CFPB Signals Intent to Scrutinize FCRA Compliance
The Consumer Financial Protection Bureau recently released a bulletin expressing concern that financial institutions and other organizations that furnish information to credit reporting agencies (CRAs) are not complying with obligations under the Fair Credit Reporting Act (FCRA) and Regulation V to conduct a reasonable investigation of direct consumer disputes.
The CFPB noted its recent experience with “furnishers” (i.e., banks and other creditors) that simply direct CRAs to delete disputed items without conducting an investigation.
The bulletin states the crux of the CFPB’s concern with this practice as follows: “[W]hen the furnisher conducts an investigation, it may learn of a systemic problem, thereby benefiting not only the consumer who raised the dispute, but also other similarly situated consumers who did not submit disputes. In addition, if a furnisher does not conduct investigations, consumers can be harmed because the furnisher may not carry out additional steps that the FCRA calls for with respect to a dispute. These include the obligation of a furnisher to provide notice of information found to be inaccurate to all consumer reporting agencies to which it reported.”
The bulletin was released in connection with the Bureau’s announcement of a major new initiative by certain credit card issuers to make credit scoring information more easily and regularly available to customers at no cost. The programs provide customers, directly and at no cost to customers, with the same credit scores these issuers obtain in their normal course of business, along with educational materials to help them understand the credit score.
FCRA compliance often implicates complex interrelationships with ECOA and TILA compliance, so the question of whether or not a creditor conducted a “reasonable investigation” for FCRA often rubs up against other important compliance issues. Because we fully expect FCRA issues to be a major focus of the CFPB in coming months, we are recommending that banks and other creditors review their current dispute investigatory practices to align them with industry best practices.