By:  Jennifer Winston

jwinston@cusolaw.com

The Consumer Financial Protection Bureau (CFPB) has recently released another Circular addressing reasonable investigations of consumer reporting disputes. The CFPB is issuing this Circular to emphasize that certain practices involving the failure to conduct a reasonable investigation of disputes can violate the Fair Credit Reporting Act (FCRA).

In Circular 2022-07, the CFPB states that consumer reporting agencies (CRAs) and furnishers will be liable under the FCRA if they fail to investigate any dispute that meets statutory and regulatory requirements.  In addition, CRAs or furnishers may be liable for putting any limits or obstacles on consumers’ dispute rights by requiring any specific format or any specific attachment such as a police report.

This Circular is in response to frequent complaints about both the accuracy of consumer reports and investigations into disputes of incorrect information found in credit reports.  Due to repeated complaints on these issues, the Circular reminds CRAs and furnishers that they are obligated to conduct a reasonable investigation of disputes and cannot avoid this obligation by making consumers satisfy any demands outside of what is permitted by statute or regulation.   The Circular provides examples of conduct that violates the obligation to investigate disputes including:

• CRAs that require a consumer to provide a recent copy of their report or file before investigated despite the consumer providing sufficient information to investigate the dispute;
• Furnishers that require a consumer to provide additional specific documents even though the consumer has already provided supporting documentation required to substantiate the basis of a direct dispute; and
• CRAs or furnishers that require a consumer to attach a completed proprietary form before investigating the consumer’s dispute.

Only disputes that have been deemed frivolous or irrelevant may avoid investigation, and the consumer must be made aware of this decision within five business days with an explanation of what additional information is needed to investigate the dispute.  However, furnishers are required to reasonably investigate all indirect disputes they receive from CRAs, they are not permitted to deem these disputes frivolous or irrelevant without investigation.

The Circular leaves open the possibility that enforcers may bring a claim against a CRA if it fails to promptly provide the furnisher “all relevant information” regarding a consumer-initiated dispute filed with the CRA. CRAs that fail to provide all relevant information may face liability because this failure prevents the consumer from having their dispute reasonably investigated as required. While there is no requirement to provide original copies, the CFPB notes that it will be difficult for a CRA to “prove it complied with the FCRA if it does not provide electronic images of primary evidence for evaluation by the furnisher.”

The Circular states that both federal and state consumer protection regulators and enforcement agencies can bring claims against entities that fail to appropriately investigate consumer disputes.