On February 3, 2016, the Consumer Financial Protection Bureau (“CFPB”) held a field hearing on checking account access in Louisville, Kentucky. At the field hearing, Director Richard Cordray expressed the CFPB’s concern that some consumers are “being inappropriately sidelined” from a fair opportunity to have a deposit account by: (1) lack of account options that fit the financial needs and situations of certain consumers; and (2) inaccurate information used to screen some potential consumer customers. These concerns are of particular importance in regard to the approximately ten million American households that are “unbanked,” meaning that they do not have a deposit account at a bank or credit union. One reason a consumer may be “unbanked” is denial of a request to open an account due to reported past performance with a deposit account.
Related to the CFPB’s concern regarding accuracy of information, on the same day, the CFPB released a compliance bulletin addressing the Fair Credit Reporting Act’s (“FCRA”) requirement that furnishers of credit and other reportable information (as defined in the FCRA’s implementing regulation, Regulation V) establish and implement reasonable written policies and procedures regarding the accuracy and integrity of information related to consumers that furnishers provide to consumer reporting agencies (“CRAs”). The CFPB stressed that the requirements of Regulation V apply to all CRAs, including those specialty CRAs that receive and report information on checking or other deposit accounts. Specifically, the CFPB expressed concern with the accuracy in reporting information related to banking history, past insufficient funds (NSF) activity, unpaid or outstanding bounced checks, overdrafts, involuntary account closures and fraud – all of which are factors that could adversely impact a consumer’s ability to establish a deposit account in the future.
The CFPB noted – both at the field hearing and in the compliance bulletin – that its supervisory experience suggests some financial institutions are not compliant with their obligations as furnishers, particularly in reporting to specialty CRAs on deposit account activity. In its compliance bulletin, the CFPB stated that it will continue to monitor furnishers’ compliance with the requirements of Regulation V to establish and implement reasonable written policies and procedures regarding the accuracy and integrity of consumer reports and will take appropriate supervisory and enforcement actions to address violations and seek all appropriate remedial measures, including redress to consumers.
At the field hearing and in the compliance bulletin, the CFPB also encouraged financial institutions to provide lower-risk deposit accounts and products that, for example, ensure a customer cannot overspend. While the CFPB acknowledged that some financial institutions already offer such products, the CFPB encouraged more advertising to make consumers aware of the availability of such products. This two-part approach of ensuring accurate and reliable reporting and encouraging financial institutions to offer lower-risk deposit products are part of the overall work of the CFPB “to ensure that the banking system is open to all consumers who want a banking relationship and will not engage in fraudulent conduct,” as described by Director Cordray at the field hearing.