Additional guidance offered to address the question of how to handle consumer disputes under the Fair Credit Reporting Act (FCRA). The Consumer Financial Protection Bureau (CFPB) issued a Compliance Aid to assist in interpreting the consumer reporting requirements of the CARES Act as well as the CFPB’s Policy Statement on Supervisory and Enforcement Practices Regarding the Fair Credit Reporting Act (FCRA) and Regulation V in light of the CARES Act.
The Compliance Aid takes the form of ten FAQs. While the FAQs focus mostly on furnishers, one of the FAQs addresses enforcement of the statutory deadlines for completing FCRA-mandated reinvestigations by furnishers and consumer reporting agencies pursuant to section 611.
Reinvestigations Under the FCRA
Section 611 of the FCRA generally requires a background screening company (a/k/a consumer reporting agency) to conduct a reasonable reinvestigation of a consumer dispute within 30 days of receipt of the notice of dispute. The reinvestigation must be free of charge. A consumer may dispute the accuracy or completeness of any item of information contained in a background check report. The purpose of the reinvestigation is to determine whether the information is inaccurate or incomplete and record the current status of the information, or delete the information.
Compliance Aid and FAQ 3
Due to COVID-19 closures, a question arose as to how to handle reinvestigations when a court is closed or offering limited services such that information cannot be checked at the source. Pursuant to the FCRA, a background screening company has 30 days to handle a consumer dispute and the subsequent reinvestigation, with the only extension of time being if the consumer provides additional information during the 30-day period that is relevant to the reinvestigation (and then 15 more days may be added).
Question 3 of the FAQs indicates that consumer reporting agencies do not have an “unlimited time beyond the statutory deadlines,” must conduct reinvestigations “in a timely fashion,” and the CFPB expects consumer reporting agencies to “make good faith efforts to investigate disputes as quickly as possible when they are impacted by COVID-19.” The guidance goes on to provide an acknowledgement by the CFPB that consumer reporting agencies are “facing unique challenges” and the Compliance Aid reiterates that the agency will look at enforcement on a case-by-case basis to “evaluate individually the efforts and circumstances of each furnisher and consumer reporting agency in determining if it made good faith efforts to investigate disputes as quickly as possible.”
Takeaway from the Compliance Aid
While this additional guidance isn’t crystal clear, it does seem to reiterate the point that the CFPB will address questions around reinvestigations and the timeliness of such on a case-by-case basis, particularly with respect to enforcement actions. Having said that, there are limits to this discretion. One takeaway is the importance of documenting all efforts that impact reinvestigations so that at a later date it is not a guessing game as to why a reinvestigation took a certain amount of time. The file and logs should clearly document any closures and note attempts taken as part of the reinvestigation. This isn’t the time to stick one’s head in the sand and say, “well, I tried but the court was closed.” As FAQ 3 says, “…the Bureau believes it is appropriate to evaluate individually the efforts and circumstances of each…consumer reporting agency in determining if it made good faith efforts to investigate disputes as quickly as possible.” In the Policy Statement issued in April 2020, the CFPB appeared to acknowledge that in some cases reinvestigations may take longer than the statutory 30-days. In the Compliance Aid they appear to be saying, “yes, maybe in some cases a reinvestigation may take longer than 30 days due to COVID-19;” however, there limits to that discretion from an enforcement perspective.
Resources
Click here to read the Compliance Aid.
Click here to read more about the CARES Act and the related CFPB Policy Statement (click here) which was the first to address the question of how consumer reporting agencies can handle consumer disputes in light of COVID-19 restrictions that impact their ability to conduct a reinvestigation.
