1. Fair Credit Reporting Act (FCRA) Training

2. Fair Credit Reporting Act
The Fair Credit Reporting Act (FCRA) is a federal law that regulates the collection, dissemination, and use of consumer information. The FCRA promotes the accuracy and privacy of information in consumer credit reports. It also controls the use of credit reports and requires Credit Reporting Agencies (CRAs) to maintain correct and complete files.
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3. FCRA Regulates Regulates three types of activity: Credit reporting
Furnishing of credit information
Using credit information
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4. Consumer Rights
Consumers have the right to know what is in their file.
They may request and obtain all the information about their file from a Credit Reporting Agency (CRA). The three major CRAs are:
Experian
Trans Union
Equifax
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5. Consumer Rights Continued…
Consumers have the right to dispute incomplete or inaccurate information.
If a consumer identifies information in their file that is incomplete or inaccurate, and reports it to the CRA, the agency must investigate the dispute unless it is frivolous.
CRAs must correct or delete inaccurate, incomplete, or unverifiable information and usually do so within 30 days.
However, a Credit Reporting Agency may continue to report information it has verified as accurate.
CRAs may not report outdated negative information.
Access to a consumer’s file is limited:
A CRA may provide information about the consumer only to people with a valid need - usually to consider an application with a creditor, insurer, employer, landlord, or other business.
The FCRA specifies those with a valid need for access.
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6. Consumer Rights Continued…
Consumers must give their consent for their report to be provided to employers.
Consumers have a right to sue CRAs, users, and providers in state and federal court for violations of the FCRA.
Consumers may request that CRAs do not distribute their name on lists used by creditors and insurers to make unsolicited offers of credit and insurance.
Requests can be made by telephone or in writing by filling out a form available from each credit reporting agency.
For telephone requests, consumers can call (888) 5 OPT OUT to be excluded from Experian, Equifax, and Trans Union.
Telephone requests last for two years, written request are permanent.
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7. Consumer Rights Continued…
Consumers are entitled to a free file disclosure if:
A person has taken adverse action against them because of information on their credit report.
They are the victim of identity theft and place fraud alert on their file.
Their file contains inaccurate information as a result of fraud.
They are on public assistance.
They are unemployed but expect to apply for employment within 60 days.
In addition, all consumers are entitled to one free disclosure every 12 months upon request from each nationwide credit bureau and from nationwide specialty CRAs.
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8. Fair Credit Reporting Act 101
15 U.S.C. § 1681s-2(a): accurate reporting requirement
15 U.S.C. § 1681s-2(b): reasonable investigation requirement inposed on furnishers upon receipt of notification from the CRA of a dispute
Direct disputes from consumer = obligation to investigate but no private right of action for consumer. See Nelson v. Chase Manhattan Mortg. Corp., 282 F. 3d (9th Circ. 2002).
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9. “Reasonable Investigation”
FCRA does not specify type of investigation required to satisfy § 1681s- 2(b). Most courts require a ‘reasonable’ “reasonable investigation.”
Scope of investigation is tied to relevant information CRA provides to furnisher as part of dispute notification. See Boggio v. USAA Fed. Sav. Bank, 696 F.3d 611 (6th Cir. 2012).
Furnisher must review all relevant information provided to it by CRA.
Nature and specificity of information provided by CRA may affect scope of investigation.
Furnisher cannot require consumer to confirm information in ACDV before investigation.
Duty to perform a “reasonable investigation” includes informing CRA’s if the consumer has submitted a “bona fide” dispute that could alter how a reported debt is understood. See, e.g., Gorman v. Wolpoff & Abramson, 584 F.3d 1197 (9th Cir. 2009); Saunders v. Branch Banking & Trust Co. of Va., 526 F.3d 142 (4th Cir. 2008); Noel v. First Premier Bank, 2012 WL (M.D. Pa. Mar. 12, 2012).
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10. Key provision for the USE of consumer reporting information
15 U.S.C. 1681b(a)(3)
Must have a permissible purpose to acquire the information
Review of an account for collection purposes is a permissible purpose
15 U.S.C. § 1681b(a)(3)(A)
Huertas v. Galaxy Asset Mgmt., 641 F.3d 28, 34 (3rd Cir. 2011)
Plaintiff’s burden to prove no permissible purpose
Must allege User obtained the ifnroamtion without having a purpose to review or collect a debt.
Good faith belief there was an account is enough for a permissible purpose; focus is on the intent of the user/party obtaining the report, not what the actual facts may be. Trikas v. Universal Card Servs. Corp., 351 F. Supp. 2d 37 (E.D.N.Y. 2005)
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11. Prohibited Information
Credit applications cannot ask a consumer about their:
Sex
Race
Color
Religious affiliation
National origin
Unless they are applying for residential real estate. Even then, they are not required to answer.
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12. Prohibited Information Continued…
In reviewing a consumer’s credit application, lenders cannot discriminate on the basis of:
Sex
Marital status
Race
Religion
National origin
Income from assistance programs
If they have exercised rights under the Consumer Protection Act
The only acceptable criteria is their ability and intent to repay funds borrowed.
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13. Exceptions
Creditors can ask how old a consumer is in order to be certain they have reached legal age to enter into contracts. They can also consider a consumer’s age to estimate how long they will continue to work. However, age cannot be used to deny credit to those 62 or older or to those applicants whose age exceeds that required for credit insurance.
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14. Takeaways
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15. Takeaways TMLG does not credit report.
Our clients likely do credit reporting.
What you do when collecting and litigating on accounts may affect what a client reports.
Clients may need your advice to be sure they are compliant in reporting accounts and obtaining consumer credit reports.
Consumers increasingly are raising credit reporting issues, both as counterclaims and in settlement negotiations.
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16. Takeaways continued…
Furnishers do not have much time to conduct a reasonable investigation.
A Credit Reporting Agency (CRA) has 5 days from receipt to send Automated Consumer Dispute Verification (ACDV) to furnisher.
CRA must respond to ACDV within 30 days of receipt.
Leaves a window of, at most, 25 days to respond and that is only if the furnisher gets a ACDV on the same day it is received.
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17. Procedures
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18. Dispute Handling
All TMLG employees are responsible for following all client and firm requirements when a dispute is received. The following are the proper steps in escalating a dispute:
Notate the customer’s dispute in the account notes
Notify
Client is notified
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19. Types of Disputes Not my account (Fraud/Identity Theft) Not my charges
Prior settlement
Account charged off in error
Credit bureau dispute
Failure to credit payments to account
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20. Customer Dispute Handling
Does not have to be in writing. Treat oral disputes as “disputes.”
Brady v. Credit Recovery Co., Inc., 160 F.3d 64, 66 (1st Cir )
Any disagreement with the status of an account should be treated as a “dispute” and client should be informed immediately.
No reason for the dispute needs to be stated.
Dispute does not have to be valid. It is not up to you or client to determine merits for purposes of updating credit reporting.
Do not have to use the word “dispute”.
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21. Policy
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22. Credit Information & TMLG
The Moore Law Group does not report to any reporting agencies.
The Moore Law Group uses credit reports for collection purposes only and for no other purpose. Using credit reports for collection purposes only is a permissible use purpose pursuant to the Fair Credit Reporting Act.
The Moore Law Group prohibits the discussion of the impact of a settlement, payment or non payment on a debtor’s credit report. Specifically TMLG prohibits use of the “reporting” of a settlement or payment or the potential credit score impact as a collection tool.
The Moore Law Group will not pull a credit report on an account if a prior credit report has been pulled within the last six months. If there is reason to pull a credit report sooner than six months manager authorization is required however under no circumstance is a credit report to be pulled within four months of a prior credit report pull.
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23. Credit Information & TMLG continued…
No employee of The Moore Law Group is to discuss the impact of a settlement, payment or non payment on a debtor’s credit report as a collection tool with a debtor.
The use of “reporting” of a settlement or payment or the potential credit score impact as a collection tool is grounds for corrective action and may be grounds for immediate termination.
Collectors may use the credit reports for skip tracing purposes. Collectors and attorneys shall review the credit report in connection with suit worthiness, recommendations and determinations.
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24. Definitions
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25. Hard Inquiry
A “hard” inquiry or pull is visible to anyone who pulls a copy of the consumer’s credit report.
Typically results from inquiries indicating that the consumer is taking on additional financial obligations
Stays on credit report for one to two years
Likely will affect consumer’s credit score
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26. Soft Inquiry
A “soft” inquiry or pull is visible only to the consumer and does not affect the consumer’s credit score.
Allows consumer to monitor who is requesting his or her credit information.
Typically results from inquiries other than new financial commitments.
Consumer requesting his or her own report
Periodic account review by existing creditor
Potential employers
Pre-approved credit offers
Allows consumer to monitor who is requesting his or her credit information
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27. Soft Inquiry (Cont.)
TMLG only uses a soft inquiry when running credit reports
Code 2H for Experian
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28. FCRA Assessment
You can now begin the assessment portion of this training
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