The Consumer Data Industry Association (CDIA) and the Metro 2 Task Force announced that they have approved a new Special Comment Code, DS — Debt Settlement, in response to industry requests for clearer identification of consumer debt settlement activity in credit reporting. An implementation date has not yet been established, but CDIA anticipates that furnishers will be able to begin reporting the DS code in Q2 2027.

Background

Credit risk assessors have long had limited visibility into the period when a consumer is actively participating in a debt settlement program with a for-profit debt settlement company but before the account is ultimately reported as paid in full for less than the full balance. During this interim period, a consumer’s repayment obligations may be materially altered without any indication through existing credit reporting. The DS code is intended to address this gap by enabling identification of an established, verified for-profit debt settlement engagement prior to settlement completion.

What the Code Means

The DS Special Comment Code indicates that the furnisher has verified that the consumer has engaged a for-profit debt settlement company to act on the consumer’s behalf. The code applies during periods when a consumer is actively participating in a for-profit debt settlement program, including periods prior to final settlement when the consumer is expected to pay a reduced amount but the account has not yet been reported as settled.

According to CDIA’s announcement, the DS code should be reported on all applicable accounts at the same financial institution when:

  • The furnisher has verified that a consumer is actively participating in a for-profit debt settlement program, and
  • The participation is expected to materially alter repayment terms, including during periods prior to settlement completion.

The DS code should not be reported for:

  • Debt management plans;
  • Credit counseling arrangements; or
  • Preliminary inquiries, informal discussions, or speculative negotiations where the consumer has not engaged a for-profit debt settlement company to negotiate directly with the furnisher.

All other fields should continue to be reported in accordance with existing Metro 2 Format and Credit Reporting Resource Guide (CRRG) guidance.

Practical Considerations for Data Furnishers

Data furnishers should take note of the new DS code and begin preparing for implementation ahead of the anticipated Q2 2027 effective date. There are a few things to keep in mind. First, the code requires that the furnisher has verified the consumer’s engagement with a for-profit debt settlement company. Furnishers should consider what documentation or verification steps they will require before applying the DS code to an account to avoid potential risk if accused of reporting false or inaccurate information. Second, because the DS code expressly excludes debt management plans and credit counseling arrangements, furnishers will need clear internal procedures to distinguish between such arrangements and for-profit debt settlement programs before applying the code. Lastly, inaccurate or inconsistent application of the DS code could create potential claims under the Fair Credit Reporting Act. Furnishers should ensure their reporting policies and procedures are updated to reflect the new code before implementation begins.

CDIA has indicated that Consumer Reporting Agencies (CRA) have initiated internal discussions to support the DS code, and that additional reporting guidance and timing details will be provided in future communications and published to the CRRG. Furnishers with questions in the interim should contact their respective CRA representatives.