CFPB Targets Faulty Background Checks


The Consumer Financial Protection Bureau (CFPB) advised consumer credit reporting companies against providing false, incomplete and old information.

WASHINGTON – The Consumer Financial Protection Bureau (CFPB) cautioned consumer reporting companies – including Equifax, TransUnion and Experian – to address outdated and inaccurate information in background check and credit file reports, which are widely used for tenant and insurance screenings.

CFPB Director Rohit Chopra said companies that provide misinformation in background check reports and all other consumer reports create “flawed reputational dossiers.”

 “Background check reports, and all other consumer reports, must be accurate, up to date and available to the people that the reports are about,” he said.

In its advisory to the consumer reporting companies, the CFPB focused on two topics:

Consumer credit reporting companies must maintain “reasonable procedures” to avoid producing false or misleading information, including any information that expunged, sealed or legally restricted from public access. The companies must ensure disposition information is included for arrests, criminal charges, eviction proceedings and other court filings that are included in background check reports.

The CFPB also said the companies must follow the rules regarding reporting periods.

“For example, a criminal charge that does not result in a conviction generally cannot be reported by a consumer reporting company beyond the seven-year period that starts at the time of the charge,” the CFPB said.

Consumers must be provided with all sources for the information included in their file, including from the original and other sources, so they can correct misinformation.  Consumers only need to make a request and provide identification to get their report rather than using specific language or lingo. The report must be presented in a way “an average person could understand” and include the sources of information.

The CFPB’s advisory opinion has no effect on formal rulemaking but highlights the bureau’s top concerns. It comes as the CFPB considers expanding and updating federal credit reporting standards under the Fair Credit Reporting Act.

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