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For the fifth consecutive month, in July, a record number of consumers filed complaints with the Consumer Financial Protection Bureau (CFPB), according to an analysis by U.S. PIRG and the Frontier Group. Complaints since the national onset of the COVID-19 pandemic (March-July 2020) are up 50 percent over the same five-month period in 2019.
Credit reporting always has been among the leading sources of complaints, but during the pandemic, the total number of those complaints has surged by 86 percent. As a percentage of overall complaints, they accounted for 65 percent in July, compared to 54 percent in February.
The accuracy of credit reports is important because lenders determine how much to charge you for a loan or credit card based on a credit score derived from your report and potential employers decide whether or not to hire you based on your credit report.
“Consumers have every right to be angry with credit bureaus. So many Americans don’t have the money to pay their bills as a result of the coronavirus crisis, and it’s not their fault,” said U.S. PIRG Senior Director for Federal Consumer Programs Ed Mierzwinski. “A simple solution Congress can take immediately to ease that pain is to stop debt collection and negative credit reporting.”
The recent surge in credit reporting complaints has been driven by nearly double the number of complaints about incorrect information. Nearly three out of four of these complaints allege that information on a consumer’s credit report belongs to someone else. Consumer complaints have also spiked about delayed investigations into credit problems, and investigations that do not result in a fix.
In addition to supporting the bans on negative credit reporting and debt collection (Sections 110401 and 110402) proposed in the House-passed Heroes Act, H.R. 6800, U.S. PIRG is calling on the CFPB to enforce consumer laws, instead of repeatedly telling banks and other firms it will give them flexibility to ignore the rules.
"The record level of consumer complaints is a blaring red light signaling the huge challenges consumers are facing during the COVID-19 emergency,” said Gideon Weissman of Frontier Group. “The Consumer Complaint Database has long been an early warning system for emerging problems in the financial marketplace, and it has never been more valuable than now."
“These problems are nothing new. They've just been exacerbated by the current economic crisis caused by the pandemic. The truth is the credit bureaus are long overdue for an overhaul. In the interim, the least we can do is stop them from penalizing consumers who are struggling through no fault of their own," said U.S. PIRG Consumer Campaign Director Mike Litt.
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