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Fair Credit Reporting: 2.7.4 Collection Agencies and Credit Bureau Collection Departments
Collection agencies and collection departments of credit bureaus are CRAs in certain circumstances.
Fair Credit Reporting: 2.7.5 “Alternative Data”
There have been numerous efforts to consider and promote the use of “alternative data” in credit decisions—that is, data beyond the information traditionally used in consumer credit reports from the nationwide CRAs. Alternative data is seen as a way to help consumers who lack a credit history or whose history is too scant or “thin” to generate a credit score, referred to as “credit invisibles.”712
Fair Credit Reporting: 4.4.6.9.5 Reporting of significant updated information that is furnished to a consumer reporting agency
If a CRA is informed of later developments relating to an item in the consumer’s file, either by the furnisher or the consumer, the CRA must update the file.977 A CRA must report significant, verified information it possesses about an item.978 Even when the consumer does not formally dispute the accuracy of a report, if the consumer provides additional information on an incomplete file, then the CRA must include the statement.979 A CRA that r
Fair Credit Reporting: 4.4.6.10.1 Introduction
There are several recurring inaccuracy problems regarding the reporting of bankruptcy in a consumer’s credit report.
Fair Credit Reporting: 4.4.6.10.2.2 Failure to follow reasonable procedures in reporting discharged debt
It is clear that accounts discharged in bankruptcy must be reported as such, with a zero balance.997 A CRA must employ reasonable procedures to keep its file current on past due accounts, which could include requiring furnishers to notify the CRA when a previously past-due account has been paid or discharged in bankruptcy.998
Fair Credit Reporting: 4.4.6.10.2.3 Furnisher liability for reporting of debts discharged in bankruptcy
Furnishers sometimes do not automatically update the status of accounts included in bankruptcy.1008 While the FCRA does require furnishers to update information,1009 there is no private cause of action for violation of that provision.1010 In general, there is no private remedy for consumers against furnishers for reporting inaccurate information or failing to maintain procedures for accuracy.1011
Fair Credit Reporting: 4.4.6.10.2.4 Class actions settlement reforming CRA procedures for reporting discharged debts
As a result of a major class action settlement, the three nationwide CRAs were required to revise their procedures as to how they report debts discharged in a chapter 7 bankruptcy.1026 The settlements essentially reversed the presumption of non-dischargeability that the CRAs had been applying to chapter 7 bankruptcies by requiring the CRAs to treat all prebankruptcy debts as discharged, unless furnishers provide information showing that a debt was excludable from discharge.
Fair Credit Reporting: 4.4.6.10.3 Incorrect reporting of bankruptcy on reports of joint obligors
The second bankruptcy inaccuracy problem is the CRA’s incorrect reporting of a “bankruptcy innocent” consumer as having been subject to a bankruptcy.1035 CRAs have sometimes reported information on bankruptcy filings in the files of spouses or other joint obligors, even when only one of the obligors filed for bankruptcy.1036 This practice also occurs even after a divorce.
Fair Credit Reporting: 4.4.6.10.4 Issues regarding the status of a bankruptcy
Any report of a consumer’s bankruptcy must identify the chapter under which the case arises, “if provided by the source of the information” about the bankruptcy.1042 Even before this language was added to the statute by amendment, the Conference Report, when the FCRA was first enacted, notes that the House conferees intended that the standards of accuracy shall impose a duty to distinguish between straight bankruptcies and wage earner plans.1043 Thus, bankruptcies should commonly be reported
Fair Credit Reporting: 4.5.3.2 Inaccuracy Required for Liability
The plain language of the FCRA itself does not require a showing of inaccuracy to impose liability for failure to conduct a reasonable investigation.1367 Section 1681i(a) states that, “if the completeness or accuracy of any item of information . . . is disputed by the consumer and the consumer notifies the agency directly, . . .
Fair Credit Reporting: 4.5.1.1 Generally
One of the most critical protections provided by the FCRA is the consumer’s right to dispute the accuracy or completeness of any item of information in their file.1119 A CRA on notice as to potentially inaccurate information in the consumer’s file is in a very different position than a CRA without such notice.1120 Much of the successful litigation against CRAs to challenge inaccuracy within a consumer’s file comes after a consumer has made a dispute directly to the CRA.
Fair Credit Reporting: 4.5.1.2 The Reinvestigation Process
This section discusses the CRA reinvestigation process. The consumer’s request triggers the CRA reinvestigation.1125 While no special language is required to make the request, some care should be taken to appropriately identify which information is being disputed.1126 A request that fails to provide sufficient information or is otherwise deemed to be frivolous will not lead to a reinvestigation.1127
Fair Credit Reporting: 4.5.1.3 How Consumers Learn of Their Right to Dispute
Consumers will frequently learn of their right to dispute inaccurate information from the Summary of Consumer Rights, which the CRAs must provide whenever consumers request a copy of their file disclosures.1133 This form summarizes major rights consumers have under the FCRA, including the right to request a reinvestigation.
Fair Credit Reporting: 4.5.1.4 Longstanding Deficiencies in the Nationwide CRAs’ Dispute Systems
This right to dispute information is an important safeguard necessary to ensure accuracy.1136 The legislative history rightly characterizes the dispute and correction process as “the heart of . . . efforts to ensure the ultimate accuracy of consumer report.”1137 Despite this, the “Big Three” nationwide CRAs and other CRAs have little incentive to accommodate consumers because the CRAs’ customers are their subscribers, rather than the consumers.
Fair Credit Reporting: 4.5.1.5 Pleading a Violation of the CRA Reinvestigation Requirement
Each time a consumer lodges a dispute and the CRA fails to conduct an adequate reinvestigation constitutes a separate and distinct claim under the FCRA.1148 However, in order to allege a violation, conclusory accusations may not be sufficient,1149 especially under the Supreme Court’s standard under Bell Atlantic v. Twombly1150 and Ashcroft v.
Fair Credit Reporting: 4.5.2.1 When a CRA Must Reinvestigate
If a consumer conveys to the CRA a dispute over the completeness or accuracy of any item of information in the consumer’s file, the CRA must delete the disputed information or conduct a reinvestigation.1170 The dispute need not be in writing,1171 although practitioners recommend doing so.1172 The CFPB has reported that 13% of consumer disputes to nationwide CRAs are submitted by telephone.1173
Fair Credit Reporting: 4.5.2.2 Specificity Required of a Dispute
The FCRA does not require that consumers submit disputes on any specific form.1185 A consumer’s lack of precision as to the item being disputed is usually not a sufficient reason to refuse to reinvestigate.1186 But if the consumer does not provide a clear statement that the accuracy or completeness of specific information is “disputed” or “challenged,” the consumer’s statement may not be construed as an exercise of rights under the Act.1187
Fair Credit Reporting: 4.5.2.3 CRA May Not Impose Unreasonable Preconditions for a Dispute
A CRA may not impose unreasonable preconditions on the consumer before starting a reinvestigation. The CFPB has specifically stated that CRAs and furnishers “cannot avoid the obligation to conduct a reasonable investigation of disputes by making consumers satisfy demands other than those specified by statute or regulation.”1204
Fair Credit Reporting: 4.5.2.4.1 Contents of the dispute
A consumer’s dispute will be most effective if it includes the following information about the consumer:
Fair Credit Reporting: 4.5.2.4.2 Form of the dispute
Although not required by the statute,1229 it is safest if the consumer requests the reinvestigation in writing (keeping copies of all correspondence), or follows up a telephone request with a written confirmation.
Fair Credit Reporting: 4.5.2.4.3 Keep a file
In many cases, a request for reinvestigation is just the beginning of a protracted battle with the CRA that may ignore correspondence or fail to follow up as promised. Thus, it is good practice for the consumer to establish a file of all correspondence sent to and received from the CRA, and to have proof that the CRA has received the consumer’s correspondence.
Fair Credit Reporting: 4.5.2.4.4 Send a copy to the furnisher
Consumers should also directly notify the creditor or other furnisher of the disputed information at the same time, if not before.1243 Furnishers must participate in the CRA reinvestigation procedures and conduct their own reinvestigation.1244 A furnisher’s investigation obligation arises when it receives the consumer’s dispute indirectly through the CRA.1245 However, furnishers sometimes claim that they did not receive adequate notice of the