United States: Time for Some Spring (Credit Reporting) Cleaning

In March 2017, the CFPB issued a special edition of its Supervisory Highlights addressing consumer reporting from the perspective of consumer reporting companies ("CRCs") (commonly referred to as credit bureaus or consumer reporting agencies) and furnishers. This follows the CFPB's February 2017 Monthly Complaint Report, which focused on complaints related to credit reporting. These publications, along with recent statements by Director Robert Cordray, suggest that the CFPB will be placing additional supervisory focus on credit reporting for both CRCs and furnishers of consumer information.

Lessons Learned from Examinations of Furnishers

The Supervisory Highlights focuses on recent findings from examinations of furnishers, with a particular emphasis on inaccurate credit reporting and dispute resolution procedures. The CFPB continues to emphasize the importance of a robust compliance management system ("CMS") to help ensure accurate credit reporting and proper handling of both direct and indirect credit reporting disputes. This includes appropriate Board and management oversight, reasonable written policies and procedures, proper employee training, and robust monitoring and corrective action. In particular, this edition of Supervisory Highlights serves as a good reminder for furnishers to re-visit the requirements of Appendix E in Regulation V, which outlines the various compliance components furnishers should consider when developing and executing policies and procedures.

Furnishing accuracy

The Supervisory Highlights focuses on particular situations where furnishers failed to report accurate information to CRCs. Examiners found issues where furnishers did not have procedures to handle loan servicing data transfers that did not contain the borrower's date of first delinquency ("DOFD"). Examiners also found situations where furnishers reported an inaccurate DOFD in the context of consumers who had filed for bankruptcy. Supervision also found weak policies and procedures for and inaccurate reporting on deposit accounts.

Examiners had many concerns with inadequate quality control of information furnished. Furnishers should consider reviewing their policies and procedures to ascertain whether they include performing quality reviews of furnished data, testing for accuracy after data is furnished, and periodic ongoing reviews of furnished data and/or practices. For instance, the CFPB found that some furnishers' policies and procedures failed to include requirements that the furnisher promptly update inaccurate or incomplete information that had already been reported.

Dispute resolution

The Supervisory Highlights emphasize the importance of having appropriate written policies and procedures for dispute resolution, including policies and procedures for: appropriately creating and documenting substantiation of final dispute resolutions; conducting reasonable investigation into direct disputes; and performing a timely investigation of disputes.

Examiners took particular issue with document retention policies that did not require retention of documents used to substantiate the furnisher's handling of a dispute (e.g., the logic or documents used in connection with the employee's reasonable investigation) or the documents a consumer submitted to the CFC in connection with an indirect dispute. Furnishers should consider reviewing their policies in this regard, with an eye to how those policies address document retention practices. Furnishers should also consider whether their monitoring or compliance audits address this issue, and whether they conduct compliance reviews of proper investigations into and timely handling of disputes.

The CFPB continues to emphasize consumer communications in connection with disputes. Furnishers that rely on the "frivolous or irrelevant dispute" exception in the FCRA to not investigate a dispute should timely inform borrowers of the furnisher's determination. Furnishers should also adequately report the results of a direct dispute investigation back to the consumer, including to consumers in bankruptcy.

Lessons Learned from Examinations of Consumer Reporting Companies

For CRCs, the Supervisory Highlights focused on data accuracy and dispute handling and resolution. In both cases, the CFPB's discussion included information that would be valuable for furnishers as well as CRCs.

Data Accuracy

The CFPB expects CRCs to have effective data governance systems, establish quality control programs to assess the accuracy and integrity of data included in consumer reports, including data from third-party public records providers, establish programs to vet furnishers of credit reporting information, and use care when relying on resold merged reports.

Of particular interest to furnishers is the expectation that CRCs vet and monitor furnisher data. The CFPB stressed that CRCs should continue to vet furnishers, even after a furnisher has passed the initial vetting. This vetting process should include review of furnishers' data security standards and data quality. The CFPB also suggested that CRCs should monitor for inactive furnishers and for those that don't comply with the CRC's data submission thresholds, and should alert furnishers where anomalies are detected in furnished data in order to correct inaccuracy.

Dispute Resolution

The CFPB's discussion of dispute resolution for CRCs focused on the importance of reinvestigation of disputed items and notice to both the furnisher and the consumer regarding the dispute. The CFPB stressed the importance of considering all of the documentary information provided by a consumer when reinvestigating disputed items, and noted that the CFPB had directed CRCs to revise existing policies and procedures to ensure that consumer-submitted evidence is appropriately reviewed.

With respect to notice, the CFPB stressed the importance of providing notice to furnishers of both the existence of a dispute and of any modification or deletion of an item as a result of a dispute. The CFPB noted that it had directed CRCs to develop a process and procedure that would ensure that appropriate notice was provided to furnishers.

Finally, the CFPB noted that it had instructed CRCs that it was insufficient to simply notify customers that a dispute had been resolved. Instead, the consumer reporting company should clearly articulate the result of the reinvestigation and indicate whether a change was made to an item and, if so, what change was made.

> *             *             *

The CFPB's recent publication suggests continued focus on accuracy of consumer information and consistent, timely, and accurate dispute resolution for both furnishers and CRCs. Furnishers should consider reviewing their credit reporting policies and procedures in light of Appendix E to Regulation V and evaluating their credit reporting practices across business lines and at the company-level for consistency and accuracy in reporting and dispute resolution.

Visit us at mayerbrown.com

Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2017. The Mayer Brown Practices. All rights reserved.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.