Written By Digital Content Editor Thomas Ahearn

On November 10, 2022, the Consumer Financial Protection Bureau (CFPB) issued a circular about “Reasonable Investigation of Consumer Reporting Disputes” to affirm that consumer reporting companies and information furnishers cannot “skirt dispute investigation requirements,” according to a news release from the CFPB.

“The CFPB found that consumer reporting companies and some furnishers have failed to conduct reasonable investigations of consumer disputes and to spend the time necessary to get to the bottom of inaccuracies,” the news release stated. These failures can affect, among other things, people’s eligibility for employment.

Consumer reporting companies are required to investigate all non-frivolous disputes and may be liable under the Fair Credit Reporting Act (FCRA) if they fail to investigate disputes. Claims can be pursued by both state and federal consumer protection enforcers and regulators. Specific responsibilities for investigations include:

  • Consumer reporting companies must promptly provide to the furnisher all relevant information regarding a person’s dispute: After a person disputes the accuracy or completeness of information in their file, the consumer reporting company must notify the entity that originally furnished the information within five business days. In addition, the consumer reporting company must give the furnisher all relevant information provided by the individual.
  • Consumer reporting companies and furnishers may not limit a person’s dispute rights: Consumer reporting companies and furnishers must reasonably investigate disputes received directly from individuals. For furnishers, they must reasonably investigate all indirect disputes received from consumer reporting companies. These requirements remain in place even if a person does not include or use the entity’s preferred format, intake forms, or documentation.

People who identify inaccurate information on their consumer reports can dispute it with consumer reporting companies, but that right is dependent on the companies conducting complete investigations. The CFPB’s supervisory exams suggest these companies do not always live up to their investigatory responsibilities.

In some cases, the CFPB found consumer reporting companies ignored the results of their investigations and simply deleted disputed tradelines instead of correcting inaccurate information. Inaccurate information and failures to investigate are the two most common consumer reporting complaints received by the CFPB.

“One wrong piece of information on a person’s credit report can have destructive consequences that follow a consumer for years,” CFPB Director Rohit Chopra stated in the news release. “Companies that fail to properly address consumer disputes in accordance with the law may face serious consequences.”

Employment Screening Resources (ESR) is a service offering of ClearStar, a leading Human Resource technology company specializing in background checks, drug testing, and occupational health screening. ClearStar offers FCRA-compliant background checks of job applicants for employers. To learn more, contact ClearStar.

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