Update: This article has been revised to feature feedback from Experian following its original publication.

As per a lawsuit initiated Tuesday by the Consumer Financial Protection Bureau, Experian has habitually issued misleading details in credit reports that influence whether individuals are approved for loans, employment, or residences and neglected to correctly inquire into or amend inaccuracies when people contested these errors.

The CFPB’s statistics indicate that in the preceding year, the body received 352,760 grievances from consumers regarding erroneous data appearing on their Experian credit reports, marginally fewer than the two other significant credit agencies. Consumers lodged 361,534 complaints about mistakes in Equifax reports and 378,538 grievances concerning inaccuracies in TransUnion reports.

“When consumers raised disputes about inaccuracies on their credit reports, Experian executed insubstantial investigations rather than appropriately evaluating the objections as necessitated by federal law,” CFPB Director Rohit Chopra remarked in an announcement. “Errors in credit reporting can lead to grave implications for a household’s finances, and it is vital that the major credit reporting entities comply with the law.”

Jordan Takeyama, a representative for Experian, stated that the firm had previously been in dialogue with the CFPB regarding how the credit reporting sector manages potentially inaccurate information.

“The legal action lacks any foundation. It contradicts established regulatory and judicial precedent and is yet another instance of reckless overreach by the CFPB,” he stated in an email, adding “We are dedicated to fulfilling the demands of consumers and complying with all our regulatory duties diligently. We go to great lengths to thoroughly investigate every consumer objection and surpass the stipulations of the law. We strongly contest both the substance and the tone of the CFPB’s allegations.

When a customer flags an inaccuracy on their Experian report, the company dispatches an Automated Credit Dispute Verification (ACDV) form to the provider of the contested data, such as a bank, credit card issuer, or debt collector. This form includes a code meant to signify the reason for the customer’s dispute so that the data provider can examine and reply, but according to the CFPB legal suit, Experian often transmits codes that “misrepresent or fail to communicate highly pertinent details regarding consumers’ disputes.”

In several instances, the CFPB asserts, Experian employs a code for the broadly generic category “Claims inaccurate information. Did not provide specific dispute,” even when the consumer has indeed provided comprehensive data concerning the error.

Adding to these issues, it is alleged that Experian puts excessive trust in the answers it gets from data providers in response to those ACDV forms. The CFPB mentions that consumers frequently present evidence to back their disputes, such as bankruptcy discharge dates and case numbers, or documents indicating that the data provider has previously agreed to eliminate or adjust the incorrect information.

“However, Experian typically assigns the supporting documents no consideration in resolving the dispute and customarily undertakes no further reinvestigation beyond the provider’s ACDV reply,” as asserted in the legal filing.

In other circumstances, the CFPB claims, Experian already retains documents substantiating the consumer’s claims within its own archives but the firm still does not proceed with the investigation beyond sending and obtaining an ACDV.

Upon conducting its examinations, Experian sends letters to consumers that are intended to elaborate on the result and detail any information that was altered. According to the lawsuit, these letters are often “confounding, misleading, incorrect, and lack coherence.”

The CFPB argues that Experian’s conduct infringes upon the Fair Credit Reporting Act and has petitioned a federal court to prevent the company from conducting additional violations and mandate Experian to compensate consumers harmed by its actions.