• CFPB Puts Data Furnishers on Notice of FCRA Dispute Obligations
  • September 11, 2013 | Authors: David N. Anthony; Paige S. Fitzgerald; Timothy "Tim" J. St. George; Alan D. Wingfield
  • Law Firm: Troutman Sanders LLP - Richmond Office
  • The Consumer Financial Protection Bureau (CFPB) has served notice this week on businesses within the CFPB’s jurisdiction that report information to consumer reporting agencies (CRAs) that their handling of consumer disputes will be an important point of regulatory examination and enforcement. This CFPB notice is the latest signal by federal regulators that compliance by all persons involved in consumer reporting with the Fair Credit Reporting Act (FCRA) is a priority regulatory concern. As reported previously, for example, the Federal Trade Commission has recently obtained substantial penalties and injunctive relief in recent enforcement actions under the FCRA.

    As background on this most recent pronouncement, the FCRA generally requires a CRA to notify a furnisher when a consumer disputes the accuracy or completeness of an item of information provided by the furnisher to the CRA. The furnisher, in turn, generally must “conduct an investigation with respect to the disputed information,” “review all relevant information” provided by the CRA, and respond appropriately based on the result of the investigation.

    The CFPB Bulletin Regarding Data Furnisher Obligations

    On September 4, 2013, the CFPB released a bulletin to “‘specifically address furnishers’ obligations to ‘review all relevant information’ they receive in connection with disputes forwarded by CRAs.” In general, with respect to disputes received by furnishers from CRAs, the CFPB stated that it expects each furnisher to comply with the FCRA by undertaking and maintaining the following processes:

    • Maintaining a system reasonably capable of receiving from CRAs information regarding disputes, including supporting documentation;
    • 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;
    • Reporting the results of the investigation to the CRA that sent the dispute;
    • Providing corrected information to every nationwide CRA that received the information if the information is inaccurate or incomplete; and
    • 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.

    The CFPB warned that if the CFPB determines that a furnisher has engaged in any acts or practices that violate the FCRA or other federal consumer financial laws and regulations, “it will take appropriate supervisory and enforcement actions to address violations and seek all appropriate corrective measures, possibly including remediation of harm to consumers.”

    What Now?

    Last fall, the CFPB began regulating CRAs, and it is anticipated that the CFPB will continue to issue advisory statements relevant to the FCRA and to conduct investigations against both data furnishers and CRAs. “Credit reports play a critical role in the lives of consumers,” CFPB Director Richard Cordray said in a statement. “Given the importance of these reports, consumers need to know that their documents are being reviewed when they dispute what they believe is a mistake on a report.” This bulletin reflects an increased scrutiny by the CFPB of compliance under the FCRA, including as to furnishers, which widely include entities, such as creditors (e.g., banking institutions) and debt collectors. The clear implication from the CFPB is that, going forward, furnishers monitoring and responding to consumer disputes will be a regulatory priority.