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Financial Services Law Insights and Observations

CFPB releases report on consumer credit disputes

Federal Issues CFPB Consumer Finance Credit Report Auto Lending Student Lending Consumer Credit Outcomes Credit Cards Covid-19 FCRA

Federal Issues

On November 2, the CFPB released a report on credit report disputes that outlined the demographic characteristics of disputers and the outcomes for accounts with dispute flags. The report highlighted that consumers in majority Black and Hispanic neighborhoods, as well as younger consumers and those with low credit scores, are far more likely to have disputes on their credit reports. The post—part of a series documenting trends in consumer credit outcomes during the Covid-19 pandemic (the first covered by InfoBytes here)—used data on auto loan, student loan, and credit card accounts opened between 2012 and 2019. Among other things, the report found that majority Black and Hispanic neighborhoods continue to face significant challenges with credit records; for example, in almost every credit category outlined in the report, consumers residing in majority Black areas were more than twice as likely to have disputes on their credit reports compared to consumers residing in majority white areas. For auto loans, consumers in majority Black areas were more than three times as likely to have disputes appear on their credit reports compared to majority white areas. The report also noted that approximately 40 percent of student loans with dispute flags are deleted within four years of the dispute, although this represents less than 0.2 percent of all student loans opened between 2012 and 2019.

According to Director Rohit Chopra, “[e]rror-ridden credit reports are far too prevalent and may be undermining an equitable recovery.” The report noted that “an important subject for future research is whether these patterns are driven by differences across groups and credit types in the type or frequency of the underlying issues that result in a dispute flag, or whether they are driven by furnishers’ practices for reporting dispute flags or responding to disputes.” Additionally, the Bureau said in its press release that it “is committed to further researching the root causes of credit information disputes, as well as investigating the reasons for the demographic disparities found in the report.” As previously covered by InfoBytes, the CFPB, along with the FTC and the North Carolina Department of Justice, filed an amicus brief in support of the consumer plaintiffs in Henderson v. The Source for Public Data, L.P., arguing that a public records website, its founder, and two affiliated entities cannot use Section 230 liability protections to shield themselves from credit reporting violations.

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