Disputes Ignored: Credit Repair Companies to Blame?

There have been a record breaking amount of complaints from 2020 through 2021, with more than 619,000 in 2021 alone and Rep. James Clyburn, the chairman of the House Select Subcommittee on the Coronavirus Crisis wants credit reporting agencies TransUnion, Experian, and Equifax to be investigated.

The agencies have allegedly failed to respond to consumer complaints during the pandemic and continue to have longstanding problems with consumers raising complaints about credit reporting errors.

In May, the CFPB reported that  4.1% of complaints were resolved in 2021 compared to 25% in 2019 before the pandemic.

It appears that the majority of credit report disputes have not resulted in correction or removal of errors in consumers credit reports. The subcommittee found that between 2019-2012:

• Equifax corrected 43% - 47% of disputed items.

• Experian corrected about 52% of late payment disputes or other inaccurate data.

• TransUnion corrected approximately 49% - 53% of disputed credit reports during this time.

The CARES act, paused loan payments and were supposed to report them as current, though some lenders may have incorrectly categorized them as late.

Consumers have been reporting errors on a larger scale. The CFPB estimated the combined number of dispute submissions among Equifax, Experian and TransUnion to be 8 million in 2011. The subcommittee found that in 2021 Equifax received nearly 14 million complaints alone.

The record breaking amount of complaints consist of nearly 336 million items, including names, addresses and credit accounts on their credit reports. Yet evidence by the subcommittee found that credit raters discard millions of disputes a year without investigation. At least 13.8 million were thrown out between 2018 and 2021.

Discarding disputes violates the Fair Credit Reporting Act (FCRA) if they are submitted directly by consumers to authorized representatives.

The companies defense is that disputes are discarded without investigation when they suspect a credit repair service is making the complaint. Which highlights the importance of why you should make complaints yourself, as they may also be disputing information on your report that is accurate.

The agencies have a criteria that determine which disputes may be submitted by an unauthorized third party. For instance, Equifax, tosses out mail that tends to similar language and formatting and also comes from the same zip code.

Experian takes into account for envelope and letter characteristics, this includes same/similar ink color, same/similar formatting when choosing what disputes to discard.

It was found that credit rating companies referred more than half of the disputes to data furnishers for investigations between 2019 and 2021. TransUnion referred the most.

The prevalence of credit reporting errors have been especially concerning at a time when consumers needed access to their credit to handle difficult economic circumstances brought on by the pandemic. Errors in credit reports have the potential to lower credit scores that could deny access to loans, housing, and possibly employment, among other serious consequences.

Recent reports have noted increased activity among credit repair companies which can inflate the complaint numbers. This seems to be the biggest cause of consumer complaints being thrown out. It highlights the importance of making complaints about credit reporting errors yourself rather than relying on a third party, since many credit repair companies may make illegitimate complaints or dispute information on your reports that are accurate.

The credit reporting industry is continuing to to collaborate with the CFBB and policymakers to better serve consumers and will continue to make better economic opportunity solutions.

FTC is Launching Identity Theft Awareness Week

The FTC is launching an Identity Theft Awareness week. We will be doing the same. Follow us on social media to gain more insight.

Below is from the FTC website with helpful links and information.

FTC Marks Identity Theft Awareness Week with Events to Help Consumers Identify Risks of Identity Theft During the COVID-19 Pandemic

The Federal Trade Commission is launching Identity Theft Awareness Week, February 1-5, 2021, with a series of events to highlight steps consumers can take to help reduce their risk of identity theft and recover if identity theft occurs.

Identity theft happens when someone steals personal information about you such as your Social Security number or credit card information, and uses it to commit fraud. Reports about any type of identity theft topped the list of consumer complaints submitted to the FTC through the third quarter of 2020.

As part of Identity Theft Awareness Week, the FTC will participate in webinars and other events to highlight what you can do to protect your personal information, red-flag warning signs of possible identity theft, and steps to take if identity theft happens to you. Events include a webinar on Monday, February 1, with Identity Theft Resource Center and FTC experts discussing identity theft during the pandemic, and a Facebook Live discussion on Thursday, February 4, hosted by the AARP Fraud Watch Network, focused on COVID-19-related identity theft, current trends, and ways to protect yourself.

You can find the full list of events at ftc.gov/IDtheftweek, along with details on how to participate and tips on how to reduce the risk of identity theft.

The Federal Trade Commission works to promote competition and to protect and educate consumers. You can learn more about consumer topics and report scams, fraud, and bad business practices online at ReportFraud.ftc.gov. Like the FTC on Facebook, follow us on Twitter, get consumer alerts, read our blogs, and subscribe to press releases for the latest FTC news and resources.

For Consumers

Identity Theft Awareness Week Calendar of Events

More news from the FTC >>

Plaintiff Brings Claim Against Employer

A Plaintiff by the name Gennaro Mattiaccio II was terminated by Defendant DHA Group for alleged misconduct. On July 21st, 2020, The United States District Court, District of Columbia issued an opinion in Matticcio v. DHA Group., Inc. that said the Plaintiff had standing to pursue claims of Fair Credit Reporting Act (FCRA) violations against his former employee. The DHA Group used a background check that was used to justify Plaintiff Maticcio’s termination from work.

Mattiaccio II claims that these background checks were retaliation for a complaint he had filed against DHA Group. Typically, pre- and post- employment background checks that investigate employee misconduct are exempt from the FCRA.

Mattiaccio II brought two FCRA claims: Defendant lacked proper authorization to perform the background checks, since they were not clearly formatted and Plaintiff did not authorize a post-employment background check and was given neither a summary of rights or an opportunity to review his report before his termination. 

District Judge Colleen Kollar-Kotelly wrote an opinion that has been cause of the latest decision in almost a decade-long dispute between the two parties. Judge Koller-Kotelly granted in part and denied in part the Defendant’s Motion for Summary Judgement for lack of standing under Article III of the U.S. Constitution.
She states that the Plaintiff has a standing on claims that he did not authorize the post-employment background check but he cannot bring in the claim that he did not authorize the pre-employment background check. She states that he also has a claim that he was not provided a copy of the report or his summary of rights before the adverse action was taken against him. The case has now been taken to court. 

The FCRA promotes the accuracy, fairness, and privacy of consumer information contained in the files of Consumer Reporting Agencies (CRA’s), protects consumers from the willful and/or negligent inclusion of inaccurate information in their consumer reports, including consumer credit information. 

Employment Screening Resources (ESR) wants to remind us that allegations made in a lawsuit are not proof that a business or individual violated any law, rule, or regulation. The allegations written in this blog are not factual at this current time. 

If you feel that your employer has put a violation wrongfully against you, contact us to take a look at your case and we will provide you with information and let you know if you have a claim.