One of my earliest blogs in this series addressed the furnishing of information to Credit Reporting Agencies (CRAs) by creditors. See here. I talked about the duties of furnishers generally but did not focus on the duty to respond to direct dispute notices sent to the creditor by or on behalf of a consumer.

The FCRA and Furnisher Rule are clear that if a direct dispute is sent to a creditor challenging the accuracy of information contained in a consumer report, the creditor has a duty to investigate and correct any incorrect information that it is reporting to the CRA.  (This is a duty independent from that arising under e-OSCAR—a web-based, automated system that enables creditors and CRAs to create and respond to consumer credit history disputes.)  

Regrettably, the Furnisher Rule method of challenging incorrect trade information has led to wide and systemic abuse by consumers, credit repair organizations, and debt adjustment companies. The time and attention that creditors are putting into researching alleged inaccuracies have ballooned in recent years—leading too many creditors to the conclusion that it is just simpler to accede to the consumer’s demand for correction and ask the CRAs to remove even accurate trade lines from the credit report.

But, there is another way.

The law and the Furnisher Rule clearly provide that the duty to investigate direct disputes only arises if the direct dispute notice includes:

  • Sufficient information to identify the account in dispute (name, address, telephone number, etc.),
  • The specific information being disputed and an explanation of the basis for the dispute, and
  • Substantiating documentation or information from the consumer (such as a copy of the relevant portion of the consumer report that contains the allegedly inaccurate information, a police report, a fraud or identity theft affidavit, a court order, or an account statement).

Absent these factors, the notice from the consumer does not require investigation under the Rule.  

Further, if the notice is substantially the same as a prior notice that has been investigated, pertains to information that the creditor does not have an obligation to investigate, or was submitted or prepared on a form supplied by a credit repair organization, there is no duty to investigate at all.

A huge percentage of notices fall outside of the Furnisher Rule’s duty to investigate, and such may be considered “frivolous or irrelevant.”  And, in that circumstance, a pro forma response from the creditor is an appropriate response, alleviating the necessity for the creditor to undertake a time-consuming investigation.

Practice Pointer:  Know your duties and obligations under the FCRA and Furnisher Rule; but know your rights also.

Please note: This is the eightieth blog in a series of Back to Basics blogs, in which relevant and resourceful information can be easily accessed by clicking here.