The Consumer Financial Protection Bureau is asking each of the nation’s six largest credit card lenders why they are choosing to not include the amount that their customers pay each month when furnishing information to the credit reporting agencies, saying that the practice has the potential to suppress consumers’ credit scores and prevent them from receiving the best possible terms when applying for credit.
The letter, written by John McNamara, the Principal Assistant Director – Markets in the CFPB’s Division of Research, Markets & Regulation and a name many in the accounts receivable management industry will recognize thanks to his long tenure here before he joined the Bureau, was sent to the Chief Executives of American Express, JPMorgan Chase, Bank of America, Citibank, Capital One, and Discover.
The CFPB issued a report back in 2020 that detailed how many lenders have stopped furnishing the actual payment data to credit reporting agencies going back to 2012. One possible explanation, at least for credit card lenders, is that withholding that information is a competitive advantage intended to keep other lenders from poaching consumers who do not pay their balances every month.
In reaching out to the lenders, the CFPB now wants to know why that information is not being supplied. Along with an explanation, the CFPB wants to make sure there aren’t any “material barriers” to prevent the lenders from supplying that information, and whether the companies have any plans to start furnishing that piece of information.
The letter points out that participation by the lenders is voluntary and is not a “supervisory request.”
The CFPB has been ratcheting up its interest in the credit reporting space for several months. It published a report analyzing the complaint data submitted by consumers with respect to credit reporting of medical debts, it published an issue of its Supervisory Highlights report that looked at misleading credit reporting statements, it recently sued a credit reporting agency and one of its executives, and it called out the three major agencies for not treating consumers fairly.
“Consumers reasonably expect that they will receive competitively priced credit based on their ability to manage and repay their credit obligations, but this is impaired if actual payment amount information is being suppressed by major credit card companies,” McNamara wrote in the letter.