Alert March 04, 2014

CFPB Releases Report and Guidance Bulletin on Credit Reporting

The CFPB releasedreport on the findings of its first major study on credit reporting principally resulting from thousands of complaints received between July 21, 2011 and February 1, 2014. The CFPB noted that during this period, 11% of the consumer complaints it received were about credit reporting. According to the report, it received five types of complaints about credit reporting: (1) incorrect information on credit report; (2) issues with the credit reporting agency’s investigation; (3) inability to obtain a credit report or score; (4) improper use of a credit report; and (5) issues with credit monitoring or identity protection, with over 73% of the complaints about incorrect information on credit reports.

In conjunction with the report, the CFPB also issued a guidance bulletin and a letter to creditors. The guidance bulletin sets forth CFPB expectations for how companies that supply information for credit reports, commonly referred to as furnishers, should comply with the requirements of the Fair Credit Reporting Act in handling investigations of consumer disputes. FCRA requires consumer reporting agencies to notify and provide all relevant information to a furnisher when a consumer disputes the accuracy or completeness of information provided by the furnisher to the CRA. The furnisher is then required to conduct an investigation, including a review of "all relevant information" provided by the CRA. Of particular concern to the CFPB are furnishers’ practice of deleting an item from a consumer report rather than investigating a consumer’s dispute. The bulletin advises that investigations of disputes are “important because investigations provide a critical check on the accuracy of furnished items.” The CFPB believes that investigations can assist furnishers learn of systematic problems. The bulletin follows similar guidance issued by the CFPB on a furnisher’s duty to investigate (see September 13, 2013 Alert). The letter to creditors urged them to make credit scores “regularly and freely” available to consumers.