Federal consumer watchdog bares teeth at consumer reporting agencies

creditreport

CONSUMER FINANCIAL PROTECTION BUREAU — The Consumer Financial Protection Bureau (CFPB) has just released a bulletin to nationwide specialty consumer reporting agencies underscoring their obligation under the law to provide a streamlined process for consumers to request a free annual consumer report.

After reviewing a number of agencies’ practices, the CFPB is also issuing warning letters to those that may be violating the law by failing to provide consumers the required streamlined process for accessing their reports.

“Nationwide specialty consumer reporting agencies can have great influence over a consumer’s tenancy, insurance premiums, or even employment,” said CFPB Director Richard Cordray.

“Today, the CFPB is reminding these companies that they must follow the law and provide consumers with easy access to their free annual report. If we have reason to believe that companies are not following the law, we will take action,” Cordray promised.

Consumer reporting agencies

Nationwide specialty consumer reporting agencies primarily collect and provide specific types of information on a consumer’s history, such as check-writing, medical payments, tenancy, employment, or insurance claims.

They are included in the larger industry category of consumer reporting agencies, which also includes credit reporting companies or credit bureaus.

Credit reporting businesses generally assemble or evaluate a consumer’s credit and other information, then sell it to third parties.

There are roughly 400 consumer reporting agencies in the U.S., with three companies dominating the market – Equifax Information Services LLC, Experian Information Solutions Inc., and TransUnion LLC.

Consumers have a right to a free annual report (technically known as a “file disclosure”) not only from the largest three credit bureaus, but also from nationwide specialty consumer reporting agencies.

Because many creditors make financial decisions and set terms on the basis of information contained in these reports, accuracy is critical.

Consumer rights

Under federal law, consumers have a right to dispute the information in these reports and the underlying information consumer reporting agencies have about them. The consumer reporting agency must then investigate the dispute and correct any inaccuracies it discovers.

A consumer can find out more about important consumer rights online.

A CFPB bulletin emphasizes that the Fair Credit Reporting Act (FCRA), which the CFPB oversees, requires all nationwide specialty consumer reporting agencies to provide an easy way for consumers to get free access to their annual reports.

Companies must provide a toll-free number that is published in every telephone directory in which a number for the company appears, and is clearly and prominently posted on the company’s website.

In addition, federal law requires the company to have clear and easy instructions for consumers to get these reports, and adequate staff in place or means to deal with consumers’ requests.

Today’s actions stem from a CFPB review of how nationwide specialty consumer reporting agencies are complying with these requirements. The CFPB looked at phone listings and websites for nationwide specialty consumer reporting agencies across the country and also attempted to request reports.

Why CFPB acted

The review identified several problems, such as companies that are not listing toll-free numbers, and companies that have toll-free numbers but do not make it easy for consumers to request reports.

The CFPB is sending warning letters to several companies that advise recipients that they may be in violation of the law, and that they should review their compliance with requirements to provide consumers streamlined access to their free annual reports.

A warning letter is not a determination of wrongdoing. The CFPB has invited the companies receiving letters to advise the Bureau of the steps they have taken or will take to ensure compliance with the law, or to explain why they believe these legal requirements do not apply to them.

The CFPB is committed to a fair and reasonable inquiry into these matters.

See an example of a warning letter here from the CFPB to the nationwide specialty consumer reporting companies.

Companies that the CFPB believes have violated the requirement to provide consumers streamlined access to their reports could be subject to enforcement actions. Through its supervisory and enforcement functions, the Bureau will continue to monitor consumer reporting agencies to ensure compliance with this obligation and other federal consumer financial laws.

In October, the CFPB began accepting individual complaints about consumer reporting agencies. If a consumer files a complaint with a reporting company and is dissatisfied with the resolution, the CFPB is available to assist here.

Source: “CFPB Bulletin 2012-09″

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