I. INTRODUCTION
The federal banking agencies (Agencies) have published final rules to implement the accuracy and integrity and direct dispute provisions of the Fair and Accurate Credit Transactions Act of 2003 (FACT Act) that amended the Fair Credit Reporting Act (FCRA). The final rules implement the requirement that the Agencies issue guidelines for use by furnishers regarding the accuracy and integrity of the information about consumers that they furnish to consumer reporting agencies (CRAs) and prescribe regulations requiring furnishers to establish reasonable policies and procedures for implementing the guidelines. The final rules also implement the requirement that the Agencies issue regulations identifying the circumstances under which a furnisher must reinvestigate disputes about the accuracy of information contained in a consumer report based on a direct request from a consumer (direct dispute regulations). The final rules became effective on July 1, 2010.
II. ACCURACY AND INTEGRITY REGULATIONS AND GUIDELINES
A. Key Definitions
An understanding of the following defined terms is important in complying with the accuracy and integrity regulations:
1. Accuracy means that information that a furnisher provides to a consumer reporting agency about an account or other relationship with the consumer correctly:
a. Reflects the terms of and liability for the account or other relationship;
b. Reflects the consumer’s performance and other conduct with respect to the account or other relationship; and
c. Identifies the appropriate consumer.
2. Direct dispute means a dispute submitted directly to a furnisher (including a furnisher that is a debt collector) by a consumer concerning the accuracy of any information contained in a consumer report and pertaining to an account or other relationship that the furnisher has or had with the consumer.
3. Furnisher means an entity that furnishes information relating to consumers to one or more CRAs for inclusion in a consumer report. An entity is not a furnisher when it:
a. Provides information to a consumer reporting agency solely to obtain a consumer report in accordance with Sections 604(a) and (f) of the FCRA;
b. Is acting as a “consumer reporting agency” as defined in Section 603(f) of the FCRA;
c. Is a consumer to whom the furnished information pertains; or
d. Is a neighbor, friend, or associate of the consumer, or another individual with whom the consumer is acquainted or who may have knowledge about the consumer, and who provides information about the consumer’s character, general reputation, personal characteristics, or mode of living in response to a specific request from a CRA.
4. Identity theft has the same meaning as in 16 C.F.R. 603.2(a) (a fraud committed or attempted using the identifying information of another person without authority).
5. Integrity means that information that a furnisher provides to a CRA about an account or other relationship with the consumer:
a. Is substantiated by the furnisher’s records at the time it is furnished;
b. Is furnished in a form and manner that is designed to minimize the likelihood that the information may be incorrectly reflected in a consumer report; and
c. Includes the information in the furnisher’s possession about the account or other relationship that the relevant agency has:
(1) Determined that the absence of which would likely be materially misleading in evaluating a consumer’s creditworthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living; and
(2) Listed in Section I.(b)(2)(iii) of Appendix E of this part (the credit limit, if applicable and in the furnisher’s possession).
B. Reasonable Policies and Procedures
Each furnisher must establish and implement reasonable written policies and procedures regarding the accuracy and integrity of the information about consumers that it furnishes to a CRA. The policies and procedures must be appropriate to the nature, size, complexity, and scope of the furnisher’s activities.
C. Guidelines
Each furnisher must consider the accuracy and integrity guidelines in developing its policies and procedures and incorporate those guidelines that are appropriate. Furnishers should consider the guidelines in the context of the nature, size, complexity, and scope of their activities and incorporate the guidelines that are appropriate to promote the accuracy and integrity of the information about consumers that they provide to CRAs. The agencies expect that the written policies and procedures for a small retail entity will differ substantially from, and be significantly less complex than, those of a multi-billion dollar financial services company.
D. Reviewing and Updating Policies and Procedures
Each furnisher must review its policies and procedures periodically and update them as necessary to ensure their continued effectiveness. The final rule does not impose an audit requirement on a furnisher to conduct an official examination and verification of consumer accounts and records regarding its policies and procedures. However, the Agencies do expect a furnisher to be able to demonstrate to its regulator that it has established and implemented policies and procedures consistent with the final rules. The Agencies also expect that a furnisher would engage in a periodic review of its policies and procedures when there is a significant substantive change in its business plan or furnishing activities, or when it has identified significant deficiencies in the accuracy or integrity of the information it has provided to CRAs. A furnisher also may choose to review its policies and procedures periodically when it engages in a general review of FCRA compliance or general compliance with consumer protection laws and regulations.
III. ACCURACY AND INTEGRITY GUIDELINES
The Agencies encourage voluntary furnishing of information about consumers to CRAs, reflecting the recognition that the voluntary system of consumer reporting produces substantial benefits for consumers, users of consumer reports, and the economy as a whole. Furnishers are reminded that the regulations require each furnisher to (1) establish and implement reasonable written policies and procedures concerning the accuracy and integrity of the information about consumers that it furnishes to CRAs and (2) consider the guidelines in developing those policies and procedures. The guidelines further remind furnishers that they are required to review their policies and procedures periodically and update them as necessary to ensure their continued effectiveness.
A. Nature and Scope of Policy and Procedures
A furnisher’s policies and procedures must be appropriate to the nature, size, complexity, and scope of the furnisher’s activities. In developing its policies and procedures, a furnisher should consider, for example:
1. The types of business activities in which the furnisher engages;
2. The nature and frequency of the information the furnisher provides to consumer reporting agencies; and
3. The technology used by the furnisher to furnish information to consumer reporting agencies.
B. Objectives
A furnisher’s policies and procedures should be reasonably designed to promote the following objectives:
1. To furnish information about accounts or other relationships with a consumer that is accurate, such that the furnished information:
a. Identifies the appropriate consumer;
b. Reflects the terms of and liability for those accounts or other relationships; and
c. Reflects the consumer’s performance and other conduct with respect to the account or other relationship;
2. To furnish information about accounts or other relationships with a consumer that has integrity, such that the furnished information:
b. Is furnished in a form and manner that is designed to minimize the likelihood that the information may be incorrectly reflected in a consumer report; thus, the furnished information should:
(1) Include appropriate identifying information about the consumer to whom it pertains; and
(2) Be furnished in a standardized and clearly understandable form and manner and with a date specifying the time period to which the information pertains; and
c. Includes the credit limit, if applicable and in the furnisher’s possession;
3. To conduct reasonable investigations of consumer disputes and take appropriate actions based on the outcome of such investigations; and
4. To update the information it furnishes as necessary to reflect the current status of the consumer’s account or other relationship, including, for example:
a. Any transfer of an account (e.g., by sale or assignment for collection) to a third party; and
b. Any cure of the consumer’s failure to abide by the terms of the account or other relationship.
C. Establishing and Implementing Policies and Procedures
In establishing and implementing its policies and procedures, a furnisher should:
1. Identify practices or activities of the furnisher that can compromise the accuracy or integrity of information furnished to consumer reporting agencies, such as by:
a. Reviewing its existing practices and activities, including the technological means and other methods it uses to furnish information to consumer reporting agencies and the frequency and timing of its furnishing of information;
b. Reviewing its historical records relating to accuracy or integrity or to disputes; reviewing other information relating to the accuracy or integrity of information provided by the furnisher to consumer reporting agencies; and considering the types of errors, omissions, or other problems that may have affected the accuracy or integrity of information it has furnished about consumers to consumer reporting agencies;
c. Considering any feedback received from consumer reporting agencies, consumers, or other appropriate parties;
d. Obtaining feedback from the furnisher’s staff; and
e. Considering the potential impact of the furnisher’s policies and procedures on consumers.
2. Evaluate the effectiveness of existing policies and procedures of the furnisher regarding the accuracy and integrity of information furnished to consumer reporting agencies; consider whether new, additional, or different policies and procedures are necessary; and consider whether implementation of existing policies and procedures should be modified to enhance the accuracy and integrity of information about consumers furnished to consumer reporting agencies.
3. Evaluate the effectiveness of specific methods (including technological means) the furnisher uses to provide information to consumer reporting agencies; how those methods may affect the accuracy and integrity of the information it provides to consumer reporting agencies; and whether new, additional, or different methods (including technological means) should be used to provide information to consumer reporting agencies to enhance the accuracy and integrity of that information.
D. Specific Components of Policies and Procedures
In developing its policies and procedures, a furnisher should address the following, as appropriate:
1. Establishing and implementing a system for furnishing information about consumers to consumer reporting agencies that is appropriate to the nature, size, complexity, and scope of the furnisher’s business operations.
2. Using standard data reporting formats and standard procedures for compiling and furnishing data, where feasible, such as the electronic transmission of information about consumers to consumer reporting agencies.
3. Maintaining records for a reasonable period of time, not less than any applicable recordkeeping requirement, in order to substantiate the accuracy of any information about consumers it furnishes that is subject to a direct dispute.
4. Establishing and implementing appropriate internal controls regarding the accuracy and integrity of information about consumers furnished to consumer reporting agencies, such as by implementing standard procedures and verifying random samples of information provided to consumer reporting agencies.
5. Training staff that participates in activities related to the furnishing of information about consumers to consumer reporting agencies to implement the policies and procedures.
6. Providing for appropriate and effective oversight of relevant service providers whose activities may affect the accuracy or integrity of information about consumers furnished to consumer reporting agencies to ensure compliance with the policies and procedures.
7. Furnishing information about consumers to consumer reporting agencies following mergers, portfolio acquisitions or sales, or other acquisitions or transfers of accounts or other obligations in a manner that prevents re-aging of information, duplicative reporting, or other problems that may similarly affect the accuracy or integrity of the information furnished.
8. Deleting, updating, and correcting information in the furnisher’s records, as appropriate, to avoid furnishing inaccurate information.
9. Conducting reasonable investigations of disputes.
10. Designing technological and other means of communication with consumer reporting agencies to prevent duplicative reporting of accounts, erroneous association of information with the wrong consumer(s), and other occurrences that may compromise the accuracy or integrity of information provided to consumer reporting agencies.
11. Providing consumer reporting agencies with sufficient identifying information in the furnisher’s possession about each consumer about whom information is furnished to enable the consumer reporting agency properly to identify the consumer.
12. Conducting a periodic evaluation of its own practices, consumer reporting agency practices of which the furnisher is aware, investigations of disputed information, corrections of inaccurate information, means of communication, and other factors that may affect the accuracy or integrity of information furnished to consumer reporting agencies.
13. Complying with applicable requirements under the Fair Credit Reporting Act and its implementing regulations.
IV. DIRECT DISPUTE REGULATIONS
A. General Rule
A furnisher must conduct a reasonable investigation of a direct dispute if it relates to:
1. The consumer’s liability for a credit account or other debt with the furnisher, such as direct disputes relating to whether there is or has been identity theft or fraud against the consumer, whether there is individual or joint liability on an account, or whether the consumer is an authorized user of a credit account;
2. The terms of a credit account or other debt with the furnisher, such as direct disputes relating to the type of account, principal balance, scheduled payment amount on an account, or the amount of the credit limit on an open-end account;
3. The consumer’s performance or other conduct concerning an account or other relationship with the furnisher, such as direct disputes relating to the current payment status, high balance, date a payment was made, the amount of a payment made, or the date an account was opened or closed; or
4. Any other information contained in a consumer report regarding an account or other relationship with the furnisher that bears on the consumer’s creditworthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living.
B. Exceptions
The requirements for a furnisher to conduct a reasonable investigation of a direct dispute do not apply if:
1. The direct dispute relates to:
a. The consumer’s identifying information (other than a direct dispute relating to a consumer’s liability for a credit account or other debt with the furnisher) such as name(s), date of birth, Social Security number, telephone number(s), or address(es);
b. The identity of past or present employers;
c. Inquiries or requests for a consumer report;
d. Information derived from public records, such as judgments, bankruptcies, liens, and other legal matters (unless provided by a furnisher with an account or other relationship with the consumer);
e. Information related to fraud alerts or active duty alerts; or
f. Information provided to a consumer reporting agency by another furnisher; or
2. The furnisher has a reasonable belief that the direct dispute is submitted by, is prepared on behalf of the consumer by, or is submitted on a form supplied to the consumer by, a credit repair organization, as defined in 15 U.S.C. 1679a(3), or an entity that would be a credit repair organization, but for 15 U.S.C. 1679a(3)(B)(i).
C. Direct Dispute Address
A furnisher is required to investigate a direct dispute only if a consumer submits a dispute notice to the furnisher at:
1. The address of a furnisher provided by a furnisher and set forth on a consumer report relating to the consumer;
2. An address clearly and conspicuously specified by the furnisher for submitting direct disputes that is provided to the consumer in writing or electronically (if the consumer has agreed to the electronic delivery of information from the furnisher); or
3. Any business address of the furnisher if the furnisher has not so specified and provided an address for submitting direct disputes.
D. Direct Dispute Notice Contents
A dispute notice must include:
1. Sufficient information to identify the account or other relationship that is in dispute, such as an account number and the name, address, and telephone number of the consumer, if applicable;
2. The specific information that the consumer is disputing and an explanation of the basis for the dispute; and
3. All supporting documentation or other information reasonably required by the furnisher to substantiate the basis of the dispute. This documentation may include, for example: a copy of the relevant portion of the consumer report that contains the allegedly inaccurate information; a police report; a fraud or identity theft affidavit; a court order; or account statements.
E. Duty of Furnisher After Receiving a Direct Dispute Notice
After receiving a dispute notice from a consumer, the furnisher must:
1. Conduct a reasonable investigation with respect to the disputed information;
2. Review all relevant information provided by the consumer with the dispute notice;
3. Complete its investigation of the dispute and report the results of the investigation to the consumer before the expiration of the period under Section 611(a)(1) of the FCRA(15 U.S.C. 1681i(a)(1)) within which a consumer reporting agency would be required to complete its action if the consumer had elected to dispute the information under that section; and
4. If the investigation finds that the information reported was inaccurate, promptly notify each consumer reporting agency to which the furnisher provided inaccurate information of that determination and provide to the consumer reporting agency any correction to that information that is necessary to make the information provided by the furnisher accurate.
F. Frivolous or Irrelevant Disputes
A furnisher is not required to investigate a direct dispute if the furnisher has reasonably determined that the dispute is frivolous or irrelevant. A dispute qualifies as frivolous or irrelevant if:
1. Notice of Determination
Upon making a determination that a dispute is frivolous or irrelevant, the furnisher must notify the consumer of the determination not later than five business days after making the determination, by mail or, if authorized by the consumer for that purpose, by any other means available to the furnisher.
2. Contents of Notice of Determination that a Dispute is Frivolous or Irrelevant
A notice of determination that a dispute is frivolous or irrelevant must include the reasons for such determination and identify any information required to investigate the disputed information, which notice may consist of a standardized form describing the general nature of such information.