[Federal Register Volume 69, Number 153 (Tuesday, August 10, 2004)]
[Notices]
[Pages 48494-48497]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 04-18290]
-----------------------------------------------------------------------
FEDERAL RESERVE SYSTEM
[Docket No. OP-1209]
Request for Information for Study on Investigations of Disputed
Consumer Information Reported to Consumer Reporting Agencies
AGENCY: Board of Governors of the Federal Reserve System.
ACTION: Notice of study and request for information.
-----------------------------------------------------------------------
SUMMARY: Pursuant to section 313(b) of the Fair and Accurate Credit
Transactions Act of 2003 (FACT Act), the Board of Governors of the
Federal Reserve System is conducting a study on investigations by
furnishers of consumer information to consumer reporting agencies when
that information is disputed. The FACT Act generally amends the Fair
Credit Reporting Act. In preparing this study, the Board requests
public comment on a number of issues relating to the prompt
investigation, completeness, and correction or deletion of information
reported to credit reporting agencies.
DATES: Comments must be received by September 17, 2004.
ADDRESSES: You may submit comments, identified by Docket No. OP-1209,
by any of the following methods:
Agency Web site: http://www.federalreserve.gov. Follow the
instructions for submitting comments on the http://
www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
E-mail: regs.comments@federalreserve.gov. Include docket
number in the subject line of the message.
FAX: 202/452-3819 or 202/452-3102.
Mail: Jennifer J. Johnson, Secretary, Board of Governors
of the Federal Reserve System, 20th Street and Constitution Avenue,
NW., Washington, DC 20551.
All public comments are available from the Board's Web site at
www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as submitted,
except as necessary for technical reasons. Accordingly, your comments
will not be edited to remove any identifying or contact information.
Public comments may also be viewed electronically or in paper in Room
MP-500 of the Board's Martin Building (20th and C Streets, NW.) between
9 a.m. and 5 p.m. on weekdays.
FOR FURTHER INFORMATION CONTACT: Minh-Duc T. Le or Ky Tran-Trong,
Senior Attorneys, Division of Consumer and Community Affairs, Board of
Governors of the Federal Reserve System, at (202) 452-3667 or 452-2412;
for users of Telecommunications Device for the Deaf (``TDD'') only,
contact (202) 263-4869.
SUPPLEMENTARY INFORMATION:
I. Background
The Fair and Accurate Credit Transactions Act of 2003 (FACT Act)
was signed into law on December 4, 2003. Pub. L. 108-159, 117 Stat.
1952. In general, the FACT Act amends the Fair Credit Reporting Act
(FCRA) to enhance the ability of consumers to combat identity theft, to
increase the accuracy of consumer reports, and to allow consumers to
exercise greater control regarding the type and amount of marketing
solicitations they receive. The FACT Act also restricts the use and
disclosure of sensitive medical information. To bolster efforts to
improve financial literacy among consumers, title V of the Act
(entitled the ``Financial Literacy and Education Improvement Act'')
creates a new Financial Literacy and Education Commission empowered to
take
[[Page 48495]]
appropriate actions to improve the financial literacy and education
programs, grants, and materials of the Federal government. Lastly, to
promote increasingly efficient national credit markets, the FACT Act
establishes uniform national standards in key areas of regulation
regarding consumer report information.
As part of the effort to increase the accuracy of consumer reports,
section 313(b) of the FACT Act requires the Board to conduct a joint
study with the Federal Trade Commission (FTC) regarding the extent to
which, and the manner in which, consumer reporting agencies and
furnishers of consumer information to consumer reporting agencies are
complying with the procedures, timelines, and requirements under the
FCRA for (1) the prompt investigation of disputed information, (2) the
completeness of information provided to consumer reporting agencies,
and (3) the prompt correction or deletion of any inaccurate or
incomplete information or information that cannot be verified.
Furnishers of information to consumer reporting agencies may include
banks, retailers, mortgage companies, medical establishments, and
others.
The FTC and the Board must jointly submit a progress report to
Congress on the results of this study no later than December 4, 2004,
which is 12 months after the date of enactment of the FACT Act. The
report also must contain recommendations for legislative or
administrative actions as the Board and FTC jointly determine to be
appropriate.
In this notice, the Board requests specific information about the
current duties and practices of furnishers regarding the prompt
investigation of information, the completeness of information, and the
prompt correction or deletion of information. The Board also seeks
comment on possible legislative and regulatory action to improve the
dispute process.
II. The Fair Credit Reporting Act
The FCRA was amended in 1996 to impose duties on furnishers of
consumer information. Consumer Credit Reporting Reform Act of 1996
(Pub. L. 105-347), 15 U.S.C. 1681 et seq. With the passage of the FACT
Act, certain duties were amended and additional duties were imposed.
The first section below will discuss the furnishers' duties imposed by
the FCRA in effect prior to the FACT Act amendments, since the
amendments have not, or have only recently become effective. The second
section will discuss the new obligations arising from the FACT Act
amendments.
The FCRA--Pre FACT Act
The 1996 amendments to the FCRA established duties for furnishers
of consumer information. These duties, found in FCRA section 623,
include the duties to report accurate information; to provide notice of
a dispute; to provide notice of closed accounts; to provide notice
involving delinquent accounts; and to investigate after receiving
notice of a dispute from a consumer reporting agency.
Section 623(a)(1) of the FCRA prohibits a furnisher from reporting
any information to a consumer reporting agency that it knows or
consciously avoids knowing is inaccurate. This general prohibition,
however, does not apply if a furnisher provides an address for
consumers to use to notify the furnisher that specific information is
inaccurate. If the furnisher provides such an address, the furnisher
may not report information relating to a consumer to any consumer
reporting agency if the consumer has notified the furnisher at the
specified address that the information is inaccurate, and the
information is in fact inaccurate.
Section 623(a)(2) of the FCRA provides that when a furnisher who
regularly and in the ordinary course of business reports information to
one or more consumer reporting agencies determines that the information
provided is not complete or accurate, the furnisher must promptly
notify the consumer reporting agency. The furnisher must also provide
the consumer reporting agency any corrections to that information, or
any additional information necessary to make the information provided
by the furnisher to the consumer reporting agency complete and
accurate. Thereafter, the furnisher must not report to the consumer
reporting agency any of the information that remains incomplete or
inaccurate.
Section 623(a)(3) of the FCRA requires that if the completeness or
accuracy of any information reported by the furnisher to a consumer
reporting agency is disputed by a consumer directly to the furnisher,
the furnisher may not report that information to any consumer reporting
agency without notice that the information is disputed by the consumer.
Furnishers have a duty to provide notice of closed accounts and
delinquent accounts. Under section 623(a)(4), a furnisher--who
regularly and in the ordinary course of business reports information to
a consumer reporting agency about a consumer who has a credit account
with the furnisher--must notify the consumer reporting agency of the
voluntary closure of the account by the consumer. This notice must be
included with information regularly furnished for the period in which
the account is closed. Under section 623(a)(5), a furnisher that
reports to a consumer reporting agency that a delinquent account is
being placed for collection, charged off, or subjected to any similar
action must notify the consumer reporting agency of the month and year
of the commencement of the delinquency that immediately preceded the
collection, charge off, or similar action. The month and year must be
reported within 90 days of the furnisher reporting the collection,
charge off, or similar action.
A furnisher also has duties when a consumer disputes information
with a consumer reporting agency. Section 611 of the FCRA requires that
the consumer reporting agency notify the furnisher of the dispute
received from the consumer and provide the furnisher with all the
information relevant to the dispute. When the furnisher receives this
notification, section 623(b) of the FCRA requires the furnisher to
conduct an investigation with respect to the disputed information,
review all the relevant information provided, and report the results to
the consumer reporting agency generally within 30 days of the consumer
reporting agency having received notice of the dispute from the
consumer. If the furnisher's investigation establishes that the
information was incomplete or inaccurate, the furnisher must report
that result to all other nationwide consumer reporting agencies to whom
the furnisher provided that information. The time period for
investigation, review, and report may be extended for 15 days if the
consumer reporting agency receives additional relevant information from
the consumer.
The FCRA--Post FACT Act Amendments
The FACT Act amends the FCRA with respect to furnishers' duties in
several ways. For example, section 312(b) of the FACT Act amends the
FCRA's prohibition on knowingly reporting inaccurate information to
prohibit reporting of information if the furnisher ``knows or has
reasonable cause to believe that the information is inaccurate.''
``Reasonable cause to believe that the information is inaccurate''
means ``having specific knowledge, other than solely allegations by the
consumer, that would cause a reasonable person to have substantial
doubts about the accuracy of the information.''
[[Page 48496]]
Other provisions of the FACT Act add to a furnisher's duties. For
example, section 312(c) of the FACT Act requires the Board, FTC, and
other federal banking regulators to jointly prescribe regulations that
would identify when a furnisher would be required to reinvestigate a
dispute concerning the accuracy of information contained in a consumer
report on the consumer, based on a direct request from a consumer. The
furnisher, upon receiving this notice would generally have 30 days to
investigate the disputed information, review all relevant information
provided by the consumer, and report the results to the consumer. If
the furnisher finds that the information reported was inaccurate, the
furnisher also must promptly notify each consumer reporting agency to
which the furnisher had reported the inaccurate information and provide
any correction to that information that is necessary to make the
information accurate. Section 314(b) of the FACT Act would further
require furnishers that find an item disputed by a consumer to a
consumer reporting agency to be inaccurate, incomplete, or unverifiable
after any reinvestigation to promptly modify, delete, or permanently
block the reporting of that item of information.
Since these provisions of the FACT Act generally have not become
effective, the Board understands that information about a furnisher's
practices with respect to reporting and dispute investigations will be
mostly about practices as they exist under the FCRA prior to the FACT
Act amendments.
III. Request for Specific Information
As described above, section 313(b) of the FACT Act requires the
Board and the FTC to jointly study the extent to which, and the manner
in which, consumer reporting agencies and furnishers of consumer
information to consumer reporting agencies are complying with the
procedures, timelines, and requirements under the FCRA for the prompt
investigation of the disputed accuracy of any consumer information. The
agencies also must study the completeness of the information provided
to consumer reporting agencies and the prompt correction or deletion of
any inaccurate or incomplete information or information that cannot be
verified. In conducting the study, the Board is requesting public
comment from furnishers, consumers, and other persons on the following
issues:
General Information
What type of entity reports negative and/or positive
information to a consumer reporting agency and what type of entity does
not report negative and/or positive information to a consumer reporting
agency? If an entity does not report information to a consumer
reporting agency, why not?
Of all disputes received by the furnisher, what percentage
of the disputes or complaints comes through a consumer reporting
agency? What percentage comes directly from consumers? What percentage
comes from other sources (e.g., credit repair entities)?
Do the answers to the questions below vary based on
industry, size of entity, type of credit, or other characteristics? Are
there any generalizations that can be made based on industry, size of
entity, type of credit, or other characteristics?
Disputes Communicated by Consumers Directly to Furnishers
Does the furnisher provide an address for consumers to use
if they want to dispute information directly with the furnisher? If
not, why? If an address is provided, how is the consumer informed about
this address?
Regardless of whether an address is provided, what is the
furnisher's process and timeline in handling disputes and complaints
that come directly from consumers? Under what circumstances do
furnishers currently investigate disputes regarding information in a
consumer file, based on a direct request of the consumer?
Is sufficient relevant information provided to the
furnisher by the consumer? If not, what relevant information is often
missing, and why? If relevant information is lacking, how does the
furnisher resolve the dispute?
What are consumers' experiences in resolving a dispute
where the furnisher provided an address? What are their experiences
locating and using this address to resolve their dispute?
What are consumers' experiences in resolving disputes
where the furnisher does not provide an address? How were the disputes
resolved and what entity or person (e.g., furnisher, consumer reporting
agency, credit repair entity, legal representative, etc.) was
instrumental in resolving the dispute?
Other Furnisher Duties
How does the furnisher ensure that it complies with the
applicable statutory requirements regarding the accuracy and
completeness of information it reports to the consumer reporting
agency?
What are the furnisher's procedures and timelines if it
finds the information is not complete or accurate?
What are the furnisher's procedures and timelines for
reporting information that has been directly disputed by a consumer?
What are the furnisher's procedures and timelines for
reporting when a delinquency began on an account that has been placed
for collection, charged off, or subjected to similar action?
What are the furnisher's procedures and timelines for
notifying a consumer reporting agency that a consumer has voluntarily
closed a credit account with the furnisher?
What are consumers' experience with communicating with
furnishers, with the timing of the notice of dispute appearing on the
credit report, or any other matter related to having the notice of
dispute placed on the credit report when disputed information continues
to be reported but with a notice of the dispute?
What are consumers' experiences with furnishers reporting
that credit accounts with the furnishers have been voluntarily closed?
What is the time span between the consumer closing the account and
information about the closure appearing on the credit report?
Disputes Communicated by Consumers to Consumer Reporting Agencies
When a consumer reporting agency receives notice of
consumer disputes and forwards the information to the furnisher, how
does the consumer reporting agency provide the furnisher with the
notices and relevant information? What information does the consumer
reporting agency transmit to the furnisher? Describe any guidelines or
procedures, voluntary or otherwise, that apply to this process.
How does a consumer reporting agency ensure that
furnishers comply with the requirements and timelines established under
the FCRA for disputes communicated to a consumer reporting agency?
What are the furnisher's procedures and timelines for
investigating the disputes and reviewing the information provided?
Is sufficient relevant information provided to the
furnisher by the consumer through the consumer reporting agency? Is all
relevant information from a consumer provided to the furnisher through
the consumer reporting agency? If not, what relevant information is
often missing, and why? If relevant information is lacking, how does
the furnisher resolve the dispute?
If the furnisher finds that the information it reported to
the consumer reporting agency was incomplete or inaccurate, what steps
does the furnisher take?
[[Page 48497]]
If the furnisher does not find the information reported to
the consumer reporting agency to be incomplete or inaccurate, what
steps does the furnisher take?
Describe any guidelines or procedures that may apply to
the treatment of information that continues to be disputed by the
consumer after the formal dispute process has been concluded. How often
do the furnisher and consumer fail to reach an agreement after the
conclusion of the formal dispute process, for example, where the
consumer maintains that the disputed information is inaccurate and the
furnisher maintains that it is accurate?
Recommendations
What, if any, legislative or regulatory changes do you
recommend besides changes made by the FACT Act and its implementing
rules? How would these recommendations improve the system? What
benefits or burdens should be considered?
By order of the Board of Governors of the Federal Reserve
System, August 5, 2004.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. 04-18290 Filed 8-9-04; 8:45 am]
BILLING CODE 6210-01-P