CFPB Issues Recommendations to Consumer Reporting Agencies to Remove “Facially False Data” to Maintain FCRA Compliance | Troutman’s pepper | So Good News

Pursuant to its authority under Section 1022(b)(1) of the Dodd-Frank Act, the Consumer Financial Protection Bureau (CFPB) printed An advisory opinion to consumer reporting agencies (CRAs), clarifying their role in reviewing and removing apparently false information from consumer credit reports. In particular, the CRAs were advised to implement policies, procedures, and systems to check and eliminate “inconsistent information”.

In its advisory opinion, the CFPB emphasized the negative impact that inaccurate reporting can have on consumers: “[I]Inaccurate, defamatory information in consumer reports can result in higher interest rates, disqualification from advertising, or lower credit scores for affected consumers. This can cost consumers hundreds or thousands of dollars to increase the interest rate. Worse, inaccurate, derogatory information in consumer reports can cause lenders to reject the consumer outright, making it difficult or impossible for the consumer to obtain a mortgage, car loan, student loan, or other loan.”

The advisory opinion also provided examples of other types of reasonable inconsistencies that the CFPB contends that “reasonable methods to ensure greater accuracy” would look for and eliminate:

• Non-Personal Account Information, which may include:
  • An account whose position is paid in full, and therefore has no balance but shows a balance due;
  • An account that shows an “Initial Loan Amount” that increases over time, impossible by definition;
  • Defamatory information being reported on an account, even if the defamatory information originated from a previous report that did not include the defamatory information;
• Reporting the First Delinquency Date related to the account, which may include:
  • The date of the First Delinquency reported for an account whose records do not indicate a delinquency, such as through activity that indicates a current account (full history of on-time payments, $0 overdue balances) or through a current account code;
  • The Date of the Original Crime which lowers the date of removal; and
  • The First Delinquency Date, or last payment date, which begins on the account opening date (for non-collecting accounts).
• Providing unbiased reports about consumers, which may include:
  • Impractical customer information – for example, a sales line that includes a due date for a future account or personal account that begins with the customer’s previously recorded birthday or is too old;
  • Information that does not correspond to what has been said, so that one information must be wrong – for example, if all other transactions show a payment operation in progress, when the transaction line has the symbol “dead”; and
• Unauthorized loans for a minor.

According to the CFPB, complaints related to incorrect information on consumer reports represent the largest portion of credit or consumer complaints submitted to the CFPB each year for the past six years. The advisory opinion emphasized that “a consumer reporting agency that does not implement internal controls to prevent the inclusion of false data, including inconsistent information, in the consumer reports it prepares is not using adequate procedures to ensure reasonable accuracy under section 607(b) of the Fair Credit Reporting Act.” “