Yesterday we blogged about CFPB Bulletin 2013-09, which examined the CFPB’s expectations of furnishers investigating disputes under the federal Fair Credit Reporting Act (FCRA). The FCRA was also the topic of a panel sponsored by the Consumer Financial Services Committee at the American Bar Association’s Annual Meeting in San Francisco on Friday, August 9. Much of the program was spent discussing data contained in the FTC’s December 2012 10-year study of credit reports and the CFPB’s subsequent research.
But the clear focus of the program was that the CFPB is very concerned about data accuracy and integrity and has an expansive view of its regulatory authority under the FCRA. Lucy Morris, Deputy Enforcement Director of the CFPB, took the stage for the program alongside Katherine Armstrong, an attorney in the FTC’s Division of Privacy and Identity Protection. While none of Ms. Morris’s comments were revolutionary, they foreshadowed an active future of CFPB FCRA enforcement actions and offered insight into the predicate for Bulletin 2013-09.
Ms. Morris suggested that furnisher investigations under the FCRA have been insufficient. While she sympathized with businesses that face frivolous repeat disputes, she noted a similar frustration shared by consumers facing inaccurate reporting and characterized a consumer’s right to dispute reported information as “truly fundamental.”
She indicated that, despite the 1996 amendment to the FCRA and the addition of the FACT Act in 2005, which imposed various accuracy and research requirements upon furnishers, 1 in 5 consumers still have errors on their credit reports. Consequently, she said, furnishers simply need to do more to ensure data accuracy. It was plain that the CFPB would be asking for dispute files when examining furnishers. Ms. Morris also noted that furnishers who looked only at their files when investigating what they deem to be proper disputes may be subject to special scrutiny, particularly if the consumer had directly provided the furnisher information related to his or her dispute. As we explained yesterday, the CFPB’s position in this regard has now been formalized in Bulletin 2013-09.
Ms. Morris also addressed issues outside of the CFPB’s recent bulletin. Discussing the recent American Express consent order, Ms. Morris stated that the “disputed” designation is so important that furnishers should report accounts as disputed, even if the furnisher corrects the disputed information.
Ms. Morris also noted that the CFPB is the first entity to supervise and regulate “the entire ecosystem” of credit reporting, and that the CFPB has an expansive view of who falls within that ecosystem under the larger participant rule and service provider bulletin. For example, Ms. Morris suggested that if an entity is a service provider to a supervised entity, the CFPB can also supervise and regulate that entity or at least use its authority to obtain documents and information from that entity, even if it exists entirely outside of the country.
Ms. Morris’s comments – like yesterday’s CFPB bulletin – emphasize the importance of furnishers monitoring CFPB activities and bulletins through the CFPB Monitor and reviewing their existing policies and procedures with counsel to make sure they can satisfy the requirements of the CFPB.