CFPB warns card issuers on credit reports

The Consumer Financial Protection Bureau has threatened action over card issuers not reporting full consumer payment data for tracking credit histories

The Consumer Financial Protection Bureau last week put credit card issuers on notice that it doesn’t like their newfound practices of limiting reporting on consumer credit card payments.

After observing a change in the way the biggest U.S. credit card issuers were reporting consumer payment data to the nationwide system that tracks credit histories, the agency asked the companies’ CEOs last May for more information on the new practices. Since then, the agency has received responses and suggested it isn’t pleased with the feedback.

While the agency didn’t announce any new actions in connection with the Feb. 16 post, it made clear that it’s scrutinizing the new behavior.

“We will continue to monitor and address credit card company practices that impede effective market competition, like actual payment data suppression,” John McNamara, the agency’s principal assistant director for markets, wrote in a CFPB blog post last week. “We will also brief the appropriate financial regulators and law enforcement agencies on our findings.”

CFPB concerns cropped up in 2020 when the issuers shifted to not reporting consumers’ actual credit debt payment amounts, meaning that the system that determines consumers’ creditworthiness was being deprived of information that might benefit their credit profiles. After receiving responses to letters sent to the issuers’ CEOs, the agency showed its discontent last week and issued a thinly veiled threat.

“Credit card companies’ failure to report actual payment data means that millions of people’s credit reports are missing fundamental information about their credit card repayment behavior that could help many of them receive better financial offers and potentially save billions of dollars in interest expenses,” McNamara said in the post.

The CFPB last year sent the inquiry letters to JPMorgan Chase, Citibank, Bank of America, Capital One, Discover and American Express, the agency said. The responses the CFPB received from the financial institutions showed that the issuers seemed to follow each other in changing their reporting behavior after one large company made the first move, leading the others to do so for competitive reasons.

“The responses suggested companies withheld information in an attempt to make it harder for competitors to offer their more profitable and less risky customers better rates, products, or services,” the post said. “A few companies specifically noted they observed other credit card companies had stopped furnishing actual payment information and didn’t want to be at a ‘competitive disadvantage’ by providing data their competitors had chosen to stop sharing.”

The bank card issuers didn’t immediately respond to requests for comment.

By Lynne Marek on Feb 21, 2023
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