League InfoSight Highlight: Fair Credit Reporting Act Responsibilities

By Glory LeDu, CEO, League InfoSight and CU Risk Intelligence

I’ve written several articles these past few years showing the string of events and the history of guidance and bulletins coming out of the CFPB leading to proposed rulemaking. In this article, I want to highlight the emphasis over the past two years (I’m starting with 2022 because there seems to be a recent uptick, but publications have been coming out of the CFPB since 2012) on the Fair Credit Reporting Act (FCRA).

This week the CFPB once again identified some trends in their latest edition of Supervisory Highlights specifically related to accuracy problems in the credit report system. Although this report highlights the inaccuracies and noncompliance found with both furnishers’ processes and the credit reporting companies’ processes, the issues identified are similar. There continues to be issues with the accuracy of information being reported, inadequate or non-existent dispute investigations, and deficiencies with identify theft requirements. Below are a few examples identified in the report:

• Furnishers continued to report fraudulent accounts to credit reporting companies (CRCs) for several years after determining accounts were fraudulent. Even for accounts closed for fraudulent purposes, information was provided showing accounts were valid. There was also a failure to instruct the CRCs to delete the accounts after determining the account was fraudulent. 
• Furnishers who received direct disputes from consumers were continuing to furnish the disputed information to CRCs without notifying the CRCs that the information was subject to dispute.
• Failure of furnishers to conduct a reasonable investigation of direct disputes.
• Furnishers providing information to CRCs in cases where consumers submitted an identity theft report stating that the information maintained by the furnisher was the result of identity theft, yet furnishers continued to provide that information identified in the report before knowing or being informed by the consumer that the information was correct.

Just last month, the CFPB wrote a blog on consumer reporting companies having an obligation to correct errors.

While not all the communications coming out of the CFPB are directed at furnishers (many are related to credit reporting agencies), the emphasis on the law/regulation is evident. Here a few publications to review and consider:

• Nov. 1, 2021 – Advisory Opinion on consumer reporting agencies’ matching practices.
• July 5, 2022 – Final Rule effective prohibiting consumer reporting agencies from furnishing a consumer report containing adverse item(s) of information that resulted from certain types of human trafficking.
• July 7, 2022 - Advisory Opinion on the permissible purposes for furnishing, using, and obtaining consumer reports.
• July 11, 2022 – Interpretive Rule on FCRA’s limited preemption of state laws.
• Oct. 20, 2022 - Advisory Opinion on fair credit reporting and facially false data.
• Nov. 10, 2022 – CFPB Circular – Reasonable investigation of consumer reporting disputes.
• Jan. 11, 2024 – Advisory Opinion on fair credit reporting and file disclosure.
• Jan. 11, 2024 – Advisory Opinion on fair credit reporting and background screening.
• March 29, 2024 – Blog on consumer reporting companies having an obligation to correct errors.

With all that in mind, it’s a good time to review your policies and procedures regarding the FCRA. CU PolicyPro model policies are also being reviewed and updates will be forthcoming in the next release. InfoSight contains links and resources that might be helpful for your credit union, so everyone is knowledgeable on the requirements of FCRA and its implementing Regulation V, especially related to credit reporting.