Major CFPB Report on Credit Reporting Agencies

by Jeff Sovern

Here.  Two points from the Executive Summary, though there's quite a bit more than this: 

The NCRAs have created an automated system for handling consumer disputes and forwarding them to data furnishers.
Through this automated system – called e-OSCAR – the NCRAs provide furnishers with one or two numeric codes indicating the nature of the consumer’s dispute and in a minority of cases (26%), explanatory text. At present, the NCRAs generally do not forward documentation that consumers submit with mailed disputes or provide a mechanism for consumers to forward supporting documents when filing disputes online or via phone. The NCRAs resolve an average of 15% of trade line disputes internally (without furnisher involvement) and refer the remaining 85% of the disputes they receive from consumers concerning trade lines to data furnishers through e-OSCAR. The furnisher of the disputed data is then required by the FCRA to investigate the dispute and report back to the NCRA.

The NCRAs’ reliance on furnisher responses as the principal means of resolving disputes is a source of controversy. The NCRAs report that in seeking to maximize accuracy and in resolving disputes, they rely on furnishers meeting their obligations under the FCRA to report information accurately and to respond to disputes appropriately. Consumer advocates have argued that the NCRAs have an obligation to monitor and manage furnisher practices as part of their broader obligation to achieve credit report accuracy.

The first point quoted above from the CFPB Report seems to confirm statements that appear in the National Consumer Law Center's report, Chi Chi Wu, Automated Injustice: How a Mechanized Dispute System Frustrates Consumers Seeking to Fix Errors in Their Credit Reports (2009).  Here is a striking excerpt from the Wu Report, at pp. 18-19, quoting from a 2007 deposition of
Equifax’s Vice President of Global Consumer Services:

 Q: What knowledge do you have as to the mechanics of how a DDC Filipino employee would process an Equifax dispute?

[. ..]

A: The electronic image would be displayed on their screen. They would have an ACIS [Automated consumer Interview System] screen that they would use. They would then look at the electronic image. They would read off the identifying information, enter [. . .] that ID information into the system, access that credit report. At that point, they'd be able to determine if they were looking at the correct file. If they were, they'd go further. They'd read the letter, they gain an understanding of the issues at hand, and they'd look at the credit report to see if the credit report at that time reflects that. If it does, they would send those particular items to the data furnisher or furnishers. They would request that an investigation be started.

[. . . .]

Q: Right. But they're not — they're not going to handle whatever response the creditor may provide?

A: That's correct.

Q: Do DDC employees have telephones on their desk?

A: I do not believe so.

Q: As part of their compliance with Equifax's procedures, do DDC's employees telephone consumers as part of conducting a reinvestigation?

A: They do not.

Q: Do they telephone creditors, the furnishers, as part of conducting a reinvestigation?

A: They do not.

Q: Do they telephone anybody from outside DDC or Equifax as part of conducting a reinvestigation of a consumer dispute?

A: They do not.

Q: What about e-mailing any of those non-Equifax, non-DDC people, creditor, consumer, or third party?

A: They should not be — they do not e-mail them.

Q: And what about fax machines?

A: [. . .] They do not have fax machines either.

Q: Under what circumstances will a DDC employee forward the consumer's actual dispute letter or documents the consumer provided to the furnisher, the creditor, as part of a reinvestigation?

A: A mechanism does not exist to forward the actual documents.

The Wu Report states that the automated forms also include a place where a clerk can type a line of text and reportedly about 30% of the time the clerk writes something in that line.  Under the Fair Credit Reporting Act, 15 U.S.C. 1681i(a)(1)(A), credit bureaus must conduct a "reasonable reinvestigation" upon receiving notice of a consumer dispute. I sure would not want to defend the reasonableness of the process described above. 

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