Name-Only Matching Not Enough for Credit Reporting Agencies, CFPB Cautions

It’s common practice for some credit reporting agencies, including tenant and employment screeners, to use names only when compiling their reports.

This can lead to all kinds of headaches for consumers and can result in damage to their credit ratings, job prospects and housing choices. But a recent advisory opinion by the Consumer Financial Protection Bureau may put an end to such slipshod practices.

“Using inadequate matching procedures to match information to consumers … is not using reasonable procedures to assure maximum possible accuracy under section 607(b) of the Fair Credit Reporting Act (FCRA),” the bureau said.

“Inaccurate information in consumer reports can have significant adverse impacts on consumers.  These impacts are particularly concerning for prospective renters and job seekers struggling  to recover from the impacts of the COVID-19 pandemic,” the opinion stated.

The FCRA, enacted in 1970, requires credit reporting agencies to “follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report
relates.”

“This requirement remains as important today as it was when the statute was enacted in 1970,” the CFPB said.

The advisory opinion is a “game changer,” said Chi Chi Wu of the National Consumer Law Center. “[This] strong action by the CFPB will lead to increased accountability, better accuracy, and fewer consumers being denied jobs and housing.”

With nearly 300k complaints to the CFPB last year, saying that the credit bureaus have “serious problems” is an understatement on my part https://t.co/lz9NAnXlZi

— Chi Chi Wu (@ChiChiWu8) November 13, 2021

Credit reports generate the most complaints

Incorrect credit reports make up the largest percentage of consumer complaints received by the bureau regarding credit or consumer reporting each year for at least the last five years, the CFPB noted.

Name-only matching – in which the credit agency uses only a consumer’s first and last names – is particularly prone to error for the simple reason that lots of people have the same name.

“For example, in the United States, the 2010 census (the most recent to have last name statistics available) found more than 2.4 million respondents with the last name of Smith, 1.9 million respondents with the last name of Johnson, 1.6 million respondents with the last name of Williams, and more than 1 million respondents each with the last name of Brown, Jones, Garcia, Miller, Davis, Rodriguez,Martinez, or Hernandez,” the CFPB opinion said.

The risk of mismatching from name-only matching is likely to be greater for Hispanic, Asian, and Black individuals because there is less last-name diversity in those populations than among the non-Hispanic white population, the bureau noted, quoting Census Bureau findings.

Learn more about your rights under the Fair Credit Reporting Act in this Federal Trade Commission summary.