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Latest CFPB Guidance in ‘Circular’ Covers Dispute Investigations

Rhode IslandThe bureau’s circular—part of an enforcement strategy—outlines FCRA requirements and filing claims on dispute investigations that may be a violation, but that may only burden legitimate furnishers working with consumers.  

11/10/2022 5:15 P.M.

3 minute read

A new Consumer Financial Protection Bureau circular focuses on dispute investigation requirements for credit reporting agencies and data furnishers.

“The circular outlines how federal and state consumer protection enforcers, including regulators and attorneys general, can bring claims against companies that fail to investigate and resolve consumer report disputes,” the CFPB reports in a news release.

The CFPB stated, based on its supervisory examinations, “that consumer reporting companies and some furnishers have failed to conduct reasonable investigations of consumer disputes and to spend the time necessary to get to the bottom of inaccuracies. These failures can affect, among other things, people’s eligibility for loans and interest rates, for insurance, and for rental housing and employment.”

The CFPB’s circulars are a new enforcement strategy for the bureau. The reports are issued to the broad set of government agencies responsible for enforcing federal consumer financial law.

The circulars are “policy statements under the Administrative Procedure Act and will be released publicly to increase transparency for the benefit of the public and regulated entities,” according to the CFPB.

The credit reporting circular presents the following Q&A:

Q. “Are consumer reporting agencies and the entities that furnish information to them (furnishers) permitted under the Fair Credit Reporting Act to impose obstacles that deter submission of disputes?

A, Consumer reporting agencies and furnishers are liable under the FCRA if they fail to investigate any dispute that meets the statutory and regulatory requirements, as described in more detail below. Enforcers may bring claims if consumer reporting agencies and furnishers limit consumers’ dispute rights by requiring any specific format or requiring any specific attachment such as a copy of a police report or consumer report beyond what the statute and regulations permit.

Q, Do consumer reporting agencies need to forward to furnishers consumer-provided documents attached to a dispute?

A. It depends. Enforcers may bring a claim if a consumer reporting agency fails to promptly provide to the furnisher “all relevant information” regarding the dispute that the consumer reporting agency receives from the consumer. While there is not an affirmative requirement to specifically provide original copies of documentation submitted by consumers, it would be difficult for a consumer reporting agency to prove they provided all relevant information if they fail to forward even an electronic image of documents that constitute a primary source of evidence.”

ACA’s Take
Compliance with the Fair Credit Reporting Act is at the core of the compliance policies of data furnishers in ACA International membership.

ACA members respect the FCRA and the responsibility that comes with furnishing. They typically have strong compliance management systems in place to ensure compliance with FCRA and other laws and to properly investigate disputes.

As the CFPB looks at these and other FCRA issues, they can help legitimate furnishers by taking action against those Credit Repair Organizations that behave in unscrupulous ways, flooding legitimate processes with fraudulent and/or irrelevant disputes, which places a real burden on furnishers to have strong systems to tell the difference.  For Americans to realize the full benefits of a credit-based economy, organizations in each part of the ecosystem need to have strong compliance management systems—to adhere to the relevant laws—and regulators need to keep bad actors out of the system.

Accounts receivable management industry companies can use the bureau’s semiannual supervisory highlights reports to measure compliance standards with regard to the bureau’s enforcement of federal consumer financial laws and to help limit risks to consumers.

If you have executive leadership updates or other member news to share with ACA, contact our communications department at [email protected]. View our publications page for more information and our news submission guidelines here.

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