Federal Agencies Announce Final Rule on Procedures to Enhance the Accuracy and Integrity of Information Furnished to Consumer Reporting Agencies

July 24, 2009 at 7:13 pm Leave a comment

The federal financial regulatory agencies, in conjunction with the Federal Trade Commission (FTC), have  published final rules on procedures to enhance the accuracy and integrity of information furnished to consumer reporting agencies (CRAs). The rule is published pursuant to the Fair and Accurate Credit Transactions Act (FACTA) and Fair Credit Reporting Act (FCRA), which generally describe the responsibilities of persons that furnish consumer information to CRAs.  The rule becomes effective July 1, 2010.

The final rule is broken into three parts: (1) accuracy and integrity regulations; (2) accuracy and integrity guidelines; and (3) direct dispute regulations.

1. Accuracy and Integrity Regulations

          • Definitions – the rule defines: accuracy, direct dispute, furnisher, identity theft, and integrity.

          • Policies and Procedures – a furnisher must “establish and implement reasonable written policies and procedures regarding the accuracy and integrity” of the consumer information it furnishes to CRAs. The policies and procedures must be “appropriate to the nature, size, complexity and scope of each furnisher’s activities.”

          • Guidelines – furnishers must “consider the guidelines in Appendix A.” The Guidelines provide suggestions regarding (i) the nature, scope and objectives of policies and procedures, (ii) establishing and implementing policies and procedures and (iii) specific components of policies and procedures that should be addressed.

          • Reviewing and Updating – furnishers must periodically review their policies and procedures and update them as necessary.

2. Accuracy and Integrity Guidelines (found in Appendix A)

          • Nature and Scope – a furnisher should consider the types of its business activities, the nature and frequency of information it provides to CRAs and the technology it uses.

          • Objectives – a furnisher should provide information that is accurate and has integrity (the Guidelines give examples of such information). A furnisher should reasonably investigate consumer disputes and update information it furnishes as necessary.

          • Implementation – a furnisher should identify any practices it has that could compromise the accuracy and integrity of information and evaluate the effectiveness of its existing policies and procedures and specific methods (including technology) used to provide information to CRAs.

          • Specific Components – a furnisher should, as appropriate: implement a system to furnish consumer information to CRAs; use standard data reporting formats; maintain records; implement internal controls; train staff; oversee relevant service providers; furnish information to consumers and CRAs after mergers, acquisitions and other such transactions; delete, update and correct information as appropriate; investigate disputes; communicate with CRAs; provide sufficient identifying information; periodically evaluate its practices; and comply with the FCRA and its implementing regulations.

3. Direct Dispute Regulations.

          A direct dispute is a dispute submitted directly to the furnisher by the consumer regarding information about the consumer’s account or that the furnisher provided to a CRA. If the furnisher receives a proper direct dispute notice, then the furnisher must:

          • conduct a reasonable investigation;

          • review all relevant information;

          • complete the investigation and send a report on the results to the consumer; and

          • promptly notify any CRAs that received inaccurate information.

          A proper direct dispute notice:

          • identifies the account or relationship and the specific information disputed

          • includes supporting documentation

          • relates to: the consumer’s liability for the account or debt; the terms of a credit account or debt; the consumer’s performance or other conduct concerning the account or relationship with the furnisher; or any other information regarding the account or relationship that bears on the consumer’s creditworthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living.

          A furnisher is NOT required to conduct an investigation if:

          • the dispute relates to: the consumer’s identifying information; the identity of consumer’s employers; requests for consumer reports; information from public records; fraud alerts or active duty alerts; information provided by another furnisher; or information supplied by a credit repair organization.

          • the consumer submits the notice to a wrong address; or

          • the dispute is “frivolous or irrelevant.”  

          A dispute is frivolous or irrelevant if the consumer did not provide sufficient information, the dispute is substantially the same as a previous dispute or the dispute relates to exempt information. Upon making a determination that a dispute is frivolous or irrelevant, the furnisher must notify the consumer within 5 business days, include reasons for the determination, and identify any missing information.

A complete copy of the final rules can be found here.

Entry filed under: Uncategorized.

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