WASHINGTON–The CFPB has announced new efforts to address what it is calling “shoddy” investigation practices by consumer reporting companies.
The Bureau has issued a circular it said is intended to “affirm that neither consumer reporting companies nor information furnishers can skirt dispute investigation requirements.”
The circular outlines how federal and state consumer protection enforcers, including regulators and attorneys general, can bring claims against companies that fail to investigate and resolve consumer report disputes, according to the CFPB, which said it has found that consumer reporting companies and some furnishers have failed to conduct reasonable investigations of consumer disputes and to spend the time necessary to get to the bottom of inaccuracies.
“These failures can affect, among other things, people’s eligibility for loans and interest rates, for insurance, and for rental housing and employment,” the CFPB said. “When people identify inaccurate information on their consumer report, they can dispute it with the consumer reporting company. However, that important right is dependent on consumer reporting companies and furnishers conducting complete investigations.”
The CFPB said its supervisory exams suggest that consumer reporting companies do not always live up to their investigatory responsibilities. In some cases, the CFPB said it has found consumer reporting companies ignored the results of their investigations and simply deleted disputed tradelines instead of correcting inaccurate information.
‘Similar Problems’
“Consumer complaints received by the CFPB highlight similar problems. In fact, inaccurate information and failures to investigate are the two most common consumer reporting complaints received by the CFPB,” the Bureau said, noting “consumer reporting companies are required to investigate all disputes that are not frivolous or irrelevant.”
Consumer reporting companies and furnishers may be liable under the Fair Credit Reporting Act if they fail to investigate relevant disputes, and claims can be pursued by both state and federal consumer protection enforcers and regulators, the Bureau said.
Specific Responsibilities
The CFPB said that among the specific responsibilities for the investigations include:
- Consumer reporting companies must promptly provide to the furnisher all relevant information regarding a person’s dispute. “After a person disputes the accuracy or completeness of information in their file, the consumer reporting company must notify the entity that originally furnished the information within five business days. In addition, the consumer reporting company must give the furnisher all relevant information provided by the individual.”
- Consumer reporting companies and furnishers may not limit a person’s dispute rights. “Consumer reporting companies and furnishers must reasonably investigate disputes received directly from individuals. For furnishers, they must reasonably investigate all indirect disputes received from consumer reporting companies. These requirements remain in place even if a person does not include or use the entity’s preferred format, intake forms, or documentation.”
The Purpose
The CFPB said the purpose of its circulars is to promote consistency in approach across the various federal and state enforcement agencies and regulators, as well as to provide transparency to partner agencies regarding the CFPB’s intended approach when cooperating in enforcement actions.