I have written many times about the obligations that creditors have to investigate complaints by consumers that information included in their credit reports to credit bureaus (CRAs) is inaccurate. See, for example, Frivolous or Irrelevant Disputes; The Furnisher Rule Under the Fair Credit Reporting Act (FCRA), The Obligation on Furnishers of Consumer Information and Responding to Frivolous or Irrelevant Direct Disputes. 

There are two primary ways that consumers register their complaints about inaccurate information contained within their credit files—one is by contacting the CRA and another is by contacting the creditor or furnisher of the information to the CRA. Both of these methodologies—indirect and direct—result in obligations by either the CRA or the furnisher or both, to review and respond. I discussed the distinction between these two primary processes in Back to Basics, Continued - Direct Dispute Complaints v. e-OSCAR Referred Complaints.

The CFPB recently issued an advisory opinion to remind CRAs that do not implement reasonable internal controls to prevent the inclusion of facially false data, including logically inconsistent information in consumer reports they prepare, that the same is in violation of section 607(b) of the Fair Credit Reporting Act. 

The CFPB also reminded furnishers that when a dispute comes through the CRA and is passed along to the furnisher, the furnisher is also required to conduct its own investigation into the disputed information and report the results of its investigation back to the CRA. The CFPB reminded furnishers that they must investigate all indirect disputes received from CRAs, and they may not circumvent this requirement by deeming a dispute frivolous or irrelevant. There is nothing in the direct dispute “frivolous” rule that exempts a furnisher from investigating indirect disputes forwarded by CRAs.

In the September 14, 2022 release, the Bureau stated that CRAs are supposed to be filtering out frivolous disputes before forwarding them to furnishers for response. So, it is not appropriate in the Bureau’s view for furnishers to summarily reject an indirect dispute on the basis that it is frivolous. 

Many creditors find the investigations to be tedious and time consuming. They are. However, the entire point of the requirement (as I am reminded by my partner Sam Friedman) is that a full and complete review of the file be undertaken—without shortcuts. 

Please Note: This is the two hundred-thirty-eighth blog in a series of Back to Basics blogs, in which relevant and resourceful information can be easily accessed by clicking Dentons - Consumer Finance Report.