Dive Brief:

• The Consumer Financial Protection Bureau is revamping its online consumer complaint portal to address “abuse,” particularly tied to credit reporting, the agency said Wednesday.
• Citing an increase in credit reporting complaint volume, the CFPB said it’s emphasizing that consumers must exhaust their dispute rights with a credit reporting agency before turning to the consumer watchdog, launching two-factor authentication and directing resources toward complaints that “warrant a substantive response.”
• The CFPB, which said the changes would make the system more effective, is also working to ensure credit reporting agencies follow a standardized process to address complaints and building technology to share complaint information with companies in a more efficient manner.

Dive Insight:

The CFPB framed the move as one that would fix longstanding issues “to restore integrity” to its complaint system.  

“The consumer complaint portal has long been plagued by issues that severely limit its effectiveness in addressing consumers’ complaints and practical utility of its information,” the bureau said in its news release.

The CFPB received about 150,000 credit or consumer reporting complaints in 2019. Last year, that number exceeded 5 million, the bureau said.

The CFPB attributed that to credit repair firms “misusing” the complaint process as a tool of their business, “social media influencers with questionable expertise encouraging followers to submit complaints,” artificial intelligence tools acting on a person’s behalf, and the rise of businesses seeking to boost credit scores by disputing information on reports.

Alongside other changes, the CFPB said it intended to educate consumers on addressing errors on their credit reports.

The National Consumer Law Center, however, said the agency’s changes make it “increasingly difficult for people to seek help from the CFPB” and shift resources “to discouraging people from disputing errors on their credit reports.”

“The Trump administration’s CFPB, at the behest of the credit reporting companies, is deliberately creating barriers for people to report illegal and abusive actions by large financial companies,” Diane Thompson, NCLC’s deputy director and chief advocacy officer, said in a Thursday news release. “The CFPB was created to protect consumers, not corporations, and should return to that mission.” 

In February, the CFPB published new language demanding consumers confront credit bureaus to dispute inaccurate information before turning to the agency, and establishing an amount of time that must elapse before consumers can reach out to the CFPB. Under Acting Director Russ Vought, the bureau has repeatedly sought to slash its headcount, an effort that has been challenged in court.

Credit bureaus Equifax, Experian and TransUnion and the trade groups that represent them have argued that the CFPB’s complaint portal has been overrun by submissions generated by bots or third-party credit repair companies posing as consumers.    

But consumer advocates say the CFPB’s moves amount to hurdles.

“The CFPB should be doing its job to make it easier for people to get help, not throwing new obstacles in their path,” Chi Chi Wu, director of consumer reporting and data advocacy and acting co-director of federal advocacy at NCLC, said in Thursday’s release. “It should be focusing on the abuses of the credit reporting oligopoly, not acting in cahoots with it.”