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Credit Reporting - The Creditor's Duty to Investigate Disputes (A Refresher Course)

Last week, the Consumer Financial Protection Bureau (CFPB) issued a bulletin (CFPB Bulletin 2013-09) intended to remind creditors what is expected of them when a consumer formally disputes something that the creditor has reported to the credit reporting agencies (CRAs).  The CFPB explains that, to comply with the Fair Credit Reporting Act (FCRA), every creditor (also known as a “furnisher”) must:

  • (1) Maintain a system reasonably capable of receiving from CRAs information regarding disputes, including supporting documentation;
  • (2) Conduct 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) Report the results of the investigation to the CRA that sent the dispute;
  • (4) Provide corrected information to every nationwide CRA that received the information if the information is inaccurate or incomplete; and
  • (5) Modify or delete the disputed information, or permanently block the reporting of the information if the information is incomplete or inaccurate, or cannot be verified.

The CFPB warns that “[a]ny [creditor] not currently maintaining a process that meets these requirements should take immediate steps to comply with the requirements of the law.”

Translation:  Now would be a good time for credit unions to review their systems and procedures to make sure that they meet the standards outlined in the CFPB’s bulletin.

The complete bulletin can be downloaded from the CFPB’s website here.  The FCRA is found in the U.S. Code beginning at 15 U.S.C. 1681, and it can be found online here.  The CFPB’s regulations under the FCRA (known as “Regulation V”) are found in the Code of Federal Regulations beginning at 12 CFR 1022.1.  The regulations can be found online here.

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