What's Worse Than a Plague?

There is a wave of human, financial suffering quietly building in America. It began a while ago, but has gained strength from the pandemic. Faulty or mistaken credit reports are setting back or destroying Americans’ ability to make money or secure a home at an exponential rate. The numbers of innocent people who are being removed from the productive class of society are hard to take in, and hard to agree upon. 

Suddenly deprived of their credit standing, or having it replaced with that of a criminal or deceased person, can send anyone tumbling down the economic ladder. A growing number of Americans are not fighting their way back up. In many of these cases, their loss is a windfall gain for the people that put them there. 

It’s a lot to unpack.

The economy runs on credit at all levels. Personal credit is a commodity supplied by three main corporations. Equifax, Experian, and Transunion all sell Credit reports to companies looking to hire employees or finance purchases. Making and spending money are the essence of any economy. An individual’s place in that economy, and any opportunities they might get to improve it, are determined by their credit report. A person’s credit report decides where they start in an economy, and largely predicts how far they will be able to go. It is probably the most determinative factor in an adult citizen’s life.*

Millions of Americans are trying to dispute credit reports every month, with the numbers growing. While they wait for the errors to be corrected, the three main corporations mentioned above have built machines to slow or prevent their lives from being restored. The more they can slow the process, the less money they have to spend. And they are openly circumventing the laws and rules that (bipartisan) Congressional committees have put in place. 

These corporations, Transunion, Experian, and Equifax are collectively referred to as the CRA’s, or nationwide credit reporting agencies. They provide the essential commodity of credit reports. The data that they package and render into this commodity is obtained from Data Furnishers, who we will examine later.

A CRA profits from its products whether the information is accurate or not. Selling wrongful or mistaken data does not cost these corporations anything, but correcting that data does. In a logical world, the cost of repairing data mistakes (and people’s lives) would be factored into the process of making profits from that data. That is the opposite of what has happened. The CRAs are an industry that exploded into unregulated productivity, far faster than any attempts to deal with the hardships that industry is creating for people. 

The pandemic increased hardship all around, leading to a significant percentage of the population needing to rely on its credit in order to survive. Depriving vulnerable people access to that credit further adds to the growing wave of economic loss and suffering.

The government body attempting to monitor and regulate the three main CRAs is the Consumer Financial Protection Bureau, or CFPB. As these two groups struggle over rules to protect people, the gap between regulations and compliance continues to widen. More and more Americans are trying to dispute credit report mistakes every year, and the rising number of those dispute claims that are being dismissed or denied has been kept from the CFPB until recently. The scope of the problem that was being covered up came to light and led to an October 13th letter from the Select Congressional Subcommittee on the Corona Virus to the Director of the Consumer Financial Protection Bureau (CFPB), Rohit Chopra.

In that letter, the destructive and potentially sinister actions of the CRAs and their Data Furnishers were brought out.

What had become apparent was that the CRAs are using their Data Furnishers to effectively launder claimant’s disputed credit reports out of the system entirely. Over half of the disputed Experian credit reports were farmed out to Data Furnishers last year. More than 60% of Equifax credit reports, and 80% of the Transunion credit reports that were disputed got farmed out in the same year.

After several years of scrutiny, it has come to the attention of the CFPB that the practices of these Data Furnishers has been to reject over half of the claims on loopholes that do not even require that the envelopes the disputes come in be opened. They are rejecting disputes wholesale because of reasons as simple as envelope, font, and color of print ink.

Millions of Americans’ last shot at financial redemption are being thrown away, unopened. Even preparing their request for relief by using the templates provided by U.S. government websites can cause a person’s claim to be disqualified. It adds insult to injury. Consider that after a person has been financially ruined and made to prepare elaborate written proofs with documentation, that those proofs will be summarily discarded, never even to be read. 

It is hoped that such a glaring fact as that may stir peoples’ attention to this problem when individual narratives and sheer weight of numbers have failed. 

This unregulated wave of Americans being unfairly kicked out of the productive class has only begun. Many more lives will be destroyed so these three corporations may continue to profit without limit.

We at Consumer Attorneys believe that citizens deserve better, and we support the efforts of the CFPB to bring the practices of the CRAs and their Data Furnishers further into the light of public scrutiny.

Dan Cohen

Founding Partner, Consumer Attorneys