Section 607. Compliance procedures [15 U.S.C. § 1681e]
(b) Accuracy of report.—Whenever a consumer reporting agency prepares a consumer report it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates.
Section 611. Procedure in case of disputed accuracy [15 U.S.C. § 1681i]
(a)(1)(A) In general.— Subject to subsection (f), if the completeness or accuracy of any item of information contained in a consumer’s file at a consumer reporting agency is disputed by the consumer and the consumer notifies the agency directly or indirectly through a reseller of such dispute, the agency shall, free of charge, conduct a reasonable reinvestigation to determine whether the disputed information is inaccurate and record the current status of the disputed information, or delete the item from the file in accordance with paragraph (5), before the end of the 30-day period beginning on the date on which the agency receives the notice of the dispute from the consumer or reseller.
(a)(2)(A) In general.—Before the expiration of the 5-business-day period beginning on the date on which a consumer reporting agency receives notice of a dispute from any consumer or a reseller in accordance with paragraph (1), the agency shall provide notification of the dispute to any person who provided any item of information in dispute, at the address and in the manner established with the person. The notice shall include all relevant information regarding the dispute that the agency has received from the consumer or reseller.
Ultimately, CRA’s are dependent on those who “furnish” the data they report (creditors, debt collectors and other CRA’s, for example) – addressed in Section 623 of the FCRA.
Section 623. Responsibilities of furnishers of information to consumer reporting agencies [15 U.S.C. § 1681s-2]
Section 623 imposes specific responsibilities on “furnishers of information”, first by prohibiting reporting of information the furnisher knows to be (or has reasonable cause to believe is) inaccurate. Secondly –
(a)(2)(A) <A person who> regularly and in the ordinary course of business furnishes information to one or more consumer reporting agencies about the person’s transactions or experiences with any consumer; and
(B) has furnished to a consumer reporting agency information that the person determines is not complete or accurate, shall promptly notify the consumer reporting agency of that determination and provide to the agency any corrections to that information, or any additional information, that is necessary to make the information provided by the person to the agency complete and accurate, and shall not thereafter furnish to the agency any of the information that remains not complete or accurate.
The law requires CRA’s to exercise reasonable care in collecting, storing, and reselling consumer data. The law also requires furnishers of data to CRA’s to exercise care in doing so. Further, the error rate in consumer credit reporting – errors that negatively impact credit scores – is rather low – under 5%. Why then, is accuracy (rather inaccuracy) in consumer reporting getting so much attention these days? Here’s why:
- Consumer credit data is used more often and for more reasons than ever before – e.g. insurance underwriting, employment screening, etc. – reasons that have nothing to do with credit risk but can have a profound impact on consumer’s lives;
- There is a perceived (arguably real) lack of transparency in the consumer reporting process;
- There is a growing awareness by consumers (and trial lawyers) of their rights under state and federal consumer reporting law;
- There have been numerous high-profile failures – reporting errors combined with mishandling of disputes – resulting in Federal Trade Commission or Consumer Financial Protection Bureau (CFPB) regulatory action;
- It’s personal. Consumer reporting impacts lives – the ability to secure employment, housing, an automobile and insurance; and
- The CFPB brings considerable additional regulatory capacity to bear on the problem.
The answer is actually quite simple.
- Reduce errors. Whenever a consumer reporting agency prepares a consumer report it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates;
- Increase transparency by providing copies of the consumer reports (procured by end-users) to the individuals about whom the report relates;
- Limit use of consumer reports to purposes authorized under the FCRA and that rise to the level business necessity; and
- Consistent enforcement of consumer reporting law.
An emphasis on accuracy benefits all parties to the consumer reporting transaction. It is good for End-users (landlord, employer, lenders, etc.) – who are reliant upon the data to make important decisions. It is good for the consumer – who might otherwise fall victim to errors. It is good for the consumer reporting industry – given the cost associated with handling disputes – better to get it right in the first place.
The majority of the fuss thus far has been directed at consumer credit reporting. But that is changing. Specialized consumer reporting agencies – those providing tenant and employee screening services for example – are subject to the same statutes and regulatory activity.
Congress recognized the importance of accurate consumer reporting to the proper functioning of our economy when they passed the FCRA. It is in our interest as End-users and CRA’s, therefore, to hold ourselves to a high standard.