Consumer bureau needs to better communicate its expectations for accuracy, dispute investigations for consumer reporting agencies, GAO finds

Expectations about reasonable procedures for assuring maximum possible accuracy, and reasonable investigations of consumer disputes, should be communicated to consumer reporting agencies (CRAs) by the federal consumer financial protection agency, the congressional watchdog said in a report issued Tuesday.

The Government Accountability Office (GAO) stated that it would be “beneficial” for the Consumer Financial Protection Bureau (CFPB) to communicate its expectations of the CRAs in the two areas. GAO defined CRAs as private companies that collect sensitive consumer information, such as loan status or payment and employment history, package the information into consumer reports, and sell the reports to third parties. The three largest CRAs – Equifax, Experian and TransUnion – together hold information on more than 200 million Americans, GAO noted.

In its report, “CFPB Should Define Its Supervisory Expectations (GAO-19-459), the congressional watchdog said the bureau has not defined its expectations about how the companies can comply with key statutory requirements. The GAO pointed to, for example, provisions of the Fair Credit Reporting Act (FCRA) which call on CRAs to follow reasonable procedures for ensuring maximum possible accuracy, and to conduct reasonable investigations of consumer disputes.

GAO’s view about how flaws in the consumer reporting process affects final results

“CFPB has identified deficiencies related to these requirements in its CRA examinations, but it has not defined its expectations – such as by communicating information on appropriate practices – for how CRAs can comply with these requirements,” GAO wrote.

The oversight agency said that, absent that information, the four CRAs that GAO interviewed said their companies look to other sources, such as court cases or industry presentations, to determine what the consumer bureau will consider to be “noncompliant” during exams.

GAO noted that a policy statement issued by CFPB and other regulators last year highlighted the role of supervisory expectations in helping ensure consistency in supervision “by providing transparent insight to industry and to supervisory staff.”

“By providing information to CRAs about its expectations for complying with key FCRA requirements, CFPB could help achieve its goal of accurate consumer reporting and effective dispute resolution processes,” GAO wrote. “Such information also could help to promote consistency and transparency in CFPB’s supervisory approach.”

The GAO study was prompted by last year’s regulatory relief law, the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA, S. 2155). The law included a provision for GAO to examine issues related to the consumer reporting market. “This report examines, among other objectives, the causes of consumer report inaccuracies and how CFPB has overseen CRAs,” GAO wrote.

Consumer Reporting Agencies: CFPB Should Define Its Supervisory Expectations

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