Companies That Furnish Info For Credit Reports Are Obligated To Investigate Disputes

More than 1-in-4 credit reports contain some sort of error, according to a recent Federal Trade Commission report, but one can’t lay all the blame at the feet of the three major credit bureaus — Experian, TransUnion, Equifax — as the companies that supply this information are not always fulfilling their legal obligation to investigate disputes by consumers.

Last week, the Consumer Financial Protection Bureau, issued a bulletin, putting “furnishers” — those companies that supply the information that ends up consumers’ credit reports — on notice.

In the bulletin, the CFPB points out that the Fair Credit Reporting Act generally requires a credit bureau to notify a furnisher whenever a consumer disputes the accuracy or completeness of any info provided by the furnisher to the bureau.

The law requires that the bureau must also promptly provide the furnisher ‘all relevant information’ regarding the dispute, and that the furnisher must then “conduct an investigation with respect to the disputed information” and respond appropriately.

If it’s found that a furnisher supplied inaccurate or incomplete information, it must not only report the results of its investigation to credit bureaus nationwide, it must also modify, delete, or permanently block the disputed information.

“Credit reports play a critical role in the lives of consumers,” said CFPB Director Richard Cordray. “Given the importance of these reports, consumers need to know that their documents are being reviewed when they dispute what they believe is a mistake on a report. Today’s bulletin helps ensure that the right people will be doing just that.”

While the three major bureaus do use the same electronic system to send information about a dispute to furnishers, the CFPB says that, as recently as December 2012, the system did not provide any way for the bureaus to transmit any documents the consumer might have provided to support a dispute.

So if you had a receipt showing you paid a bill and should never have been sent to collections, the system only let the bureaus tell the furnisher that such a bill existed, but did not let the bureau send a copy of the document as evidence.

At the urging of CFPB, the system has since been updated to allow for this transmission of consumer-supplied documents. Now that furnishers can finally receive this information, it was as good a time as any to remind the furnishers of their legal obligation to investigate and respond to disputes.

Failure to comply with the rules set forth in the FCRA would put a furnisher at risk for an enforcement action, which could possibly result in restitution to harmed consumers.

While we’re on the subject of the CFPB and credit bureaus, here’s the friendly reminder that the agency has an online complaint portal that allows consumers to file complaints about credit bureaus, bank accounts, credit cards, debt collectors, money transfer services, mortgage lenders and servicers, student loans, and vehicle and consumer loans.