Key Takeaways: CFPB Releases Spring 2024 Supervisory Highlights

On April 8, 2024, the Consumer Financial Protection Bureau (CFPB) issued its Spring 2024 edition of Supervisory Highlights, entitled "Supervisory Highlights Consumer Reporting Companies and Furnishers" ("the Spring 2024 Special Edition" throughout this summary). The findings in the Spring 2024 Special Edition cover select examinations in connection with credit reporting and furnishing that were completed from April 1, 2023, through December 31, 2023.

Below is a summary of issues raised in the Spring 2024 Special Edition, including a discussion of legal standards and observed violations.

Why This Matters

The CFPB's Supervisory Highlights details some violations found in recent exams.

This Spring 2024 Special Edition highlights areas of interest as it relates to consumer reporting companies (CRCs) compliance with the accuracy and identity theft requirements, and furnishers' compliance with the accuracy and dispute investigation requirements of the FCRA and implementing Regulation V. Additionally, while the focus is ostensibly credit reporting and furnishing, this edition of Supervisory Highlights also discusses auto lending and deposit furnishers.

Breakdown of Issues in the Spring 2024 Supervisory Highlights

Consumer Reporting Companies

• Duty to block the reporting of information resulting from an alleged identify theft
• Duty to consumers impacted by identity theft
• Duty to provide victims of identity theft with summaries of rights
• Duty to block adverse information resulting from human trafficking
• Duty to follow reasonable procedures to assure maximum possible accuracy

Furnishers

• Duty to promptly correct and update information determined to be incomplete or inaccurate
• Duty to notify CRCs of direct disputes
• Duty to conduct reasonable investigations of direct disputes
• Duty to provide notice of delinquency of accounts
• Duty not to furnish information that purports to relate to a consumer upon receipt of an identity theft report

CBA's Take

While the CFPB has focused on so-called "junk fees" over the past few months, the CFPB remains very interested in the credit reporting marketplace. The focus on the Fair Credit Reporting Act (FCRA) suggests we may see more regulatory activity in the credit reporting space. This Special Edition follows prior advisory opinions, amicus briefs and other rulemaking activity under the FCRA.

CBA's Regulatory team reviewed the Spring 2024 Special Edition of Supervisory Highlights and recommends that members review the following issues identified by the CFPB and consider any implications these observations may have on compliance practices across product lines.

Consumer Reporting Agencies' Compliance With FCRA Accuracy and Identity Theft Requirements

Identity Theft. In this issue, the CFPB discusses exam findings concerning CRCs' compliance with identity theft requirements under the FCRA. Among other things, the FCRA generally requires CRCs to block the reporting of any information in a consumer's file identified by the consumer as originating from alleged identity theft within four business days of the CRC receiving notice and appropriate documentation. A CRC must also notify the affected consumer if the CRC declines to block or rescinds a block of information that the consumer identified as resulting from an alleged identity theft. The CFPB found that some CRCs failed to timely implement blocks, maintained policies which improperly denied blocks, or failed to provide required Summary of Rights disclosures to consumers.

Accuracy. The FCRA requires that, when preparing a consumer report, a CRC must follow reasonable procedures to assure "maximum possible accuracy" of the information concerning the individual about whom the report relates. In this Spring 2024 Special Edition, the CFPB notes that CRCs failed to adhere to this requirement in a number of ways. CRCs failed to monitor dispute metrics that would suggest a furnisher may no longer be a reliable and verifiable source of information. CRCs also continued to include information in consumer reports provided by unreliable furnishers without implementing procedures to assure the accuracy of information. Further, the CFPB asserts CRCs should have known that the furnishers were no longer reliable based on the furnishers' response (or lack thereof) to disputes.

The CFPB has focused on accuracy requirements under the FCRA in prior guidance and other public statements, including multiple advisory opinions (Advisory Opinions on Background Checks, Facially False Data) and amicus briefs (in Sessa v. Trans Union, LLC and Milgram v. JPMorgan Chase).

Furnishers' Compliance With FCRA Accuracy, Dispute Investigation Requirements and Notice Requirements

In recent reviews of furnishers, the CFPB states that they found deficiencies in furnishers' compliance with FCRA accuracy, dispute investigation, and identity theft requirements. Among other requirements under the FCRA, furnishers are required to: promptly correct and update furnished information after determining that such information is incomplete or inaccurate and notify CRCs that the accuracy or completeness of items being furnished by them are subject to dispute.

Auto furnishers. The CFPB found auto loan furnishers that had continued to furnish incomplete or inaccurate information for several months or years, after the furnishers determined, through either dispute handling or identification of systemic issues, the information was furnished incomplete or inaccurate. The CFPB also found that auto loan furnishers did not timely send corrections or updates to CRCs after accounts with lease returns were paid-in-full.

Regulation V, the implementing regulation for the FCRA, does not permit a furnisher to establish additional requirements beyond what is required by regulation to initiate a direct dispute investigation by the furnisher. The CFPB found evidence that furnishers failed to investigate direct disputes because those direct disputes did not satisfy those furnishers' additional (but impermissible under Regulation V) identity verification requirements. CFPB also found furnishers inaccurately reported dates of first delinquency due to coding errors, or dates of first delinquency were reported more recent than they should have been.

The FCRA requires furnishers to stop furnishing information identified by a consumer as information resulting from identity theft until the furnisher subsequently knows or is notified by the consumer that the information is correct.

The CFPB found that furnishers who received reports of identity theft continued to furnish information covered by this identity theft report before knowing or being informed by the consumer that the information was correct.

Deposit furnishers. The CFPB found deposit furnishers that continued to report fraudulent accounts to CRCs for several years after determining those accounts were fraudulent. Additionally, the CFPB found that furnishers who received direct disputes from consumers were continuing to furnish the disputed information to CRCs without indicating the information was subject to dispute.

Read the CFPB's prior Winter 2023 Supervisory Highlights Junk Fees Special Edition HERE. View the Summer 2023 Supervisory Highlights HERE.

Public link

Please use the above public link if you want to share this noodl on another website.