In December 2019, the Consumer Financial Protection Bureau (CFPB) issued its Supervisory Highlights covering its findings from examinations in the areas of credit reporting and the furnishing of credit information to consumer reporting agencies (CRAs). The following are a few of the key takeaways from the CFPB’s findings and comments.
1. The Lack of Procedures Necessary to Fit a Furnisher’s “Nature, Size, Complexity and Scope of Activities”
The CFPB highlighted that a furnisher’s policies and procedures must be appropriate to fit the nature, size, complexity, and scope of a furnisher’s activities. This includes, among other things, sufficient direction on what documentation and information a representative should review when investigating a dispute. In our experience, what documents can and should be reviewed varies significantly from dispute to dispute. The CFPB also noted the importance of retaining “dispute investigation documents and records,” and highlighted a furnisher’s updated procedures which called for the retention of “imaged screenshots, for a minimum of seven years.” This is an area of weakness we continue to see in various policies and procedures. It is important from both a regulatory and a litigation perspective that furnishers develop procedures that document what steps a representative undertook for a particular search, and that such documentation be retained for a sufficient period of time. While testimony and evidence relating to investigative policies and procedures generally is useful, it is important to document that a representative followed those policies and procedures in each instance.
The CFPB also noted that a furnisher’s policies and procedures should be designed to ensure that account information is timely updated to reflect the “current status of a consumer’s account.” Specifically, the CFPB noted a furnisher’s failure to provide prompt notifications to the CRAs upon a furnisher’s determination that an account had been improperly opened as a result of identity theft. The CFPB also noted various failures to promptly update or correct information where a consumer’s charged-off balances had been discharged in bankruptcy, or where a consumer paid a charged-off balance in full. The CFPB noted that the furnishers updated their internal systems with this information, but failed to update and correct the information being furnished to the CRAs. FULL ARTICLE