CFPB Responds to Consumer Disputes | So Good News

On November 10, 2022, the CFPB published an article detailing perceived problems with Consumer Reporting Agencies (“CRAs”) and dispute resolution agents. See Circular 2022-07.

As noted, the FCRA requires CRAs and brokers to conduct a reasonable investigation after being properly notified of a dispute over information contained in a consumer report. This article will answer two questions about this important issue.

Question 1: Whether the CRA or the supplier can “impose barriers that prevent the delivery of disputes?”

Not surprisingly, the CFPB got the first question wrong. The CFPB points out that CRAs and brokers are holding themselves accountable for imposing unreasonable demands on consumers before conducting investigations. The CFPB provided several examples from past audits and potential enforcement actions no allowed:

• CRAs require the consumer to provide a current copy of the consumer report before investigating the dispute;

• Equipment that requires additional documentation even when the buyer has provided sufficient information to support a direct dispute; and

• Need to use the official form.

The CFPB closed by reminding CRAs and issuers of the responsibility to investigate non-frivolous disputes “even if such disputes do not have the agency’s preferred format, preferred receipt forms, or preferred documents or forms.”

Question 2: Should the CRA send the documents attached to the buyer in dispute to the issuer?

The CFPB responded, “It depends.”

The CRA may violate the FCRA by failing to promptly provide the issuer with “all relevant information” about the dispute that the CRA receives from consumers. The CFPB states that while “there is no requirement to ensure that the CRA provides the original documents received from consumers, … it may be difficult for the CRA to demonstrate that it provides all the necessary information if it fails to submit even an electronic copy of the documents that are the primary source of evidence.”

On this point, the CFPB appears to be taking CRAs to use automated processes, noting that CRAs “likely to enter information from consumers using protocols, and share information with electronic developers.” Although these automated procedures can help reduce costs and time, the CFPB notes that CRAs are at risk of violating the FCRA by not sending “original paper records” to the issuer because it will be “difficult” for the CRA to claim that it “has complied with the FCRA if it does not provide computerized images of the evidence required for review by the issuer.” .”

Take away

Consumer complaints to the CFPB regarding the accuracy of consumer reporting information by the CRA and/or issuer investigations of disputes are increasing each year and as such, the CFPB remains very focused on these issues. CRAs and regulators must continue to exercise due diligence in their investigations to ensure compliance with FCRA and CFPB regulations.