[Federal Register Volume 87, Number 225 (Wednesday, November 23, 2022)]
[Rules and Regulations]
[Pages 71507-71509]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-25138]



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 Rules and Regulations
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  Federal Register / Vol. 87, No. 225 / Wednesday, November 23, 2022 / 
Rules and Regulations  

[[Page 71507]]



BUREAU OF CONSUMER FINANCIAL PROTECTION

12 CFR Chapter X


Consumer Financial Protection Circular 2022-07: Reasonable 
Investigation of Consumer Reporting Disputes

AGENCY: Bureau of Consumer Financial Protection.

ACTION: Consumer financial protection circular.

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SUMMARY: The Consumer Financial Protection Bureau (Bureau or CFPB) has 
issued Consumer Financial Protection Circular 2022-07, titled, 
``Reasonable Investigation of Consumer Reporting Disputes.'' In this 
circular, the Bureau responds to the questions, ``1. Are consumer 
reporting agencies and the entities that furnish information to them 
(furnishers) permitted under the Fair Credit Reporting Act (FCRA) to 
impose obstacles that deter submission of disputes? '' and ``2. Do 
consumer reporting agencies need to forward to furnishers consumer-
provided documents attached to a dispute? ''

DATES: The Bureau released this circular on its website on November 10, 
2022.

ADDRESSES: Enforcers, and the broader public, can provide feedback and 
comments to [email protected].

FOR FURTHER INFORMATION CONTACT: David Wake, Senior Counsel, at (202) 
435-9613. If you require this document in an alternative electronic 
format, please contact [email protected].

SUPPLEMENTARY INFORMATION: 

Questions Presented

    1. Are consumer reporting agencies and the entities that furnish 
information to them (furnishers) permitted under the Fair Credit 
Reporting Act (FCRA) to impose obstacles that deter submission of 
disputes?
    2. Do consumer reporting agencies need to forward to furnishers 
consumer-provided documents attached to a dispute?

Responses

    1. No. Consumer reporting agencies and furnishers are liable under 
the FCRA if they fail to investigate any dispute that meets the 
statutory and regulatory requirements, as described in more detail 
below. Enforcers may bring claims if consumer reporting agencies and 
furnishers limit consumers' dispute rights by requiring any specific 
format or requiring any specific attachment such as a copy of a police 
report or consumer report beyond what the statute and regulations 
permit.
    2. It depends. Enforcers may bring a claim if a consumer reporting 
agency fails to promptly provide to the furnisher ``all relevant 
information'' regarding the dispute that the consumer reporting agency 
receives from the consumer. While there is not an affirmative 
requirement to specifically provide original copies of documentation 
submitted by consumers, it would be difficult for a consumer reporting 
agency to prove they provided all relevant information if they fail to 
forward even an electronic image of documents that constitute a primary 
source of evidence.\1\
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    \1\ Examples of primary sources of evidence include but are not 
limited to documents submitted by a consumer in support of a dispute 
such as copies of letters from creditors, bank statements, checks, 
or periodic billing statements.
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Background

    Information contained in consumer reports has critical effects on 
Americans' daily lives. Consumer reports are used to evaluate 
consumers' eligibility for loans and the interest rates they pay, their 
eligibility for insurance and the premiums they pay, their eligibility 
for rental housing, and their eligibility for checking accounts. 
Prospective employers commonly use consumer reports in their hiring 
decisions.\2\ Given the importance of this information, Congress 
enacted the FCRA to ``prevent consumers from being unjustly damaged 
because of inaccurate or arbitrary information in a credit report.'' 
\3\
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    \2\ See generally Consumer Financial Protection Bureau, Key 
Dimensions and Processes in the U.S. Credit Reporting System (2012), 
https://files.consumerfinance.gov/f/201212_cfpb_credit-reporting-white-paper.pdf.
    \3\ S. Rep. No. 91-517, at 1 (1969).
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    A central component of the protections against inaccurate 
information is the requirement to conduct a reasonable investigation of 
consumer disputes. Since its enactment, the FCRA has required consumer 
reporting agencies to investigate consumer disputes.\4\ To further 
ensure that consumer reports are accurate, in 1996 Congress amended the 
FCRA to also impose ``duties on the sources that provide credit 
information to CRAs [consumer reporting agencies], called `furnishers' 
in the statute.'' \5\ Thus, when consumer reporting agencies and 
furnishers are properly notified of a dispute about information 
furnished in a consumer report, both consumer reporting agencies and 
furnishers must conduct a reasonable investigation of the dispute.\6\
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    \4\ 84 Stat. 1114, 1132 (Oct. 26, 1970).
    \5\ Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147, 1153 (9th 
Cir. 2009).
    \6\ See, e.g., 15 U.S.C. 1681i(a)(1)(A) (Consumer reporting 
agency obligation to ``conduct a reasonable reinvestigation to 
determine whether the disputed information is inaccurate''); 15 
U.S.C. 1681s-2(b)(1) (furnisher obligation to ``conduct an 
investigation with respect to the disputed information'' for 
disputes provided by a consumer reporting agency); 12 CFR 
1022.43(e)(1) (furnisher obligation to ``conduct a reasonable 
investigation with respect to the disputed information'' for 
disputes sent directly from a consumer); see also Johnson v. MBNA 
America Bank, NA, 357 F.3d 426, 431 (4th Cir. 2004) (holding that 
furnishers receiving indirect disputes from consumer reporting 
agencies must ``conduct a reasonable investigation of their records 
to determine whether the disputed information can be verified'').
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    These responsibilities are part of the FCRA's overall framework for 
ensuring accuracy in consumer reports. Consumers are in a good position 
to identify inaccurate information in their consumer reports, and 
timely and responsive investigations of these identified inaccuracies 
is crucial to the FCRA's purpose of ensuring fair and accurate consumer 
reporting.
    Despite Congress's repeated efforts to promote accuracy by 
requiring reasonable investigation of disputes, consumers continue to 
report problems with accuracy and dispute investigations. Between 
January and September 2021, the CFPB received more than 500,000 
complaints about credit or consumer reporting; the most common issue 
they identified was incorrect information on a credit report.\7\ In 
each of the past three

[[Page 71508]]

calendar years, the top two most frequently identified issues in 
complaints submitted to the CFPB were ``Incorrect information on your 
report'' and ``Problem with a credit reporting company's investigation 
into an existing problem.''
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    \7\ See Consumer Financial Protection Bureau, Annual Report of 
Credit and Consumer Reporting Complaints (Jan. 2022), at 21, 30, 
https://files.consumerfinance.gov/f/documents/cfpb_fcra-611-e_report_2022-01.pdf.

Figure 1: Credit or Consumer Reporting Complaints to the CFPB 2019-2021
[GRAPHIC] [TIFF OMITTED] TR23NO22.176

    The CFPB is responsible for issuing rules and enforcing compliance 
with these provisions of the FCRA.\8\ The FCRA can also be enforced by 
other Federal government agencies and States,\9\ and through private 
actions brought by consumers.\10\ The CFPB is issuing this Circular to 
emphasize that certain practices involving the failure to conduct a 
reasonable investigation of disputes can violate the FCRA.
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    \8\ See, e.g., 12 U.S.C. 5481(12)(F), 5512(b), 5514(c), 5515(c), 
and also Subtitle E (12 U.S.C. 5561-5567); 15 U.S.C. 1681s(b)(1)(H), 
(e). Authority over 15 U.S.C. 1681m(e) and 1681w are limited to the 
Federal banking agencies, the NCUA, the FTC, the CFTC, and SEC.
    \9\ 15 U.S.C. 1681s. States can directly bring actions under 
FCRA. See 12 U.S.C. 1681s(c). States can also bring actions under 
the Consumer Financial Protection Act (CFPA) against ``covered 
persons'' and ``service providers'' based upon violations of Federal 
consumer financial laws, including the FCRA. See Authority of States 
to Enforce the Consumer Financial Protection Act of 2010, 87 FR 
31940 (May 26, 2022).
    \10\ 15 U.S.C. 1681n, 1681o.
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Analysis

    Consumer reporting agencies and furnishers cannot avoid the 
obligation to conduct a reasonable investigation of disputes by making 
consumers satisfy demands other than those specified by statute or 
regulation.
    The CFPB is aware that consumer reporting agencies and furnishers 
have sought to evade the obligation to investigate disputes by 
requiring consumers to submit particular items of information or 
documentation with a dispute before the entity will conduct its 
investigation of the dispute. Examples of this conduct include:
     Consumer reporting agencies that require a consumer to 
provide a recent copy of the consumer's report or file disclosure 
before investigating disputes despite the consumer providing sufficient 
information to investigate the disputed information; \11\
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    \11\ See, e.g., Consumer Financial Protection Bureau, 
Supervisory Highlights (Spring 2014), at 10, https://files.consumerfinance.gov/f/201405_cfpb_supervisory-highlights-spring-2014.pdf.
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     Furnishers that require a consumer to provide additional 
specific documents even though the consumer has already provided the 
supporting documentation or other information reasonably required to 
substantiate the basis of a direct dispute; \12\ and
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    \12\ See, e.g., Complaint at 15, CFPB v. Fair Collections & 
Outsourcing, Inc., D. Md. No. 19-Civ-2817 (Filed Sept. 25, 2019).
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     Consumer reporting agencies or furnishers that require a 
consumer to attach a completed proprietary form before investigating 
the consumer's dispute.\13\
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    \13\ With respect to furnisher direct disputes, see 74 FR 
31,484, 31,500 (July 1, 2009) (``Some industry commenters also 
suggested that the Agencies issue a model direct dispute complaint 
form, with some advocating that consumers be required to use the 
model complaint form. The Agencies decline to adopt these 
suggestions because such requirements would cause otherwise valid 
disputes to be rejected as frivolous or irrelevant due solely to the 
consumer's failure to meet a technical requirement that probably 
would be unknown to the consumer.'').
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    Enforcers may consider bringing an action under the FCRA when 
furnishers and consumer reporting agencies require consumers to provide 
documentation or proof documents, other than as described in the 
statute or regulation, as a precondition to investigation. For disputes 
received directly from a consumer, a consumer reporting agency or 
furnisher must reasonably investigate the dispute unless they have 
reasonably determined that the dispute is frivolous or irrelevant.\14\ 
If such a determination is made, the consumer reporting agency or 
furnisher must notify the consumer of such determination within five 
business days of the determination and identify the additional 
information needed from the consumer to investigate the dispute.\15\ 
Further, furnishers are not permitted to deem disputes as frivolous or 
irrelevant if the dispute has been provided to the furnisher from a

[[Page 71509]]

consumer reporting agency pursuant to FCRA section 623(b).\16\
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    \14\ 15 U.S.C. 1681i(a)(3)(A) (identifying which disputes the 
consumer reporting agency can determine to be frivolous or 
irrelevant); 12 CFR 1022.43(f)(1) (identifying which disputes the 
furnisher can determine to be frivolous or irrelevant).
    \15\ 15 U.S.C. 1681i(a)(3) (Consumer reporting agency frivolous 
or irrelevant determination); 12 CFR 1022.43(f) (furnisher direct 
dispute frivolous or irrelevant determination).
    \16\ 15 U.S.C. 1681s-2(b). See Brief for Consumer Financial 
Protection Bureau and Federal Trade Commission as Amici Curiae 
Supporting Plaintiff-Appellant, Ingram v. Waypoint Resource Group, 
LLC, Third Circuit Court of Appeals (No. 21-2430).
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    Accordingly, consumer reporting agencies and furnishers must 
reasonably investigate disputes received directly from consumers that 
are not frivolous or irrelevant--and furnishers must reasonably 
investigate all indirect disputes received from consumer reporting 
agencies--even if such disputes do not include the entity's preferred 
format, preferred intake forms, or preferred documentation or forms.
    Consumer reporting agencies must provide to the furnisher all 
relevant information regarding the dispute that it received from the 
consumer.
    Enforcers may bring a claim if a consumer reporting agency fails to 
promptly provide to the furnisher ``all relevant information'' 
regarding the dispute that the consumer reporting agency receives from 
the consumer.\17\ Through its supervision, the CFPB has found that 
consumer reporting agencies tend to ingest dispute information from 
consumers using automated protocols, and they also share dispute 
information with furnishers electronically.\18\ The use of these 
technologies has reduced the cost and time to transmit relevant 
information.
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    \17\ 15 U.S.C. 1681i(a)(2)(A).
    \18\ Consumer Financial Protection Bureau, Bulletin 2013-09 
(Sept. 4, 2013), at 1, https://files.consumerfinance.gov/f/201309_cfpb_bulletin_furnishers.pdf (alerting furnishers to the fact 
that consumer reporting agencies have begun forwarding images of 
relevant documentation to furnishers as part of the reasonable 
investigation of disputes).
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    When transmitting information about a dispute, a consumer reporting 
agency may be able to demonstrate that it has transmitted ``all 
relevant information'' even if it does not provide original documents 
in paper form. However, given that primary sources of evidence provided 
by consumers can be dispositive in determining whether there has been a 
furnishing error, and given that the character of a primary source of 
evidence is probative and thus relevant to the investigation,\19\ it 
will be difficult for a consumer reporting agency to prove that it 
complied with the FCRA if it does not provide electronic images of 
primary evidence for evaluation by the furnisher.\20\
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    \19\ For example, a copy of a bill supporting the consumer's 
dispute conveys information regarding the persuasiveness of a 
consumer's dispute that data about the bill would not.
    \20\ Federal Trade Commission, 40 Years of Experience with the 
Fair Credit Reporting Act: An FTC Staff Report with Summary of 
Interpretations (July 2011), at 77, https://www.ftc.gov/sites/default/files/documents/reports/40-years-experience-fair-credit-reporting-act-ftc-staff-report-summary-interpretations/110720fcrareport.pdf (``A CRA does not comply with this provision if 
it merely indicates the nature of the dispute, without communicating 
to the furnisher the specific relevant information received from the 
consumer. For example, if the consumer claimed ``never late'' and 
submitted documentation (such as cancelled checks) to support his/
her dispute, a CRA does not comply with the requirement that is 
provide ``all relevant information'' if it simply notifies the 
furnisher that the consumer disputes the payment history without 
communicating the evidence received.'').
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    The consumer reporting agency's failure to provide the furnisher 
with all relevant information limits the furnisher's ability to 
reasonably investigate the dispute. A furnisher must ``review all 
relevant information'' provided by the consumer reporting agency.\21\ 
Accordingly, consumer reporting agency compliance with the obligation 
to provide all relevant information is crucial to the consumer's right 
to have their dispute reasonably investigated.
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    \21\ 15 U.S.C. 1681s-2(b)(1)(B).
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About Consumer Financial Protection Circulars

    Consumer Financial Protection Circulars are issued to all parties 
with authority to enforce Federal consumer financial law. The CFPB is 
the principal Federal regulator responsible for administering Federal 
consumer financial law, see 12 U.S.C. 5511, including the Consumer 
Financial Protection Act's prohibition on unfair, deceptive, and 
abusive acts or practices, 12 U.S.C. 5536(a)(1)(B), and 18 other 
``enumerated consumer laws,'' 12 U.S.C. 5481(12). However, these laws 
are also enforced by State attorneys general and State regulators, 12 
U.S.C. 5552, and prudential regulators including the Federal Deposit 
Insurance Corporation, the Office of the Comptroller of the Currency, 
the Board of Governors of the Federal Reserve System, and the National 
Credit Union Administration. See, e.g., 12 U.S.C. 5516(d), 5581(c)(2) 
(exclusive enforcement authority for banks and credit unions with $10 
billion or less in assets). Some Federal consumer financial laws are 
also enforceable by other Federal agencies, including the Department of 
Justice and the Federal Trade Commission, the Farm Credit 
Administration, the Department of Transportation, and the Department of 
Agriculture. In addition, some of these laws provide for private 
enforcement.
    Consumer Financial Protection Circulars are intended to promote 
consistency in approach across the various enforcement agencies and 
parties, pursuant to the CFPB's statutory objective to ensure Federal 
consumer financial law is enforced consistently. 12 U.S.C. 5511(b)(4).
    Consumer Financial Protection Circulars are also intended to 
provide transparency to partner agencies regarding the CFPB's intended 
approach when cooperating in enforcement actions. See, e.g., 12 U.S.C. 
5552(b) (consultation with CFPB by State attorneys general and 
regulators); 12 U.S.C. 5562(a) (joint investigatory work between CFPB 
and other agencies).
    Consumer Financial Protection Circulars are general statements of 
policy under the Administrative Procedure Act. 5 U.S.C. 553(b). They 
provide background information about applicable law, articulate 
considerations relevant to the Bureau's exercise of its authorities, 
and, in the interest of maintaining consistency, advise other parties 
with authority to enforce Federal consumer financial law. They do not 
restrict the Bureau's exercise of its authorities, impose any legal 
requirements on external parties, or create or confer any rights on 
external parties that could be enforceable in any administrative or 
civil proceeding. The CFPB Director is instructing CFPB staff as 
described herein, and the CFPB will then make final decisions on 
individual matters based on an assessment of the factual record, 
applicable law, and factors relevant to prosecutorial discretion.

Rohit Chopra,
Director, Consumer Financial Protection Bureau.
[FR Doc. 2022-25138 Filed 11-22-22; 8:45 am]
BILLING CODE 4810-AM-P