Credit reports – a wealth of information about a person’s financial habits that can serve as the determining factor in credit decisions or even employment decisions or background checks. Given the outsized impact a credit report can have on a person’s life, it’s important that the information contained in the credit report be accurate, and that credit unions handle disputed information appropriately. Last week the Consumer Financial Protection Bureau (CFPB or bureau) provided guidance on this topic by publishing a new consumer financial protection circular on the topic of consumer reporting disputes.
The FCRA and Disputes
Let’s review some basics. The Fair Credit Reporting Act (FCRA) governs “consumer reports,” which are reports of a consumer’s financial history and habits – this term commonly covers credit reports, but also may cover reports from companies like Chex Systems. These reports are compiled by “consumer reporting agencies” (CRAs). The information a CRA includes in a consumer report is often provided by a data furnisher (or simply “furnisher”). Credit unions can be furnishers if they provide information to CRAs about their members – such as their members’ accounts, transactions, and debts. Notably, credit unions are not required to furnish data to CRAs, but credit unions which choose to furnish data will be subject to certain requirements in the FCRA and Regulation V. For example, section 1022.42 of Regulation V requires credit unions that act as furnishers to have “reasonable written policies and procedures regarding the accuracy and integrity” of the information furnished.
For credit unions, some of the biggest data furnisher obligations relate to handling disputes over the information the credit union has furnished. Under the FCRA there are two types of disputes. The first are disputes in which a consumer first submits their dispute to the CRA. Under the FCRA, the CRA is then required to notify the furnisher within 5 business days, and the furnisher is then required to investigate the dispute and report the results to the CRA before the expiration of the CRA’s 30-day investigation period. I’ll refer to these as “indirect disputes” because they come to the credit union indirectly – i.e., through the CRA rather than directly from the consumer.
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