On April 8, the CFPB published its Spring 2024 Supervisory Highlights detailing key findings from the CFPB’s recent examinations into perceived accuracy problems in the credit reporting system. Notably the report focused solely on institutions’ credit reporting violations, and not on violations of other federal consumer financial laws. Among the report’s more significant findings:
- Consumer reporting companies failed to block or remove information related to identity theft and human trafficking. The FCRA requires consumer reporting companies (“CRC”) to block the reporting of any information in a consumer’s file that the consumer identifies as information that resulted from an alleged identity theft not later than four business days after the CRC receives certain documentation relating to the alleged identity theft. Examiners, however, found that companies refused to honor consumer requests to block information associated with identity theft based on overbroad criteria. Moreover, examiners found that companies failed to inform consumers when blocks were denied or rescinded (despite FCRA’s requirement they do so); failed to provide victims of identity theft with summaries of rights; and failed to timely block all information resulting from human trafficking identified by consumers.
- Consumer reporting companies accepted information from unreliable furnishers. FCRA requires that, wherever a CRC “prepares a consumer report it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates. However, examiners learned that CRC’s accepted information from furnishers that may have been no longer providing reliable, verifiable information about consumers, and continued to include information from “unreliable” furnishers without implementing procedures to assess its accuracy.
- Furnishers provided information to CRCs they knew was false. Examiners found that furnishers provided information to CRCs they knew was false, and continued to share incomplete or inaccurate information for months or years after learning the information was false, incomplete, or inaccurate. Furnishers also provided information even after determining it was fraudulent or obtained by identity theft. Finally, furnishers continued to provide information that consumers were disputing without indicating the information was in dispute.
- Furnishers did not follow requirements for dispute investigations and identity theft. Regulation V requires furnishers investigate disputes, and specifically defines what a consumer must include in a dispute notice to trigger a furnisher’s duty to investigate. Despite receiving this information, furnishers failed to conduct investigations into the accuracy of information consumers disputed.
Putting it into Practice: The CFPB’s Spring 2024 Supervisory Highlights, with its focus on credit reporting, comes out just before the agency is set to release its final FCRA rule. Compliance with the Fair Credit Reporting Act has been a top priority of this Bureau. CRCs and furnishers should closely review the Bureau’s report but also stay tuned as larger rulemaking is on the horizon.