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CFPB issues Supervisory Highlights special edition on consumer reporting

Federal Issues CFPB Consumer Reporting FCRA Compliance Regulation V Credit Report

Federal Issues

On December 9, the CFPB released a special edition of its fall 2019 Supervisory Highlights, focusing on recent supervisory findings in the areas of consumer reporting and information furnishing to consumer reporting companies (CRCs). This is the second special edition to focus on consumer reporting issues, and follows a report that the Bureau released in March 2017 covered by InfoBytes here. According to the Bureau, recent supervisory reviews of FCRA and Regulation V compliance have identified new violations as well as compliance management system (CMS) weaknesses at CFPB-supervised institutions. However, the Bureau noted that examiners have also observed significant improvements, such as continued investment in FCRA-related CMS.

Highlights of the supervisory findings include:

  • Recent examples of CMS weaknesses and FCRA/Regulation V violations (where corrective action has either been taken or is currently being taken) in which one or more (i) mortgage loan furnishers did not maintain policies and procedures “appropriate to the nature, size, complexity, and scope of the furnisher’s activities”; (ii) auto loan furnishers’ policies and procedures failed to provide sufficient guidance for investigating indirect disputes containing allegations of identity theft; (iii) debt collection furnishers’ policies and procedures failed to differentiate between FCRA disputes, FDCPA disputes, or validation requests, leading to a lack of consideration for applicable regulatory requirements when handling these matters; and (iv) deposit account furnishers lacked written policies and procedures for furnishing or validating the information provided to specialty CRCs.
  • Examiners found that one or more furnishers provided information they knew, or had reasonable cause to believe, was inaccurate. Examples include inaccurate derogatory status codes due to coding errors and unclear addresses for consumers to submit disputes.
  • Examiners discovered several instances where furnishers failed to send prompt notifications to CRCs after determining that information previously furnished was inaccurate, including situations where furnishers failed to promptly update or correct information after consumers paid charged-off balances in full or discharged them in bankruptcy.
  • Examiners found that some furnishers reported the incorrect date of the first delinquency in connection with their responsibility to provide notice of delinquent accounts to CRCs.
  • Examiners found several instances where furnishers failed to investigate disputes, complete investigations in a timely manner, or notify consumers of certain determinations related to “frivolous or irrelevant” disputes.

The Bureau also discussed supervisory observations concerning CRC compliance with FCRA provisions, and commented that CRCs continue to (i) improve procedures concerning the accuracy of information contained in consumer reports; (ii) implement improvements to prevent consumer reports from being furnished to users who lack a permissible purpose; (iii) strengthen procedures to “block information that a consumer has identified as resulting from an alleged identity theft”; and (iv) investigate and respond to consumer disputes. 

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