CFPB Bulletin Admonishes Banks and Other Furnishers to Review FCRA Investigation Procedures
The Consumer Financial Protection Bureau (“CFPB”) recently issued a bulletin on the Fair Credit Reporting Act’s (“FCRA”) requirement that furnishers of credit information investigate disputes and review all relevant information (“Bulletin”).1 Financial institutions are the most prominent “furnishers” covered by the FCRA, and the Bulletin has prompted some banks and credit unions to revisit their practices for handling FCRA investigations and disputes.
The Bulletin details the CFPB’s expectations for furnisher systems in this area and warns that non-complying furnishers will face appropriate supervisory and enforcement action. Notably, the CFPB states that such action may include the remediation of any harm done to consumers. In light of this, financial institutions furnishing credit report information to a credit reporting agency (“CRA”) are advised to review their systems in accordance with the Bulletin to ensure they are complying with the CFPB’s expectations.
Generally, if a consumer disputes the accuracy or completeness of an item of information provided to a CRA by a furnisher, the CRA is required to notify the furnisher of the dispute. Moreover, the CRA must provide the furnisher all relevant information related to the dispute that the CRA received from the consumer.2 The furnisher, after receiving notification of the dispute from the CRA, must investigate and review the relevant information and this requirement is the focal point of the CFPB’s Bulletin.
According to the Bulletin, the CFPB expects furnishers to have “reasonable systems and technology in place” for receiving and processing disputes and all related information transmitted from CRAs and to review all relevant information related to the dispute. Furnishers are instructed to review both their own records in addition to any information they receive from the CRA. Notably, the Bulletin provides the following five processes that the CFPB expects furnishers to have in place to meet FCRA requirements:
(1) Maintaining a system reasonably capable of receiving from CRAs information regarding disputes, including supporting documentation;
(2) Conducting an investigation of the disputed information including reviewing:
a. “all relevant information” forwarded by the CRA and;
b. the furnisher’s own information with respect to the dispute;
(3) Reporting the results of the investigation to the CRA that sent the dispute;
(4) Providing corrected information to every nationwide CRA that received the information if the information is inaccurate or incomplete; and
(5) Modifying or deleting the disputed information, or permanently blocking the reporting of the information if the information is incomplete or inaccurate, or cannot be verified.3
In light of the CFPB’s focus on this area, and the threatened penalties if corrective action is needed and not taken, financial institutions furnishing credit report information to a CRA should review their systems to ensure they comply with these requirements and take steps to achieve compliance if their systems do not.
1 CFPB Bulletin 2013-09, The FCRA’s requirement to investigate disputes and review “all relevant” information provided by consumer reporting agencies about the dispute, available here (last visited, September 25, 2013).