CFPB to Begin Regulating Credit Bureaus
On September 30, 2012, the Consumer Financial Protection Bureau (CFPB) will begin regulating the largest credit reporting agencies. Speaking for the National Consumer Law Center, Ms Chi Chi Wu said, “The fact that the CFPB will oversee the large credit reporting agencies is a game changer” and the CFPB “could potentially improve the economic lives of millions of Americans by improving the accuracy of the system and its responsiveness to consumers.”
The three national credit bureaus have credit information on about 200 million Americans. The reports are the basis for consumers’ all-important credit scores. Credit reports and scores have a huge impact on our economic lives since they are used by lenders, insurers, employers, landlords, and others.
Until the CFPB steps in, the three companies were not subject to supervision by any federal agency! The FTC had the ability to take law enforcement actions against the credit bureaus, but such actions were rare, difficult, and usually a case of locking the barn door after the horse was gone. The CFPB has the authority to examine the policies and procedures of these companies and to require changes the supervision process.
Wu of the NCLC said oversight by the CFPB may lead to better accuracy and a better credit reporting system. There have been longstanding complaints about the accuracy of credit reports, as well as the handling of disputes over errors. Studies have found errors in 25% of credit reports serious enough to cause a denial of credit, while studies funded by the industry have claimed that this rate was less than 1%. Even an error rate of 1% is problematic, given that means that two million consumers would be affected.