[co-author: Noland Butler]
On June 23, the Consumer Financial Protection Bureau (CFPB) issued a final rule, prohibiting consumer reporting agencies (CRAs) from reporting adverse information resulting from human trafficking on survivors’ credit reports. This rule took effect on July 25.
The CFPB’s final rule amends Regulation VII, the Fair Credit Reporting Act’s (FCRA) implementing regulation, to comply with the 2021 Debt Bondage Repair Act’s credit reporting requirement. Specifically, the Debt Bondage Repair Act requires the CFPB to implement a process through which survivors of human trafficking can retract adverse information resulting from trafficking from their credit reports.
Many victims of human trafficking suffer severe financial abuse by their traffickers, who use victims’ identities to avoid detection, make money, and exercise control. Traffickers destroy victims’ financial status to prevent victims from leaving and to ensure victims’ dependence on the trafficking organization. Even when survivors leave a trafficking situation, they face inescapable financial hardship that often leaves them at risk of re-exploitation. In response to this troubling situation, this new rule is intended to help survivors rebuild their financial lives by eliminating their exposure to negative financial consequences of information incurred from any period during which the survivors were being trafficked.
As of July 25, CRAs must establish and implement a method for survivors of trafficking to submit documentation of their trafficking experience to the agencies. This rule applies to all CRAs regardless of reach or scope, including specialty agencies focused on discrete areas.
Method for Survivors of Trafficking to Submit Trafficking Documentation to CRAs
According to the amended regulations, survivors of trafficking will be required to submit documentation directly to the CRAs. First, survivors must submit proof of identity in accordance with each CRA’s requirements. Next, survivors must submit documentation establishing their status as a trafficking victim and self-identify what information on their credit report was a result of trafficking. Significantly, CRAs cannot challenge trafficking victim determinations or self-attestations.
Additionally, CRAs must provide survivors with two mailing addresses to submit trafficking documentation and proof of identity: (1) a mailing address specifically for submissions of trafficking documentation; and (2) a mailing address used for disputes under Section 611 of the FCRA.
CRA Review Procedures
CRAs should note that these new regulations require them to act within specific timeframes.
- Blocking Adverse Information. After receiving a survivor’s submission, the agency has four business days to block the adverse information.
- Notification to Consumer to Resolve Deficiencies. Under limited circumstances, the agency has five business days to request additional or missing information from the survivor. Any request for additional information is limited to establishing proof of identity, requesting victim determination documents or identifying the adverse items at issue. The agency does not have the authority to dispute victim determination documents or whether adverse information resulted from trafficking.
- Final Determination. The agency must make a final determination within 25 business days of the consumer’s original submission, not within the date of request for additional information.
Consumer Notification Requirements
Additionally, the final rule imposes stringent notification requirements on CRAs. Within five business days of making a final determination, the CRA must notify survivors of the following:
- Confirmation that they have completed the review;
- Explanation of the outcome;
- Free credit report showing any revisions;
- Description of procedures used to determine the outcome;
- Method to appeal the determination; and
- Link to where survivors can submit a complaint to the CFPB directly.
Record Keeping
Under this rule, CRAs must maintain records of determination outcomes for a period of seven years after they receive the survivor’s submission.
Conclusion
CRAs should note the CFPB’s recent credit repair rule for survivors of human trafficking. To ensure compliance, CRAs of all types need to initiate procedures to review consumers’ trafficking documentation, make determinations, and comply with the legally required timelines. As of recent, several national CRAs have already taken steps to implement the novel credit repair rule. However, in this short time, survivors have been quick to point out the shortcomings of the CRAs’ existing procedures. Survivors have reported the complexity of complying with proof of identity requirements, concerns regarding confidentiality of sensitive information, and lack of compliance with the required timelines. Thus, the CFPB’s recent rule will require CRAs to navigate an evolving and complex legal landscape to ensure compliance, which may require consultation with a legal team knowledgeable about consumer protection regulations and the novel requirements emerging from the CFPB.
