CFPB Issues Circular Regarding CRA and Furnisher Failures to Reasonably Investigate Consumer Disputes
The CFPB recently published Circular 2022-07 explaining how consumer reporting agencies (CRAs) and information furnishers can violate the Fair Credit Reporting Act (FCRA) by failing to conduct reasonable investigations of consumer disputes.
Under FCRA, CRAs and furnishers have a duty to conduct a reasonable investigation when a consumer files a dispute concerning the accuracy or completeness of the information in their file. As explained in the Circular, a CRA or furnisher may violate this duty by failing to investigate any dispute that satisfies statutory and regulatory requirements, or by making consumers satisfy demands other than those specifically in the statute or regulation. For instance, if a CRA or furnisher creates preconditions to investigation, such as requiring the consumer to submit the dispute in a specific format or with additional specific documents, then the Circular explains that doing so limits a consumer’s dispute rights and could lead to liability under FCRA.
FCRA requires that any dispute received directly from a consumer must be reasonably investigated, unless the CRA or furnisher has reasonably determined that the dispute is frivolous or irrelevant. Upon making such a determination, the CRA or furnisher must notify the consumer and identify the additional information needed to investigate the dispute. The Circular explains that any dispute a furnisher receives from a CRA (an indirect dispute) cannot be deemed frivolous or irrelevant, and must be reasonably investigated. The CFPB notes that this requirement to investigate exists even if the dispute does not include an entity’s preferred format, intake form, or preferred documentation.
The Circular also states that a CRA can violate FCRA by failing to promptly provide a furnisher with all relevant information received from the consumer regarding the dispute. While there is no affirmative requirement to provide the furnisher with original copies, the CFPB asserts that it would be difficult for a CRA to comply without at least electronically forwarding the furnisher all primary evidence the consumer submitted with their dispute.
The CFPB also highlighted a furnisher’s duty to conduct reasonable investigations of direct disputes in its Fall 2022 Supervisory Highlights, issued on November 17, 2022. Similar issues concerning CRA and furnisher duties to investigate disputed information were also discussed in the CFPB’s Spring 2022 Supervisory Highlights, addressed in a prior WBK article.
