New CFPB Bulletin Issues Strong Warning to Furnishers of Consumer Credit Information

Furnishers Are Required to Review Documentation from Credit Reporting Agencies

The Consumer Financial Protection Bureau (the “CFPB”) has issued a Bulletin, dated September 4, 2013, to companies that furnish information to consumer reporting agencies (“CRAs”) regarding furnisher obligations under the Fair Credit Reporting Act (the “FCRA”). The Bulletin is intended to deal specifically with the FCRA requirement that furnishers are required to “review all relevant information” when investigating a consumer dispute. The CFPB Bulletin provides a warning to furnishers that the CFPB maintains supervisory and enforcement authority which it will use to address furnisher violations.

Limitations of the e-OSCAR System | Credit Report Disputes

In a study released this month by the Consumer Financial Protection Bureau, the CFPB found that there are specific limitations on the e-OSCAR system; the electronic system used by the national consumer reporting agencies (Trans Union, Experian and Equifax) (CRAs) to process consumer disputes of the accuracy of their credit reports.  Under the Fair Credit Reporting Act, the CRAs are required to send data furnishers a notice of a consumer dispute that includes “all relevant information regarding the dispute that the agency has received from the consumer.” 

Understanding How Credit Information Is Reported

In order to effectively protect your credit history, you must first understand how credit information is reported to the consumer reporting agencies. The consumer reporting agencies (Trans Union, Experian, Equifax and CSC Credit Services) receive credit related information and store that information in sophisticated databases. Those that provide credit information to the agencies are known as "furnishers." Furnishers are typically lenders (such as those that provide revolving credit lines, mortgages, student loans and the like) but may also include others like public information venders that collect and provide public record information (such as judgments and bankruptcies) to the consumer reporting agencies.

One common misconception is that when furnishers report your credit information that information posts directly to your "credit report" which in turn is provided to potential creditors when you apply for new credit.  This misconception is wrong for many reasons all of which relate to how the agencies collect, sort and then disseminate credit information.

More About How Trans Union Processes Consumer Disputes - E-OSCAR and the ACDV Process

In 2005, a Trans Union ("TU") representative testified as follows regarding TU's procedures to conduct reinvestigations when a consumer disputes inaccurate information on their credit report: In general, when TU receives a dispute from a consumer, TU investigates the dispute using one of two systems developed for the purpose of processing and tracking disputes: the mail Consumer Dispute Verification process (“CDV”) and; the electronic Automated Consumer Dispute Verification process (“ACDV”) utilized in the instant matter.

How does Trans Union process consumer disputes?

In general, when Trans Union receives a dispute from a consumer, Trans Union investigates the dispute using one of two systems developed for the purpose of processing and tracking disputes, the Consumer Dispute Verification process (“CDV”) and the Automated Consumer Dispute Verification process (“ACDV”).  Through the ACDV process, Trans Union contacts the furnisher of the disputed credit information and, via an automated process, asks the furnisher to verify that the indicative (e.g., name, social security number, address, date of birth, etc.) information on the consumer matches the indicative information maintained in the furnisher’s records and is associated with the particular account being disputed.  Trans Union also asks the furnisher to verify the accuracy of the account information, e.g. account balance, payment history, credit limit, etc., being reported to Trans Union by the furnisher.

If the furnisher verifies that the reported information is correct, Trans Union updates the information on the consumer's credit file and notifies the consumer of that fact. If the furnisher reports that the information is inaccurate or can no longer be verified, or if the creditor does not respond within the required time, Trans Union deletes the information from the consumer's credit file and notifies the consumer that the information has been deleted.  Trans Union may employ additional procedures depending on the precise dispute involved and the circumstances of the case.