Requirements for Persons Who Provide Information to Agencies

No Deliberate Falsehoods

The first rule is that no one may provide information to a consumer reporting agency that that person knows is false or the truthfulness of which the person consciously avoids knowing. The same is true of information that is inaccurate and whose inaccuracy has been pointed out to the provider by the consumer. [15 USC 1681s-2(a)(1)] These rules make sense, but they are followed by an odd rule which says that the rule prohibiting the supplying of information known to be false does not apply if the provider supplies a consumer with an address for giving notice of inaccuracy of information about the consumer. [15 USC 1681s-2(a)(1)(C)] This is an important exception for the information provider. It allows the provider to significantly reduce its exposure to liability for reporting inaccurate information and also allows the provider to control how any notice of inaccuracy is delivered to it.

Duty to Promptly Correct

The second rule applies only to persons who furnish information “regularly and in the ordinary course of business.” If such a provider determines that it has provided information that is inaccurate or incomplete, the provider must promptly notify the consumer reporting agency and provide the necessary corrections or additional information.

[15 USC 1681s-2(a)(2)]

Required Notice of Disputed Information

The third rule applies when a consumer has disputed information provided to a consumer reporting agency by a provider. This rule prohibits the provider from furnishing the information to any other consumer reporting agencies without also including notice of the fact that the consumer disputes the information. [15 USC 1681s-2(a)(3)]

Notice of Voluntary Closing of Account

The fourth rule also applies only to persons who provide information “regularly and in the ordinary course of business.” Such a provider must inform the consumer reporting agency if the consumer voluntarily closes a credit account held with the provider. The provider must do so with regularly furnished information in the period when the account is closed. [15 USC 1681s-2(a)(4)]

Notice of Most Recent Delinquency

The fifth rule applies to persons supplying information about an account being placed for collection, charged to profit or loss, or subjected to similar action. The provider must notify the consumer reporting agency of the month and year of the delinquency that immediately preceded the action the provider took. The provider must do this within 90 days of supplying the information. [15 USC 1681s-2(a)(5)] This information helps the consumer reporting agency track how old the delinquency is so the agency can comply with rules against including out-of-date material in consumer reports.

Duty to Investigate Disputed Information

The sixth and final rule applies when the provider receives a notice from the consumer reporting agency stating that the consumer is disputing the information. The provider must investigate the dispute, review all materials provided by the consumer reporting agency, and report the results of the investigation to the consumer reporting agency. If the provider determines that information it has provided is incorrect or incomplete, the provider must also report that finding to all other consumer reporting agencies to which the provider supplied the information if the agency compiles and maintains files on a nationwide basis. The provider must do all this within the time frame provided for the consumer reporting agency to resolve the dispute. [15 USC 1681s-2(b)] This is generally within 30 days of when the consumer reporting agency was notified of the dispute by the consumer.

Miscellaneous FACT Act Provisions

President Bush signed the Fair and Accurate Credit Transactions Act of 2003 (FACT Act) into law on December 4, 2003. The FACT Act significantly amends the Fair Credit Reporting Act. Most of the amendments that would be important to readers of this manual went into effect December 1, 2004. The FACT Act mandated that a number of federal agencies issue implementing regulations, which have now all been issued.

Persons who furnish information must have procedures in place to prevent furnishing information in connection with which they have received a “block” notice from a consumer reporting agency. Persons who furnish information are prohibited from doing so with respect to information that a consumer alleges is the result of identity theft, unless the furnisher is able to determine that the information is correct. [15 USC 1681s-2(a)(6)]

If a financial institution furnishes negative information about a consumer to a nationwide consumer reporting agency, the institution must provide a notice to the consumer to the effect that it has provided negative information. The institution must provide the notice prior to or within 30 days after providing the negative information. [15 USC 1681s-2(a)(7)] The Federal Reserve Board is directed to provide model language for the notice, which is found in 12 CFR 1022, Appendix B. The Board is also directed to issue regulations governing when a consumer can dispute the accuracy of information directly with a furnisher of the information and require the furnisher to reinvestigate. [15 USC 1681s-2(a)(8)]

The federal financial institution regulatory agencies are directed to issue guidelines for use by institutions concerning the accuracy and integrity of the information the institutions provide to consumer reporting agencies, which is found in 12 CFR 1022, Appendix E. [15 USC 1681s-2(e)]