On February 3, 2016, the Consumer Financial Protection Bureau (CFPB) issued a bulletin warning companies that furnish information on consumers to consumer reporting agencies (CRAs) yet again of the need to have adequate policies and procedures. This bulletin makes clear that any company that supplies information to CRAs is in an area of top federal concern, and that a key regulator continues to see a troubling level of non-compliance with the requirements of the Fair Credit Reporting Act (FCRA).
II. FCRA Requirements
Furnishers are governed by the Furnisher Rule (Regulation V promulgated by the CFPB under the FCRA), which requires furnishers to: (1) furnish information that is accurate and complete, and (2) investigate consumer disputes about the accuracy of information they provide. The CFPB’s September 2013 bulletin emphasized a furnisher’s investigative obligation to review “all relevant information” provided by CRAs about a consumer dispute and “the furnisher’s own information with respect to the dispute.”
The Furnisher Rule also requires that furnishers implement reasonable written policies and procedures regarding the accuracy and integrity of information relating to consumers that they furnish to CRAs. The CFPB bulletin issued on February 3, 2016, focuses on this latter obligation.
III. 2016 Compliance Bulletin
In its latest bulletin, the CFPB emphasizes the fact that the Furnisher Rule’s requirement – that furnishers maintain written policies and procedures regarding the accuracy and integrity of information furnished – applies to furnishing information to all CRAs, including furnishing to “specialty CRAs.” The bulletin states that the Bureau’s supervisory experience suggests that some financial institutions are not compliant with their obligations under Regulation V with regard to furnishing to specialty CRAs.
The CFPB notes that a furnisher’s “policies and procedures must be appropriate to the nature, size, complexity, and scope of each furnisher’s activities.” In other words, “if an institution furnishes both credit information to nationwide CRAs and deposit account information to nationwide specialty CRAs, that institution must consider the appropriate approach to each type of furnishing in its policies and procedures in order to comply with Regulation V.”
The bulletin concludes with a warning to furnishers to have appropriate policies and procedures in place with respect to all types of consumer information furnished to each of the CRAs to which it furnishes. “If the CFPB determines that a furnisher has engaged in any acts or practices that violate Regulation V or other federal consumer financial laws and regulations, it will take appropriate supervisory and enforcement actions to address violations and seek all appropriate remedial measures, including redress to consumers.”
The CFPB has previously shown its enforcement strength against non-compliant furnishers. For example, First Investors Financial Services Group, Inc., an auto finance company, was fined $2.75 million for failure to establish reasonable written policies and procedures regarding the accuracy and integrity of information furnished. Similarly, DriveTime Automotive Group, Inc., the nation’s largest “buy-here, pay-here” auto dealer, was required to pay an $8 million penalty for having inadequate written policies governing the furnishing of information to CRAs. (The firm’s consumer financial services law monitor reported on this enforcement action here.) In December 2014, the CFPB even enlisted CRAs to help the Bureau monitor the activities of furnishers and report on potentially problematic companies that provide credit reporting information. (The firm wrote about the CFPB’s enlistment of the CRAs in its supervision of furnishers here.)
The CFPB’s new bulletin is clearly aimed to spur compliance in an area where the regulators have not seen a desired level of response to prior bulletins and enforcement action. The situation is ripe for further enforcement actions to make examples and spark compliance. Furnishers should take action now to avoid being the CFPB’s next target.
Troutman Sanders has a team of seasoned FCRA litigation and compliance lawyers that regularly advise companies on strategies to comply with the FCRA and specifically the Furnisher Rule. Troutman Sanders’ vast experience in furnisher-related FCRA obligations and compliance helps clients better identify compliance-related issues before they become problematic.