There are now quite serious obligations on Installment Lenders and Credit Sellers as “furnishers” of data under the Fair and Accurate Credit Transactions Act (FACTA), an amendment to the Fair Credit Reporting Act. Originally, the Fair Credit Reporting Act primarily dealt with the obligations of credit reporting agencies (CRAs) with respect to data collection, retention and reporting. However, with the passage of the FACTA amendments in 2003, furnishers and users of data began to have more “skin in the game.”
For anyone who has experienced the inability to purchase a home, car or other big ticket item—or the inability to obtain a direct loan—because of inaccurate credit information in one's credit file, the accuracy and integrity of data being reported to CRAs is huge. And, because of the preponderance of problems that still continue today, I call your attention to the need for compliance with the rules relating to furnishers.
Furnishers of information to CRAs have a statutory duty to provide accurate information and to correct and update information. Furnishers also have a duty not to furnish information with actual knowledge of errors nor report information after notice and confirmation of errors. And, after confirming the accuracy of furnished information, the furnisher has a duty to notify the complaining consumer. Furnishers have the further duty to address allegations of identity theft-related information.
The above is a very simplistic statement of major obligations that now fall upon installment lenders and credit sellers as furnishers. The CFPB has been focused on a number of furnisher issues. It has found that too many furnishers have weak or non-existent programs for data governance, furnishing and dispute handling, management and board of directors' oversight, and monitoring and corrective action.
My partner Sam Friedman and I have held webinars, written frequently and even lectured about these duties. So, let me summarize, via two practice pointers, what you need to be doing to help assure your compliance:
Practice Pointer #1: Identify practices or activities in your office that might affect the accuracy and integrity of information that you furnish to the CRAs by reviewing existing practices including technology systems as to both the “when” and the “how often” information is furnished to the CRAs. Evaluate existing policies and consider whether any changes need to be made. Review the effectiveness of the specific methods being used to transmit information to the CRAs, and consider how these methods may be coming up short.
Practice Pointer #2: Never, never ignore a customer complaint. Don't let a customer's complaint go unanswered. You should have in place very specific forms and systems to respond to customers who have alleged that the information you are reporting to CRAs is inaccurate. If you are getting customer complaints, you've got a problem. As Sam likes to say, “Complaints are the canary in the coal mine.”
As with all compliance matters, an ounce of prevention is worth a pound of cure.
Please note: This is the third blog in a series of “Back-to-Basics” blogs, in which relevant and resourceful information can be easily accessed by clicking on the link below: