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Fair Credit Reporting: 6.3.3.13.1 Bankruptcy reporting

Any report mentioning a bankruptcy can have a detrimental effect on the consumer. Thus, it is important that the report accurately indicate what kind of bankruptcy is involved and the proper status of any bankruptcy proceeding.186 The Metro 2 format requires that a furnisher specify in some detail the nature of any reference to bankruptcy.187

Fair Credit Reporting: 6.3.3.13.2 Bankruptcy associated with nonfiling joint obligor

It is especially important to track separately the obligations and status of primary and associated consumers when one or the other has filed for bankruptcy. The bankruptcy of one should not be imputed to the other, because it is irrelevant to the creditworthiness of the other consumer.

According to the Metro 2 Manual, the status of such an account should be reflected as follows:

Fair Credit Reporting: 6.4.1 Overview

The notion of accuracy pervades the FCRA and generally includes information that is true and correct as well as complete and not misleading.197 As discussed below, several provisions addressing accuracy apply specifically to furnishers. However, courts naturally use the general and accepted understanding of accuracy and completeness developed under the entirety of the FCRA to inform the furnisher provisions which employ the same standard.198

Fair Credit Reporting: 6.4.2.1 Duty Stated in the Negative

Unlike the requirement placed on CRAs, the FCRA does not specify an affirmative standard of accuracy for those who furnish information to CRAs. CRAs must maintain reasonable procedures to ensure the “maximum possible accuracy” of the information they report.205 In contrast, the duty of furnishers to provide accurate information is stated in the negative, as two prohibitions against reporting inaccurate information.

Fair Credit Reporting: 6.4.2.4 Interaction with the Furnisher’s Duty to Correct and Update Inaccurate or Incomplete Information

The two accuracy standards must be read in conjunction with the subsection that immediately follows them establishing a duty to promptly correct and update furnished information determined to be incomplete or inaccurate.225 This duty is applicable to furnishers who regularly and in the ordinary course of business furnish information to CRAs.226 In general terms, furnishers are required to provide accurate, complete, and updated information.227

Fair Credit Reporting: 6.4.2.5 Furnisher Accuracy Duty and Metro 2

The Metro 2 standard operating procedure employed by creditors for transmitting information to CRAs,233 formally known as the CDIA Credit Reporting Resource Guide, has been painstakingly designed so that information vital to the preparation of accurate consumer reports is identified and defined in a manner to facilitate the routine provision of accurate and complete information.

Fair Credit Reporting: 6.4.2.6 FTC Staff Opinions on Furnisher Accuracy

Formerly, the Federal Trade Commission had been the primary agency charged with implementation of the FCRA.264 FTC staff had issued informal opinions regarding what a furnisher may report. One creditor was told that it may not submit information about delinquencies for which the consumer is not actually liable. The mortgage lender had been reporting payment histories of consumers who took title to mortgaged property (by will, for example) without formal obligation to make payments.

Fair Credit Reporting: 6.4.2.7 Ability of Furnishers to Delete Information

Furnishers will sometimes claim that they are prohibited from removing supposedly accurate information from a consumer’s credit report that they previously have furnished. In particular, consumers and practitioners are advised to ask for deletion of negative information in return for payment of a debt—a practice sometimes called “pay for deletion.”266 Yet debt collectors and creditors may assert that “pay for deletion” is unlawful under FCRA.

Fair Credit Reporting: 6.4.2.8 California Furnisher Accuracy Standards

The California version of the FCRA—the Consumer Credit Reporting Agencies Act (CCRAA)—has a standard similar to that of the FCRA277 in that it prohibits a furnisher from providing information if it “knows or should know the information is incomplete or inaccurate.”278 Unlike almost all other state laws governing furnisher accuracy, this California provision is specifically saved from preemption and is privately enforceable.279

Fair Credit Reporting: 6.4.3.1 Generally

The Fair and Accurate Credit Transactions Act of 2003 (FACTA) required guidelines to be issued for furnishers regarding the accuracy and integrity of information they furnish to the consumer reporting agencies.282 FACTA also mandated regulations to be issued requiring furnishers to establish reasonable policies and procedures for implementing those guidelines.283

Fair Credit Reporting: 6.4.3.2 Furnishers Required to Have Policies and Procedures for Accuracy and Integrity

The furnisher accuracy and integrity guidelines are divided into two parts—the Guidelines themselves and mandatory provisions in Regulation V. Regulation V requires furnishers to establish and implement reasonable policies and procedures regarding the accuracy and integrity of the information that they furnish to CRAs.288 However, while having a set of policies and procedures is mandatory, compliance with all of the Guidelines is not.

Fair Credit Reporting: 6.4.3.3 Definitions

Regulation V defines accuracy and integrity302 for the purposes of both the accuracy and integrity guidelines and the direct dispute regulation.303 The Supplemental Information for the regulation states that these definitions are not intended to be used in any other context (for example, for purposes of the accuracy requirements for CRAs).304 However, these definitions should be considered in pari materia with the standard for accuracy und

Fair Credit Reporting: 6.4.3.4.1 Introduction

The guidelines are located in Appendix E of Regulation V. They are divided into three parts: Nature, Score, and Objectives; Establishing and Implementing Policies and Procedures; and Specific Components of Policies and Procedures.

Fair Credit Reporting: 6.4.4 Accuracy When Creditor Clearly and Conspicuously Maintains a Special Address for the Consumer to Give Notification of Inaccurate Information

Large national creditors and many others who furnish information to CRAs may maintain a special address which may be used to notify the creditor of inaccuracies. The address should be readily available to the consumer and may be used by the consumer in any effort to have the creditor correct information that may be provided to CRAs. Many creditors will maintain addresses that a consumer may use to notify the creditor that specific information is inaccurate because it fosters good customer relations.

Fair Credit Reporting: 6.5.1 Furnishers Must Promptly Correct and Update Information

If a furnisher determines that information it has provided to a consumer reporting agency is inaccurate or incomplete, the furnisher must promptly inform the CRA of the determination and provide corrected information.378 This duty applies only to furnishers that “regularly and in the ordinary course of business” furnish information on at least one consumer. This condition is typically inconsequential since most entities that furnish information to CRAs do so on a regular and ongoing basis.

Fair Credit Reporting: 6.5.2.1 Generally

The Fair and Accurate Credit Transactions Act of 2003 (FACTA) established the right of consumers to directly dispute consumer report information with the furnisher of the information.392 Prior to FACTA, the FCRA had no provision allowing a consumer to dispute an inaccurate item of information and request a reinvestigation directly with the furnisher.

Fair Credit Reporting: 6.5.2.3 Notice of Dispute

In order to trigger the direct dispute obligation, a consumer must submit a proper notice of dispute.414 The notice must be sent to either an address provided by the furnisher set forth on the consumer report or 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).415 If the furnisher has failed to specif

Fair Credit Reporting: 6.5.2.4 Exceptions

Regulation V contains a number of exceptions to the direct dispute requirement. Furnishers are not required to conduct an investigation if the dispute relates to: