Washington, D.C. – After announcing late yesterday that the State Farm Bank violated the Fair Credit Reporting Act by reporting inaccurate information about its customers to the credit bureaus and for illegally pulling credit reports without a permissible purpose, the Consumer Financial Protection Bureau decided to impose no fines or consumer restitution on the Bank.
“State Farm Bank is one of the largest 1% of all banks in America,” said Christopher Peterson, Consumer Federation of America’s Director of Financial Services and senior fellow. “Nevertheless, they paid less than a parking ticket to resolve a federal investigation into serious, widespread violations of our consumer protection laws.”
“State Farm wrongly reported accounts as past due, or marred the credit reports of the wrong consumer, depressing their credit scores,” stated National Consumer Law Center attorney Chi Chi Wu. “What’s worse, State Farm should have known this information was inaccurate because it allegedly conflicted with the company’s own records – yet State Farm will not pay one penny for its reckless behavior.”
Peterson also noted that State Farm apparently took months to clear up the errors, even after customers complained or the company otherwise knew the information was inaccurate. In the meantime, customers may have been rejected for credit, jobs, insurance or other benefits because of this false information. As for the illegally pulled reports, in behavior reminiscent of the Wells Fargo scandal, State Farm agents made up nonexistent loan applications in order to make a credit inquiry.
“It is reasonable for a bank with over sixteen billion dollars in assets to pay a substantial fine and reimburse every customer harmed by the bank’s illegal practices. Instead, on his last day as Acting Director of the Consumer Financial Protection Bureau, Mick Mulvaney didn’t even slap the bank on the wrist,” added Peterson. “In over 200 CFPB enforcement cases, I cannot recall another case that was so obviously incomplete.”
Wu advised consumers who are State Farm customers or have “shopped” with the company to immediately obtain their credit reports from www.annualcreditreport.com (consumers are entitled to one free report per year for each of the “Big Three” credit bureaus: Equifax, TransUnion, and Experian). Consumers should check if State Farm or its agents unlawfully pulled their credit reports by reviewing the section called “Hard Inquiries” or “Inquiries Shared with Others” for unfamiliar names.
Existing State Farm customers should check the account history on their credit reports for their State Farm accounts. If there is any inaccurate information in the history, the consumer should submit a dispute to the credit bureau reporting the information, with a copy to State Farm. “It’s important to send the dispute to the credit bureau if you want to preserve your legal rights,” said Wu. “With the exception of California, you can’t go after State Farm in court for messing up your credit report unless you first dispute with the credit bureau.”
More information on how to send a dispute to a credit bureau is available in the National Consumer Law Center’s guide Disputing Errors in a Credit Report.