getting the run around from the bureaus. Please help.”
- Another consumer in California said that his/her mortgage showed up on credit reports as “deferred” because of COVID. The consumer never signed up for payment assistance and his/her bank confirmed that the account was current.
- A consumer in New Jersey reported that all three credit bureaus as well as several credit-card companies all agreed that the information regarding accounts on the credit report was wrong. But they said the pandemic created an “unexpected temporary hardship” which prevented them from correcting the problems.
- A consumer in Massachusetts applied for a loan but was denied because the credit-reporting agencies showed that he/she did not have any credit. The consumer called the credit agencies, which said there was an “internal issue” that caused the consumer’s credit profile to mix with another person. But the agencies failed to correct their errors.
“I say maybe it’s time to fire the credit bureaus,” said Edmund Mierzwinski, a senior director with U.S. Public Interest Research Group, a nonprofit organization that has been a staunch critic of the credit bureaus’ business practices for 30 years.
He said the complaint numbers during the pandemic have been astounding.
“It’s just unbelievable. So, the Consumer Financial Protection Bureau has a public complaint consumer database which we fought to create, and we fought to protect,” Mierzwinski said. “In the 50 years of the credit-reporting agency act, the Fair Credit Reporting Act, there have been very few penalties imposed on the bureaus for mistakes.”
Mierzwinski is calling for more regulations against the credit-reporting agencies and compassion for consumers.
“We’ll be asking that new director to take a close look at the credit-reporting agencies and their problems. You’ve got to,” Mierzwinski said.
The Casulas agree that accountability is needed as they deal with the tedious process of rebuilding their credit.
“I feel like we were not treated fairly,” Mrs. Casula said.
“We want to do all we can to get this off our credit report,” her husband said.
The National Association of Consumer Advocates advises consumers to do the following to protect their credit histories:
- Get a copy of your credit report. Consumers are entitled to a free credit report annually from each of the three credit-reporting agencies.
- Find the causes of credit mistakes. Errors such as incorrect names and social security numbers happen often.
- Always document. File a written dispute with all the relevant documentation.
- Send dispute letters directly to the credit-reporting agencies and put them on notice.
- Contact an attorney who handles credit issues in your area.
A CFPB spokesperson told InvestigateTV that the agency is exploring the issue and released a written statement: “Consumers have submitted significantly more complaints during the pandemic. Complaints are the lifeblood of the CFPB and they drive the agency’s strategic thinking. The high complaint volume during COVID-19 is one of the reasons why Acting Director (Dave) Uejio announced that responding to economic hardship associated with COVID-19 will be one of the agency’s two priorities, along with promoting racial equity. The CFPB takes companies’ responsiveness to these complaints very seriously, and we are looking at how companies respond to complaints and what those complaints say when determining whether to prioritize exams or law enforcement action.”
InvestigateTV requested comment from Equifax, Experian and TransUnion. None of them responded.
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