One of the basic principles of the Fair Credit Reporting Act (FCRA) is… fair credit reporting. Seems simple enough, right? Well, according to the CFPB, some companies are still struggling with the concept.
In 2009 (with a 2010 effective date), the federal banking agencies along with the Federal Trade Commission published a rule requiring “furnishers” to establish and implement written policies and procedures regarding the accuracy and integrity of information reported to consumer reporting agencies. A furnisher is generally any company that reports consumer information to a consumer reporting agency for inclusion in a consumer report. The rule (sometimes called the “Furnisher Rule” or the “Accuracy and Integrity Rule” and available here) is now under the CFPB's jurisdiction and squarely on its radar screen.
The rule lists specific guidelines for a company's policy, which must be tailored to the company's business model. Generally, the policy should deal with the accuracy of information the company reports and the integrity of the systems the company uses to report the information.
Earlier this month, the CFPB released a Compliance Bulletin reminding furnishers of the rule and the obligation to have policies and procedures in place. According to the CFPB, this is so important because, “Such policies and procedures protect against the furnishing of inaccurate information that could potentially cause adverse consequences for consumers when included in a credit report, such as being denied a loan at a more favorable interest rate or being unable to open a transaction account.” The Bulletin also specifically explains that the rule applies to companies reporting to nationwide consumer reporting agencies as well as specialty consumer reporting agencies.
We have known for a while that this rule is a focus of the CFPB. The agency has severely punished companies for incorrectly reporting with a specific emphasis on the failure to have adequate policies and procedures in accordance with the rule. In other words, it is not enough to just report correctly. A furnisher is violating the FCRA if it does not have a written policy in place.
The Bulletin warns, “The CFPB will continue to monitor furnishers' compliance with the Regulation V requirement to establish and implement reasonable written policies and procedures regarding the accuracy and integrity of all furnished information. Furnishers must ensure that they have such policies and procedures in place with respect to all information furnished. If the CFPB determines that a furnisher has engaged in any acts or practices that violate Regulation V or other federal consumer financial laws and regulations, it will take appropriate supervisory and enforcement actions to address violations and seek all appropriate remedial measures, including redress to consumers.”
So, furnishers, are you breaking the law?