Consumers may dispute information furnished by a credit union through the consumer reporting agency or directly with the credit union for investigation and resolution. Regulation V specifies the procedures furnishers must follow when responding to direct disputes from consumers.
Credit unions must investigate a direct dispute if it relates to an account, debt, or other relationship the institution has (or had) with a consumer (including accounts/debts resulting from ID theft).
A credit union is only required to investigate a direct dispute if a consumer submits a dispute notice to the credit union that contains sufficient information to identify the account or other relationship in dispute, an explanation of the basis for the dispute, and supporting documentation or other information reasonably required by the credit union to substantiate the basis of the dispute (e.g., account statements, police report, ID theft affidavit, etc.).
Credit unions generally have 30 days to complete an investigation and report the results to the consumer. If the investigation finds the information in the report was inaccurate, the credit union must correct the error and provide accurate information to the credit bureau.
A credit union is not required to investigate disputes that are determined to be “frivolous or irrelevant.” Those include cases with insufficient information to investigate or substantially similar disputes that were previously submitted to the credit union or reporting agency by or on behalf of the consumer (e.g., by a credit repair company).
If a dispute is found to be frivolous or irrelevant, a furnisher must notify the consumer within five business days of receiving the dispute. The notice must include the reason for the determination and, if relevant, any information the consumer needs to submit so the furnisher can investigate the disputed information.
Common violations
Five common violations identified by the CFPB’s Supervisory Highlights: Consumer Reporting Edition (Issue 20, Fall 2019):
1. Inaccurate reporting to specialty reporting agencies. CFPB found some furnishers did not have written policies and procedures for reporting information to “specialty deposit” agencies (e.g., check verification services).
Some institutions also failed to validate the furnished data, causing them to inaccurately provide consumers’ account status to the reporting agencies in violation of the FCRA. The furnishers were required to evaluate the effectiveness of existing polices and develop new written polices where appropriate.
2. Failure to investigate disputes consumers submitted. CFPB examiners found that some furnishers violated the FCRA when they failed to investigate disputes consumers submitted and instead treated the disputes as general account correspondence.
The agency even found backlogs of direct disputes accumulated in document processing queues that were not investigated or responded to at all. It required furnishers to develop proper dispute handling policies and procedures to ensure they conducted investigations in accordance with the requirements of the FCRA and Regulation V.
3. Reporting information with “actual knowledge” of errors. Examiners found that one or more institutions furnished information they knew or had reasonable cause to believe was inaccurate, in some cases reporting thousands of accounts to one or more reporting agencies with inaccurate derogatory status codes.
Furnishers were required to implement a program fix for the inaccurate coding issue and review all furnished accounts to identify and correct inaccurate reporting on all affected consumers.
4. Failure to correct inaccurate information. CFPB examiners found furnishers that failed to correct and update loan data that resulted from identity theft. In these cases, the furnishers recorded the results of their investigations internally but failed to correct the information furnished to the consumer reporting agency.
They were required to develop and implement policies and procedures to ensure prompt notification and correction of any inaccurate information furnished to reporting agencies going forward.
5. Failure to report the date of first delinquency within 90 days. CFPB noted that one or more furnishers reported the incorrect date of first delinquency. The date of first delinquency is important for reporting agencies, creditors, and consumers because it determines when information on a consumer report becomes obsolete and may no longer be reported.
CFPB has supervisory authority over banks, thrifts, and credit unions with more than $10 billion in assets, as well as their affiliates; nonbank mortgage originators and servicers, payday lenders, and private student lenders; and larger participants in these markets: consumer reporting, consumer debt collection, student loan servicing, international money transfer, and automobile financing.
The term “accuracy” means the information the furnisher provides to a consumer reporting agency about an account or other relationship with the consumer correctly:
Reflects the terms of and liability for the account or other relationship.
Reflects the consumer’s performance and other conduct with respect to the account or other relationship.
Identifies the appropriate consumer.
“Integrity” means the information a furnisher provides to the consumer reporting agency about an account or other relationship with the consumer:
Is substantiated by the furnisher’s records at the time it is furnished.
Is furnished in a form and manner designed to minimize the likelihood that the information may be incorrectly reflected in a consumer report.
Includes the information in the furnisher’s possession about the account or other relationship that, if omitted from the credit report, would present a misleading picture of the consumer’s creditworthiness.
Integrity also includes the consumer’s credit limit if applicable and in the furnisher’s possession as explained in the guidelines.
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