WASHINGTON — Top Senate Democrats urged the Consumer Financial Protection Bureau to pursue far-reaching reforms of the credit reporting industry and take a more more hands-on role to police errors in consumers’ credit histories.
The seven senators told CFPB Director Rohit Chopra in a Nov. 10 letter to address credit file mistakes that "can ruin lives."
“In an industry that affects all Americans so directly, even a small error rate means tens of millions of people can be denied jobs or housing through no fault of their own,” wrote the lawmakers, including Senate Banking Committee Chairman Sherrod Brown, D-Ohio, and Senate Finance Committee Chair Ron Wyden, D-Ore.
"We request you take immediate action to protect consumers and introduce much-needed accountability into the credit reporting system," the senators wrote.
Also signing the letter were Sens. Brian Schatz, D-Hawaii; Elizabeth Warren, D-Mass.; Jack Reed, D-R.I.; Chris Van Hollen, D-Md.; and Ben Ray Luján, D-N.M.
The senators made several policy recommendations for the CFPB to pursue, such as forcing the major U.S. credit bureaus — Experian, Equifax and TransUnion — to “devote sufficient personnel and resources" to address customer credit disputes.
They also recommended the creation of an CFPB “ombudsperson” who could manage disputes between customers and credit bureaus over errors.
Analysts say that these policy recommendations are likely to carry significant weight with Chopra. The CFPB released a report earlier this month that found that reporting errors were disproportionately common among
“Chopra already put the credit bureaus in the spotlight,” Jaret Seiberg, a policy analyst with Cowen Washington Research Group, said in a research note. “We see this letter as offering political cover to go beyond enforcement actions and to adopt rules codifying these requests.”
The senators also argued that the CFPB should ban credit bureaus from certain practices that are prone to causing errors. They raised the example of using a partial Social Security number to link a consumer with a matching debt, which runs the risk of mistakenly assigning the debt to someone else.
The lawmakers also said the CFPB should “consider requiring nationwide [credit reporting agencies] to perform periodic accuracy audits on information furnishers.”
Policymakers have long accused the credit bureaus of a less-than-stellar record when it comes to the accuracy of their data. The senators’ letter cited a 2012 study from the Federal Trade Commission that found one in five consumers had an error in at least one of their credit reports.
Consumer advocates have complained for years that the process to fix credit records is
“As a result of simple mistakes, consumers may pay more for credit or be denied loans altogether; they might face obstacles applying for a job, getting a mortgage, or renting an apartment,” the senators wrote.
