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Fair Credit Reporting: 6.6 Furnisher Must Note Disputes

If a consumer disputes the accuracy or completeness of any information which has been furnished to a consumer reporting agency, the furnisher may not in the future report this information to a CRA unless it notes that it has been disputed.477 Even if the furnisher determines that the disputed information was neither inaccurate nor incomplete, or is unable to make any determination about the dispute raised by the consumer, the furnisher must note that the information is disputed whenever it furnishes the information to a CRA in the future.

Fair Credit Reporting: 6.7 Furnisher Must Furnish Dates of Delinquency

Accounts placed for collection or charged to profit and loss generally may not be included in consumer reports after seven years, as afterwards the information is considered obsolete.488 The seven-year period begins either 180 days after the first missed payment or when the account is placed for collection or charged to profit and loss.

Fair Credit Reporting: 6.9.1 “Financial Institution” as Defined by Gramm-Leach-Bliley Must Notify Customers of Negative Information Furnished to Reporting Agencies

The FCRA requires that a “financial institution” must notify a customer that it is furnishing negative information about that customer.504 The notice must be given within thirty days of reporting negative information.505 This requirement applies to financial institutions as defined by cross reference to the Gramm-Leach-Bliley definition of a financial institution.506 This furnisher notification requirement is further limited by the FCRA to only tho

Fair Credit Reporting: 6.9.2 Special CARES Act Reporting Requirements

The Coronavirus Aid, Relief, and Economic Security (CARES) Act517 amended the FCRA to provide temporary consumer reporting relief in response to the economic upheaval caused by the COVID-19 pandemic, adding subparagraph (F) to section 1681s-2(a)(1). This provision expires 120 days after the termination of the national emergency declared by the President over the COVID-19 pandemic.518

Fair Credit Reporting: 6.10.1.1 Formal Consumer Reporting Agency Dispute Process Subjects the Furnisher to Obligations That Are Enforceable by the Consumer

Furnishers are subject to only a single category of duties that may be enforced by consumers—despite the fact that they are the people with the greatest incentive and ability to police their own consumer reports.532 These privately enforceable duties are limited to the process where consumers may dispute the accuracy and completeness of information by initiating a reinvestigation under section 1681i with the CRA (and where applicable via a reseller),533 not with the person who furnished

Fair Credit Reporting: 6.10.1.2 Deficiencies in the CRA Reinvestigation Process

Absent a section 1681i(a)/1681s-2(b) dispute lodged with a CRA or reseller, furnishers are simply not liable to the consumer for a breach of any of their other FCRA duties, such as to initially report accurate information,546 to correct and update furnished information,547 and to comply with the other FCRA requirements for furnishing information.

Fair Credit Reporting: 6.10.2.1 Numerous Cases Uphold a Consumer’s Right to Seek Relief

Furnishers are required to undertake five enumerated duties upon receipt of a notice that the consumer has disputed the accuracy or completeness of any information provided by that furnisher with a consumer reporting agency.567 Any furnisher who fails to comply with any of these five section 1681s-2(b) duties is liable to the consumer in a private cause of action for its negligent or willful noncompliance.568 Numerous cases affirm the consumer’s right to seek relief for violation of these duties

Fair Credit Reporting: 6.10.2.3 Requirement of a Consumer’s Dispute with the CRA Is a Congressionally-Imposed “Filtering Mechanism”

Congress carefully distinguished between section 1681s-2(a), requiring furnishers initially to report accurate and complete information but omitting any private enforcement mechanism, and section 1681s-2(b), permitting private enforcement of any breach by furnishers of their subsequent duty to help investigate consumer disputes. In effect, Congress decided that furnishers are entitled to the proverbial “one free bite,” as confirmed by the Ninth Circuit in the seminal case recognizing the right of consumers to enforce a furnisher’s breach of its investigation and related duties:

Fair Credit Reporting: 6.10.2.4 Inaccuracy Is Required for Furnisher Liability

The overwhelming authority now holds that disputed information must, in fact, be inaccurate or incomplete in order for a consumer to maintain a claim to redress the furnisher’s failure to comply with its duties under section 1681s-2(b). While there are some earlier cases have allowed cases to proceed without an inaccuracy, after the Supreme Court’s decisions in Spokeo v. Robins613 and TransUnion v.

Fair Credit Reporting: 6.10.2.5 CRA’s Notification to a Furnisher of an Inaccuracy Based on an Underlying Legal Dispute Triggers the Furnisher’s Section 1681s-2(b) Duties

Several circuit courts of appeals have held that CRAs are not equipped to arbitrate unresolved legal disputes between consumers and furnishers through the FCRA dispute process, and therefore that CRAs are not liable for their failure to investigate or correct disputes based on the legal validity of debts that only a tribunal can resolve.633 The rationale for this body of law establishes why the CRA exception does not apply to the duties of furnishers under section 1681s-2(b); indeed, several district courts and the leading circuit court opini

Fair Credit Reporting: 6.10.3.1 Consumer Reporting Agency Investigation Must Involve the Furnisher

The reinvestigation procedures that a CRA undertakes when a consumer disputes the accuracy or completeness of information must involve the person who furnished the disputed information to the CRA.676 After a consumer has initiated the reinvestigation by submitting a dispute to a CRA (or as appropriate with a reseller),677 the CRA must notify the furnisher.678 The CRA must provide this notice of dispute within five days after receipt of the dispute

Fair Credit Reporting: 6.10.3.2 How Disputes Are Communicated in Practice

In practice, the consumer’s dispute is communicated by the CRA to the furnisher using a Consumer Dispute Verification form, known colloquially as a CDV. An automated version of the form, communicated entirely electronically, is known as an ACDV.681 Although the statute does not specify any particular form, it does require notification “in a manner” established by the CRA with the furnisher.682

Collection Actions: 31 C.F.R. § 285.4 Offset of Federal benefit payments to collect past-due, legally enforceable nontax debt

(a) Scope.

(1) This section sets forth special rules applicable to the offset of Federal benefit payments payable to an individual under the Social Security Act (other than Supplemental Security Income (SSI) payments), part B of the Black Lung Benefits Act, or any law administered by the Railroad Retirement Board (other than payments that such Board determines to be tier 2 benefits) to collect delinquent nontax debt owed to the United States.

Collection Actions: Listing of Provisions

Title 31—Money and Finance—Treasury

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Chapter II—Fiscal Service, Department of the Treasury

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Part 285—Debt Collection Authorities Under the Debt Collection Improvement Act of 1996

Sec.

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285.2 Offset of tax refund payments to collect past-due, legally enforceable nontax debt

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Collection Actions: 31 C.F.R. § 285.8 Offset of tax refund payments to collect certain debts owed to States

(a) Definitions. For purposes of this section:

Debt means past-due, legally enforceable State income tax obligation or unemployment compensation debt unless otherwise indicated.

Debtor means a person who owes a debt.

Fiscal Service means the Bureau of the Fiscal Service, a bureau of the Department of the Treasury.

IRS means the Internal Revenue Service, a bureau of the Department of the Treasury.

Collection Actions: 31 C.F.R. § 285.11 Administrative wage garnishment

(a) Purpose. This section provides procedures for Federal agencies to collect money from a debtor's disposable pay by means of administrative wage garnishment to satisfy delinquent nontax debt owed to the United States.

(b) Scope.

(1) This section applies to any Federal agency that administers a program that gives rise to a delinquent nontax debt owed to the United States and to any agency that pursues recovery of such debt.