The Consumer Financial Protection Bureau ("CFPB")
continues to move forward with implementation of its nonbank
supervision program by releasing the procedures it will use in
examining credit bureaus and other consumer reporting
companies. According to the Bureau, "these procedures
are a field guide for CFPB examiners looking to check that these
companies are following the law." The CFPB's
authority to supervise consumer reporting companies takes effect
September 30, 2012.
The Dodd-Frank Act gave the CFPB authority to supervise
"larger participants" in the consumer financial markets
as defined by rule. In July 2012, the CFPB identified a
market for consumer reporting and defined larger participants to
include companies in that market that have more than $7 million in
annual receipts. According to the CFPB, its supervisory
authority will cover an estimated 30 companies that account for
about 94 percent of the market's annual receipts.
Under the regulation, "consumer reporting" includes
different types of consumer reporting entities, such as credit
bureaus, resellers, specialty consumer reporting agencies, and
analyzers of consumer report information and other account
information. (12 CFR 1090.104(a)(4); 77 Fed. Reg. at 42875,
42883-85). Notably, while there is considerable overlap, the
definition of "consumer reporting" in the CFPB's
larger participant rule does not mirror the FCRA's definitions
of "consumer report" or "consumer reporting
agency." As a result, the CFPB concedes that
"an entity that is subject to the larger participant rule may
or may not be a 'consumer reporting agency' for FCRA
Examiners will be looking to verify that consumer reporting
companies are complying with requirements of federal consumer
financial law, including:
Using and Providing Accurate
Information: Examiners will assess whether companies
have reasonable procedures in place to ensure accuracy of the
information about consumers that appears in their reports. This
will include looking at how companies screen information that they
receive for accuracy and how companies match incoming information
to a particular consumer's file to make sure it appears on the
right consumer's report.
Handling Consumer Disputes: Examiners will
determine if reporting companies conduct reasonable investigations
when consumers dispute the accuracy or completeness of their files.
Examiners will also evaluate the systems, procedures, and policies
used by the company for tracking, handling, investigating, and
resolving consumer inquiries, disputes, and complaints.
Making Disclosures Available: Examiners will
determine whether reporting companies disclose to consumers their
file information and credit scores when required to do so, and
whether they have trained personnel to explain the information in
their disclosures to consumers.
Preventing Fraud and Identity Theft: Examiners
will look to see whether these companies are fulfilling the
requirements to address identity theft and to protect active duty
military consumers, through such means as fraud and active duty
alerts, and blocking of reporting of information that stems from
The CFPB's general Supervisory and Examination
Manual and provide guidance on how the Bureau will be
conducting its monitoring in the consumer reporting market.
The examination process will be an ongoing process of
pre-examination scoping and review of information, data analysis,
onsite examinations, and regular communication with supervised
entities, as well as follow-up monitoring. The CFPB has
indicated repeatedly that examiners will coordinate and work
closely with the CFPB's enforcement staff, when
Examiners are tasked with evaluating the quality of the regulated
entity's compliance management systems, review practices to
ensure they comply with federal consumer financial law, and
identify risks to consumers throughout the consumer reporting
process. The CFPB has previously issued similar procedures
for other companies under its supervision, such as mortgage
originators, mortgage servicers, and payday lenders.
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