Last week the Consumer Financial Protection Bureau (CFPB) issued its latest Compliance Bulletin, called “The FCRA’s Requirement that Furnishers Establish and Implement Reasonable Written Policies and Procedures Regarding the Accuracy and Integrity of Information Furnished to all Consumer Reporting Agencies.” A copy of the Bulletin can be found here.
The Bulletin was released in conjunction with the CFPB Field hearing on Checking Account Access, and on the same day the CFPB sent a letter to the 25 largest retail banks encouraging them to make available and widely market lower-risk deposit accounts that help consumers avoid over-drafting.
In Director Cordray’ s prepared remarks at that Field Hearing he stated, “The second step we are taking today to improve checking account access is to remind banks and credit unions of their obligations with respect to the accuracy of the information they report about consumer use of checking accounts. In addition, the consumer reporting companies also have an obligation to ensure accuracy when they sell this information to others. Today we are issuing a bulletin warning banks and credit unions that they must meet their legal obligation to have appropriate systems in place with respect to accuracy when they report information, such as negative account histories, to the consumer reporting companies.”
The Bulletin states, “The CFPB issues this bulletin to emphasize the obligation of furnishers under Regulation V to establish and implement reasonable written policies and procedures regarding the accuracy and integrity of information relating to consumers that they furnish to consumer reporting agencies (CRAs).”
The obligation has been required under Regulation V since July 2010. Regulation V details the requirements for furnishers when creating and updating their accuracy and integrity policies.
The Bulletin requires that furnishers must have policies and procedures that meet this requirement with respect to all CRAs to which they furnish. The Bulletin further notes:
Supervisory experience of the Bureau suggests that some financial institutions are not compliant with their obligations under Regulation V with regard to furnishing to specialty CRAs. Furnishers’ establishment and implementation of reasonable policies and procedures regarding the accuracy and integrity of information are essential components of a fair and accurate credit reporting system. Such policies and procedures protect against the furnishing of inaccurate information that could potentially cause adverse consequences for consumers when included in a credit report, such as being denied a loan at a more favorable interest rate or being unable to open a transaction account.
Though the Bulletin was issued in conjunction with the aforementioned field hearing on checking account access and was initially directed at financial institutions, the message and requirements of Regulation V apply to all furnishers of information to CRAs. ARM industry entities that provide information to CRAs should periodically review their policies and procedures in this area to ensure compliance. Then, once convinced that the policies and procedures are solid, the entity needs to periodically audit the process to ensure that the policies and procedures are being followed.