I’ve written in the past about Frivolous or Irrelevant Disputes and the obligations of finance companies under the Fair Credit Reporting Act’s Furnisher Rule. See this blog. Based on my discussions with clients and friends, there remains uncertainty as to the difference between obligations that arise under the Furnisher Rule, and those that arise as a result of the contract that the finance company has with its Credit Reporting Agencies (CRAs).
Recall that under the Furnisher Rule, 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. The law provides that the duty to investigate direct disputes only arises if the direct dispute notice includes sufficient information to identify the account in dispute, the specific information being disputed, an explanation of the basis for the dispute, and substantiating documentation. Too often, direct disputes are frivolous or irrelevant—and the law provides guidance on how to deal with such disputes. My point here, however, is that the obligation of finance companies under the Furnisher Rule arises as a matter of law.
Contrast this with the contractual obligation of finance companies to respond to an e-OSCAR notification. E-OSCAR is the short-hand name for the “Electronic Online System for Correct and Accurate Reporting” (not to be confused with the Oscar Meyer wiener)! This is the information system created by the original big three credit reporting agencies. E-OSCAR is a web-based, Metro2 compliant, automated system that enables finance companies and CRAs to track and respond to consumer credit history disputes. The system primarily supports automated processing services that handle registration, subscriber code management, and reporting.
Under e-OSCAR, consumer complaints made directly to a CRA are routed to the appropriate furnishers, and responses are returned to the initiating CRA with updated information (if any) relating to the consumer’s credit history. If an account is modified or deleted, copies are sent to each CRA with whom the furnisher has a reporting relationship.
Credit reporting accuracy is a huge part of the consumer finance industry. The fact that there is both a Furnisher Rule and a contract that requires finance companies to report accurately is evidence of the importance. Purchasers of goods and services and consumer borrowers benefit from accurate credit reporting because it enables deserving consumers to obtain credit on favorable terms. Finance companies benefit by helping to assure that their risks are priced appropriately. This is why I encourage friends and clients to carefully follow the requirements of both the Furnisher Rule as well as their contractual commitments to their CRAs.
Please Note: This is the one hundred tenth blog in a series of Back to Basics blogs, in which relevant and resourceful information can be easily accessed by clicking here.