The Consumer Financial Protection Bureau (CFPB) has released the examination procedures to be used in examining larger credit bureaus and Consumer Reporting Agencies (CRAs) so CFPB examiners may verify that these companies are complying with requirements of federal consumer financial law. The CFPB’s authority to supervise larger consumer reporting companies takes effect September 30, 2012. The ‘Examination Procedures for Larger Participants of the Consumer Reporting Market’ is available at: http://files.consumerfinance.gov/f/201209_cfpb_Consumer_Reporting_Examination_Procedures.pdf.
“Our supervision program will benefit hundreds of millions of consumers by making sure these companies are playing fairly and by the rules, and our field guide will ensure that all companies are held to the same standards,” CFPB Director Richard Cordray stated in a press release.
According to the CFPB Examination Procedues, the examination process intended for larger participants in the consumer reporting market contain a series of modules that group similar requirements together, and each examination will cover one or more of the following modules:
- Entity Business Model.
- Accuracy of Information and Furnisher Relations.
- Contents of Consumer Reports.
- Permissible Purposes and Other User Issues.
- Consumer File and Score Disclosures.
- Consumer Inquiries, Complaints, and Disputes and the Reinvestigation Process.
- Consumer Alerts and Identity Theft Provisions.
- Prescreening, Employment Reports, and Investigative Consumer Reports.
- Other Products and Services and Risks to Consumers.
Examiners will be looking to verify that consumer reporting companies are complying with requirements of federal consumer financial law. The ‘Examination Objectives’ listed in the CFPB Examination Procedures include the following:
- To evaluate the quality of the regulated entity’s compliance management systems, including its internal controls and policies and procedures, related to its consumer reporting business.
- To identify acts or practices that materially increase the risk of violations of federal consumer financial law in connection with consumer reporting.
- To gather facts that help to determine whether a regulated entity engages in acts or practices that violate the requirements of federal consumer financial law.
- To determine, in accordance with CFPB internal consultation requirements, whether a violation of federal consumer financial law has occurred and whether further supervisory or enforcement actions are appropriate.
The Dodd-Frank Act gives the CFPB authority to supervise “larger participants” in the consumer financial markets, which are defined as having more than $7 million in annual receipts. The CFPB will have supervisory authority over an estimated 30 companies that account for about 94 percent of the consumer reporting market’s annual receipts. The three largest credit reporting companies – Equifax, Experian, and TransUnion – combined to issue more than 3 billion consumer reports a year and maintain files on over 200 million Americans.
As reported earlier in the ESR News blog, the CFPB adopted a rule to begin supervising larger consumer reporting agencies for the first time at the federal level in July 2012. The rule outlining the CFPB’s supervision of larger consumer reporting agencies is available here: http://files.consumerfinance.gov/f/201207_cfpb_final-rule_defining-larger-participants-consumer-reporting.pdf. A factsheet about CFPB supervision of credit reporting is available here: http://files.consumerfinance.gov/f/201207_cfpb_factsheet_credit-reporting-market.pdf.
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