[Federal Register Volume 74, Number 125 (Wednesday, July 1, 2009)]
[Rules and Regulations]
[Pages 31483-31528]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-15323]



[[Page 31483]]

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Part II

Department of the Treasury



Office of the Comptroller of the Currency



Office of Thrift Supervision



12 CFR Parts 41 and 571



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Federal Reserve System

12 CFR Part 222



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Federal Deposit Insurance Corporation

12 CFR Parts 334



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National Credit Union Administration

12 CFR Part 717



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Federal Trade Commission

16 CFR Part 660



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Procedures To Enhance the Accuracy and Integrity of Information 
Furnished to Consumer Reporting Agencies Under Section 312 of the Fair 
and Accurate Credit Transactions Act; Final Rule; Guidelines for 
Furnishers of Information to Consumer Reporting Agencies; Proposed Rule

Federal Register / Vol. 74, No. 125 / Wednesday, July 1, 2009 / Rules 
and Regulations

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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Part 41

[Docket ID OCC-2008-0023]
RIN 1557-AC89

FEDERAL RESERVE SYSTEM

12 CFR Part 222

[Docket No. R-1300]
RIN 7100-AD18

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Parts 334

RIN 3064-AC99

DEPARTMENT OF THE TREASURY

Office of Thrift Supervision

12 CFR Part 571

[Docket No. OTS-2008-0025]
RIN 1550-AC01

NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 717

FEDERAL TRADE COMMISSION

16 CFR Part 660

RIN 3084-AA94


Procedures To Enhance the Accuracy and Integrity of Information 
Furnished to Consumer Reporting Agencies Under Section 312 of the Fair 
and Accurate Credit Transactions Act

Agencies: Office of the Comptroller of the Currency, Treasury (OCC); 
Board of Governors of the Federal Reserve System (Board); Federal 
Deposit Insurance Corporation (FDIC); Office of Thrift Supervision, 
Treasury (OTS); National Credit Union Administration (NCUA); and 
Federal Trade Commission (FTC).

ACTION: Final rules.

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SUMMARY: The OCC, Board, FDIC, OTS, NCUA, and FTC (Agencies) are 
publishing these final rules to implement the accuracy and integrity 
and direct dispute provisions in section 312 of the Fair and Accurate 
Credit Transactions Act of 2003 (FACT Act) that amended section 623 of 
the Fair Credit Reporting Act (FCRA). The final rules implement the 
requirement that the Agencies issue guidelines for use by furnishers 
regarding the accuracy and integrity of the information about consumers 
that they furnish to consumer reporting agencies (CRAs) and prescribe 
regulations requiring furnishers to establish reasonable policies and 
procedures for implementing the guidelines. These final rules also 
implement the requirement that the Agencies issue regulations 
identifying the circumstances under which a furnisher must 
reinvestigate disputes about the accuracy of information contained in a 
consumer report based on a direct request from a consumer.

DATES: These rules are effective on July 1, 2010.

FOR FURTHER INFORMATION CONTACT: 
    OCC: Stephen Van Meter, Assistant Director, Community and Consumer 
Law Division, (202) 874-5750; Patrick T. Tierney, Senior Attorney, Carl 
Kaminski, Senior Attorney, Legislative and Regulatory Activities 
Division, (202) 874-5090; or Malloy T. Harris, Jr., National Bank 
Examiner, Compliance Policy, (202) 874-4851, Office of the Comptroller 
of the Currency, 250 E Street, SW., Washington, DC 20219.
    Board: David A. Stein, Managing Counsel, Amy E. Burke, Senior 
Attorney, or Jelena McWilliams, Attorney, Division of Consumer and 
Community Affairs, (202) 452-3667 or (202) 452-2412; or Anne B. Zorc, 
Counsel, (202) 452-3876, or Kara L. Handzlik, Attorney, (202) 452-3852, 
Legal Division, Board of Governors of the Federal Reserve System, 20th 
and C Streets, NW., Washington, DC 20551.
    FDIC: Glenn S. Gimble, Senior Policy Analyst, (202) 898-6865, 
Division of Supervision and Consumer Protection; Richard M. Schwartz, 
Counsel, (202) 898-7424, or Richard B. Foley, Counsel, (202) 898-3784, 
Legal Division; 550 17th St., NW., Washington, DC 20429.
    OTS: April Breslaw, Director, Consumer Regulations, (202) 906-6989; 
Suzanne McQueen, Consumer Regulations Analyst, Compliance and Consumer 
Protection Division, (202) 906-6459; or Richard Bennett, Senior 
Compliance Counsel, Regulations and Legislation Division, (202) 906-
7409, at 1700 G Street, NW., Washington, DC 20552.
    NCUA: Linda Dent or Regina Metz, Attorneys, Office of General 
Counsel, phone (703) 518-6540 or fax (703) 518-6569, National Credit 
Union Administration, 1775 Duke Street, Alexandria, VA 22314.
    FTC: Clarke W. Brinckerhoff and Pavneet Singh, Attorneys, (202) 
326-2252, Bureau of Consumer Protection, Federal Trade Commission, 600 
Pennsylvania Avenue NW., Washington, DC 20580.

SUPPLEMENTARY INFORMATION: 

I. Introduction

    The Fair Credit Reporting Act (FCRA), which was enacted in 1970, 
sets standards for the collection, communication, and use of 
information bearing on a consumer's creditworthiness, credit standing, 
credit capacity, character, general reputation, personal 
characteristics, or mode of living.\1\ In 1996, the Consumer Credit 
Reporting Reform Act extensively amended the FCRA.\2\ The FACT Act \3\ 
further amended the FCRA for various purposes, including improved 
accuracy of consumer reports.
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    \1\ 15 U.S.C. 1681-1681x.
    \2\ Public Law 104-208, 110 Stat. 3009 (Sept. 20, 1996).
    \3\ Public Law 108-159, 117 Stat. 1952 (Dec. 4, 2003).
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    Section 623 of the FCRA describes the responsibilities of persons 
that furnish information about consumers (furnishers) to CRAs.\4\ 
Section 312 of the FACT Act amended section 623 by requiring the 
Agencies to issue guidelines for use by furnishers regarding the 
accuracy and integrity of the information about consumers that they 
furnish to CRAs and to prescribe regulations requiring furnishers to 
establish reasonable policies and procedures for implementing the 
guidelines (the accuracy and integrity regulations and guidelines). 
Section 312 also requires the Agencies to issue regulations identifying 
the circumstances under which a furnisher must reinvestigate disputes 
concerning the accuracy of information contained in a consumer report 
based on a direct request from a consumer (the direct dispute 
regulations). The Agencies are issuing these final accuracy and 
integrity regulations and guidelines and final direct dispute 
regulations to satisfy the requirements of section 312 of the FACT Act.
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    \4\ Section 623 is codified at 15 U.S.C. 1681s-2.
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    The final rules include the accuracy and integrity regulations, 
which contain definitions of key terms such as ``accuracy,'' 
``integrity,'' ``direct dispute,'' and ``furnisher'' and require 
furnishers to establish and implement reasonable written policies and 
procedures regarding the accuracy and integrity of consumer information 
provided to a CRA. The final rules also include guidelines concerning 
the accuracy and integrity of information furnished to CRAs that 
furnishers must

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consider in developing their policies and procedures. The Agencies 
believe that the final accuracy and integrity rules and guidelines 
strike an appropriate balance that affords furnishers the flexibility 
to establish policies and procedures that are appropriate to the 
nature, size, complexity, and scope of each furnisher's activities 
while enhancing the accuracy and integrity of consumer information 
provided to CRAs.
    The final direct dispute regulations: Set forth the circumstances 
under which a furnisher must reinvestigate a consumer's direct dispute; 
provide exceptions to the requirements imposed; detail the direct 
dispute address and dispute notice content requirements; specify 
furnishers' duties after receiving a direct dispute; and establish when 
a furnisher may deem a direct dispute to be frivolous or irrelevant. 
The final direct dispute rule is designed to permit direct disputes in 
virtually all circumstances involving disputes about the accuracy of 
furnished information typically provided by a furnisher to a CRA. This 
approach enables consumers to submit a dispute directly to the 
furnisher (with certain exceptions) when the issue in dispute relates 
to information for which the furnisher is responsible.

II. Statutory Requirements

A. Accuracy and Integrity Regulations and Guidelines

    Section 623(e)(1)(A) of the FCRA requires the Agencies to establish 
and maintain guidelines for use by each furnisher ``regarding the 
accuracy and integrity of the information relating to consumers'' that 
the furnisher provides to CRAs. In developing the guidelines, section 
623(e)(3) directs the Agencies to:
     Identify patterns, practices, and specific forms of 
activity that can compromise the accuracy and integrity of information 
furnished to CRAs;
     Review the methods (including technological means) used to 
furnish information relating to consumers to CRAs;
     Determine whether furnishers maintain and enforce policies 
to assure the accuracy and integrity of information furnished to CRAs; 
and
     Examine the policies and processes employed by furnishers 
to conduct reinvestigations and correct inaccurate information relating 
to consumers that has been furnished to CRAs.
The Agencies also are required to update the guidelines as often as 
necessary.
    Section 623(e)(1)(B) of the FCRA requires the Agencies to prescribe 
regulations requiring furnishers to ``establish reasonable policies and 
procedures for implementing the guidelines'' established pursuant to 
section 623(e)(1)(A). Section 623(e)(2) of the FCRA provides that the 
Agencies must consult and coordinate with one another so that, to the 
extent possible, the regulations prescribed by each Agency are 
consistent and comparable with the regulations prescribed by each other 
Agency. These consistent and comparable final rules are being issued 
following extensive consultation and coordination among the Agencies.

B. Direct Disputes

    Section 623(a)(8) of the FCRA directs the Agencies jointly to 
prescribe regulations that identify the circumstances under which a 
furnisher is required to reinvestigate a dispute concerning the 
accuracy of information contained in a consumer report on the consumer, 
based on a direct request by the consumer. In prescribing the direct 
dispute regulations, section 623(a)(8) directs the Agencies to weigh 
the following specific factors:
     The benefits to consumers and the costs to furnishers and 
the credit reporting system;
     The impact on the overall accuracy and integrity of 
consumer reports of any direct dispute requirements;
     Whether direct contact by the consumer with the furnisher 
would likely result in the most expeditious resolution of any dispute; 
and
     The potential impact on the credit reporting process if 
credit repair organizations are able to circumvent the provisions in 
subparagraph G of section 623(a)(8), which generally states that the 
direct dispute rules shall not apply when credit repair organizations 
provide notices of dispute on behalf of consumers.

III. The Agencies' Consideration of the Statutory Accuracy and 
Integrity Criteria and Direct Dispute Factors

    The Agencies published an advance notice of proposed rulemaking 
(ANPR) in the Federal Register in March 2006 \5\ in order to obtain 
information pertaining to the criteria that Congress directed the 
Agencies to consider in developing the accuracy and integrity 
guidelines and the factors that Congress directed the Agencies to weigh 
in prescribing the direct dispute regulations. The ANPR contained 
detailed requests for comment on ten issues related to the statutory 
criteria governing the development of the accuracy and integrity 
guidelines and on eight issues related to the statutory factors that 
the Agencies must weigh when promulgating the direct dispute 
regulations. The Agencies also specifically requested comment on how 
the issues presented by the ANPR might differ depending on the type of 
furnisher, the types of information furnished, the frequency with which 
a furnisher reports information about consumers to CRAs, or the type of 
CRA that receives the furnished information.
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    \5\ 71 FR 14419 (March 22, 2006).
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    The Agencies collectively received a total of 197 comment letters 
on the ANPR, including multiple copies of the same letter sent by 
commenters to more than one Agency. Commenters included depository 
institutions, other financial services companies, trade associations, 
consumer reporting and credit scoring companies, a mortgage company, 
consumer organizations, and individual consumers.

IV. The Notice of Proposed Rulemaking

    On December 13, 2007, the Agencies published a notice of proposed 
rulemaking (NPRM) in the Federal Register containing proposed rules to 
implement section 312 of the FACT Act.\6\ The NPRM summarized key 
issues identified in the comment letters received on the ANPR 
concerning accuracy and integrity criteria and on the direct dispute 
factors.\7\ The proposal contained the section 312 statutory 
requirement that each furnisher must establish reasonable policies and 
procedures regarding the accuracy and integrity of the information 
about consumers that it furnishes to a CRA. The proposal stated that 
the policies and procedures must be written and be appropriate to the 
nature, size, complexity, and scope of the furnisher's activities. The 
proposal provided that each furnisher would have to consider the 
accuracy and integrity guidelines in developing its policies and 
procedures and review its policies and procedures periodically and 
update them as necessary to ensure their continued effectiveness.
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    \6\ 72 FR 70944 (December 13, 2007).
    \7\ 72 FR 70947-949 (December 13, 2007).
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    The proposal included an appendix to each Agency's regulations 
containing accuracy and integrity guidelines that: (1) Set forth the 
nature, scope, and objectives of a furnisher's policies and procedures; 
(2) enumerated the accuracy and integrity duties of furnishers under 
the FCRA; (3) identified the steps that furnishers should take when 
establishing accuracy and integrity policies and procedures; and (4) 
detailed specific components that

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should be addressed in a furnisher's policies and procedures.
    The proposal included two approaches for defining the terms 
``accuracy'' and ``integrity,'' terms that are not defined by section 
312: \8\ A ``Regulatory Definition Approach'' and a ``Guidelines 
Definition Approach.'' The Regulatory Definition Approach included 
definitions for both terms in regulations. The Guidelines Definition 
Approach defined the terms in guidelines--rather than regulations--with 
reference to the objectives that a furnisher's policies and procedures 
should be designed to accomplish.
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    \8\ In addition, the Agencies noted in the NPRM that the 
legislative history of the FACT Act does not resolve how the terms 
``accuracy'' and ``integrity'' should be defined. See 72 FR 70949-
950 (December 13, 2007).
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    Both proposed approaches defined the term ``accuracy'' to mean that 
any information that a furnisher provides to a CRA about an account or 
other relationship with the consumer reflects without error the terms 
of and liability for the account or other relationship and the 
consumer's performance and other conduct with respect to the account or 
other relationship.
    The proposed Regulatory Definition Approach provided that 
information furnished to a CRA could be technically ``accurate'' yet 
lack ``integrity'' if it presented a misleading picture of the 
consumer's creditworthiness by omitting critical information, such as a 
credit limit on a revolving credit account. In contrast, the proposed 
Guidelines Definition Approach provided that furnished information 
would have ``integrity'' if it: (1) Is reported in a form and manner 
that is designed to minimize the likelihood that the information, 
although accurate, may be erroneously reflected in a consumer report; 
and (2) is substantiated by the furnisher's own records.\9\ The 
objectives included in the Agencies' respective appendices also 
differed in a manner that reflected these alternative definitions.
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    \9\ Key components of the definition of ``integrity'' proposed 
under the Guidelines Definition Approach were incorporated into the 
Regulatory Definition Approach as objectives set forth in the 
proposed guidelines.
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    Both approaches proposed consistent definitions for other key terms 
such as ``furnisher'' and ``direct dispute.''
    Finally, the proposal included regulations that would implement 
section 623(a)(8) of the FCRA, which directs the Agencies jointly to 
prescribe regulations that identify the circumstances under which a 
furnisher is required to reinvestigate \10\ a dispute concerning the 
accuracy of information about a consumer contained in a consumer 
report, based on a direct request by the consumer. The proposal 
specified the circumstances under which a furnisher must investigate a 
direct dispute; included certain exceptions; set forth requirements 
regarding a furnisher's address for receiving direct dispute notices; 
specified the content requirements for direct dispute notices from 
consumers; and addressed frivolous and irrelevant disputes, which, 
pursuant to section 623(a)(8)(F) of the FCRA, furnishers are not 
required to investigate.
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    \10\ Section 312 uses the terms ``reinvestigate'' and 
``investigate'' interchangeably to apply to direct disputes. Compare 
15 U.S.C. 1681s-2(a)(8)(A) with 15 U.S.C. 1681s-2(a)(8)(E). The 
Agencies believe that, as applied to section 312, there is no 
difference in the meaning of these two terms, and, therefore, have 
used only the term ``investigate'' in the final regulations and 
guidelines for ease of comprehension, to provide clarity to 
consumers who file direct disputes, and to assist furnishers with 
the implementation of the regulations and guidelines.
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    In addition, the NPRM requested specific comment on the following 
issues: The definitions of the terms ``accuracy'' and ``integrity'' and 
their placement in either the regulatory text or guidelines; whether 
the proposed definition of ``accuracy'' should include updating 
information as necessary to ensure that the information furnished is 
current; whether the proposed definition of ``accuracy'' is appropriate 
to the direct dispute rule; whether the proposed direct dispute rules 
appropriately reflect the relevant statutory considerations or whether 
a more targeted approach would be more appropriate; whether to permit 
furnishers to provide oral notice for a direct dispute address; whether 
certain types of business addresses should be excluded from receiving 
direct dispute notices; what mechanisms should be required, if any, for 
informing consumers of their direct dispute rights; how the proposed 
direct dispute requirements would affect furnishers to smaller and 
specialty CRAs; and whether the guidelines should incorporate a 
specific record retention time period.
    A more detailed discussion of the provisions of the NPRM is 
contained in the Section-by-Section Analysis.

V. Overview of the Comments Received in Response to the NPRM

    Each agency received the following number of comment letters: OCC--
23, Board--25, FDIC--19, OTS--16, NCUA--17, and FTC--27. Many 
commenters sent copies of the same letter to more than one Agency. The 
Agencies received comments from a variety of banks, thrifts, credit 
unions, credit card companies, mortgage lenders, other non-bank 
creditors, and trade associations. The Agencies also received comments 
from consumer organizations and individual consumers.
    In general, consumer organizations supported the specificity of the 
Regulatory Definition Approach while industry commenters favored the 
flexibility provided by the Guidelines Definition Approach to permit a 
furnisher to adopt policies and procedures that are suitable to their 
specific circumstances. Consumer organization and industry commenters 
also differed in their opinions regarding the level of detail and 
applicability of the proposed guidelines. Consumer organizations 
generally supported more detailed guidelines that should apply to all 
furnishers while industry commenters generally supported less detailed 
guidelines that do not impose requirements on all furnishers. A number 
of industry commenters and most consumer organizations generally 
supported the proposed direct dispute regulations.
    The Agencies have carefully considered all comments received and 
have decided to modify the proposal and adopt the final rules and 
guidelines as described below in the Section-by-Section Analysis.

VI. Section-by-Section Analysis \11\
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    \11\ The OCC, Board, FDIC, OTS, and NCUA are placing the final 
regulations and guidelines implementing section 312 in the part of 
their regulations that implements the FCRA--12 CFR parts 41, 222, 
334, 571, and 717, respectively. For ease of reference, the 
discussion in the SUPPLEMENTARY INFORMATION section uses the shared 
numerical suffix of each of these agency's regulations. The FTC also 
is placing the final regulations and guidelines in the part of its 
regulations implementing the FCRA, specifically 16 CFR part 660. 
However, the FTC uses different numerical suffixes that equate to 
the numerical suffixes discussed in the SUPPLEMENTARY INFORMATION 
section as follows: Suffix .40 = FTC suffix .1, suffix .41 = FTC 
suffix .2, suffix .42 = FTC suffix .3, and suffix .43 = FTC suffix 
.4. In addition, Appendix E referenced in the SUPPLEMENTARY 
INFORMATION section is the FTC's Appendix A.
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    The following describes the three parts of these final rulemaking 
actions: The accuracy and integrity regulations, the accuracy and 
integrity guidelines, and the direct dispute regulations.

A. Accuracy and Integrity Regulations

Section --.40 Scope
    Section --.40 of the proposal set forth the scope of each Agency's 
regulations. Each of the Agencies has tailored this section to describe 
the entities to which its respective subpart applies and have adopted 
this section in the final rules

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without change. The Agencies did not receive comments on this section.
Section --.41 Definitions
Placement of Definitions
    As described in section IV of this SUPPLEMENTARY INFORMATION, the 
Agencies proposed two alternative approaches in the NPRM for defining 
the terms ``accuracy'' and ``integrity''--a Regulatory Definition 
Approach and a Guidelines Definition Approach. Although the proposed 
definition of ''accuracy'' was the same under both alternatives, the 
two approaches differed with respect to the substance of the definition 
of ``integrity'' and the placement of the definitions. The substantive 
aspects of each approach, and the significant comments the Agencies 
received on each, are described in the discussion of the definitions 
later in this section. This portion of the discussion addresses the 
placement of the definitions which, in the final rules, appear in the 
regulation text.
    Under the proposed Regulatory Definition Approach, the definitions 
for the terms ``accuracy'' and ``integrity'' appeared in the regulation 
text. In order to be accurate, furnished information would have to 
reflect without error the terms of and liability for the account or 
other relationship and the consumer's performance and other conduct 
with respect to the account or other relationship. Furnished 
information would have ``integrity'' if it did not omit any term, such 
as a credit limit or opening date, of that account or other 
relationship, the absence of which could reasonably be expected to 
contribute to an incorrect evaluation by a user of a consumer report 
about a consumer's creditworthiness, credit standing, credit capacity, 
character, general reputation, personal characteristics, or mode of 
living.
    Under the proposed Guidelines Definition Approach, the Agencies 
identified four objectives pertaining to the ``accuracy'' and 
``integrity'' of information furnished and placed these objectives in 
the guidelines, rather than the text of the regulation. Definitions for 
the terms ``accuracy'' and ``integrity'' were incorporated into the 
first two objectives. The guidelines would have defined ``accuracy'' in 
substantially the same manner as under the Regulatory Definition 
Approach; however, the definition of ``integrity'' was different from 
that in the Regulatory Definition Approach. Under the proposed 
Guidelines Definition Approach, furnished information would have 
``integrity'' if it: (1) Is reported in a form and manner that is 
designed to minimize the likelihood that the information, although 
accurate, may be erroneously reflected in a consumer report; and (2) is 
substantiated by the furnisher's own records.
    Generally, consumer organizations supported the Regulatory 
Definition Approach because they believed that locating the definitions 
in the regulations, rather than the guidelines, would enhance the 
substantive requirements applicable to furnishers. They believed this, 
in turn, would result in more accurate consumer reports and improved 
assessments of consumers' creditworthiness. One industry commenter also 
supported this approach, stating that it would ensure that important 
credit terms are provided by furnishers to CRAs and thus promote 
correct credit evaluations of consumers by users of consumer reports.
    On the other hand, industry commenters generally favored the 
Guidelines Definition Approach. These commenters preferred a less 
prescriptive approach enabling furnishers' policies and procedures to 
reflect the nature, size, complexity, and scope of their respective 
business activities.
    The Agencies have decided to place the definitions of the terms 
``accuracy'' (Sec.  --.41(a)) and ``integrity'' (Sec.  --.41(e)) in the 
text of the final regulations. This approach more clearly establishes 
that these definitions apply for purposes not only of the guidelines, 
but also to the requirement in the regulations that furnishers must 
establish and implement reasonable written policies and procedures 
regarding the ``accuracy'' and ``integrity'' of furnished information. 
Furthermore, the Agencies note that section 623(a)(8) of the FCRA 
directs the Agencies jointly to prescribe regulations that identify the 
circumstances under which a furnisher is required to reinvestigate a 
dispute concerning the accuracy of information about the consumer 
contained in a consumer report, based on a direct request by the 
consumer. In light of section 623(a)(8), the Agencies have determined 
that the term accuracy should be defined in the text of the regulation.
    Some industry commenters expressed concern that placement of the 
definitions in the text of the regulations would increase the risk of 
litigation initiated by plaintiffs asserting that furnished information 
failed to meet the accuracy and integrity standards included in the 
proposal. To address these concerns, the Agencies have, as was proposed 
in the NPRM, limited the applicability of defined terms in Sec.  --.41, 
including ``accuracy'' and ``integrity,'' to each Agency's regulations 
in subpart E--Duties of Furnishers of Information and the accompanying 
guidelines in Appendix E. The definitions do not impose stand-alone 
obligations on furnishers but guide and inform the duties otherwise 
imposed on furnishers under the regulations. The Agencies' promulgation 
of the definitions of the terms ``accuracy'' and ``integrity'' in Sec.  
--.41 of the final regulations does not mean that they intend to use 
the same definitions in any other context. The Agencies further note 
that section 623(c) of the FCRA limits private rights of action for a 
furnisher's noncompliance with the rules issued pursuant to section 312 
of the FACT Act, which include the definitions of ``accuracy'' and 
``integrity.''
Accuracy
    Both the proposed Regulatory Definition Approach and the proposed 
Guidelines Definition Approach defined ``accuracy'' to mean that any 
information that a furnisher provides to a CRA about an account or 
other relationship with the consumer reflects without error the terms 
of and liability for the account or other relationship and the 
consumer's performance and other conduct with respect to the account or 
other relationship.
    In the final rules, the Agencies have revised the proposed 
definition of ``accuracy.'' Under Sec.  --.41(a) of the final rules, 
``accuracy'' means that information that a furnisher provides to a 
consumer reporting agency about an account or other relationship with 
the consumer correctly:
     Reflects the terms of and liability for the account or 
other relationship;
     Reflects the consumer's performance and other conduct with 
respect to the account or other relationship; and
     Identifies the appropriate consumer.

This definition differs from the proposed definition in two ways.

    First, the phrase ``without error'' that was included in the 
proposal has been removed from the definition in the final rules. 
Industry commenters stated that, in general, the proposed definition of 
``accuracy'' would create an unrealistic standard and that the 
``without error'' standard, in particular, was unworkable. These 
commenters stated that adopting such a standard would effectively 
require providing information to a CRA with perfect precision, which 
the commenters asserted is not feasible and could subject furnishers to 
criticism and potential litigation risks even for honest mistakes that 
are promptly corrected.

[[Page 31488]]

    The Agencies agree that the ``without error'' standard could be 
read to imply an expectation that information be reported according to 
unreasonably high standards. Such an unrealistic and potentially 
burdensome standard could lead some furnishers to cease or limit their 
furnishing of information to CRAs or act as an obstacle to entities 
becoming furnishers. Accordingly, to address the concerns raised by the 
commenters, the standard has been modified to provide that accuracy 
means that information furnished ``correctly reflects'' the terms of 
and liability for an account or other relationship and other relevant 
factors. This standard reflects the goal of providing information with 
a high degree of precision, but provides greater flexibility than the 
proposed standard and should mitigate unforeseen litigation risk.
    The second change from the proposed definition is the addition of a 
reference to the consumer's identity in the definition of ``accuracy.'' 
In the final rules, ``accuracy'' means, among other things as noted 
above, that ``information that a furnisher provides to a consumer 
reporting agency about an account or other relationship with the 
consumer correctly * * * identifies the appropriate consumer.'' This 
change makes the regulatory text consistent with section I.(b)(1)(i) of 
the final guidelines' objectives, which provides that ``[a] furnisher's 
policies and procedures should be reasonably designed to * * * furnish 
information about accounts or other relationships with a consumer that 
is accurate, such that the furnished information: (i) Identifies the 
appropriate consumer * * *.'' The Agencies expect that the addition of 
this ``consumer identity'' element to the definition of ``accuracy'' 
will reinforce the objectives' goal of decreasing the incidence of data 
matching or other errors in which information about one consumer is 
mistakenly linked to another consumer's file maintained by the CRAs.
    Consumer and public interest organizations advocated that the 
definition of ``accuracy'' include the concepts of ``completeness'' and 
``integrity.'' These commenters noted that the direct dispute rules 
only require furnishers to investigate disputes regarding the 
accuracy--and not the integrity--of furnished information. Therefore, 
excluding the concepts of ``completeness'' and ``integrity'' from the 
term ``accuracy'' would preclude consumers from directly disputing 
issues with a furnisher for lack of completeness and integrity.
    The Agencies believe that defining ``accuracy'' without 
incorporating concepts of ``completeness'' and ``integrity'' best 
comports with the text and structure of section 312 of the FACT Act and 
the FCRA.\12\ The text of section 312 uses the terms ``accuracy and 
integrity'' as separate and distinct concepts. A similar observation 
applies with respect to the use of the term ``completeness'' in other 
provisions of the FCRA. The legislative history does not compel a 
different conclusion. Earlier versions of the legislation that became 
the FACT Act required the Agencies to prescribe regulations and 
guidelines regarding the ``accuracy and completeness'' of information 
relating to consumers. That language was also contained in the bill 
passed by the Senate and referred to the Conference Committee. However, 
the bill reported by the Conference Committee and enacted into law 
replaced the term ``completeness'' with ``integrity.'' \13\
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    \12\ See 72 FR 70949-50.
    \13\ Compare 149 Cong. Rec. S13990 (Nov. 5, 2003) (bill as 
passed by the Senate) with 149 Cong. Rec. H12198 (Nov. 21, 2003) 
(bill as reported by the Conference Committee).
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    Two industry commenters stated that the final rules should not 
define ``accuracy'' at all. One of these commenters noted that neither 
the FCRA nor the FACT Act defines ``accuracy,'' and that Congress did 
not direct the Agencies to do so. This commenter recommended that, 
instead of defining those terms in this rulemaking action, the Agencies 
advise furnishers to look to case law for guidance on the meaning of 
the term ``accuracy.''
    The Agencies believe that a definition of ``accuracy'' is important 
to achieve the purposes of this rulemaking. As a threshold matter, no 
express statutory direction is needed to allow the Agencies to define 
terms important to the implementation of section 312 of the FACT Act. 
Moreover, defining the term ``accuracy'' will assist furnishers in 
establishing the required reasonable policies and procedures while 
reducing uncertainty about their appropriate scope and content. In 
addition, the definition provides clear direction to consumers and 
furnishers regarding which issues can be disputed directly with a 
furnisher under Sec.  --.43 of the final rules. For these reasons the 
Agencies believe, and many commenters agreed, that the term 
``accuracy'' should be defined for the purposes of the rules and 
guidelines implementing section 312 of the FACT Act. Using this 
definition in Sec.  --.43 of the rules, however, does not cause it to 
apply for purposes of any other provision of the FCRA or other 
provisions of the Agencies' rules.
    Consumer organizations and industry commenters raised other issues 
with the definition of ``accuracy.'' For example, one industry 
commenter expressed concern that the scope of the proposed definition 
of ``accuracy'' was too broad, and suggested that the Agencies limit 
the application of this definition to credit reports (and similar 
reports of financial transactions) so that it would not apply to 
descriptions of the characteristics of individuals or their employment 
histories.
    Neither the statutory language of section 312 of the FACT Act nor 
its legislative history supports limiting the scope of ``accuracy'' to 
credit reports (and similar reports of financial transactions) so that 
the definition would not apply to the descriptions of characteristics 
of individuals or their employment histories. However, to address the 
commenter's concern that the proposed definition of ``accuracy'' was 
too broad and difficult to apply to an ``investigative consumer 
report,'' \14\ the Agencies in Sec.  --.41(c)(4) have excluded from the 
definition of ``furnisher'' certain individuals (e.g., a neighbor, 
friend, or associate who may have knowledge about the consumer) who may 
provide information to a CRA in this context. The Agencies also note 
that, under Sec.  --.43(b)(1)(ii), the direct dispute rules do not 
apply to a furnisher if the dispute relates to the identity of past or 
present employers.
---------------------------------------------------------------------------

    \14\ Section 603(e) (codified at 15 U.S.C. 1681a(e)) defines an 
``investigative consumer report'' to mean a consumer report or 
portion thereof in which information on a consumer's character, 
general reputation, personal characteristics, or mode of living is 
obtained through personal interviews with neighbors, friends, or 
associates of the consumer reported on or with others with whom the 
consumer is acquainted or who may have knowledge concerning any such 
items of information. However, this information does not include 
information on a consumer's credit record obtained directly from a 
consumer's creditor or from a CRA that obtained the information 
directly from a consumer's creditor or the consumer.
---------------------------------------------------------------------------

    In both proposed approaches, the Agencies included a guideline 
providing that furnishers should update information provided to CRAs as 
necessary to reflect the current status of the consumer's account or 
other relationship. In connection with the proposed definition of 
``accuracy,'' the Agencies asked for comment on whether the definition 
of ``accuracy'' should specifically provide that, in order to be 
``accurate,'' furnished information must be updated as necessary to 
ensure that it is current.
    Most industry commenters opposed including any updating standards 
in the

[[Page 31489]]

definition of ``accuracy.'' They generally stated that if the final 
rules require updating, they should specify that updating should be 
consistent with standard business practices: That is, a furnisher 
should only be required to update information with its regular 
submission of data to a CRA. Several industry commenters expressed 
concern that the updating standard described in the Agencies' request 
for comment could be read to include a requirement to provide daily 
updates. These commenters stated that it would be impossible for some 
furnishers to do this and unnecessarily costly and burdensome for 
others. One industry commenter suggested that furnishers should be 
expected to ``periodically update'' the information, rather than to 
update information as necessary to ensure that the information is 
current.
    Three commenters stated that the definition of ``accuracy'' should 
not include an updating requirement at all because it is implicit in 
the concept of ``accuracy.'' Two of these commenters noted that an 
updating requirement already is encompassed within the FCRA and 
elsewhere in the guidelines.
    Consumer organizations stated that the definition of ``accuracy'' 
should require that information is updated so that it is, and remains, 
current.
    The Agencies recognize that the nature, size, complexity, and scope 
of a furnisher's activities affect the type of information it 
voluntarily provides to a CRA, as well as the frequency with which it 
updates the information. Given the voluntary nature of the reporting 
system, the diversity of furnishers, the differences in the types of 
information furnishers report to CRAs, and the disparities in the 
frequencies with which furnishers voluntarily update information, the 
Agencies believe it is more appropriate to follow a less prescriptive 
approach and address issues related to updating in the guidelines, 
rather than in the text of the regulations as an element of 
``accuracy.'' At the same time, the Agencies believe that the overall 
accuracy of information is improved when, for information that a 
furnisher elects to provide to a CRA, it is updated to reflect the 
current status of an account or relationship. Therefore, section 
I.(b)(4) of the final guidelines states that a furnisher's policies and 
procedures ``should be reasonably designed * * * to update the 
information it furnishes as necessary to reflect the current status of 
the consumer's account or other relationship, including * * * any 
transfer of an account * * * and * * * any cure of the consumer's 
failure to abide by the terms of the account or other relationship.''
Integrity
    The proposed Regulatory Definition Approach provided that 
information furnished to a CRA may be technically ``accurate'' yet lack 
``integrity'' because it presents a misleading picture of the 
consumer's creditworthiness by omitting critical information, such as a 
credit limit on a revolving credit account. The proposed Regulatory 
Definition Approach defined the term ``integrity'' to mean that any 
information that a furnisher provides to a CRA about an account or 
other relationship with the consumer does not omit any term, such as a 
credit limit or opening date, of that account or other relationship, 
the absence of which can reasonably be expected to contribute to an 
incorrect evaluation by a user of a consumer report about a consumer's 
creditworthiness, credit standing, credit capacity, character, general 
reputation, personal characteristics, or mode of living.
    Under the proposed Guidelines Definition Approach, the definition 
of ``integrity'' did not address the omission of any term the absence 
of which could contribute to an incorrect evaluation of a consumer's 
creditworthiness by a user of a credit report. Instead, the proposed 
definition of ``integrity'' addressed two specific issues pertaining to 
furnished information. The proposed Guidelines Definition Approach 
defined ``integrity'' to mean that any information that a furnisher 
provides to a CRA about an account or other relationship with the 
consumer: (1) Is reported in a form and manner that is designed to 
minimize the likelihood that the information, although accurate, may be 
erroneously reflected in a consumer report (form and manner provision); 
and (2) should be substantiated by the furnisher's own records 
(substantiation provision). The form and manner provision included the 
following three examples of methods furnishers could use to comply with 
that provision: Reporting the furnished information with appropriate 
identifying information about the consumer; reporting the information 
in a ``standardized and clearly understandable form and manner;'' and 
including in the information a date specifying the time period to which 
it pertained. Thus, in addition to being placed in a different 
location, the guidelines definition was substantively different from 
that proposed in the Regulatory Definition Approach.
    The final rules place the definition of ``integrity'' in the text 
of the regulations, at Sec.  --.41(e), and define ``integrity'' to mean 
that information that a furnisher provides to a CRA about an account or 
other relationship with the consumer:
     Is substantiated by the furnisher's records at the time it 
is furnished;
     Is furnished in a form and manner that is designed to 
minimize the likelihood that the information may be incorrectly 
reflected in a consumer report; and
     Includes the information in the furnisher's possession 
about the account or other relationship that the relevant Agency has:

--Determined that the absence of which would likely be materially 
misleading in evaluating a consumer's creditworthiness, credit 
standing, credit capacity, character, general reputation, personal 
characteristics, or mode of living; and
--Listed in section I.(b)(2)(iii) of the guidelines. Section 
I.(b)(2)(iii) provides one item on this list: The credit limit, if 
applicable and in the furnisher's possession.

    Most industry commenters recommended that the Agencies adopt the 
definition of ``integrity'' in the Guidelines Definition Approach. Many 
of these commenters objected to the content of the definition proposed 
in the Regulatory Definition Approach. They said that the definition 
would create substantial uncertainty about what information must be 
furnished because furnishers may not know or be able to ascertain how 
other entities use credit report data. Some of these commenters said 
that the Regulatory Definition Approach, in effect, would impose on 
furnishers a burdensome ``full-file'' reporting requirement in order to 
satisfy the integrity standard. These commenters indicated that, 
because users of consumer reports are diverse and may evaluate consumer 
reports differently, defining the parameters of the information that 
must be furnished by reference to how third-party users of a consumer 
report might evaluate a consumer's creditworthiness is an unworkable, 
unclear, and burdensome standard that would discourage voluntary 
reporting under the FCRA. These commenters noted, among other things, 
that most credit scoring models are confidential, and that the wide 
variety of users of consumer reports exacerbates the difficulty of 
knowing what information users will consider material. One industry 
commenter suggested that if the Agencies choose to adopt the Regulatory 
Definition Approach, they should itemize the specific credit terms they 
believe must be reported to achieve ``integrity.'' Several industry 
commenters also

[[Page 31490]]

asserted that the Regulatory Definition Approach conflicted with the 
legislative history of section 312 of the FACT Act because it equated 
``integrity'' with ``completeness.''
    Consumer organizations generally supported the proposed Regulatory 
Definition Approach. As a general matter, consumer organizations 
believed that this approach essentially equated ``integrity'' with 
``completeness'' and would enhance the requirements applicable to 
furnishers, the effectiveness of the credit reporting system, and 
assessments of consumers' creditworthiness.\15\
---------------------------------------------------------------------------

    \15\ As discussed above, however, some of these commenters 
stated that the concept of ``integrity'' should be included in the 
definition of ``accuracy.''
---------------------------------------------------------------------------

    Substantively, the final rules incorporate, in revised form, the 
elements of the definition of ``integrity'' that were included in both 
the proposed Regulatory Definition Approach and Guidelines Definition 
Approach. First, the definition of ``integrity'' in the final rules 
includes a substantiation provision. Some commenters requested that the 
regulations include a substantiation requirement, and the Agencies 
agree that the ``integrity'' of furnished information depends, in part, 
on its consistency with the furnisher's own records. A timing component 
has been added to the provision in the final rules requiring furnished 
information to be substantiated by the furnisher's records at the time 
it is furnished so that the information provided to a CRA reflects, and 
is supported by, the furnisher's records at that time.
    Second, the Agencies are adopting the form and manner provision as 
part of the definition of ``integrity'' to address omissions and data 
transmission and similar errors that may lead to information being 
incorrectly reflected on a credit report. This provision contemplates, 
for example, that information will be furnished in a form and manner 
that would permit a CRA to accept data regarding a consumer and link it 
appropriately to the consumer.
    Two industry commenters expressed concern about the phrase 
``standardized and clearly understandable form,'' as used in the 
examples provided in connection with the guidelines' definition. These 
commenters stated that the Agencies should recognize that not every 
furnisher provides information in the same manner or format. One of 
these commenters suggested the phrase instead be revised to encourage 
furnishers to achieve standardization to the extent reasonably 
possible. The Agencies have not included the phrase ``standardized and 
clearly understandable form'' in the definition of ``integrity'' but 
have included it in the objectives at section I.(b)(2)(ii)(B) of the 
guidelines.
    Finally, the Agencies have modified the definition of ``integrity'' 
that was proposed under the Regulatory Definition Approach while 
retaining the key concept that the omission of certain information 
affects the integrity of that information. In light of the range and 
diversity of users of consumer reports, the information that such users 
may find relevant and material, and the use of various proprietary 
credit scoring models and underwriting methodologies, it could be 
difficult or impossible for furnishers to predict what information 
third parties would find relevant or material to make credit or other 
determinations based on consumer reports. Given these impediments, the 
Agencies conclude that the proposed regulatory definition of 
``integrity'' would have created an unworkable standard because 
furnishers cannot be expected to identify all types of information 
that, if omitted, could reasonably be expected to contribute to an 
incorrect evaluation of a consumer's creditworthiness by a user of a 
consumer report. Accordingly, the Agencies have determined to retain 
the ``material omission'' concept that informed the Regulatory 
Definition Approach in a manner that does not place the burden of 
making that determination on furnishers.
    Under the final rules, in order to satisfy the definition of 
``integrity,'' furnished information must include items in the 
furnisher's possession about the account or other relationship only if 
the relevant Agency has determined that its absence would likely be 
materially misleading in evaluating a consumer's creditworthiness, 
credit standing, credit capacity, character, general reputation, 
personal characteristics, or mode of living; and has listed that item 
of information in the Agency's guidelines. Thus, each Agency, in 
consultation and coordination with the other Agencies, will determine, 
and list in its guidelines, the types of information in a furnisher's 
possession about a consumer's account or other relationship that the 
furnisher will be expected to provide to promote the integrity of the 
information. This list will be based on the Agency's determination that 
the absence of the information would likely be materially misleading in 
evaluating a consumer's creditworthiness, credit standing, credit 
capacity, character, general reputation, personal characteristics, or 
mode of living.
    Consistent with this approach, the Agencies have listed in the 
guidelines the consumer's credit limit, if applicable and in the 
furnisher's possession. A consumer's credit limit was one of the items 
used in the proposed regulatory text to illustrate the type of 
information covered by the standard contained in the definition of 
``integrity'' as proposed.
    As the Agencies noted in the NPRM, one key factor for evaluating 
the creditworthiness of an individual is credit utilization. If a 
creditor fails to furnish a credit limit for an account, credit 
evaluators must either ignore credit utilization data in the evaluation 
model or use a substitute measure for the credit limit, such as the 
highest balance (the largest amount ever owed on the account). 
Substituting the highest balance level for the credit limit generally 
results in a higher estimate of credit utilization because the highest-
balance amount is typically lower than the credit limit. A higher 
credit utilization estimate generally leads, in turn, to a higher 
perceived level of credit risk for some consumers.\16\
---------------------------------------------------------------------------

    \16\ See Robert B. Avery, Paul S. Calem, Glenn B. Canner, Credit 
Report Accuracy and Access to Credit; Federal Reserve Bulletin, 
Summer 2004, p. 306.
---------------------------------------------------------------------------

    Therefore, the revised ``integrity'' provision requires that 
furnishers provide a credit limit to a CRA, if applicable and in the 
furnisher's possession, in order for the furnished information to have 
``integrity.'' The qualifying phrase reflects the Agencies' recognition 
that some credit products may not have a credit limit, in which case it 
is appropriate for the furnisher not to provide credit limit 
information because a credit limit would not be ``applicable.'' 
However, if the furnisher subsequently establishes a credit limit for 
the consumer's account or other relationship, then the furnisher is 
expected to provide the information with its next regular data 
transmission to a CRA. Likewise, if a furnisher changes a credit limit 
for the consumer's account, then the furnisher also is expected to 
furnish that change with its next regular data transmission to a CRA. 
Additionally, a furnisher may have acquired a consumer account or 
relationship through a sale or transfer, and the credit limit data may 
not have been provided to the acquiring furnisher. In those instances, 
a furnisher also would not be expected to provide credit limit 
information since it is not in its possession. Consistent with the 
FCRA, under which the furnishing of information about consumers is 
voluntary, the definition of ``integrity''

[[Page 31491]]

applies only to information that the furnisher elects to provide to a 
CRA. Furnishers should note that they may be subject to separate 
obligations to furnish all available information about an account or 
other relationship.\17\
---------------------------------------------------------------------------

    \17\ Furnishers that provide information about consumers to CRAs 
related to mortgage loans also may be subject to requirements 
imposed by Freddie Mac, Fannie Mae, and the Federal Housing 
Administration. See Fannie Mae Servicing Guide, Part I, section 
304.09 and Part VII, section 107, Freddie Mac Service Guide, section 
55.4: Reports to credit repositories; and the Federal Housing 
Administration Servicing Handbook, section 4330.1(c) (Rev-5) 
(incorporating by reference the Fannie Mae Servicing Guide). 
Further, the Department of Housing and Urban Development has defined 
``Mortgages contrary to good lending practices'' to include a 
mortgage or a group or category of mortgages entered into by a 
lender and purchased by Fannie Mae or Freddie Mac where it can be 
shown that a lender engaged in a practice of failing to report 
monthly on borrowers' repayment history to credit repositories on 
the status of each loan purchased by Fannie Mae or Freddie Mac that 
a lender is servicing. 24 CFR 81.2(b).
---------------------------------------------------------------------------

    The proposed definition of ``integrity'' that was included in the 
Regulatory Definition Approach also included the opening date of an 
account or other relationship as an example of a type of data that, if 
omitted, reasonably could be expected to contribute to an incorrect 
evaluation by a user of a consumer report of a consumer's 
creditworthiness. The Agencies do not have sufficient information to 
determine whether, and under what circumstances, the omission of an 
account opening date undermines the ``integrity'' of furnished 
information. Therefore, the Agencies have not incorporated any 
reference to account opening dates into the definition of ``integrity'' 
in the final rules and have not listed it in section I.(b)(2)(iii) of 
the guidelines. However, the Agencies are publishing an advance notice 
of proposed rulemaking in this same issue of the Federal Register for 
the purpose of obtaining information that would assist the Agencies in 
determining whether, and under what circumstances, it would be 
appropriate to propose any additions to the guidelines, including 
whether and under what circumstances the Agencies should include an 
account opening date as an item furnishers would be expected to provide 
to a CRA to promote the integrity of the information.
Direct Dispute
    Proposed Sec.  --.41(e) defined ``direct dispute'' to mean a 
dispute submitted directly to a furnisher by a consumer concerning the 
accuracy of any information contained in a consumer report relating to 
the consumer.
    The Agencies have revised the definition of ``direct dispute'' to 
mean a dispute submitted directly to a furnisher (including a furnisher 
that is a debt collector) by a consumer concerning the accuracy of any 
information contained in a consumer report and pertaining to an account 
or other relationship that the furnisher has or had with the consumer. 
The definition in the final rules includes a parenthetical clause that 
clarifies that a ``furnisher'' also includes a debt collector that 
provides information to a CRA. This clarifying language has been added 
in response to a number of commenters that stated information furnished 
by a collection agency, which may be collecting a debt on behalf of 
another furnisher, should be covered by the direct dispute regulation.
    Section 623(a)(8)(A) of the FCRA requires the Agencies to jointly 
prescribe regulations that identify the circumstances under which a 
furnisher shall be required to investigate a direct dispute. This is 
accomplished in part through the definition of ``direct dispute.'' 
Under the final rules, a direct dispute includes only a dispute 
concerning the accuracy of information contained in a consumer report 
that pertains to an account or other relationship that the furnisher 
has or had with the consumer. This revision addresses comments made by 
several industry commenters that expressed concern that the scope of 
the proposed direct dispute definition was too broad. They suggested 
limiting the definition of ``direct dispute'' to include only those 
disputes about information in a consumer report that relate to 
information provided by the furnisher, rather than disputes about any 
information contained in the report.\18\
---------------------------------------------------------------------------

    \18\ While the final definition of direct dispute pertains to 
information about an account or other relationship that the 
furnisher has or had with the consumer rather than whether the 
furnisher provided the information, in response to these comments, 
the Agencies also have added an exception to the circumstances under 
which a furnisher must investigate a direct dispute. Section 
--.43(b)(1)(vi) of the final rule states that the investigation 
requirements do not apply to a furnisher if the dispute relates to 
information provided to a CRA by another furnisher.
---------------------------------------------------------------------------

    The Agencies note that the phrase ``consumer report,'' as used in 
the definition of ``direct dispute,'' includes a ``file disclosure'' 
from a CRA toa consumer.\19\
---------------------------------------------------------------------------

    \19\ Under section 609(a) of the FCRA, CRAs are required to 
provide certain information to consumers upon request. CRAs 
generally provide such disclosures in a different format than a 
consumer report they provide to a third party, and refer to them as 
``file disclosures,'' rather than consumer reports.
---------------------------------------------------------------------------

Furnisher
    Proposed Sec.  --.41(c) defined the term ``furnisher'' to mean an 
entity other than an individual consumer that furnishes information 
relating to consumers to one or more CRAs. The proposed definition of 
``furnisher'' excluded entities that provide information to a CRA 
solely to obtain a consumer report under sections 604(a) and (f) of the 
FCRA, which, respectively, enumerate the circumstances under which a 
CRA may provide a consumer report and prohibit persons from obtaining 
or using consumer reports for impermissible purposes.
    The final regulations at Sec.  --.41(c) define ``furnisher'' to 
mean an entity that furnishes information relating to consumers to one 
or more CRAs for inclusion in a consumer report. The definition also 
provides that an entity is not a furnisher when it:
     Provides information to a CRA solely to obtain a consumer 
report in accordance with sections 604(a) and (f) of the FCRA;
     Is acting as a CRA as defined in section 603(f) of the 
FCRA;
     Is a consumer to whom the furnished information pertains; 
or
     Is a neighbor, friend, or associate of the consumer, or 
another individual with whom the consumer is acquainted or who may have 
knowledge about the consumer, and who provides information about the 
consumer's character, general reputation, personal characteristics, or 
mode of living in response to a specific request from a CRA.
    The final rules continue to exclude from the definition of 
``furnisher'' entities that provide information to a CRA solely to 
obtain a consumer report in accordance with sections 604(a) and (f) of 
the FCRA. As discussed in the NPRM, users of consumer reports may 
provide information about consumers to CRAs to obtain such reports, but 
not for the purpose of having that information included in consumer 
reports. For this reason, although the user's request for the report 
may be reflected in the consumer report as an inquiry, furnishing 
information related to such an inquiry is not subject to the final 
regulations and guidelines. The final rules revise the wording of the 
definition to make clear that an entity is a ``furnisher'' only when it 
furnishes information for purposes of inclusion in a consumer report. 
The final rules are intended to avoid discouraging entities that use 
consumer reports from obtaining or using consumer reports for 
permissible purposes.
    The Agencies also have added three other exclusions from the 
definition of ``furnisher'' in response to comments indicating that the 
proposed definition was too broad. For example, one

[[Page 31492]]

industry commenter urged the Agencies to exempt resellers of consumer 
report information because those entities already are subject to 
dispute requirements under section 611(f) of the FCRA. The final rules 
include an exemption for entities acting in the capacity of a 
``consumer reporting agency'' as defined in section 603(f) of the FCRA. 
This exemption covers ``resellers'' acting in that capacity because, 
under section 603(u) of the FCRA, resellers are a type of CRA.
    In addition, the Agencies note that increasing numbers of consumers 
are self-reporting certain types of information, such as rent or 
utility payments, to alternative consumer reporting agencies. To 
address this development and encourage consumers to provide information 
to CRAs, the final rules explicitly exempt from the ``furnisher'' 
definition in Sec.  --.41(c)(3) a consumer who provides to a CRA 
information pertaining to himself or herself.
    Finally, the Agencies have added an exception that excludes from 
the definition of ``furnisher'' a neighbor, friend, or associate of a 
consumer, or another individual with whom the consumer is acquainted or 
who may have knowledge about the consumer, and who provides information 
about the consumer's character, general reputation, personal 
characteristics, or mode of living in response to a specific request 
from a CRA (excepted persons). This new exception parallels the types 
of information that are collected in connection with an ``investigative 
consumer report'' as described in section 603(e) of the FCRA. The 
Agencies believe that this exception is necessary to avoid disrupting 
the information collection processes that have been established for 
creating investigative consumer reports. These excepted persons play a 
crucial role by providing information used in connection with matters 
such as insurance applications and employment-related background 
checks.
Identity Theft
    The Agencies proposed to define ``identity theft'' as having the 
same meaning as in the FTC's regulations at 16 CFR 603.2(a). Section 
603.2(a), which was adopted pursuant to section 111 of the FACT 
Act,\20\ defines the term ``identity theft'' to mean ``a fraud 
committed or attempted using the identifying information of another 
person without authority.'' \21\ This definition also is used in the 
interagency regulations implementing section 114 of the FACT Act, 
relating to identity theft prevention, detection, and mitigation 
programs. The Agencies received no comments on the definition of 
``identity theft'' and adopt the definition without change in the final 
rules.
---------------------------------------------------------------------------

    \20\ Section 111 of the FACT Act provides for a definition of 
the term ``identity theft,'' and authorizes the FTC to refine that 
definition. See section 603(q)(3) of the FCRA; 15 U.S.C. 
1681a(q)(3).
    \21\ See 16 CFR 603.2(b) for the FTC's definition of 
``identifying information.'' The FTC's definition of ``identifying 
information'' includes any name or number that may be used, alone or 
in conjunction with any other information, to identify a specific 
person, including any: Name, social security number, date of birth, 
official State or government issued driver's license or 
identification number, alien registration number, government 
passport number, employer or taxpayer identification number; unique 
biometric data, such as fingerprint, voice print, retina or iris 
image, or other unique physical representation; unique electronic 
identification number, address, or routing code; or 
telecommunication identifying information or access device (as 
defined in 18 U.S.C. 1029(e)).
---------------------------------------------------------------------------

Section --.42 Reasonable policies and procedures concerning the 
accuracy and integrity of furnished information
Policies and Procedures
    Proposed Sec.  --.42(a) stated that each furnisher must establish 
and implement reasonable written policies and procedures regarding the 
accuracy and integrity of the information about consumers that it 
furnishes to a CRA. The proposal provided that the policies and 
procedures must be appropriate to the nature, size, complexity, and 
scope of the furnisher's activities. The final rules retain this 
provision without change.
    Most industry commenters supported the Agencies' proposal to permit 
each furnisher the flexibility to adopt policies and procedures suited 
to their individual circumstances, but several industry commenters 
opposed the requirement that furnishers establish ``written'' policies 
and procedures. One industry commenter stated that not all community 
banks have written policies and procedures for reporting customer data. 
Three industry commenters suggested that some furnishers should be 
allowed to meet the ``writing'' requirement by simply acknowledging, 
where applicable, that the furnisher is reporting data in the Metro 2 
format, the consumer data reporting industry's standard electronic 
format for submitting information to CRAs. One industry commenter 
stated that requiring written policies and procedures was reasonable 
and would not be unduly burdensome. Consumer organizations strongly 
supported the proposed requirement that policies and procedures be 
``written.''
    The final rules retain the requirement that furnishers' policies 
and procedures be written because the Agencies have concluded that it 
is necessary both to ensure effective implementation of the final rules 
and to enable the Agencies to assess furnishers' compliance with the 
rules. The Agencies do not expect that the requirement for written 
policies and procedures will be unduly burdensome, especially since, 
under the guidelines, a furnisher may incorporate any of its existing 
policies and procedures that are relevant and appropriate. In response 
to commenters' suggestions that a particular approach to the policies 
and procedures be deemed sufficient, the Agencies note that whether any 
particular set of policies and procedures are adequate to satisfy the 
rule, including the extent to which any particular guideline should be 
reflected in such policies and procedures, depends upon the nature, 
size, complexity, and scope of the furnisher's activities.
Guidelines
    Proposed Sec.  --.42(b) stated that each furnisher must consider 
the accuracy and integrity guidelines in developing its policies and 
procedures and incorporate those guidelines that are appropriate. 
Section .--42(b) is adopted without change in the final rules. The 
Agencies note that furnishers should consider the guidelines in the 
context of the nature, size, complexity, and scope of their activities 
and incorporate the guidelines that are appropriate to promote the 
accuracy and integrity of the information about consumers that they 
provide to CRAs.
    A number of consumer organizations stated that furnishers should be 
required to implement all of the guidelines. As discussed in the NPRM, 
the Agencies recognize that there is substantial diversity among 
furnishers with respect to their structure, operations, and the types 
of business they conduct. The Agencies believe that a ``one-size-fits-
all'' approach that requires all furnishers to implement all of the 
guidelines would not appropriately reflect these differences. For that 
reason, the final rules include, at Sec.  --.42(a), a requirement that 
a furnisher's policies and procedures must be appropriate to the 
nature, size, complexity, and scope of the furnisher's activities, 
which permits furnishers to tailor their policies and procedures to 
their business activities. The Agencies expect, for example, that the 
written policies and procedures for a small retail entity will differ 
substantially from, and be significantly less complex than, those of

[[Page 31493]]

a multi-billion dollar financial services company.
Reviewing and Updating Policies and Procedures
    Proposed Sec.  --.42(c) stated that each furnisher must review its 
policies and procedures periodically and update them as necessary to 
ensure their continued effectiveness. Section --.42(c) is adopted 
without change in the final rules.
    Industry commenters expressed concern with the potential burden 
that could be imposed by the requirement to review policies and 
procedures periodically. One industry commenter recommended that annual 
reviews of policies and procedures be described as a best practice, 
rather than a requirement in the regulation. On the other hand, 
consumer organizations stated that the regulations should require all 
furnishers regularly to review and update their policies and 
procedures. These commenters added that the Agencies should require 
large furnishers to conduct annual audits, furnish information in the 
standard reporting format, and update their technology on a regular 
basis.
    The Agencies have concluded that the requirement for a furnisher to 
review policies and procedures periodically and to update them as 
necessary is essential to ensure their continued effectiveness. Section 
--.42(c) does not impose an audit requirement on a furnisher to conduct 
an official examination and verification of consumer accounts and 
records regarding its policies and procedures. However, the Agencies do 
expect a furnisher to be able to demonstrate to its regulator that it 
has established and implemented policies and procedures consistent with 
the final rules. The Agencies also expect that a furnisher would engage 
in a periodic review of its policies and procedures when there is a 
significant substantive change in its business plan or furnishing 
activities, or when it has identified significant deficiencies in the 
accuracy or integrity of the information it has provided to CRAs. A 
furnisher also may choose to review its policies and procedures 
periodically when it engages in a general review of FCRA compliance or 
general compliance with consumer protection laws and regulations.

B. Accuracy and Integrity Guidelines

    The proposed accuracy and integrity guidelines appeared in the 
appendix to the appropriate part of each Agency's proposed regulations. 
In the introductory language to the proposed guidelines, the Agencies 
encouraged voluntary furnishing of information about consumers to CRAs, 
reflecting the recognition that the voluntary system of consumer 
reporting produces substantial benefits for consumers, users of 
consumer reports, and the economy as a whole. The introduction also 
reminded furnishers that Sec.  --.42 of the proposed regulations would 
require each furnisher (1) to establish and implement reasonable 
written policies and procedures concerning the accuracy and integrity 
of the information about consumers that it furnishes to CRAs and (2) to 
consider the guidelines in developing those policies and procedures.
    The introduction to the guidelines is adopted in the final rules 
substantially as proposed, with the addition of a sentence that reminds 
furnishers that Sec.  --.42 also requires each furnisher to review its 
policies and procedures periodically and update them as necessary to 
ensure their continued effectiveness.
    Several industry commenters objected to the use of the term 
``ensure'' in the guidelines. These commenters asserted that, instead 
of expecting furnishers to ``ensure'' that reporting is free from 
errors or other defects, it would be more appropriate for the Agencies 
to promulgate regulations that require furnishers to have policies and 
procedures reasonably designed to maximize the accuracy of information 
furnished. The commenters argued that it would be sufficient that a 
furnisher's policies and procedures be reasonably designed to 
accomplish the objectives listed. In response to these comments, the 
Agencies have removed the ``ensuring'' language and substituted 
language indicating that furnishers should reasonably design their 
policies and procedures to achieve specified objectives.
Section I--Nature, Scope, and Objectives of Policies and Procedures
Nature and Scope
    The proposed Nature and Scope section noted that Sec.  --.42(a) of 
the proposed rule requires that a furnisher's policies and procedures 
must be appropriate to the nature, size, complexity, and scope of the 
furnisher's activities. In the final guidelines, this provision is 
retained without change. Additionally, the proposed nature and scope 
section provided three examples of what a furnisher's policies and 
procedures should reflect: The types of business activities in which 
the furnisher engages; the nature and frequency of the information the 
furnisher provides to CRAs; and the technology used by the furnisher to 
furnish information to CRAs. This language has been revised in the 
final guidelines to make clear that while the examples of the nature 
and scope provisions are not mandatory, they are factors that a 
furnisher should consider when developing its policies and procedures.
Objectives
    The proposed Objectives section of the guidelines provided that a 
furnisher should have written policies and procedures reasonably 
designed to accomplish the specified objectives. The proposal set forth 
alternative lists of specified objectives for the Regulatory Definition 
Approach and the Guidelines Definition Approach, and the wording of 
some of the proposed objectives in the guidelines was related to the 
alternative approaches for construing the term ``integrity'' that the 
Agencies proposed.
    In connection with the proposed Regulatory Definition Approach, the 
first two objectives of the guidelines provided that a furnisher should 
have written policies and procedures reasonably designed to ensure that 
the information it furnishes about accounts or other relationships with 
a consumer accurately identifies the appropriate consumer; accurately 
reports the terms of those accounts or other relationships; accurately 
reports the consumer's performance and other conduct with respect to 
the account or other relationship; and is designed to ensure that the 
information it furnishes about accounts or other relationships with a 
consumer avoids misleading a consumer report user as to the consumer's 
creditworthiness, credit standing, credit capacity, character, general 
reputation, personal characteristics, or mode of living.
    Under the proposed Guidelines Definition Approach, definitions of 
``accuracy'' and ``integrity'' were incorporated into the first two 
objectives. Thus, the proposed guidelines provided that a furnisher 
should have written policies and procedures reasonably designed to 
ensure that the information it furnishes about accounts or other 
relationships with a consumer is accurate. The guidelines defined 
``accuracy'' to mean that any information that a furnisher provides 
about an account or other relationship with the consumer to a CRA 
reflects without error the terms of the account or other relationship 
and the consumer's performance and other conduct with respect to the 
account or other relationship.

[[Page 31494]]

    Additionally, under the proposed Guidelines Definition Approach, 
the guidelines provided that a furnisher's written policies and 
procedures should be reasonably designed to ensure that the information 
it furnishes about accounts or other relationships with a consumer is 
furnished with integrity. The guidelines defined ``integrity'' to mean 
that any information that a furnisher provides to a CRA about an 
account or other relationship with the consumer is:
     Reported in a form and manner that is designed to minimize 
the likelihood that the information, although accurate, may be 
erroneously reflected in a consumer report, for example, by ensuring 
that the information is: (a) Reported with appropriate identifying 
information about the consumer to which it pertains; (b) reported in a 
standardized and clearly understandable form and manner; and (c) 
reported with a date specifying the time period to which the 
information pertains; and
     Substantiated by the furnisher's own records.
    The third proposed objective under both approaches stated that a 
furnisher's policies and procedures should ensure that the furnisher 
conducts reasonable investigations of consumer disputes about the 
accuracy or integrity of information in consumer reports and takes 
appropriate actions based on the outcome of such investigations.
    The fourth proposed objective under both approaches stated that a 
furnisher should have written policies and procedures reasonably 
designed to ensure that the furnisher updates information it furnishes 
as necessary to reflect the current status of the consumer's account or 
other relationship, including: (a) Any transfer of an account (e.g., by 
sale or assignment for collection) to a third party; and (b) any cure 
of the consumer's failure to abide by the terms of the account or other 
relationship.
    The fifth proposed objective under the Regulatory Definition 
Approach stated that the information a furnisher provides about 
accounts or other relationships with a consumer should be reported in a 
form and manner that is designed to minimize the likelihood that the 
information, although accurate, may be erroneously reflected in a 
consumer report, for example, by ensuring that the information is 
reported with appropriate identifying information about the consumer to 
which it pertains, in a standardized and clearly understandable form 
and manner, and with a date specifying the time period to which the 
information pertains.
    The sixth proposed objective under the Regulatory Definition 
Approach stated that the information a furnisher provides about 
accounts or other relationships with a consumer should be substantiated 
by the furnisher's own records. The fifth and sixth proposed objectives 
under the Regulatory Definition Approach incorporated the two-part 
definition of ``integrity'' used in the Guidelines Definition 
Approach.\22\
---------------------------------------------------------------------------

    \22\ Comments received regarding the definitions of ``accuracy'' 
and ``integrity'' and their placement in either rules or guidelines 
and the Agencies' responses to the comments are discussed earlier in 
this SUPPLEMENTARY INFORMATION.
---------------------------------------------------------------------------

    The final guidelines have four objectives. The first two objectives 
address how information should be furnished with ``accuracy'' and 
``integrity,'' terms that are defined in the regulations at Sec. Sec.  
--.41(a) and (e), respectively, and described earlier in this Section-
by-Section Analysis.
    The first objective states that a furnisher's policies and 
procedures should be reasonably designed to promote the furnishing of 
information about accounts or other relationships with a consumer that 
is accurate, such that the information:
     Identifies the appropriate consumer;
     Reflects the terms of and liability for those accounts or 
other relationships; and
     Reflects the consumer's performance and other conduct with 
respect to the account or other relationship.
    This first objective is substantially similar to what the Agencies 
proposed, but has been revised to conform to the definition of 
``accuracy'' that has been adopted in Sec.  --.41(a) of the 
regulations.
    The second objective has been revised to conform to the final 
definition of ``integrity'' that has been adopted in Sec.  --.41(e) of 
the regulations and incorporates language that was proposed in the 
fifth and sixth objectives of the Regulatory Definition Approach and 
the second objective of the Guidelines Definition Approach.
    The third objective provides that a furnisher's policies and 
procedures should be reasonably designed to promote the conduct of 
reasonable investigations of consumer disputes and the taking of 
appropriate actions based on the outcome of such investigations. This 
objective is similar to an objective included in both the proposed 
Regulatory Definition Approach and the proposed Guidelines Definition 
Approach.
    The fourth and final objective provides that a furnisher's policies 
and procedures should be reasonably designed to promote the updating of 
the information furnished as necessary to reflect the current status of 
the consumer's account or other relationship, including, for example:
     Any transfer of an account (e.g., by sale or assignment 
for collection) to a third party; and
     Any cure of the consumer's failure to abide by the terms 
of the account or other relationship.
    The Agencies do not expect that furnishers should update 
information any more frequently than already is required by section 
623(a)(2) of the FCRA.
    The final objective related to updating is substantively the same 
as what the Agencies proposed.
    One industry commenter expressed concern that, under the proposal, 
the obligations of an account seller with respect to updating account 
information are unclear. This commenter stated that once an account is 
sold, the seller has no ability to update the account to reflect its 
current status, beyond noting that the account has been transferred. 
This commenter stated that the obligation to prevent future problems 
with providing information to a CRA about an account that was sold must 
rest with the acquiring party, not the selling party. The Agencies 
expect furnishers to provide information to a CRA prior to the transfer 
of an account to a third party consistent with the furnisher's policies 
and procedures regarding accuracy and integrity. However, the Agencies 
do not expect that after transferring an account to a third party a 
furnisher would update the current status of the account beyond 
providing information to a CRA that the account has been transferred.
    Another industry commenter stated that the proposal could be viewed 
as requiring furnishers to update information regularly based on every 
type of event that may occur following a charge-off of an account. This 
commenter stated that furnishers typically cease to routinely furnish 
information about an account at the time of a charge-off. The commenter 
noted that although most furnishers will, as appropriate, update 
information provided to CRAs at the time a charge-off is paid in full 
or a settlement is reached after charge-off, many furnishers do not 
report interim changes based on a payment schedule agreed to as part of 
recovery efforts, nor do they report a revised status based on 
bankruptcy proceedings that take place after a charge-off. This 
commenter

[[Page 31495]]

stated that the final rules should make clear that furnishers do not 
have a duty to report changes to account status once regular reporting 
ceases, provided that the data furnished was accurate at the time it 
was furnished.
    The Agencies expect that, to the extent that a consumer cures a 
failure to abide by the terms of the account or relationship, a 
furnisher should, consistent with section I.(b)(4) of the guidelines, 
provide an update of the cured status to a CRA. For example, if a 
consumer pays off the full balance owed on a charged-off account, a 
furnisher should provide an update to the CRA with the furnisher's next 
regular reporting cycle that the account has a zero balance. A 
furnisher would not, however, have to request that the CRA delete the 
information that the account was a charge-off.
Proposed Section II--Accuracy and Integrity Duties of Furnishers Under 
the FCRA
    Proposed section II of the guidelines reminded furnishers of their 
statutory duties relating to the accuracy and integrity of the 
information about consumers they provide to CRAs. It stated that a 
furnisher's policies and procedures should address compliance with all 
applicable requirements imposed on the furnisher under the FCRA and 
listed certain of those requirements, including the duty to investigate 
direct disputes as required by proposed Sec.  --.43 and section 
623(a)(8) of the FCRA. It also listed requirements such as the duty to 
provide to CRAs corrections or additional information necessary to make 
furnished information complete and accurate under the circumstances 
specified under section 623(a)(2) of the FCRA.
    A number of commenters objected to proposed section II of the 
guidelines by stating that the summarized list of FCRA requirements 
would have created uncertainty regarding furnishers' obligations under 
the FCRA. The Agencies have removed proposed section II from the final 
guidelines in response to these comments and have renumbered subsequent 
sections accordingly. Additionally, in section III.(m) of the final 
guidelines, the Agencies have included, as a specific component that a 
furnisher's policies and procedures should address, ``[c]omplying with 
applicable requirements under the Fair Credit Reporting Act and its 
implementing regulations.''
Section II--Establishing and Implementing Policies and Procedures
    The proposed guidelines identified three steps that furnishers 
should take when establishing and implementing accuracy and integrity 
policies and procedures. First, a furnisher should identify its 
practices or activities that can compromise the accuracy and integrity 
of information about consumers furnished to CRAs. A furnisher could 
satisfy this step by, for example:
     Reviewing its existing practices and activities;
     Reviewing historical records relating to accuracy or 
integrity or to disputes, or other information relating to the accuracy 
and integrity of information provided by the furnisher to CRAs and the 
types of errors, omissions, or other problems that may have affected 
the accuracy and integrity of such information about consumers; and
     Obtaining feedback from CRAs, consumers, the furnisher's 
staff, or other appropriate parties.
    As outlined above, the second clause of this proposed guideline 
encouraged furnishers, among other things, to ``review historical 
records relating to accuracy or integrity of disputes.'' Some 
commenters noted that, for some accounts (e.g., purchased accounts), 
such historical records may not be available. In response to these 
comments, the Agencies have revised the second clause to clarify that 
it is referring only to a furnisher's review of historical records of 
its own account activities.
    The third clause of the proposed guideline encouraged furnishers to 
obtain feedback from CRAs, consumers, the furnisher's staff, or other 
appropriate parties. A number of commenters objected to this element of 
the guideline on the grounds that it would cost furnishers a fee to 
obtain information from CRAs, and that the CRAs did not always provide 
information requested by furnishers. These commenters also were 
concerned that furnishers would be required to survey consumers to 
obtain the relevant feedback, which, they stated, would be another 
costly undertaking.
    With respect to this third clause, the Agencies have revised the 
final guidelines to encourage furnishers to consider any feedback they 
may receive from CRAs, consumers, or other appropriate parties. There 
is no requirement that furnishers affirmatively seek out such 
information, but the Agencies expect furnishers to review any such 
feedback in their possession, including reports or ``score cards'' that 
furnishers may receive from a CRA regarding dispute histories processed 
through communication channels such as e-OSCAR.\23\
---------------------------------------------------------------------------

    \23\ e-OSCAR is a Web-based system that permits furnishers and 
CRAs to create and respond to consumer credit history disputes and 
to send ``out-of-cycle'' credit history updates to CRAs. See http://www.e-oscar.org/about.htm (last visited March 3, 2009).
---------------------------------------------------------------------------

    The fourth clause of the final guideline does recommend, however, 
that furnishers take affirmative action to obtain feedback from their 
staff in order to identify practices or activities of the furnisher 
that can compromise accuracy or integrity.
    The final guideline also includes a fifth clause, which states 
that, when establishing and implementing policies and procedures, a 
furnisher should consider their potential impact on consumers. 
Consideration of these impacts should result in increasing the accuracy 
and integrity of consumers' information provided by furnishers to CRAs.
    The Agencies proposed that the second step that a furnisher should 
take when establishing and implementing accuracy and integrity policies 
and procedures is to evaluate the effectiveness of its existing 
policies and procedures regarding the accuracy and integrity of 
information about consumers furnished to CRAs and consider whether 
additions or modifications to the policies and procedures or the 
implementation of such policies and procedures are necessary. 
Commenters raised no issues with respect to this provision, and it is 
adopted without change in the final guidelines.
    The Agencies proposed that a furnisher's third step should be to 
evaluate the effectiveness of specific methods (including technological 
means) the furnisher uses to provide information about consumers to 
CRAs, and how those methods may affect accuracy and integrity, and 
determine whether changes to those methods should be made to enhance 
the accuracy and integrity of that information. Commenters raised no 
issues with respect to this provision, and it is adopted without change 
in the final guidelines.
Section III--Specific Components of Policies and Procedures
    The proposed guidelines described specific components that should 
be addressed in a furnisher's policies and procedures. These components 
included:
     Establishing and implementing a system for furnishing 
information about

[[Page 31496]]

consumers to CRAs that is appropriate to the nature, size, complexity, 
and scope of the furnisher's business operations.
     Using standard data reporting formats and standard 
procedures for compiling and furnishing data, where feasible, such as 
the electronic transmission of information about consumers to CRAs.
     Ensuring that the furnisher maintains its own records for 
a reasonable period of time, not less than any applicable recordkeeping 
requirement, in order to substantiate the accuracy of any information 
about consumers it furnishes that may be subject to a direct dispute.
     Establishing and implementing appropriate internal 
controls regarding the accuracy and integrity of information about 
consumers furnished to CRAs, such as by implementing standard 
procedures, verifying random samples, and conducting regular reviews of 
information provided to CRAs.
     Training staff that participates in activities related to 
the furnishing of information about consumers to CRAs to implement the 
policies and procedures.
     Providing for appropriate and effective oversight of 
relevant service providers whose activities may affect the accuracy and 
integrity of information about consumers furnished to CRAs to ensure 
compliance with the policies and procedures.
     Furnishing information about consumers to CRAs following 
mergers, portfolio acquisitions or sales, or other acquisitions or 
transfers of accounts or other debts, in a manner that prevents re-
aging \24\ of information, duplicative reporting, or other problems 
affecting the accuracy or integrity of the information furnished.
---------------------------------------------------------------------------

    \24\ Re-aging of an account occurs when an account is sold or 
transferred to a third party that resets the account opening date to 
the date the account was received by the third party. Re-aged 
accounts may result in adverse credit information staying on a 
consumer's credit report longer than what is permissible by the 
FCRA, which for accounts that are placed in collection or charged 
off is typically no more than seven years. See section 605 of the 
FCRA.
---------------------------------------------------------------------------

     Attempting to obtain the information listed in 
Sec. --.43(d) (direct dispute notice content requirements) from a 
consumer before determining that the consumer's dispute is frivolous or 
irrelevant.
     Ensuring that deletions, updates, and corrections 
furnished to CRAs are reflected in business systems to avoid furnishing 
erroneous information.
     Conducting investigations of direct disputes in a manner 
that promotes the efficient resolution of such disputes.
     Ensuring that technological and other means of 
communication with CRAs are designed to prevent duplicative reporting 
of accounts, erroneous association of information with the wrong 
consumer(s), and other occurrences that may compromise the accuracy and 
integrity of information contained in consumer reports.
     Providing CRAs with sufficient identifying information in 
the furnisher's possession about each consumer about whom information 
is furnished to enable the CRA properly to identify the consumer.
     Conducting a periodic evaluation of its own practices, CRA 
practices of which the furnisher is aware, investigations of disputed 
information, corrections of inaccurate information, means of 
communication, and other factors that may affect the accuracy and 
integrity of information furnished to CRAs.
    Commenters raised few issues about the content of the proposed 
components, and most are adopted without change in the final 
guidelines. However, the Agencies have adopted some technical and other 
changes to the proposed components, as described below.\25\
---------------------------------------------------------------------------

    \25\ For the reasons discussed above, and in response to 
commenters' suggestions, the Agencies have removed the language 
recommending that a commenter ``ensure'' a particular result where 
it appeared in the specific components. The Agencies agree that this 
terminology is less appropriate for guidelines than language focused 
on the matters that furnishers' policies and procedures should 
address.
---------------------------------------------------------------------------

    Most significantly, the Agencies have removed from the final 
guidelines the component encouraging a furnisher to obtain the 
information listed in proposed Sec.  --.43(d) of the regulations 
(direct dispute notice content requirements) from a consumer before 
determining that the consumer's dispute is frivolous or irrelevant. The 
Agencies have determined that adoption of this component is 
inconsistent with section 623(a)(8) of the FCRA, which, among other 
things, provides that a furnisher must notify the consumer of a 
determination that a dispute is frivolous or irrelevant, and that a 
dispute would be considered frivolous or irrelevant when a consumer 
does not provide sufficient information to investigate the disputed 
information.
    Some commenters suggested that the proposed component relating to 
furnishing information after mergers and other transactions should more 
specifically direct furnishers to (1) instruct CRAs to delete accounts 
after sale or transfer to decrease the incidence of duplicate accounts 
and (2) follow industry standard reporting guidelines not to change 
account numbers, ID numbers, portfolio types, or account opening dates. 
Some commenters noted that the problems of duplicative reporting and 
re-aging of account information are common for accounts that have been 
sold or placed with debt collectors. Section III.(g) of the final 
guidelines encourages furnishers to provide information about consumers 
to CRAs following acquisitions or transfers of accounts or other 
obligations in a manner that prevents re-aging of information, 
duplicative reporting, or other problems similarly affecting the 
accuracy or integrity of the information furnished. The final rules use 
the broader term ``obligations'' rather than ``debts,'' as was 
proposed, because acquired or transferred information may relate to not 
only debts that arise from agreements, but also other obligations such 
as court-ordered judgments. The Agencies believe that it is sufficient 
for a furnisher to address these issues in its policies and procedures, 
as applicable, in a manner it determines will be effective and 
appropriate to the nature, size, complexity, and scope of its 
activities.
    With respect to the third proposed component, which focused on 
maintaining relevant records, the Agencies requested comment on whether 
a specific time period for recordkeeping should be incorporated in the 
final regulations.
    Most industry commenters opposed any new recordkeeping 
requirements. However, two industry commenters stated that they would 
not oppose guidelines governing the length of time furnishers should 
retain records in truncated formats, so long as the standard did not 
apply to original documents. One industry commenter requested that the 
Agencies clarify in the final rules that any recordkeeping requirement 
would not require a furnisher to maintain data other than data it would 
maintain in the normal course of business. This commenter stated that 
the final rules should require only that record retention practices be 
reasonable (and not require a furnisher to maintain records 
indefinitely).
    Consumer organizations supported the addition of a recordkeeping 
requirement. These commenters generally recommended that the Agencies 
require records to be kept, at a minimum, as long as information about 
an account or other relationship with a consumer is furnished to a CRA. 
These commenters stated that if furnishers fail to keep records to 
substantiate furnished information, they should report the results of a 
dispute as

[[Page 31497]]

unverifiable and instruct the CRA to delete the information.
    The Agencies have addressed the recordkeeping issue by evaluating 
both the need for additional recordkeeping requirements and the 
potential adverse consequences of imposing such requirements. First, in 
their experience assisting consumers with disputes, the Agencies have 
found that the vast majority of consumer disputes involve recent 
transactions with furnishers and that furnishers generally have records 
available to perform reasonable investigations of the disputes. Because 
of this, the Agencies believe that any benefits from adopting the 
extended recordkeeping requirement proposed by consumer organizations 
would likely be outweighed by the significant administrative and cost 
burdens such a requirement would impose on furnishers. Such a 
recordkeeping requirement also might create an incentive for furnishers 
to cease reporting information to CRAs, which would adversely affect 
the quality of the credit reporting system.
    The final rules do not impose any additional recordkeeping 
requirements on furnishers, and the final guidelines at section III.(c) 
pertaining to the maintenance of records has been adopted without 
substantive change. As noted in the NPRM, and adopted in section 
III.(c) of the guidelines, a furnisher's policies and procedures should 
address maintaining records for a reasonable period of time, not less 
than any applicable recordkeeping requirements, for example, 
recordkeeping requirements contained in regulations implementing the 
Truth in Lending Act, the Equal Credit Opportunity Act,\26\ or any 
other agency-specific requirement.\27\
---------------------------------------------------------------------------

    \26\ See 12 CFR 226.25(a) and 12 CFR 202.12(b).
    \27\ See, e.g., 12 CFR 563.170(c) (savings associations must 
retain accurate and complete records of all business transactions) 
and OTS Examination Handbook Sec.  310 (savings associations should 
retain original business transaction records until the savings 
association has two regular examinations and has resolved any 
supervisory matters raised in the examinations).
---------------------------------------------------------------------------

C. Final Regulations Concerning Direct Disputes

Section --.43 Direct Disputes
    The third component of this rulemaking comprises the Agencies' 
final regulations implementing section 623(a)(8) of the FCRA, which 
directs the Agencies jointly to prescribe regulations that identify the 
circumstances under which a furnisher is required to reinvestigate a 
dispute concerning the accuracy of information contained in a consumer 
report on a consumer, based on a direct request of a consumer. The 
statute sets forth procedural and other requirements applicable to such 
reinvestigation.
    As noted in the NPRM, a number of furnishers have indicated that 
they already voluntarily investigate direct disputes as a matter of 
good customer relations and sound business practices. The Agencies 
encourage all furnishers, as a best practice, to conduct voluntary 
investigations of consumer disputes and enhance the accuracy and 
integrity of the information about consumers they provide to CRAs.\28\ 
As noted above, the accuracy and integrity guidelines adopted by the 
Agencies contemplate that furnishers' policies and procedures will 
address the reasonable investigation of all consumer disputes, whether 
or not legally required. The guidelines state that conducting such 
investigations (and taking any appropriate remedial actions) should be 
an objective of furnishers' accuracy and integrity policies and 
procedures.
---------------------------------------------------------------------------

    \28\ The Agencies note that many entities, including depository 
institutions and their affiliates, also investigate disputes about 
information they furnish to CRAs that consumers raise through the 
consumer complaint processes established by the Agencies. See 
generally Board, ``How do I file a Complaint?,'' http://www.federalreserveconsumerhelp.gov/complaintinfo.cfm?info=1 (last 
visited March 3, 2009); FDIC, ``How to file a Written Complaint,'' 
http://www.fdic.gov/consumers/questions/consumer/complaint.html 
(last visited March 3, 2009); OTS, ``How to Resolve a Consumer 
Complaint'' (May 2008), http://www.ots.treas.gov/docs/4/480924.pdf 
(last visited March 3, 2009); and OCC, ``Assistance for Customers of 
National Banks'' (April 2005), http://www.occ.gov/customer.pdf (last 
visited March 3, 2009).
---------------------------------------------------------------------------

Section --.43(a) General Rule
    The proposed general rule required a furnisher to investigate a 
direct dispute if it relates to:
     The consumer's liability for a credit account or other 
debt with the furnisher, such as direct disputes relating to whether 
there is or has been identity theft or fraud against the consumer, 
whether there is individual or joint liability on an account, or 
whether the consumer is an authorized user of a credit account;
     The terms of a credit account or other debt with the 
furnisher, such as direct disputes relating to the type of account, 
principal balance, scheduled payment amount on an account, or the 
amount of the reported credit limit on an open-end account;
     The consumer's performance or other conduct concerning a 
credit account or other debt with the furnisher, such as direct 
disputes relating to the current payment status, high balance, date a 
payment was made, the amount of a payment made, or the date an account 
was opened or closed; or
     Any other information contained in a consumer report 
regarding an account or other relationship with the furnisher that 
bears on the consumer's creditworthiness, credit standing, credit 
capacity, character, general reputation, personal characteristics, or 
mode of living attributed to the furnisher on the consumer report.
    Section --.43(a) of the final rules differs from the proposal in 
two respects. First, the Agencies have revised the introductory 
language of the provision to state that a furnisher must conduct a 
``reasonable investigation'' of a direct dispute if it relates to one 
of the enumerated circumstances. The Agencies have added the term 
``reasonable'' because it is consistent with courts' interpretation of 
a similar duty imposed on furnishers that receive a notice of dispute 
from a CRA.\29\ In the Agencies' view, a furnisher's investigation 
resulting from a direct dispute would be required to meet the same 
standard of reasonableness as it would if the notice of dispute were 
received through a CRA. Accordingly, this revision clarifies the nature 
of furnishers' direct dispute reinvestigation duties, consistent with 
suggestions made by some commenters.
---------------------------------------------------------------------------

    \29\ See Johnson v. MBNA America Bank, N.A., 357 F.3d 426 (4th 
Cir. 2004); Schaffhausen v. Bank of America, N.A., 393 F.Supp.2d 853 
(D. Minn. 2005).
---------------------------------------------------------------------------

    Second, the final direct dispute rule clarifies, in response to 
commenters' suggestions, that debt collectors that are furnishers are 
subject to the rules. The final rules add a parenthetical clause to the 
definition of ``direct dispute'' to explicitly cover debt 
collectors.\30\
---------------------------------------------------------------------------

    \30\ An industry commenter representing debt collectors raised 
concerns about a potential conflict between the Fair Debt Collection 
Practices Act (FDCPA) and the Sec.  --.43 direct dispute rule as it 
applies to debt collectors. The direct dispute rule requires 
furnishers of information to CRAs to report the results of a direct 
dispute to the consumer (Sec.  --.43(e)(3)) or notify the consumer 
if the furnisher determines the dispute is frivolous or irrelevant 
(Sec.  --.43(f)(2)). Section 805(c) of the FDCPA provides that if a 
consumer has notified a debt collector in writing that ``the 
consumer wishes the debt collector to cease further communication 
with the consumer, the debt collector shall not communicate with the 
consumer with respect to such debt'' (with some exceptions not 
applicable to the Sec.  --.43 direct dispute rule). The concern 
raised by the commenter is that if a consumer has written the debt 
collector to cease communication, but at some future time, or at the 
same time, submits a direct dispute about information the debt 
collector has provided to a CRA, the debt collector may risk 
violating the FDCPA prohibition on contacting the consumer when it 
provides the notices required by the Sec.  --.43 direct dispute 
rule. The purpose of the notices required by the direct dispute rule 
is either to report the results of a direct dispute to the consumer 
or to notify the consumer if the furnisher determines the dispute is 
frivolous or irrelevant. Contemporaneously with the publication of 
this final rule, the FTC is publishing an advisory opinion stating 
that a notice provided to the consumer solely for the purpose of 
complying with the Sec.  --.43 direct dispute rule (the FTC rule is 
16 CFR 660.4), without conveying any other message, does not violate 
section 805(c) of the FDCPA. In addition, the Agencies will enforce 
section 805(c) of the FDCPA consistent with such advisory opinion.

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[[Page 31498]]

    The final direct dispute rules are designed to permit direct 
disputes in virtually all circumstances involving disputes about the 
accuracy of furnished information typically provided by a furnisher to 
a CRA. The Agencies believe that the approach adopted by the final 
rules enables consumers to submit a dispute directly to the furnisher 
(with certain exceptions) when the issue in dispute relates to 
information pertaining to the consumer's account or other relationship 
with that furnisher.
    A number of industry commenters supported the general approach of 
the direct dispute proposal. A few industry commenters suggested that 
the direct dispute provision should be narrower than the proposed rule, 
such as by limiting the direct dispute right to disputes related to 
identity theft. The final rules do not narrow the types of disputes 
that a furnisher must investigate. The Agencies have concluded that the 
broader approach of the proposal and final rules is more consistent 
with the statutory considerations that the Agencies must weigh pursuant 
to section 623(a)(8)(B) of the FCRA, including whether direct contact 
with a furnisher would likely result in the most expeditious resolution 
of direct disputes. The Agencies believe that the expeditious dispute 
resolutions likely to be afforded by a direct dispute right should not 
be limited to a narrow class or limited types of disputes. Also, it may 
be impossible for a consumer to tell whether an error is the result of 
identity theft or some other cause.
    Consumer organizations urged the Agencies to require furnishers to 
communicate to consumers the process for filing a direct dispute with 
the furnisher and to provide such information on their Web sites. The 
direct dispute rule-writing authority, at section 623(a)(8)(A) of the 
FCRA, does not include establishing a requirement for furnishers to 
notify consumers about the process for filing a direct dispute. 
However, the Agencies encourage furnishers, as a best practice, to 
provide consumers with appropriate information regarding the process 
for filing a direct dispute, for example by posting such information on 
their Web sites, as applicable. In addition, the Agencies note that 
section 609(c)(2) of the FCRA requires the FTC to promulgate, and CRAs 
to disseminate with their provision of file disclosures to consumers, a 
``General Summary of Consumer Rights.'' When the FTC next updates the 
General Summary of Consumer Rights to reflect the additional rights 
provided to consumers by the FACT Act and its implementing rules,\31\ 
it will include consumers' direct dispute rights in the summary.
---------------------------------------------------------------------------

    \31\ The first update of that Summary (16 CFR 698, Appendix F) 
was published on November 30, 2004 (69 FR 69788-789).
---------------------------------------------------------------------------

Section --.43(b) Exceptions
    The proposed exceptions related primarily to information with 
respect to which any consumer dispute would be more appropriately 
directed to the CRA, such as information derived from public records, 
which may be obtained directly from public sources,\32\ and information 
about requests for consumer reports (``inquiries'').
---------------------------------------------------------------------------

    \32\ The public records exception applies only to information 
``derived'' by the CRA from public records. It would not exempt a 
consumer's dispute concerning the accuracy of a furnisher's 
reference to a particular account being included in bankruptcy, for 
example.
---------------------------------------------------------------------------

    A consumer report may include identifying information about a 
consumer (e.g., name, address), trade line information (e.g., name of 
creditor, payment history, loan amount), past and present employer 
information, and public record information (e.g., information received 
from courts or other governmental authorities that are related to 
bankruptcies, judgments, or liens). Any given furnisher is the source 
of some, but not all, of the information included in a consumer report. 
The Agencies believe that a furnisher should be responsible for 
investigating disputes only about information regarding an account or 
other relationship between the furnisher and the consumer. The standard 
appropriately balances the benefits to consumers with the costs of 
furnishers as required by section 623(a)(8)(B)(i) of the FCRA. 
Accordingly, the proposal stated that a furnisher would have to 
investigate direct disputes only with respect to the types of 
information that it typically provides to CRAs. In most cases, the 
information subject to the proposed direct dispute rule would be a part 
of a furnisher's trade line entry or entries on a consumer report.
    Proposed Sec.  --.43(b)(1) excepted from the general investigation 
requirement any direct dispute that relates to:
     The consumer's identifying information (other than a 
direct dispute relating to a consumer's liability for a credit account 
or other debt with the furnisher, as provided in Sec.  
--.43(a)(1)),\33\ such as name(s), date of birth, Social Security 
number, telephone number(s), or address(es);
---------------------------------------------------------------------------

    \33\ A direct dispute that relates both to identifying 
information and a consumer's liability for a credit account or other 
debt with the furnisher, such as in cases of identity theft, must be 
investigated by a furnisher pursuant to Sec.  --.43(a)(1).
---------------------------------------------------------------------------

     The identity of past or present employers; \34\
---------------------------------------------------------------------------

    \34\ For this category of information concerning the identity of 
past or present employers, the Agencies believe that direct contact 
by the consumer would be unlikely to result in the most expeditious 
resolution of an employer identity-related dispute. For example, 
consumer reports sometimes contain certain ``employment history'' 
information, which is typically obtained from sources other than 
employers (such as credit applications). In those cases, an 
identified employer would be unable to correct disputed information 
because it was provided by another source.
---------------------------------------------------------------------------

     Inquiries or requests for a consumer report;
     Information derived from public records, such as 
judgments, bankruptcies, liens, and other legal matters (unless 
provided by a furnisher having a relationship with the consumer); or
     Information related to fraud alerts or active duty alerts.
    Commenters generally supported these exceptions and the final 
regulation adopts these exceptions without substantive change.
    In response to comments, the Agencies are including one additional 
exception. A number of commenters suggested that a furnisher should 
have to investigate only information that it provides to a CRA and not 
information provided by third parties that may be compiled and reported 
by a CRA. In this regard, the Agencies note that a furnisher would not 
likely have access to third party information that would be necessary 
to perform the investigation. Accordingly, the Agencies have added a 
new exception at Sec.  --.43(b)(1)(vi), which states that the general 
direct dispute investigation requirement does not apply to information 
provided to a CRA by another furnisher.
    Proposed Sec.  --.43(b)(2) also excepted from the investigation 
requirement any direct dispute if the notice of dispute is submitted 
by, is prepared on behalf of the consumer by, or is submitted on a form 
supplied to the consumer by, a credit repair organization (CRO) as 
defined in 15 U.S.C. 1679a(3),\35\ or an

[[Page 31499]]

entity that would be a CRO but for 15 U.S.C. 1679a(3)(B)(i), which 
excludes tax-exempt section 501(c)(3) organizations. This proposed 
exception was derived directly from an exception set forth in the 
statute.\36\
---------------------------------------------------------------------------

    \35\ Under this provision of the Credit Repair Organizations 
Act, the term ``credit repair organization''--means any person who 
uses any instrumentality of interstate commerce or the mails to 
sell, provide, or perform (or represent that such person can or will 
sell, provide, or perform) any service, in return for the payment of 
money or other valuable consideration, for the express or implied 
purpose of--(i) improving any consumer's credit record, credit 
history, or credit rating; or (ii) providing advice or assistance to 
any consumer with regard to any activity or service described in 
clause (i).
    \36\ See 15 U.S.C. 1681s-2(a)(8)(G).
---------------------------------------------------------------------------

    Many industry commenters noted that it is very difficult to 
determine with certainty whether a dispute is prepared or otherwise 
assisted by a CRO. These commenters also noted that the narrow scope of 
the proposed CRO exception would subject the furnishers to litigation 
risks. To remedy this problem, these commenters requested that the CRO 
exception be modified to apply whenever a furnisher reasonably believes 
the dispute has been submitted by, prepared on behalf of the consumer 
by, or submitted on a form supplied to the consumer by, a CRO.
    The Agencies agree that it would be unnecessarily restrictive to 
require furnishers to determine with certainty that a CRO participated 
in the preparation or submission of a dispute. Such a standard would 
not accomplish the purpose of the statutory exception. Thus, the Sec.  
--.43(b)(2) CRO exception has been revised to incorporate a 
``reasonable belief'' standard.
Section --.43(c) Direct Dispute Address
    Section 623(a)(8)(D) of the FCRA requires a consumer to provide a 
direct dispute notice ``at the address specified'' by the furnisher. 
The Agencies proposed to provide guidance about how this address should 
be specified by furnishers and effectively communicated to consumers.
    Accordingly, proposed Sec.  --.43(c) stated that a furnisher must 
investigate a direct dispute only if a consumer submits a direct 
dispute notice to the furnisher at:
     The address of the furnisher provided by a furnisher and 
set forth on a consumer report relating to the consumer (e.g., on the 
consumer file disclosures CRAs are required to provide to consumers 
under section 609(a) of the FCRA);
     An address clearly and conspicuously specified by the 
furnisher for submitting direct disputes that is provided in writing or 
electronically (if the consumer has agreed to the electronic delivery 
of information from the furnisher); or
     Any business address of the furnisher, if the furnisher 
has not so specified and provided an address for submitting direct 
disputes.
    Thus, a consumer always would be able to submit a direct dispute to 
the appropriate address of the furnisher appearing on the consumer 
report. The consumer also would be able to submit a direct dispute to 
any other business address of the furnisher but only if the furnisher 
has not separately specified an address for receiving notices of direct 
disputes on a consumer report or by other written or electronic 
communication. A furnisher choosing to specify an address for direct 
dispute notices would have to do so in a manner that is both reasonably 
understandable and designed to call the consumer's attention to the 
fact that the address is the one to use for submitting direct disputes 
about the accuracy of information in a consumer report. The Agencies 
also noted in the proposal that a furnisher that specifies an address 
for this purpose will not be deemed to have specified an address for 
purposes of section 623(a)(1)(B) of the FCRA, relating to the general 
duty to provide accurate information to the CRAs. The final rules adopt 
the proposed direct dispute address provision at Sec.  --.43(c).
    Section --.43(c)(3) of the NPRM would have required a furnisher to 
investigate a direct dispute submitted by a consumer at any business 
address of the furnisher if it had not specified and provided an 
address pursuant to proposed Sec. --.43(c)(2). Some commenters stated 
that this obligation would be burdensome and may delay efficient 
resolution of the consumer's dispute. In response to these comments, 
the final rules only require a furnisher to investigate a direct 
dispute submitted by a consumer to any of its business addresses if the 
furnisher did not either (1) provide a direct dispute address that is 
set forth on a consumer report relating to the consumer or (2) clearly 
and conspicuously specify a direct dispute address and provide it to 
the consumer either in writing or electronically (if the consumer has 
agreed to the electronic delivery of information from the furnisher).
    The Agencies specifically requested comment on whether there are 
circumstances under which it would not be appropriate for a consumer to 
submit a direct dispute notice to the address of the furnisher set 
forth on the consumer report, and on whether proposed Sec.  --.43(c)(3) 
should exclude certain types of business addresses, such as a business 
address that is used for reasons other than for receiving 
correspondence from consumers or business locations where business is 
not conducted with consumers.
    Consumer organizations generally recommended that a direct dispute 
should be accepted at any business address of a furnisher in all 
circumstances. The Agencies note that the language of section 
623(a)(8)(D) states that a consumer `` * * * shall provide a dispute 
notice directly to [a furnisher] at the address specified by the 
[furnisher] for such notices. * * * '' Permitting consumers to use any 
business address of a furnisher would not be consistent with this 
statutory provision.
    Most industry commenters stated that it would be appropriate only 
to receive direct disputes at the address a furnisher specifies for 
that purpose. Some of these commenters also stated that, at a minimum, 
a furnisher should not have to respond to direct disputes if the CRA 
supplies the wrong address on the consumer report. Industry commenters 
opposed the idea that direct disputes should be accepted ``at any 
business address'' of the furnisher, noting that such a requirement 
would be extremely difficult to implement, produce inefficient 
resolutions of consumer disputes, and be costly.
    The Agencies believe that it will benefit consumers and be 
operationally feasible to allow consumers to submit a direct dispute 
notice to the address of the furnisher specified on the consumer report 
(or otherwise specified by the furnisher). The Agencies understand that 
in a large majority of cases, the consumer report includes an address 
supplied by the furnisher.\37\ In addition, the Agencies believe that 
allowing consumers to submit direct dispute notices to the address of 
the furnisher set forth on the consumer report will increase the 
likelihood that the consumers will know where to send that notice 
(because it will appear on the same document containing the disputed 
information) and will encourage consumers to obtain and review their

[[Page 31500]]

consumer reports prior to submitting a notice to a furnisher. As the 
Agencies noted in the proposal, a furnisher will not be in violation of 
this provision for failure to investigate a dispute submitted to the 
address set forth on the consumer report if that address is incorrect 
due to an error by the CRA and does not reflect any business address of 
the furnisher.
---------------------------------------------------------------------------

    \37\ As noted in the proposal, allowing consumers to submit 
direct dispute notices to the address of the furnisher set forth on 
the consumer report is consistent with existing Federal and some 
State laws because these laws already impose related obligations. 
Section 611(a)(6)(B)(iii) of the FCRA requires the CRA to provide, 
upon the consumer's request, the business name and address, and 
phone number if reasonably available, of any furnisher the CRA 
contacts in connection with information reinvestigated in response 
to a consumer complaint filed with the CRA. California law requires 
that, upon request of the consumer, the CRA must provide the 
consumer with the ``names, addresses and, if provided by the sources 
of information, the telephone numbers identified for customer 
service for the sources of information'' (emphasis added). Cal. 
Civil Code Sec.  1785.10(c). It is the Agencies' understanding that 
CRAs commonly include the furnisher's business name, address, and 
telephone number on the consumer report (where the furnisher 
provides it) so that consumers know how to contact the furnisher 
about a dispute upon receipt of the consumer report without the need 
to request that information from the CRA.
---------------------------------------------------------------------------

    The final rules also permit a consumer to submit a direct dispute 
notice to any business address of the furnisher, but only if the 
furnisher has not specified an address for receiving notices of direct 
disputes on a consumer report or by other written or electronic notice 
to the consumer. Thus, furnishers can avoid the burden of having to 
accept notices of disputes at any business address simply by specifying 
a direct dispute address for such purpose to be provided to consumers 
on a consumer report or by other written or electronic notice to the 
consumer.
    The Agencies also requested comment on whether Sec.  --.43(c)(2) 
should be amended to permit furnishers to notify consumers orally of 
the address for direct disputes, and on whether, and, if so, how an 
oral notice can be provided clearly and conspicuously. A majority of 
industry commenters and consumer organizations stated that oral notice 
of a direct dispute address should not be permitted. These commenters 
noted that written notices of an address provide more certainty that 
the direct disputes process will work appropriately for furnishers and 
consumers. In response to these comments, the final rules require 
written notifications to consumers of a direct dispute address.
Section --.43(d) Direct Dispute Notice Contents
    Section 623(a)(8)(D) of the FCRA provides that a furnisher is not 
required to investigate a dispute unless a consumer provides the 
furnisher with a notice of dispute that:
     Identifies the specific information that is being 
disputed;
     Explains the basis for the dispute; and
     Includes all supporting documentation required by the 
furnisher to substantiate the basis of the dispute.
    Proposed Sec.  --.43(d) implemented section 623(a)(8)(D) of the 
statute by requiring that a notice of dispute include:
     The name, address, and telephone number of the consumer;
     Sufficient information to identify the account or other 
relationship that is in dispute, such as an account number;
     The specific information that the consumer is disputing 
and an explanation of the basis for the dispute; and
     All supporting documentation or other information 
reasonably required by the furnisher to substantiate the basis of the 
dispute, such as a copy of the consumer report that contains the 
allegedly inaccurate information, a police report, a fraud or identity 
theft affidavit, a court order, or account statements.
    The final direct dispute notice content requirement is adopted as 
proposed with two substantive changes. First, the final rules merge the 
proposed provisions requiring that the notice include the name, 
address, and telephone number of the consumer and sufficient 
information to identify the account or other relationship in dispute. 
Revised Sec.  --.43(d)(1) now provides that a dispute notice must 
include ``[s]ufficient information to identify the account or other 
relationship that is in dispute, such as an account number and the 
name, address, and telephone number of the consumer, if applicable.'' 
The Agencies note that, in most circumstances, address and telephone 
number information will be readily available to the furnisher, and to 
require a consumer to provide it again before the furnisher will begin 
its investigation will result in unnecessary delay. The Agencies also 
note that some consumers may not have an address or telephone number. 
For these reasons, consumer identifying information must be provided 
only if applicable and to the extent necessary to identify the account 
or relationship that is the subject of the dispute. Consumers will have 
to provide information sufficient for furnishers to inform them of the 
results of an investigation.
    The second substantive change occurs in one of the examples in 
Sec.  --.43(d)(3) of supporting documentation or other information 
reasonably required by the furnisher to substantiate the basis of the 
dispute. The proposal stated that such documentation may include a copy 
of the consumer report that contains the allegedly inaccurate 
information. Upon further review, the Agencies determined that the 
example should be revised to recommend that the dispute include ``a 
copy of the relevant portion'' of such a consumer report because the 
provision of an entire consumer report may raise privacy concerns for 
consumers.
    Although commenters generally supported Sec.  --.43(d) as proposed, 
several industry commenters said that the Agencies should require 
consumers to indicate that a dispute is a ``direct dispute'' submitted 
under the FCRA. Some industry commenters also suggested that the 
Agencies issue a model direct dispute complaint form, with some 
advocating that consumers be required to use the model complaint form. 
The Agencies decline to adopt these suggestions because such 
requirements would cause otherwise valid disputes to be rejected as 
frivolous or irrelevant due solely to the consumer's failure to meet a 
technical requirement that probably would be unknown to the consumer.
Section --.43(e) Duty Of Furnisher After Receiving a Direct Dispute 
Notice
    As an implementation aid for furnishers and consumers, the final 
rules add a new provision at Sec.  --.43(e) that incorporates the 
FCRA's section 623(a)(8)(E) statutory duties required of furnishers 
after receiving a direct dispute notice. With one clarification 
discussed below, the addition of this section tracks the statutory 
language of section 623(a)(8)(E). Pursuant to Sec.  --.43(e) of the 
final rules, after receiving a valid dispute notice from a consumer, 
the furnisher must:
     Conduct a reasonable investigation with respect to the 
disputed information;
     Review all relevant information provided by the consumer 
with the dispute notice;
     Complete its investigation of the dispute and report the 
results of the investigation to the consumer before the expiration of 
the period under section 611(a)(1) of the FCRA (15 U.S.C. 1681i(a)(1)) 
within which a CRA would be required to complete its action if the 
consumer had elected to dispute the information under that section; and
     If the investigation finds that the information reported 
was inaccurate, promptly notify each CRA to which the furnisher 
provided inaccurate information of that determination and provide to 
the CRA any correction to that information that is necessary to make 
the information provided by the furnisher accurate.
    Section 623(a)(8)(E)(i) of the FCRA requires a furnisher to conduct 
an investigation with respect to the disputed information. The final 
rules at Sec.  --.43(e)(1) require that the furnisher must conduct a 
reasonable investigation. As discussed above in connection with Sec.  
--.43(a), the inclusion of this reasonableness standard is consistent 
with how courts have interpreted the nature of a furnisher's duty to 
conduct other investigations of disputes under the FCRA.
    Section --.43(e)(3), among other things, states that a furnisher 
must report the results of the direct dispute

[[Page 31501]]

investigation to the consumer. The Agencies deem that it is permissible 
to report the results of the investigation to the consumer by mail, or 
electronically if the consumer consents, in accordance with the 
identifying information supplied by the consumer.
    Pursuant to Sec.  --.43(e)(4), if a furnisher's investigation finds 
that information it provided to a CRA was inaccurate, the furnisher 
must promptly notify each CRA to which the furnisher provided the 
inaccurate information. Additionally, the furnisher must provide to 
such CRAs any correction necessary to make the information accurate. 
Therefore, if the furnisher provided incorrect information to one or 
more CRAs, the furnisher would comply with this provision of the final 
rules by indicating to the CRA that the prior information was 
inaccurate, and by providing the corrected information. A furnisher's 
investigation may reveal that, despite being furnished accurately, 
information in dispute was not properly reflected on a consumer report. 
After reaching such a conclusion, a furnisher should notify the 
consumer that the results of its investigation confirm that the 
information is not properly reflected on the consumer report obtained 
from the consumer; it would not be adequate in these circumstances for 
a furnisher simply to notify a consumer that its investigation 
indicates that it provided accurate information to a CRA. In this 
situation, the Agencies strongly encourage furnishers, as a best 
practice, to suggest that the consumer contact the relevant CRA to 
obtain a correction.\38\
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    \38\ Furnishers also are encouraged to provide consumers with 
the Summary of Rights under the Fair Credit Reporting Act issued by 
the FTC pursuant to section 609(c) of the FCRA, although this is not 
required by the FCRA or these final rules. This step would be 
particularly helpful to consumers in circumstances in which a 
consumer received the inaccurate consumer report information from a 
source other than a CRA, such as from a potential lender. In such 
cases, the consumer may not have received the Summary of Rights in 
connection with the consumer's review of that information.
---------------------------------------------------------------------------

Section --.43(f) Frivolous or Irrelevant Disputes
    Section 623(a)(8)(F) of the FCRA provides that a furnisher is not 
required to investigate a dispute that a furnisher reasonably 
determines to be frivolous or irrelevant. The statute states that a 
frivolous or irrelevant dispute includes situations involving:
     The failure of a consumer to provide sufficient 
information to investigate the disputed information; or
     The submission by a consumer of a dispute that is 
substantially the same as a dispute previously submitted by or on 
behalf of the consumer, either directly to the furnisher or through a 
CRA under section 623(b) of the FCRA, with respect to which the 
furnisher already completed its investigation duties.
    Proposed Sec.  --.43(e) incorporated the statutory provisions, 
including identifying these two types of frivolous or irrelevant 
disputes, using wording consistent with the statute. The final rules 
adopt these provisions as proposed at Sec. Sec.  -- .43(f)(1)(i) and 
(ii).
    Section 623(a)(8)(F) specifies the two situations described above, 
but does not limit frivolous or irrelevant disputes solely to those two 
situations. The Agencies proposed to include a third situation when a 
furnisher could deem a dispute to be frivolous or irrelevant. Under 
proposed Sec.  --.43(e)(1)(iii), a dispute would be considered 
frivolous or irrelevant if the furnisher is otherwise not required to 
investigate it under the regulation.\39\ This provision was intended to 
clarify furnishers' duty to investigate direct disputes and their 
responsibilities when no such investigation is required. Under the 
proposed provision, consumers in this situation would receive notice 
from the furnisher that their dispute was deemed frivolous or 
irrelevant, including the reasons for such determination, as required 
by the FCRA in sections 623(a)(8)(F)(ii) and (iii).\40\
---------------------------------------------------------------------------

    \39\ For example, under proposed Sec.  --.43(b)(2), a furnisher 
would not be required to investigate a direct dispute that is 
submitted by, is prepared on behalf of the consumer by, or is 
submitted on a form supplied to the consumer by, a credit repair 
organization. Thus, such a dispute would be frivolous or irrelevant 
under proposed Sec.  --.43(e)(1)(iii).
    \40\ 15 U.S.C. 1681s-2(a)(8)(F)(ii) and (iii). Those provisions 
of the FCRA generally set out a furnisher's responsibilities 
regarding the notice it must provide to a consumer once it 
determines that a dispute is frivolous or irrelevant.
---------------------------------------------------------------------------

    After additional consideration, the Agencies in the final rules 
revised this third situation in which a direct dispute may be deemed to 
be frivolous or irrelevant. Section --.43(f)(1)(iii) of the final rules 
provides that a dispute qualifies as frivolous or irrelevant where 
``the furnisher is not required to investigate the direct dispute 
because one or more of the exceptions [to the direct dispute 
investigation duty] applies.'' This provision is intended to clarify 
that consumers will receive notice that their dispute will not be 
investigated because one of the exceptions applies, without requiring 
furnishers to provide such notices for consumer disputes that either 
(1) do not meet the definition of ``direct dispute'' or (2) do not 
relate to the matters described in Sec.  --.43(a) that would trigger a 
direct dispute investigation.\41\
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    \41\ For example, a furnisher that reasonably believes a dispute 
was submitted by a credit repair organization would need to provide 
a notice to the consumer that the dispute is frivolous or 
irrelevant. In contrast, a furnisher would not have to provide a 
notice to the consumer if the consumer submits a dispute about 
information pertaining to an account with a different furnisher that 
was provided to a consumer reporting agency by that other furnisher, 
since such a dispute would not meet the definition of ``direct 
dispute.''
---------------------------------------------------------------------------

    Proposed Sec.  --.43(e)(2) incorporated the FCRA's requirement, at 
section 623(a)(8)(F)(ii) of the statute, that a furnisher must notify a 
consumer of its determination that a dispute is frivolous or irrelevant 
not later than five business days after making the determination. 
Proposed Sec.  --.43(e)(3) likewise incorporated from section 
623(a)(8)(F)(iii) of the FCRA the content requirements for a notice of 
determination that a dispute is frivolous or irrelevant. The proposal 
required such notices to include the reasons for the determination and 
identify any information required to investigate the disputed 
information. These two provisions are adopted in the final rules 
without change at Sec. Sec.  --.43(f)(2) and (3) respectively.
    One industry commenter recommended that the Agencies make clear 
that the frivolous or irrelevant dispute provision includes a list of 
non-exclusive examples and that there may be other reasons why a 
dispute could be frivolous or irrelevant. An industry commenter 
recommended revising the rule text regarding the two examples of 
frivolous or irrelevant disputes that are provided for by statute to 
track the language of the statute and make clear that those examples 
are unconditional exceptions to the direct dispute investigation 
requirement. The Agencies agree with these commenters and have revised 
the regulation to provide that Sec.  --.43(f)(1) is a non-exclusive 
list of three types of frivolous or irrelevant disputes. The Agencies 
acknowledge that a furnisher is not required to investigate a direct 
dispute if the furnisher reasonably determines that the dispute is 
frivolous or irrelevant for other reasons.
    One industry commenter suggested that limits should be placed on 
how far back in time a furnisher should be required to investigate a 
dispute (for example, a limit based on a record retention period). The 
Agencies decline to deem a dispute frivolous or irrelevant because it 
involves older records that, for instance, a furnisher may no longer 
have readily available or be required to retain. The Agencies believe 
that the age of records underlying a dispute should

[[Page 31502]]

not be the sole factor used by a furnisher to reasonably determine that 
a dispute is frivolous or irrelevant.
    One industry commenter believed that the addition of the proposed 
third example to Sec.  --.43(e)(1)(iii), that would have deemed a 
dispute to be frivolous or irrelevant if the furnisher is not required 
to investigate the direct dispute, would create confusion and 
unnecessary compliance burdens. As discussed above, the Agencies have 
revised Sec.  --.43(f)(1)(iii) and other provisions in a manner that 
relieves furnishers from having to provide frivolous or irrelevant 
dispute determination notices for disputes that do not meet the 
definition of ``direct dispute'' or do not relate to matters that would 
trigger a direct dispute investigation duty.
    Another industry commenter recommended that the Agencies clarify 
that, unless a consumer identifies an additional problem with an 
account or provides additional information regarding an existing 
dispute, the furnisher should not be required to send another frivolous 
or irrelevant dispute determination notice to the consumer. Similarly, 
another commenter stated that the Agencies should permit furnishers to 
refuse to investigate disputes from consumers who have ``abused the 
process.'' The Agencies note that section 623(a)(8)(F)(i) of the FCRA 
deems disputes to be frivolous or irrelevant if they lack sufficient 
information or are duplicative. As required by section 623(a)(8)(F)(ii) 
of the FCRA, a furnisher must provide a consumer with a notice that the 
furnisher has determined that a dispute is frivolous or irrelevant.

VII. Regulatory Analysis

A. Paperwork Reduction Act

Notice of Action on NPRM
    In conjunction with the NPRM, the OCC, FDIC, OTS, NCUA, and FTC 
submitted the information collection requirements contained therein to 
OMB for review under the PRA. In response, OMB filed comments with each 
of these Agencies in accordance with 5 CFR 1320.11(c). The comments 
indicated that OMB was withholding approval at that time. These 
Agencies were directed to examine public comment in response to the 
NPRM and describe in the preamble to the final rule how these Agencies 
have maximized the practical utility of the collection and minimized 
the burden. An explanation of how these Agencies have responded to OMB 
and the public's comments has been provided elsewhere in the preamble 
to this final rule.
Comment Summary
    Of the comments received in response to the NPRM, four industry 
commenters specifically addressed PRA burden and an additional five 
industry commenters generally addressed burden issues. Some commenters 
noted that if the final rule would require furnishers to engage in 
certain activities in response to a direct consumer dispute, the number 
of disputes received from consumers would likely increase 
significantly. Commenters also noted that the Summary of Rights under 
the FCRA \42\ (currently provided to consumers) instructs consumers to 
direct their disputes to the CRA that provided them with a copy of 
their file, which may explain why most disputes are directed to 
CRAs.\43\ It is reasonable to assume that changes to the disclosures 
made by CRAs to consumers (due to the changes the FTC will make to the 
Summary of Rights to include information about consumers' section 312 
direct dispute rights) will likely increase the number of disputes 
furnishers receive directly from consumers.
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    \42\ See section 609(c) of the FCRA (15 U.S.C. 1681g(c)).
    \43\ Commenters' reporting of the extent to which furnishers 
currently receive direct disputes varied, and in the case of 
financial institutions, the size of the institution may be a factor. 
One industry commenter noted that a small portion of disputes 
currently come directly from consumers. However, another industry 
commenter indicated that community bankers report that, on average, 
40 percent of disputes are received directly from consumers.
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Accuracy of Estimates
    One industry commenter questioned the Agencies' estimates. The 
commenter stated that, until furnishers begin implementing the 
proposal, it will be impossible to determine whether the Agencies' 
estimates to implement the final rule are understated. In addition, the 
commenter stated that, until a final rule is published, it is 
impossible to estimate the time required to comply with its 
requirements. The commenter further stated that it is ``probably'' 
unreasonable to estimate that it will take only 5 minutes to prepare 
and send a notice since it is likely to take much longer to review and 
investigate a dispute. The Agencies acknowledge that furnishers are 
likely to spend more than 5 minutes reviewing and investigating 
disputes received directly from consumers. The estimated PRA disclosure 
burden per notice published in the NPRM represented strictly the 5 
minutes it would take a furnisher to prepare and distribute each 
notice; but it did not include the time required to review and 
investigate a dispute. However, given that each notice will be 
consumer-specific, and that the amount of automation used to send each 
notice will vary based on each dispute, the Agencies have decided to 
re-estimate the average time furnishers will devote to preparing and 
sending notices. The Agencies have increased the estimated burden for 
preparing and sending each notice from 5 minutes to an average of 14 
minutes per dispute to prepare and send a notice to a consumer. Our 
estimate of 14 minutes per dispute is based upon an estimate of the 
average time required to respond to three different types or categories 
of frivolous or irrelevant disputes. For purposes of estimating 
paperwork burden, we assume that disputes based on form letters from 
credit repair organizations will make up 25 percent of all frivolous or 
irrelevant disputes and, on average, furnishers will devote 8 minutes 
to each notice. We assume that duplicate credit reporting agency 
disputes will make up 60 percent of frivolous or irrelevant disputes, 
and we estimate this category will require an average of 15 minutes for 
each notice. Disputes that are frivolous or irrelevant for other 
reasons are assumed to make up 15 percent of frivolous or irrelevant 
disputes, and we estimate these other categories of disputes will 
require an average of 20 minutes each.
    Another commenter stated that, while most furnishers would only 
make minor modifications, if any, to their existing practices to 
develop and implement the accuracy and integrity program, even these 
minor modifications will require significantly more than 21 hours, 
especially for furnishers of significant amounts of data from a wide 
range of business lines.
Review of Furnishing Practices
    Two commenters expressed concern that furnishers would be required 
to audit their furnishing practice. One of them stated that it could 
take several days for furnishers to design an audit of their furnishing 
practices and additional time to perform it and provide an audit 
report. The commenter urged the Agencies to consider the impact of the 
requirements, keeping in mind accumulating burden and cost. The 
commenter stated that it is critical that the Agencies regulating 
financial institutions convey clearly and publicly to their respective 
examiners their expectations of the implementation process, given the 
Agencies' stated view that the final rule will not impose significant 
burden or cost upon furnishers.
    Another commenter opined that the suggested actions a furnisher 
should take to establish and maintain a

[[Page 31503]]

compliance program should be reduced or eliminated. The commenter 
stated it was unclear how the suggested actions could be considered and 
documented, let alone designed and implemented, in 21 hours, even for 
small furnishers. The commenter expressed the concern that examiners of 
financial institutions will treat suggestions--such as the one that 
furnishers audit their existing furnishing activities--as requirements, 
and added that it is unclear whether any furnisher needs to audit its 
existing program to comply with the final rules. The commenter 
additionally observed that the Agencies' burden estimate of 21 hours to 
comply with the final rule would be inconsistent with additionally 
having to conduct such audits. The commenter asserted that it would 
require more than 21 hours simply to conduct an audit of a mid-sized 
furnisher, and additional time beyond that to evaluate the audit 
results before drafting a compliance program. Finally, the commenter 
predicted that the costs of an audit may lead some institutions not to 
furnish information. Based on the comments received, the Agencies have 
decided to increase the burden associated with this requirement from 21 
hours to 24 hours (three business days). In doing so, however, we note 
that, as stated earlier in the SUPPLEMENTARY INFORMATION section, the 
requirement for a furnisher to periodically review policies and 
procedures and update them as necessary is not an audit requirement. 
The final rule does not impose an audit requirement on a furnisher to 
conduct an official examination and verification of consumer accounts 
and records regarding its policies and procedures. In fact, the 
Agencies believe that an audit would impose undue burden on furnishers, 
especially small furnishers, and result in less information being 
provided into the credit reporting system.
Impact on Small Institutions
    One commenter stated that the impact of the proposal on small 
institutions' current resources would be severe and that they would 
have to use significant resources to comply with the proposed 
requirements. The commenter added that its member companies spend about 
one hour verifying each dispute, and it expects a substantial increase 
in direct disputes once the rule is implemented. The commenter 
anticipates that consumers will choose to use direct disputes over 
contacting CRAs.
    As discussed earlier in the SUPPLEMENTARY INFORMATION section, the 
Agencies recognize that a ``one-size-fits-all'' approach for 
implementing the guidelines is inappropriate. The final rule specifies 
that a furnisher's policies and procedures must be appropriate to the 
nature, size, complexity, and scope of the furnisher's activities. The 
Agencies expect that the written policies and procedures for a small 
retail entity will differ substantially from, and be significantly less 
complex than, those of a multi-billion dollar financial services 
company. The Agencies have also addressed furnishers' implementation 
burden for Sec.  --.43 \44\ of the final rule by permitting furnishers 
to specify a direct dispute address for receiving such disputes. The 
address may be provided to consumers either by a CRA setting forth the 
address, which is provided by the furnisher, on a consumer report or by 
other means to consumers in writing or electronically (if the consumer 
has agreed to the electronic delivery of information from the 
furnisher).
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    \44\ 16 CFR 660.3 in the FTC regulations.
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PRA Submission to OMB for Final Rule
    The information collection requirements contained in this joint 
final rule have been submitted by the OCC, FDIC, OTS, NCUA, and FTC to 
OMB for review and approval under section 3506 of the PRA and Sec.  
1320.11 of OMB's implementing regulations (5 CFR part 1320). The review 
and authorization information for the Board is provided later in this 
section along with the Board's burden estimates. The Agencies may not 
conduct or sponsor, and an organization is not required to respond to, 
a collection of information unless it displays a currently valid OMB 
control number. The final rule requirements subject to the PRA are 
found in 12 CFR ----.42(a), ----.43(a), ----.43(f)(2), and --
--.43(f)(3) and 16 CFR 660.3(a), 660.4(a), 660.4(f)(2), and 
660.4(f)(3).
Proposed Information Collection
    Title of Information Collection: Accuracy and Integrity of 
Information Furnished to Consumer Reporting Agencies.
    Frequency of Response: On occasion; frequent for large entities.
    Affected Public:
    OCC: National banks, Federal branches and agencies of foreign 
banks, and their respective operating subsidiaries that are not 
functionally regulated within the meaning of section 5(c)(5) of the 
Bank Holding Company Act of 1956, as amended (12 U.S.C. 1844(c)(5)) 
that furnish or have furnished information to CRAs.
    Board: State member banks, uninsured state agencies and branches of 
foreign banks, commercial lending companies owned or controlled by 
foreign banks, and Edge and agreement corporations.
    FDIC: Insured nonmember banks, insured state branches of foreign 
banks, and certain subsidiaries of these entities.
    OTS: Savings associations and certain of their subsidiaries.
    NCUA: Federal credit unions.
    FTC: Businesses that furnish information to a CRA, and are subject 
to administrative enforcement by the FTC pursuant to section 621(a)(1) 
of the FCRA (15 U.S.C. 1681s(a)(1)).
    Abstract: Section .42(a) \45\ of the final regulations requires a 
furnisher to implement reasonable written policies and procedures 
regarding the accuracy and integrity of information relating to 
consumers that it provides to a CRA. The policies and procedures must 
be appropriate to the nature, size, complexity, and scope of each 
furnisher's activities. Furnishers already have an ongoing 
responsibility under section 623 of the FCRA for accurate reporting, 
which has been in place long before enactment of the FACT Act. This 
final rule would require furnishers to draft policies and procedures 
that address their section 312 responsibilities regarding the accuracy 
and integrity of information. Furnishers' accuracy and integrity 
policies and procedures may include their existing policies and 
procedures that are reasonable and appropriate. As mentioned earlier, 
the Agencies have reassessed the burden for section .42(a) and 
increased their estimate from 21 hours to 24 hours.
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    \45\ 16 CFR 660.3(a) in the FTC's regulations.
---------------------------------------------------------------------------

    Section .43(a) \46\ allows consumers, in certain circumstances, to 
initiate disputes directly with furnishers, instead of using the 
existing FCRA process through CRAs. Furnishers already have affirmative 
responsibilities to research and respond and, if necessary, make any 
corrections when a dispute is initiated by consumers through a CRA. 
Under this final rule, furnishers would have to follow a substantially 
similar process for disputes consumers submit directly to them. 
Furnishers would need to amend their procedures to ensure that disputes 
received directly from consumers are processed in a substantially 
similar manner as complaints received from CRAs. In the NPRM, the 
Agencies estimated that furnishers would devote four hours to amend 
their procedures. Based on comments received, the Agencies have 
increased the burden

[[Page 31504]]

estimate to eight hours (one business day).
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    \46\ 16 CFR 660.4(a) in the FTC's regulations.
---------------------------------------------------------------------------

    Section .43(f)(2) \47\ incorporates the section 312 requirement 
that a furnisher must notify a consumer by mail or other means (if 
authorized by the consumer) within five business days after making a 
determination that a dispute is frivolous or irrelevant.
---------------------------------------------------------------------------

    \47\ 16 CFR 660.4(f)(2) in the FTC's regulations.
---------------------------------------------------------------------------

    Section .43(f)(3) \48\ incorporates the content requirements from 
section 312 for a notice of determination that a dispute is frivolous 
or irrelevant. In the NPRM, the Agencies estimated that furnishers 
would devote four hours to implement this notice requirement. Based on 
comments received, the Agencies have increased the burden estimate to 
eight hours (one business day).
---------------------------------------------------------------------------

    \48\ 16 CFR 660.4(f)(3) in the FTC's regulations.
---------------------------------------------------------------------------

    Regarding estimated potential burden for providing the notices to 
consumers for frivolous or irrelevant disputes,\49\ the Agencies 
received an industry comment that estimated 50 percent of disputes 
received are frivolous or irrelevant. A second industry commenter 
stated that CRAs have estimated that as many as one third of the 
disputes they received are illegitimate efforts at credit repair. In 
contrast, another industry commenter stated that in only 25 percent of 
disputes is the challenged information in the consumer report verified 
as correct. However, a fourth industry commenter reported that some of 
its members suggested that only six to seven percent of disputes 
regarding their trade lines prove to be valid and result in information 
being blocked from appearing on subsequent credit reports. Thus, based 
on these various commenters' estimates, and assuming that all disputes 
are frivolous or irrelevant when information in the consumer report is 
verified as correct, the percentage of frivolous or irrelevant disputes 
could range from 25 percent to 94 percent of all disputes. At this time 
the Agencies know neither the number nor rate of frivolous or 
irrelevant disputes currently being received by CRAs, nor the extent to 
which furnishers currently receive and provide notices in response to 
frivolous or irrelevant disputes. The Agencies have considered all of 
the comments and available information and have increased their 
estimates for the number of written notices that furnishers will 
provide to consumers in response to direct disputes that are frivolous 
or irrelevant.\50\ The Agencies estimate that furnishers would devote 
an average of 14 minutes per dispute to prepare and send a notice to a 
consumer.\51\
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    \49\ Frivolous or irrelevant disputes also include incomplete 
and duplicate disputes. See Sec.  --.43(f)(1).
    \50\ Frivolous or irrelevant disputes will generally fall into 
one of three categories: (i) Disputes based on, or influenced by, 
form letters from credit repair organizations, (ii) duplicate or 
serial disputes, and (iii) disputes that are incomplete or 
classified as frivolous or irrelevant for other reasons.
    \51\ Fourteen minutes is the estimated time required to send a 
notice to a consumer as required by the final rule and, when 
appropriate, for a furnisher to transmit information to CRAs through 
e-OSCAR. The estimated burden per notice does not include the time a 
company's staff may spend locating or evaluating original documents 
or resolving the dispute.
---------------------------------------------------------------------------

    Estimated Burden: \52\
---------------------------------------------------------------------------

    \52\ Based upon comments received and upon consideration of data 
regarding current numbers of disputes, the agencies have increased 
their burden estimates from those provided in the NPRM.
---------------------------------------------------------------------------

    Thus, the burden associated with this collection of information may 
be summarized as follows.
OCC
    Number of respondents: 1,508.
    Number of frivolous or irrelevant disputes: 2.8 million.
    Number of additional non-frivolous or irrelevant disputes: 
1,874,010 million.\53\
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    \53\ A dispute related to one trade line may require more than 
one notice. For example, a notice may be sent by a furnisher for the 
same trade line to a consumer in response to a frivolous or 
irrelevant dispute, and after the dispute is re-submitted with 
additional information another notice would be required in response 
to the non-frivolous dispute. Absent input to further inform the 
estimated time to prepare and distribute non-frivolous or irrelevant 
dispute notices, the OCC will assume the same time estimates as 
applied to frivolous or irrelevant dispute notices.
---------------------------------------------------------------------------

    Estimated annual burden associated with direct disputes: 1,094,892 
hours.
    Estimated burden per respondent: 24 hours to implement written 
policies and procedures and training associated with the written 
policies and procedures, 8 hours to amend procedures for handling 
complaints received directly from consumers, 8 hours to implement the 
new dispute notice requirement, and 14 minutes per notice for 
distribution.
    Total estimated annual burden: 1,147,447 hours.
Board
    In accordance with the PRA (44 U.S.C. 3506; 5 CFR part 1320, 
Appendix A.1), the Board, under its delegated authority from OMB, has 
approved the implementation of this information collection. The 
information collection associated with this rulemaking will be 
incorporated into the Recordkeeping and Disclosure Requirements 
Associated with Regulation V (Fair Credit Reporting) and will be 
assigned OMB No. 7100-0308. The burden estimates provided below pertain 
only to the information collections associated with this final rule.
    Number of respondents: 1,172.
    Number of frivolous or irrelevant dispute notices: 611,966.
    Estimated burden per respondent: 24 hours to implement written 
policies and procedures and training associated with the written 
policies and procedures, 8 hours to amend procedures for handling 
complaints received directly from consumers, 8 hours to implement the 
new dispute notice requirement, and 14 minutes per notice for 
distribution.
    Total estimated annual burden: 189,672 hours.
FDIC
    Number of respondents: 5,104.
    Number of frivolous or irrelevant dispute notices: 100,100.
    Estimated burden per respondent: 24 hours to implement written 
policies and procedures and training associated with the written 
policies and procedures, 8 hours to amend procedures for handling 
complaints received directly from consumers, 8 hours to implement the 
new dispute notice requirement, and 14 minutes per notice for 
distribution.
    Total estimated annual burden: 227,517 hours.
OTS
    Number of respondents: 804.
    Number of frivolous or irrelevant dispute notices: 15,001.
    Estimated burden per respondent: 24 hours to implement written 
policies and procedures and training associated with the written 
policies and procedures, 8 hours to amend procedures for handling 
complaints received directly from consumers, 8 hours to implement the 
new dispute notice requirement, and 14 minutes per notice for 
distribution.
    Total estimated annual burden: 35,610 hours.
NCUA
    Number of respondents: 4,909.
    Estimated burden per respondent: 24 hours to implement written 
policies and procedures and training associated with the written 
policies and procedures, 8 hours to amend procedures for handling 
complaints received directly from consumers, 8 hours to implement the 
new dispute notice requirement, and 14 minutes per notice for 
distribution.
    Number of frivolous or irrelevant dispute notices: 153,072.
    Total estimated annual burden: 232,076 hours.
FTC \54\
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    \54\ Due to the varied nature of the entities subject to the 
jurisdiction of the FTC, this Estimated Burden section reflects only 
the view of the FTC. The banking regulatory agencies have jointly 
prepared a separate analysis.
---------------------------------------------------------------------------

    Number of respondents: 6,133.

[[Page 31505]]

    Number of frivolous or irrelevant dispute notices: 21,720.
    Estimated burden per respondent: 24 hours in the first year of the 
rule's existence to implement written policies and procedures and 
training associated with the written policies and procedures, another 8 
hours in the first year to amend procedures for handling complaints 
received directly from consumers, and 8 hours to implement the new 
dispute notice requirement, and 14 minutes per notice for preparation 
and distribution. Recurring burden, if any, in subsequent years are 
further detailed below.
    Total estimated annual burden: 95,000 hours (rounded to the nearest 
thousand)
    Section 660.3:
    Estimated Hours Burden:
    As discussed above, the final rule requires furnishers to establish 
and implement reasonable written policies and procedures regarding the 
accuracy and integrity of the information relating to consumers that it 
furnishes to a CRA. The final rule defines ``furnisher'' to mean an 
entity that furnishes information relating to consumers to one or more 
CRAs for inclusion in a consumer report, but provides that an entity is 
not a furnisher when it: Provides information to a CRA solely to obtain 
a consumer report for a permissible purpose under the FCRA; \55\ is 
acting as a CRA as defined in section 603(f) of the FCRA; is an 
individual consumer to whom the furnished information pertains; or is a 
neighbor, friend, or associate of the consumer, or another individual 
with whom the consumer is acquainted or who may have knowledge about 
the consumer's character, general reputation, personal characteristics, 
or mode of living in response to a specific request from a CRA.
---------------------------------------------------------------------------

    \55\ 15 U.S.C. 1681b(a).
---------------------------------------------------------------------------

    Given the broad scope of furnishers, it is difficult to determine 
precisely the number of furnishers that are subject to the FTC's 
jurisdiction. Nonetheless, FTC staff estimates that the final 
regulations in Sec.  660.3 will affect approximately 6,133 furnishers 
subject to the FTC's jurisdiction.\56\ As detailed below, FTC staff 
estimates that the average annual information collection burden during 
the three-year period for which OMB clearance is sought will be 57,000 
hours (rounded to the nearest thousand).
---------------------------------------------------------------------------

    \56\ This estimate is derived from the number of furnishers 
reporting to the three nationwide CRAs (approximately 18,000), minus 
the number of entities subject to jurisdiction of the Federal 
financial agencies and the NCUA (14,167 combined), and adding the 
number of furnishers to medical information bureaus (approximately 
500) and the number of insurance companies furnishing information to 
other types of CRAs (approximately 1,800).
---------------------------------------------------------------------------

    The final rule is drafted in a flexible manner that allows entities 
to establish and implement different types of written policies and 
procedures based upon the nature, size, complexity, and scope of their 
activities. A furnisher may include any of its existing policies and 
procedures in place to ensure the accuracy of information. The FTC 
believes that many entities have already implemented a significant 
portion of the policies and procedures required by the final rule. 
Entities have had an ongoing requirement under section 623 of the FCRA 
to provide accurate information when they choose to furnish data to 
CRAs. The written policies and procedures in the rule formalize the 
processes and controls necessary for accurate reporting. Accordingly, 
FTC staff estimates that entities will require 24 hours to establish 
and implement written policies and procedures, including the 
incremental time to train staff to implement these policies and 
procedures, with an annual recurring burden of 2 hours; thus, as 
annualized over a 3-year clearance period, 9.33 hours (28 hours / 3).
    Accordingly, cumulative annualized burden for 6,133 furnishers 
subject to the FTC's jurisdiction to establish and implement written 
policies and procedures is 57,000 hours (rounded to the nearest 
thousand).
    Estimated Cost Burden:
    The FTC staff derived labor costs by applying appropriate estimated 
hourly cost figures to the burden hours described above. It is 
difficult to calculate with precision the labor costs associated with 
the final regulations, as they entail varying compensation levels of 
management and/or professional technical staff among companies of 
different sizes. In calculating the cost figures, staff assumes that 
managerial and/or professional technical personnel will draft the 
written policies and procedures and train staff. In the NPRM analysis, 
FTC staff estimated labor cost for such employees to be $38.93, based 
on 2006 BLS data for management occupations. However, based on more 
current available BLS data, the FTC is revising upward this prior 
estimate to $41.\57\
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    \57\ This revised hourly wage rate is based on http://www.bls.gov/ncs/ncswage2007.htm (last visited March 3, 2009) 
(National Compensation Survey: Occupational Earnings in the United 
States 2007, US Department of Labor released August 2008, Bulletin 
2704, Table 3 (``Full-time civilian workers,'' mean and median 
hourly wages) for management occupations.
---------------------------------------------------------------------------

    Based on the above estimates and assumptions, the total annual 
labor costs for all categories of covered entities under the final 
regulations in Sec.  660.3 are $2,337,000 (rounded to the nearest 
thousand) [(57,000 hours x $41)].
    Section 660.4:
    Estimated Hours Burden:
    The final regulations would also require entities that furnish 
information about consumers to respond to direct disputes from 
consumers. FTC staff estimates that the final regulations in Sec.  
660.4 will also affect approximately 6,133 furnishers subject to the 
FTC's jurisdiction. As detailed below, FTC staff estimates that the 
average annual information collection burden during the three-year 
period for which OMB clearance is sought will cumulatively be 38,000 
hours (rounded to the nearest thousand).
    In response to public comments and in concurrence with the 
Agencies' modified estimate noted above, the FTC staff estimates that 
it will take furnishers eight hours to amend their procedures to ensure 
that disputes received directly from consumers are handled the same way 
as complaints from CRAs. FTC staff believes that furnishers of 
information to CRAs will have automated the process of responding to 
direct disputes in the first year of the clearance, therefore, there 
will be no annual recurring burden. Accordingly, the associated 
annualized burden hours over a projected three-year OMB clearance would 
be approximately 2.67 hours. Similarly, FTC staff also estimates that 
it will take furnishers eight hours in the first year to implement the 
requirement to notify a consumer by mail or other means (if authorized 
by the consumer) within five business days after making a determination 
that a dispute is frivolous or irrelevant. FTC staff believes that 
furnishers will also automate this process in the first year of 
clearance, so there will be no annual recurring burden. Likewise, 
annualized burden hours would be approximately 2.67 hours.
    In response to public comments and in concurrence with the 
Agencies' modified estimate noted above, the FTC staff now estimates 
that to prepare and distribute a notice to a consumer after a furnisher 
determines that a dispute is frivolous or irrelevant will require 
approximately 14 minutes per notice. FTC staff does not know the 
current extent to which furnishers are already directly receiving 
disputes and sending

[[Page 31506]]

related notices to consumers. Nevertheless, FTC staff assumes that 50 
percent of all disputes will be filed directly with the furnisher after 
the rule is in effect. As a result of these factors, FTC staff projects 
that furnishers under its jurisdiction would directly receive 21,720 
frivolous or irrelevant disputes requiring a notice each year.\58\ 
Thus, FTC staff estimates it will take furnishers 5,068 hours, 
cumulatively, for each of the three years for which OMB clearance is 
sought to prepare and distribute these notices.
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    \58\ This number is derived from an estimate of disputes per 
year that relate to information provided by an entity under the 
FTC's jurisdiction (108,600), an estimated 50% of which will be 
received directly by furnishers, and the Agencies' estimated 40% 
increase of the number of written notices that furnishers will 
provide to consumers in response to direct disputes that are 
frivolous or irrelevant.
---------------------------------------------------------------------------

Estimated Cost Burden
    As with its PRA analysis for Sec.  660.3, the FTC staff derived 
labor costs by applying appropriate estimated hourly cost figures to 
the burden hours described above. Again, it is difficult to calculate 
with precision the labor costs associated with the final regulations, 
as they entail varying compensation levels of different types of 
support staff among companies of different sizes. Nonetheless, in 
calculating the cost figures, staff assumes managerial and/or 
professional technical personnel will amend procedures to ensure that 
disputes received directly from consumers are handled the same way as 
complaints from CRAs and will implement the requirement to notify a 
consumer by mail or other means, after making a determination that a 
dispute is frivolous or irrelevant, at an hourly rate of $41.\59\ Staff 
now assumes that skilled administrative support personnel will provide 
the required notices to consumers, and has revised upward the estimated 
hourly rate from $13.50 to $18.50.\60\
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    \59\ See supra note 57 regarding FTC costing under Sec.  660.3 
for management occupations.
    \60\ See http://www.bls.gov/ncs/ncswage2007.htm (last visited 
March 3, 2009) (National Compensation Survey: Occupational Earnings 
in the United States 2007, US Department of Labor released August 
2008, Bulletin 2704, Table 3 (``Full-time civilian workers,'' mean 
and median hourly wages). This estimate is based on rates appearing 
therein for a combination of potentially analogous employee types 
(e.g., first-line supervisors of office support, accounting and 
auditing clerks, brokerage clerks, eligibility reviewers of 
government programs).
---------------------------------------------------------------------------

    Based on the above estimates and assumptions, the total average 
annual labor costs for all categories of covered entities under the 
final regulations in section 660.4 are $1,437,000 (rounded to the 
nearest thousand) [((2.67 hours) x 6,133 x $41) + ((2.67 hours) x 6,133 
x $41) + (5,073 hours x $18.50) (for preparing and distributing 
frivolous or irrelevant dispute notices)].

B. Regulatory Flexibility Act

    OCC: The Regulatory Flexibility Act (RFA) generally requires an 
agency that is issuing a final rule to prepare and make available a 
final regulatory flexibility analysis that describes the impact of the 
final rule on small entities, 5 U.S.C.604. However, the RFA provides 
that an agency is not required to prepare and make available a final 
regulatory flexibility analysis if the agency certifies that the final 
rule will not have a significant economic impact on a substantial 
number of small entities. 5 U.S.C. 605(b). For purposes of the RFA and 
OCC-regulated entities, a ``small entity'' is a national bank with 
assets of $175 million or less (small national bank). Based on its 
analysis and for the reason stated below, OCC certifies that these 
final rules will not have a significant economic impact on a 
substantial number of small entities. Based on two tests used to 
evaluate the impact of the final rules (compliance costs as a 
percentage of labor costs and compliance costs as a percentage of non-
interest expenses) the OCC estimates that the final rules would have a 
significant economic impact on 16 of 676 small national banks 
(approximately two percent of small national banks); the OCC does not 
consider this to be a substantial number of small entities.
    Board: The Board prepared an initial regulatory flexibility 
analysis as required by the Regulatory Flexibility Act (RFA) (5 U.S.C. 
601 et seq.) in connection with the proposed rule. The Board received 
three comment letters addressing its initial regulatory flexibility 
analysis.
    Under section 605(b) of the RFA, 5 U.S.C. 605(b), the regulatory 
flexibility analysis otherwise required under section 604 of the RFA is 
not required if an agency certifies, along with a statement providing 
the factual basis for such certification, that the rule will not have a 
significant economic impact on a substantial number of small entities 
(defined for purposes of the RFA to include commercial banks and other 
depository institutions with $175 million or less in assets). Based on 
its analysis and for the reasons stated below, the Board certifies that 
these final rules will not have a significant economic impact on a 
substantial number of small entities.
    1. Statement of the Need for, and Objectives of, the Final Rules.
    Section 312 of the FACT Act (which amends section 623 of the FCRA) 
requires the Agencies to issue regulations and guidelines relating to 
the responsibilities of furnishers of information about consumers to 
CRAs for the purpose of enhancing the accuracy and integrity of the 
information furnished. In addition, the Agencies must prescribe joint 
regulations that identify the circumstances, if any, under which 
furnishers must investigate disputes about the accuracy of the 
information contained in a consumer report on the consumer based on a 
direct request by a consumer, rather than requiring consumers to 
initiate a dispute through a consumer reporting agency.
    The SUPPLEMENTARY INFORMATION above contains information on the 
objectives of the final rules.
    2. Summaries of Issues Raised by Comments in Response to the 
Initial Regulatory Flexibility Analysis.
    In accordance with section 3(a) of the RFA, the Board conducted an 
initial regulatory flexibility analysis in connection with the proposed 
rule. The Agencies estimated in the proposed rule that it would take 
furnishers approximately 21 hours on average to implement the written 
policies and procedures regarding accuracy and integrity, including 
appropriate staff training. One commenter, Independent Community 
Bankers of America (ICBA), questioned the Agencies' estimate, noting 
that the compliance burdens will be significantly more than the 21 
hours estimated by the Agencies. Another commenter, MasterCard 
Worldwide, also questioned the Agencies' 21 hours estimate, but this 
comment did not apply uniquely to small entities. Another commenter, 
The American Financial Services Association (AFSA), predicted that the 
impact on small institutions current resources would be severe. AFSA 
stated that it anticipated that direct disputes would increase 
significantly and thus believed that the ``Estimated Hours Burden'' and 
``Estimated Cost Burden'' are extremely low.
    The Agencies estimated that it would take furnishers approximately 
four hours to adjust procedures for handling disputes received directly 
from consumers, another four hours to implement the new dispute 
process, and approximately another five minutes to send each notice of 
direct dispute. ICBA noted that it is probably unreasonable to believe 
that it will take only five minutes to prepare and send a notice of 
direct dispute since it will likely take much longer than that merely 
to review and investigate a dispute.
    3. Description and Estimate of Small Entities Affected by the Final 
Rules.

[[Page 31507]]

    The final rules apply to all banks that are members of the Federal 
Reserve System (other than national banks) and their respective 
operating subsidiaries, branches and Agencies of foreign banks (other 
than Federal branches, Federal Agencies, and insured State branches of 
foreign banks), commercial lending companies owned or controlled by 
foreign banks, and organizations operating under section 25 or 25A of 
the Federal Reserve Act (12 U.S.C. 601 et seq., and 611 et seq.). The 
Board's final rules will apply to the following institutions (numbers 
approximate): State member banks (881), operating subsidiaries that are 
not functionally regulated within the meaning of section 5(c)(5) of the 
Bank Holding Company Act of 1956, as amended (877), U.S. branches and 
agencies of foreign banks (219), commercial lending companies owned or 
controlled by foreign banks (3), and Edge and agreement corporations 
(64), for a total of approximately 2,044 institutions. The Board 
estimates that more than 1,448 of these institutions could be 
considered small entities with assets of $175 million or less.
    All small entities covered by the Board's rule potentially will be 
subject to the final rules. However, the final rules will not impose 
any requirements on small entities that do not furnish information 
about consumers to CRAs.
    4. Recordkeeping, Reporting and Other Compliance Requirements.
    The final rules require small entities that are furnishers subject 
to the rule to establish and implement reasonable policies and 
procedures regarding the accuracy and integrity of the information 
relating to consumers that they furnish to a CRA. Such furnishers are 
required to consider the guidelines in Appendix E to the proposed rule 
in developing these policies and procedures, and to incorporate those 
guidelines that are appropriate. The final rules also require small 
entities that are furnishers to investigate direct disputes received 
from a consumer that relate to an account or other relationship that 
the furnisher has with the consumer. The final rules require small 
entities to notify consumers who submit direct disputes of the results 
of the investigation or of the determination that the dispute is 
frivolous or irrelevant.
    5. Steps Taken To Minimize the Economic Impact on Small Entities.
    The Board believes the rule will not have a significant economic 
impact on a substantial number of small entities. The Board and the 
other Agencies have sought to minimize the economic impact on small 
entities by adopting consistent rules; affording furnishers the 
flexibility to establish policies and procedures that are appropriate 
to the nature, size, complexity, and scope of each furnisher's 
activities; permitting furnishers to include in their accuracy and 
integrity policies and procedures any of their existing policies and 
procedures that are relevant and appropriate; and affording furnishers 
the flexibility not to investigate disputes they reasonably believe 
have been submitted by a credit repair organization.
    The Board believes that many institutions' existing policies and 
procedures already address significant portions of the requirements 
related to furnishing information to CRAs. Similarly, the Board 
believes that many furnishers are already investigating direct disputes 
as good business practice. Furthermore, the Board notes that furnishers 
investigate disputes brought directly to a consumer reporting agency, 
which then directs the disputes to the furnisher, as appropriate, 
pursuant to existing FCRA law.
    FDIC: The FDIC prepared an initial regulatory flexibility analysis 
as required by the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et 
seq.) in connection with the December 13, 2007 proposed rule. The FDIC 
received three comment letters addressing its initial regulatory 
flexibility analysis.
    Under section 605(b) of the RFA, 5 U.S.C. 605(b), the regulatory 
flexibility analysis otherwise required under section 604 of the RFA is 
not required if an agency certifies, along with a statement providing 
the factual basis for such certification, that the rule will not have a 
significant economic impact on a substantial number of small entities 
(defined for purposes of the RFA to include commercial banks and other 
depository institutions with $175 million or less in assets). Based on 
its analysis and for the reasons stated below, the FDIC certifies that 
these final rules will not have a significant economic impact on a 
substantial number of small entities.
    Under the final rules, which implement section 312 of the FACT Act 
(which amends section 623 of the FCRA), the FDIC has issued regulations 
and guidelines relating to the responsibilities of furnishers of 
information about consumers to consumer reporting agencies for the 
purpose of enhancing the accuracy and integrity of the information 
furnished. In addition, the FDIC has prescribed joint regulations (with 
the other Agencies) that identify the circumstances under which 
furnishers must investigate disputes about the accuracy of the 
information contained in a consumer report on the consumer based on a 
direct request by a consumer, rather than requiring consumers to 
initiate a dispute through a consumer reporting agency. The 
SUPPLEMENTARY INFORMATION above contains information on the objectives 
of the final rules.
    The final rules apply to most FDIC-insured state nonmember banks, 
approximately 3,400 of which are small entities. Under the rule, 
financial institutions that furnish information about consumers to one 
or more consumer reporting agencies must have written policies and 
procedures regarding the accuracy and integrity of that information. 
The program must be appropriate to the nature, size, complexity, and 
scope of the furnishing activities. A furnisher may include any of its 
existing policies and procedures in place to ensure the accuracy of 
information. Institutions have had an ongoing requirement under section 
623 of the FCRA to provide accurate information when they choose to 
furnish data to consumer reporting agencies. The written policies and 
procedures in the rule would formalize the processes and controls 
necessary for accurate reporting. Federal Financial Institutions 
Examination Council examination procedures exist and have been used for 
years to evaluate compliance with the aspects of section 623 of the 
FCRA. Based on our examination of the financial institutions we 
supervise, the FDIC believes that many of these institutions have 
already implemented a significant portion of the policies and 
procedures required by the rule. The process of furnishing information 
to consumer reporting agencies is largely automated.
    The final rules also require financial institutions that furnish 
information about consumers to respond to direct dispute requests from 
consumers with regard to certain perceived inaccuracies. While the 
final rules would require new procedural requirements, including direct 
dispute notices, the FDIC believes that investigating direct disputes 
will not create significant additional burdens on small banks, for a 
number of reasons.
    First, most furnishers are already investigating similar disputes, 
which under the current law are brought directly to the relevant 
consumer reporting agency, which then contacts the furnisher for an 
investigation. Under this procedure, furnishers are already required to 
review all relevant information provided by the consumer reporting 
agency along with the notice; report the results of the investigation 
to the consumer reporting agency; if the disputed information is found 
to be

[[Page 31508]]

incomplete or inaccurate, report those results to all nationwide 
consumer reporting agencies to which the financial institution 
previously provided the information; and if the disputed information is 
incomplete, inaccurate, or not verifiable by the financial institution, 
promptly, for purposes of reporting to the consumer reporting agency, 
modify the item of information, delete the item of information, or 
permanently block the reporting of that item of information.
    Second, many of these furnishers are already investigating direct 
disputes as a matter of good customer relations and sound business 
practices or under other consumer protection laws.
    Third, the final rules do not require investigation in cases that 
are frivolous or irrelevant.
    OTS: The Regulatory Flexibility Act (RFA) generally requires an 
agency that is issuing a final rule to prepare and make available a 
final regulatory flexibility analysis that describes the impact of the 
final rule on small entities. 5 U.S.C. 604. However, the RFA provides 
that an agency is not required to prepare and make available a final 
regulatory flexibility analysis if the agency certifies, along with a 
statement providing the factual basis for such certification, that the 
rule will not have a significant economic impact on a substantial 
number of small entities. For purposes of the RFA and OTS-regulated 
entities, a ``small entity'' is a savings association with $175 million 
or less in assets (small savings association). Based on its analysis 
and for the reasons stated below, OTS certifies that these final rules 
will not have a significant economic impact on a substantial number of 
small entities.
    1. Reasons for Final Rules.
    The FACT Act amends the FCRA and was enacted, in part, for the 
purpose of enhancing the accuracy and integrity of information 
furnished to CRAs. Section 312 of the FACT Act generally requires the 
Agencies to issue guidelines for use by furnishers regarding the 
accuracy and integrity of the information about consumers that they 
furnish to consumer reporting agencies and prescribe regulations 
requiring furnishers to establish reasonable policies and procedures 
for implementing the guidelines. Section 312 also requires the Agencies 
to prescribe regulations identifying the circumstances under which a 
furnisher must reinvestigate disputes about the accuracy of information 
contained in a consumer report based on a direct request from a 
consumer. OTS is issuing these final rules to implement section 312 of 
the FACT Act.
    2. Statement of Objectives and Legal Basis.
    The objectives of the final rules are described in the 
SUPPLEMENTARY INFORMATION section. In sum, the objectives are: (1) To 
implement the general statutory provision that requires the Agencies to 
issue guidelines for use by furnishers regarding the accuracy and 
integrity of the information about consumers that they furnish to 
consumer reporting agencies and prescribe regulations requiring 
furnishers to establish reasonable policies and procedures for 
implementing the guidelines and (2) to fulfill the statutory mandate 
requiring the Agencies to prescribe regulations identifying the 
circumstances under which a furnisher must reinvestigate disputes about 
the accuracy of information contained in a consumer report based on a 
direct request from a consumer. The primary legal basis for the final 
rules is the Fair Credit Reporting Act found at 15 U.S.C. 1681 et seq.
    3. Description and Estimate of Small Entities Affected by the Final 
Rules.
    The final rules apply to savings associations and operating 
subsidiaries of Federal savings associations that are not functionally 
regulated within the meaning of section 5(c)(5) of the Bank Holding 
Company Act of 1956, as amended (12 U.S.C. 1844(c)(5)).
    OTS estimates that its final rules will apply to 391 small savings 
associations with assets of $175 million or less.
    4. Projected Recordkeeping, Reporting, and Other Compliance 
Requirements.
    The compliance requirements of the final rules are described in the 
SUPPLEMENTARY INFORMATION above.
    In general, the final rules require each furnisher subject to the 
rule to establish and implement reasonable policies and procedures 
regarding the accuracy and integrity of the information relating to 
consumers that it furnishes to a consumer reporting agency. Furnishers 
will be required to consider the guidelines in Appendix E to the final 
rules in developing these policies and procedures and to incorporate 
those guidelines that are appropriate.
    In response to comments about potential burden, the Agencies have 
sought to reduce the burden associated with these accuracy and 
integrity regulations and guidelines in several ways.
    First, the Agencies have adopted consistent rules.
    Second, the final rules provide substantial flexibility and 
minimize burden to allow any thrift, regardless of size, to tailor its 
practices to its individual needs. The program must be appropriate to 
the nature, size, complexity, and scope of the furnishing activities.
    Third, a furnisher may include any of its existing policies and 
procedures in place to ensure the accuracy of information. Furnishers 
have a preexisting obligation under section 623 of the FCRA to provide 
accurate information when they furnish data to consumer reporting 
agencies. OTS believes that many furnishers are likely to have existing 
policies and procedures regarding accurate reporting in order to 
satisfy their obligations under section 623, and that these policies 
and procedures could be incorporated in the policies and procedures 
required by the final rules.
    Furnishers subject to the final rules also will be required, under 
certain circumstances, to investigate disputes concerning the accuracy 
of information about the consumer contained in a consumer report based 
on a direct request of a consumer. While the rule requires new 
procedural requirements, OTS believes that investigating direct 
disputes will not create significant additional burdens on small 
institutions, for a number of reasons.
    First, most savings association furnishers already investigate 
similar disputes that are provided to them by a consumer reporting 
agency pursuant to the existing dispute provisions contained in section 
611 of the FCRA.
    Second, commenters on the ANPR and NPRM noted that many furnishers 
already investigate direct disputes as a matter of good customer 
relations, sound business practices, or because they are required to do 
so by other consumer protection laws. Savings associations also 
investigate disputes brought to the institution through OTS's customer 
complaint system.
    Third, the final rules do not require investigation of direct 
disputes when such disputes are frivolous or irrelevant.
    Fourth, savings associations already have mechanisms and processes 
in place to handle consumer complaints brought under other laws such as 
the Truth in Lending Act, Real Estate Settlement Procedures Act, and 
Electronic Funds Transfer Act. OTS believes many of these mechanisms 
and processes can be readily adapted to handle consumer disputes about 
their consumer reports.
    5. Identification of Duplicative, Overlapping, or Conflicting 
Federal Rules.
    OTS is unable to identify any statutes or rules which would overlap 
or conflict with the final rules.

[[Page 31509]]

    6. Discussion of Significant Alternatives.
    As required by the FACT Act, the final rules and guidelines apply 
to all covered institutions, regardless of the size of the institution. 
One approach to minimizing the burden on small entities would have been 
to provide a specific exemption for small institutions. However, OTS 
has no authority under section 312 of the FACT Act to grant an 
exception that would remove small institutions from the scope of the 
rule.
    The final rules do, however, provide substantial flexibility so 
that any savings association, regardless of size, may tailor its 
practices to its individual needs. For example, to minimize burden the 
final rules permit institutions to include in their accuracy and 
integrity policies and procedures their existing policies and 
procedures that are relevant and appropriate. Furthermore, OTS and 
other Agencies have attempted to minimize burden by: adopting 
consistent rules; incorporating into the final rules at Sec.  571.42(a) 
a statement that policies and procedures should be appropriate to the 
nature, size, complexity, and scope of a furnisher's activities; and 
providing furnishers with three options for providing their direct 
disputes address to consumers under Sec.  571.43(c).
    NCUA: The Regulatory Flexibility Act (RFA) requires NCUA to prepare 
an analysis to describe any significant economic impact a proposed 
regulation may have on a substantial number of small entities. 5 U.S.C. 
601-612. NCUA considers credit unions having less than ten million 
dollars in assets to be small for purposes of RFA. NCUA Interpretive 
Ruling and Policy Statement (IRPS) 87-2 as amended by IRPS 03-2. In 
connection with the December 13, 2007 proposed rule, NCUA certified 
that the proposed rule would not have a significant economic impact on 
a substantial number of small credit unions and therefore, a regulatory 
flexibility analysis was not required. Upon further review, the NCUA 
now certifies that the final rules also will not have a significant 
economic impact on a substantial number of small credit unions. The 
final rules will apply to all Federal credit unions regardless of asset 
size.
    FTC: The Regulatory Flexibility Act (``RFA''), 5 U.S.C. 601-612, 
requires that the FTC provide an Initial Regulatory Flexibility 
Analysis (``IRFA'') with a proposed rule and a Final Regulatory 
Flexibility Analysis (``FRFA''), if any, with the final rule, unless 
the FTC certifies that the rule will not have a significant economic 
impact on a substantial number of small entities. See 5 U.S.C. 603-605.
    The FTC hereby certifies that the final regulations will not have a 
significant economic impact on a substantial number of small business 
entities. The FTC continues to believe that a precise estimate of the 
number of small entities that fall under the final regulations is not 
currently feasible. Based on changes made to the final regulations in 
response to comments received, and the FTC's own experience and 
knowledge of industry practices, the FTC continues to believe that the 
cost and burden of complying with the final regulations are minimal. 
Accordingly, this document serves as notice to the Small Business 
Administration of the agency's certification of no effect. Nonetheless, 
the FTC has decided to publish a FRFA with these final regulations. 
Therefore, the FTC has prepared the following analysis:
    1. Need for and Objectives of the Rule.
    The FTC is charged with enforcing the requirements of section 312 
of the Fair and Accurate Credit Transactions Act of 2003 (FACT Act) (15 
U.S.C. 1681a-2(a)(8) and 1681a-2(e)). Section 312 of the FACT Act 
generally requires the Agencies to issue guidelines for use by 
furnishers regarding the accuracy and integrity of the information 
about consumers that they furnish to consumer reporting agencies and 
prescribe regulations requiring furnishers to establish reasonable 
policies and procedures for implementing the guidelines. Section 312 
also requires the Agencies to prescribe regulations identifying the 
circumstances under which a furnisher must reinvestigate disputes about 
accuracy of information contained in a consumer report based on a 
direct request from a consumer. In this action, the FTC promulgates 
final rules that would implement these requirements of the FACT Act.
    2. Significant Issues Received by Public Comment.
    The FTC received a number of comments on the effect of the proposed 
regulations. Some of the comments addressed the effect of the proposed 
regulations on businesses generally, and did not identify small 
businesses as a particular category. The FTC staff, therefore, has 
included all comments in this FRFA that raised potential compliance 
issues for small businesses, regardless of whether the commenter 
identified small businesses as being an affected category.
    The FTC estimated in the proposed rule that it would take 
furnishers approximately 21 hours on average to establish and implement 
the written policies and procedures regarding accuracy and integrity, 
including the incremental time to train staff. The FTC also estimated 
that it would take furnishers approximately four hours to adjust 
procedures for handling disputes received directly from consumers, 
another four hours to implement the new dispute process, and 
approximately five minutes to send each notice of direct dispute.
    One commenter questioned these estimates, stating it is impossible 
to verify whether it will take more time to implement the final rules. 
This commenter also stated that it is unreasonable to believe it will 
take only five minutes to prepare and sent a notice since it is likely 
to take longer simply to review and investigate a dispute. Another 
commenter stated that the compliance burdens will be significantly more 
than 21 hours, but this comment did not apply uniquely to small 
entities. The FTC also received a comment predicting that the impact of 
the proposed rules on small institutions would be severe, but noting 
that it is impossible to estimate the full impact. This comment noted 
that they expect that direct disputes would increase significantly and 
thus believed that the ``Estimated Hours Burden'' and ``Estimated Cost 
Burden'' are extremely low. The commenter also disputed that the bulk 
of disputes received would be handled by a clerical level employee.
    As noted in the PRA analysis, the Agencies have revised the 
estimate of 21 hours on average to establish and implement the written 
policies and procedures regarding accuracy and integrity to 24 hours. 
The Agencies have also revised the estimates of four hours to adjust 
procedures for handling direct disputes and another four hours to 
implement the new dispute process to eight hours in both instances. 
Moreover, the estimated burden per notice represents the time it will 
take a furnisher to prepare notices as required by the final rules, and 
does not include the time required to review and investigate a dispute. 
However, the Agencies have revised the estimate of time to provide a 
notice to a consumer from five minutes to fourteen minutes.
    In addition, one commenter noted that smaller entities may not have 
established policies and procedures, and requested that the final rules 
permit furnishers to adapt or rely on the instructions of CRAs or 
service providers in lieu of establishing policies and procedures. 
Another commenter also requested that the Agencies eliminate the 
requirement for written policies and procedures to minimize the burden 
of the final rules. As discussed

[[Page 31510]]

in the SUPPLEMENTARY INFORMATION, the final rules specify that a 
furnisher's policies and procedures must be appropriate to the nature, 
size, complexity, and scope of the furnisher's activities. The Agencies 
expect that the written policies and procedures for a small retail 
entity will differ substantially from, and be significantly less 
complex, than those of a multi-billion dollar financial services 
company.
    The FTC received additional comments suggesting that the agencies 
minimize the burden of the final rules by: Ensuring adequate time for 
implementation; more clearly distinguishing the responsibilities of 
furnishers from the responsibilities of CRAs; ``[e]liminat[ing] 
liability from `accuracy' and `integrity' ''; removing any obligation 
to update information that was accurate when furnished; and clarifying 
that there is no need for a furnisher to continue reporting on a debt 
once the debt is sold. The Agencies have set a mandatory compliance 
deadline of July 1, 2010, thereby providing all entities with at least 
one year within which to implement the final regulations. As discussed 
in the SUPPLEMENTARY INFORMATION, the definitions of ``accuracy'' and 
``integrity'' do not impose stand-alone obligations on furnishers but 
guide and inform the duties otherwise imposed on furnishers under the 
regulations. The Agencies further note that section 623(c) of the FCRA 
limits private rights of actions for a furnisher's noncompliance with 
the rules issued pursuant to section 312 of the FACT Act, which include 
the definitions of ``accuracy'' and ``integrity.'' Finally, with 
respect to debt that is sold, as discussed in the SUPPLEMENTARY 
INFORMATION, the Agencies do not expect that after transferring an 
account to a third party a furnisher would update the current status of 
the account beyond providing information to a CRA that the account has 
been transferred.
    3. Small Entities to Which the Final Rules Will Apply.
    The FTC's final rules will apply to ``an entity that furnishes 
information relating to consumers to one or more consumer reporting 
agencies for inclusion in a consumer report,'' except when it ``(1) 
Provides information to a consumer reporting agency solely to obtain a 
consumer report in accordance with sections 604(a) and (f) of the Fair 
Credit Reporting Act; (2) Is acting as a ``consumer reporting agency'' 
as defined in section 603(f) of the Fair Credit Reporting Act; (3) Is a 
consumer to whom the furnished information pertains; or (4) Is a 
neighbor, friend, or associate of the consumer, or another individual 
with whom the consumer is acquainted or who may have knowledge about 
the consumer, and who provides information about the consumer's 
character, general reputation, personal characteristics, or mode of 
living in response to a specific request from a consumer reporting 
agency.'' In short, the rule would apply to any entity that (1) is 
under the FTC's jurisdiction pursuant to the FCRA and (2) furnishes 
information relating to consumers to one or more consumer reporting 
agencies.
    Generally, the final regulations would apply to financial 
institutions, creditors, and other entities that furnish information 
relating to consumers to consumer reporting agencies. In particular, 
entities under FTC's jurisdiction covered by section 312 include state-
chartered credit unions, non-bank lenders, insurers, debt collectors, 
and any other entity other than an individual consumer that furnishes 
information relating to consumers to one or more consumer reporting 
agencies. The FTC requested but did not receive any comments on its 
IRFA relating to the number and type of small entities affected by the 
proposed rule. The FTC continues to believe that the available data is 
not sufficient for it to realistically estimate the number of entities 
the FTC regulates that would be subject to the final rules and that are 
small as defined by the Small Business Administration.\61\
---------------------------------------------------------------------------

    \61\ The size standard to be considered a small business for the 
majority of the non-bank creditors, insurers, and debt collectors 
that are subject to the Commission's jurisdiction is to have average 
annual receipts that are $6.5 million or less. A list of the SBA's 
size standards for all industries can be found at http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf (last visited March 3, 2009).
---------------------------------------------------------------------------

    4. Projected Reporting, Recordkeeping, and Other Compliance 
Requirements.
    The final rules require each furnisher subject to the rule to 
establish and implement reasonable written policies and procedures 
regarding the accuracy and integrity of the information relating to 
consumers that it furnishes to a consumer reporting agency. Furnishers 
will be required to consider the guidelines in Appendix A to the final 
rules in developing these policies and procedures and to incorporate 
those guidelines that are appropriate. The policies and procedures must 
be appropriate to the nature, size, complexity, and scope of the 
furnishing activities. A furnisher may include any of its existing 
policies and procedures in place to ensure the accuracy of information. 
Entities have had an ongoing requirement under section 623 of the FCRA 
to provide accurate information when they choose to furnish data to 
consumer reporting agencies. The FTC believes that many furnishers are 
likely to have existing policies and procedures regarding accurate 
reporting in order to satisfy their obligations under section 623, and 
that these policies and procedures could be incorporated in the 
policies and procedures required by the final rules.
    Entities under the FTC's jurisdiction covered by this rule include 
state-chartered credit unions, non-bank lenders, insurers, debt 
collectors, and any other entity other than an individual consumer that 
furnishes information relating to consumers to one or more consumer 
reporting agencies. In calculating costs, FTC staff assumes that for 
all entities, managerial and/or professional technical personnel will 
draft the written policies and procedures regarding the accuracy and 
integrity of furnished information.
    The FTC believes that many entities have already implemented a 
significant portion of the policies and procedures required by the 
final rules, as discussed above. Accordingly, the impact of the final 
rules would be merely incremental and not significant.
    Furnishers subject to the final rules will also be required, under 
certain circumstances, to investigate disputes concerning the accuracy 
of information about the consumer contained in a consumer report based 
on a direct request of a consumer. While the rule requires new 
procedural requirements, including direct dispute notices, the FTC 
believes that investigating direct disputes will not create significant 
additional burdens on small entities.
    Entities under the FTC's jurisdiction covered by this rule include 
state-chartered credit unions, non-bank lenders, insurers, debt 
collectors, and any other entity other than an individual consumer that 
furnishes information relating to consumers to one or more consumer 
reporting agencies. In calculating costs, FTC staff assumes that 
managerial and/or professional technical personnel will adapt 
mechanisms and processes to handle consumer disputes about their 
consumer reports and now assumes that skilled administrative support 
personnel will provide any required notices to consumers.
    The FTC believes that investigating direct disputes will not create 
significant additional burdens on covered entities for a number of 
reasons.
    First, most furnishers are already investigating similar disputes, 
which

[[Page 31511]]

under the current law are brought directly to the relevant consumer 
reporting agency, which then contacts the furnisher for an 
investigation. Under this procedure, furnishers are already required to 
review all relevant information provided by the consumer reporting 
agency along with the notice of dispute; report the results of the 
investigation to the consumer reporting agency; if the disputed 
information is found to be incomplete or inaccurate, report those 
results to all nationwide consumer reporting agencies to which the 
furnisher previously provided the information; and if the disputed 
information is incomplete, inaccurate, or not verifiable by the 
financial institution, promptly, for the purposes of reporting to the 
consumer reporting agency to modify the item of information, delete the 
item of information, or permanently block the reporting of that item of 
information.
    Second, many of these furnishers are already investigating direct 
disputes as a matter of good customer relations and sound business 
practices.
    Third, the final rules do not require investigation for disputes 
that are frivolous or irrelevant.
    Fourth, many furnishers already have mechanisms and processes in 
place to handle consumer disputes brought under other laws such as the 
Fair Debt Collection Practices Act (15 U.S.C. 1692-1692p), Truth in 
Lending Act (15 U.S.C. 1601-1665b), Fair Credit Billing Act (15 U.S.C. 
1666-1666j), Real Estate Settlement Procedures Act (12 U.S.C. 2601-
2627), and Electronic Funds Transfer Act (15 U.S.C. 1693-1693r). The 
FTC believes that many of these mechanisms and processes can be readily 
adapted to handle consumer disputes about their consumer reports.
    The final rules contain no requirement to report information to the 
FTC.
    5. Steps Taken to Minimize Significant Economic Impact of the Rule 
on Small Entities.
    The FTC considered whether any significant alternatives, consistent 
with the purposes of the FACT Act, could further minimize the final 
rules' impact on small entities. The FTC asked for comment on this 
issue. The standards in the final rules are flexible so that a covered 
entity, regardless of size, may tailor its practices to its individual 
needs. For example, to minimize the burden the final rules would permit 
entities to include in their accuracy and integrity policies and 
procedures their existing policies and procedures that are relevant and 
appropriate. Furthermore, the FTC and other Agencies have attempted to 
minimize the burden by: Adopting consistent rules; incorporating into 
the final rules at Sec.  660.3 a statement that policies and procedures 
should be appropriate to the nature, size, complexity, and scope of a 
furnisher's activities; and providing furnishers with three options for 
providing their direct disputes address to consumers under Sec.  660.4.

C. OCC and OTS Executive Order 12866 Determinations

    The OCC and OTS each determined that its portion of the final rules 
is not a significant regulatory action under Executive Order 12866.

D. OCC and OTS Executive Order 13132 Determinations

    The OCC and the OTS each determined that its portion of the final 
rules does not have any Federalism implications for purposes of 
Executive Order 13132.

E. NCUA Executive Order 13132 Determination

    Executive Order 13132 encourages independent regulatory agencies to 
consider the impact of their actions on State and local interests. In 
adherence to fundamental Federalism principles, the NCUA, an 
independent regulatory agency as defined in 44 U.S.C. 3502(5) 
voluntarily complies with the Executive Order. The final rules and 
guidelines apply only to Federally chartered credit unions and would 
not have substantial direct effects on the States, on the connection 
between the national government and the States, or on the distribution 
of power and responsibilities among the various levels of government. 
The NCUA has determined that these final rules and guidelines do not 
constitute a policy that has Federalism implications for purposes of 
the Executive Order.

F. OCC and OTS Unfunded Mandates Reform Act of 1995 Determinations

    Section 202 of the Unfunded Mandates Reform Act of 1995, Public Law 
104-4 (UMRA) requires that an agency prepare a budgetary impact 
statement before promulgating a rule that includes a Federal mandate 
that may result in the expenditure by State, local, and tribal 
governments, in the aggregate, or by the private sector of $100 million 
or more (adjusted annually for inflation) in any one year. (The 
inflation adjusted threshold is $133 million or more.) If a budgetary 
impact statement is required, section 205 of the UMRA also requires an 
agency to identify and consider a reasonable number of regulatory 
alternatives before promulgating a rule. The OCC and OTS each 
determined that its final rules will not result in expenditures by 
State, local, and tribal governments, in the aggregate, or by the 
private sector, of $133 million or more in any one year. Accordingly, 
neither OCC nor OTS has prepared a budgetary impact statement or 
specifically addressed the regulatory alternatives considered.

G. NCUA: The Treasury and General Government Appropriations Act, 1999- 
Assessment of Federal Regulations and Policies on Families

    The NCUA has determined that these final rules do not affect family 
well-being within the meaning of section 654 of the Treasury and 
General Government Appropriations Act, 1999, Public Law 105-277, 112 
Stat. 2681 (1998).

List of Subjects

12 CFR Part 41

    Banks, Banking, Consumer protection, National Banks, Reporting and 
recordkeeping requirements.

12 CFR Part 222

    Banks, Banking, Holding companies, state member banks.

12 CFR Part 334

    Administrative practice and procedure, Bank deposit insurance, 
Banks, Banking, Reporting and recordkeeping requirements, Safety and 
soundness.

12 CFR Part 571

    Consumer protection, Credit, Fair Credit Reporting Act, Privacy, 
Reporting and recordkeeping requirements, Savings associations.

12 CFR Part 717

    Consumer protection, Credit unions, Fair credit reporting, Privacy, 
Reporting and recordkeeping requirements.

16 CFR Part 660

    Fair Credit Reporting Act, Consumer reports, Consumer reporting 
agencies, Information furnishers, Identity theft, Trade practices.

Department of the Treasury

Office of the Comptroller of the Currency

12 CFR Chapter I

Authority and Issuance

0
For the reasons discussed in the joint preamble, the Office of the 
Comptroller of the Currency amends chapter I of title 12 of the Code of 
Federal Regulations by amending 12 CFR part 41 as follows:

[[Page 31512]]

PART 41--FAIR CREDIT REPORTING

0
1. Revise the authority citation for part 41 to read as follows:

    Authority: 12 U.S.C. 1 et seq., 24 (Seventh), 93a, 481, 484, and 
1818; 15 U.S.C. 1681a, 1681b, 1681c, 1681m, 1681s, 1681s-2, 1681s-3, 
1681t, 1681w, Sec. 214, Pub. L. 108-159, 117 Stat. 1952.


0
2. Add a new subpart E to part 41 to read as follows:

Subpart E--Duties of Furnishers of Information

Sec.
41.40 Scope.
41.41 Definitions.
41.42 Reasonable policies and procedures concerning the accuracy and 
integrity of furnished information.
41.43 Direct disputes.


Sec.  41.40  Scope.

    This subpart applies to a national bank, Federal branch and agency 
of a foreign bank, and their respective operating subsidiaries that are 
not functionally regulated within the meaning of section 5(c)(5) of the 
Bank Holding Company Act of 1956, as amended (12 U.S.C. 1844(c)(5)).


Sec.  41.41  Definitions.

    For purposes of this subpart and Appendix E of this part, the 
following definitions apply:
    (a) Accuracy means that information that a furnisher provides to a 
consumer reporting agency about an account or other relationship with 
the consumer correctly:
    (1) Reflects the terms of and liability for the account or other 
relationship;
    (2) Reflects the consumer's performance and other conduct with 
respect to the account or other relationship; and
    (3) Identifies the appropriate consumer.
    (b) Direct dispute means a dispute submitted directly to a 
furnisher (including a furnisher that is a debt collector) by a 
consumer concerning the accuracy of any information contained in a 
consumer report and pertaining to an account or other relationship that 
the furnisher has or had with the consumer.
    (c) Furnisher means an entity that furnishes information relating 
to consumers to one or more consumer reporting agencies for inclusion 
in a consumer report. An entity is not a furnisher when it:
    (1) Provides information to a consumer reporting agency solely to 
obtain a consumer report in accordance with sections 604(a) and (f) of 
the Fair Credit Reporting Act;
    (2) Is acting as a ``consumer reporting agency'' as defined in 
section 603(f) of the Fair Credit Reporting Act;
    (3) Is a consumer to whom the furnished information pertains; or
    (4) Is a neighbor, friend, or associate of the consumer, or another 
individual with whom the consumer is acquainted or who may have 
knowledge about the consumer, and who provides information about the 
consumer's character, general reputation, personal characteristics, or 
mode of living in response to a specific request from a consumer 
reporting agency.
    (d) Identity theft has the same meaning as in 16 CFR 603.2(a).
    (e) Integrity means that information that a furnisher provides to a 
consumer reporting agency about an account or other relationship with 
the consumer:
    (1) Is substantiated by the furnisher's records at the time it is 
furnished;
    (2) Is furnished in a form and manner that is designed to minimize 
the likelihood that the information may be incorrectly reflected in a 
consumer report; and
    (3) Includes the information in the furnisher's possession about 
the account or other relationship that the OCC has:
    (i) Determined that the absence of which would likely be materially 
misleading in evaluating a consumer's creditworthiness, credit 
standing, credit capacity, character, general reputation, personal 
characteristics, or mode of living; and
    (ii) Listed in section I.(b)(2)(iii) of Appendix E of this part.


Sec.  41.42  Reasonable policies and procedures concerning the accuracy 
and integrity of furnished information.

    (a) Policies and procedures. Each furnisher must establish and 
implement reasonable written policies and procedures regarding the 
accuracy and integrity of the information relating to consumers that it 
furnishes to a consumer reporting agency. The policies and procedures 
must be appropriate to the nature, size, complexity, and scope of each 
furnisher's activities.
    (b) Guidelines. Each furnisher must consider the guidelines in 
Appendix E of this part in developing its policies and procedures 
required by this section, and incorporate those guidelines that are 
appropriate.
    (c) Reviewing and updating policies and procedures. Each furnisher 
must review its policies and procedures required by this section 
periodically and update them as necessary to ensure their continued 
effectiveness.


Sec.  41.43  Direct disputes.

    (a) General rule. Except as otherwise provided in this section, a 
furnisher must conduct a reasonable investigation of a direct dispute 
if it relates to:
    (1) The consumer's liability for a credit account or other debt 
with the furnisher, such as direct disputes relating to whether there 
is or has been identity theft or fraud against the consumer, whether 
there is individual or joint liability on an account, or whether the 
consumer is an authorized user of a credit account;
    (2) The terms of a credit account or other debt with the furnisher, 
such as direct disputes relating to the type of account, principal 
balance, scheduled payment amount on an account, or the amount of the 
credit limit on an open-end account;
    (3) The consumer's performance or other conduct concerning an 
account or other relationship with the furnisher, such as direct 
disputes relating to the current payment status, high balance, date a 
payment was made, the amount of a payment made, or the date an account 
was opened or closed; or
    (4) Any other information contained in a consumer report regarding 
an account or other relationship with the furnisher that bears on the 
consumer's creditworthiness, credit standing, credit capacity, 
character, general reputation, personal characteristics, or mode of 
living.
    (b) Exceptions. The requirements of paragraph (a) of this section 
do not apply to a furnisher if:
    (1) The direct dispute relates to:
    (i) The consumer's identifying information (other than a direct 
dispute relating to a consumer's liability for a credit account or 
other debt with the furnisher, as provided in paragraph (a)(1) of this 
section) such as name(s), date of birth, Social Security Number, 
telephone number(s), or address(es);
    (ii) The identity of past or present employers;
    (iii) Inquiries or requests for a consumer report;
    (iv) Information derived from public records, such as judgments, 
bankruptcies, liens, and other legal matters (unless provided by a 
furnisher with an account or other relationship with the consumer);
    (v) Information related to fraud alerts or active duty alerts; or
    (vi) Information provided to a consumer reporting agency by another 
furnisher; or
    (2) The furnisher has a reasonable belief that the direct dispute 
is submitted by, is prepared on behalf of the consumer by, or is 
submitted on a form supplied to the consumer by, a credit repair 
organization, as defined in 15 U.S.C. 1679a(3), or an entity that

[[Page 31513]]

would be a credit repair organization, but for 15 U.S.C. 
1679a(3)(B)(i).
    (c) Direct dispute address. A furnisher is required to investigate 
a direct dispute only if a consumer submits a dispute notice to the 
furnisher at:
    (1) The address of a furnisher provided by a furnisher and set 
forth on a consumer report relating to the consumer;
    (2) An address clearly and conspicuously specified by the furnisher 
for submitting direct disputes that is provided to the consumer in 
writing or electronically (if the consumer has agreed to the electronic 
delivery of information from the furnisher); or
    (3) Any business address of the furnisher if the furnisher has not 
so specified and provided an address for submitting direct disputes 
under paragraphs (c)(1) or (2) of this section.
    (d) Direct dispute notice contents. A dispute notice must include:
    (1) Sufficient information to identify the account or other 
relationship that is in dispute, such as an account number and the 
name, address, and telephone number of the consumer, if applicable;
    (2) The specific information that the consumer is disputing and an 
explanation of the basis for the dispute; and
    (3) All supporting documentation or other information reasonably 
required by the furnisher to substantiate the basis of the dispute. 
This documentation may include, for example: A copy of the relevant 
portion of the consumer report that contains the allegedly inaccurate 
information; a police report; a fraud or identity theft affidavit; a 
court order; or account statements.
    (e) Duty of furnisher after receiving a direct dispute notice. 
After receiving a dispute notice from a consumer pursuant to paragraphs 
(c) and (d) of this section, the furnisher must:
    (1) Conduct a reasonable investigation with respect to the disputed 
information;
    (2) Review all relevant information provided by the consumer with 
the dispute notice;
    (3) Complete its investigation of the dispute and report the 
results of the investigation to the consumer before the expiration of 
the period under section 611(a)(1) of the Fair Credit Reporting Act (15 
U.S.C. 1681i(a)(1)) within which a consumer reporting agency would be 
required to complete its action if the consumer had elected to dispute 
the information under that section; and
    (4) If the investigation finds that the information reported was 
inaccurate, promptly notify each consumer reporting agency to which the 
furnisher provided inaccurate information of that determination and 
provide to the consumer reporting agency any correction to that 
information that is necessary to make the information provided by the 
furnisher accurate.
    (f) Frivolous or irrelevant disputes. (1) A furnisher is not 
required to investigate a direct dispute if the furnisher has 
reasonably determined that the dispute is frivolous or irrelevant. A 
dispute qualifies as frivolous or irrelevant if:
    (i) The consumer did not provide sufficient information to 
investigate the disputed information as required by paragraph (d) of 
this section;
    (ii) The direct dispute is substantially the same as a dispute 
previously submitted by or on behalf of the consumer, either directly 
to the furnisher or through a consumer reporting agency, with respect 
to which the furnisher has already satisfied the applicable 
requirements of the Act or this section; provided, however, that a 
direct dispute is not substantially the same as a dispute previously 
submitted if the dispute includes information listed in paragraph (d) 
of this section that had not previously been provided to the furnisher; 
or
    (iii) The furnisher is not required to investigate the direct 
dispute because one or more of the exceptions listed in paragraph (b) 
of this section applies.
    (2) Notice of determination. Upon making a determination that a 
dispute is frivolous or irrelevant, the furnisher must notify the 
consumer of the determination not later than five business days after 
making the determination, by mail or, if authorized by the consumer for 
that purpose, by any other means available to the furnisher.
    (3) Contents of notice of determination that a dispute is frivolous 
or irrelevant. A notice of determination that a dispute is frivolous or 
irrelevant must include the reasons for such determination and identify 
any information required to investigate the disputed information, which 
notice may consist of a standardized form describing the general nature 
of such information.

0
3. Add a new appendix E to part 41 to read as follows:

Appendix E to Part 41--Interagency Guidelines Concerning the Accuracy 
and Integrity of Information Furnished to Consumer Reporting Agencies

    The OCC encourages voluntary furnishing of information to 
consumer reporting agencies. Section 41.42 of this part requires 
each furnisher to establish and implement reasonable written 
policies and procedures concerning the accuracy and integrity of the 
information it furnishes to consumer reporting agencies. Under Sec.  
41.42(b), a furnisher must consider the guidelines set forth below 
in developing its policies and procedures. In establishing these 
policies and procedures, a furnisher may include any of its existing 
policies and procedures that are relevant and appropriate. Section 
41.42(c) requires each furnisher to review its policies and 
procedures periodically and update them as necessary to ensure their 
continued effectiveness.

I. Nature, Scope, and Objectives of Policies and Procedures

    (a) Nature and Scope. Section 41.42(a) of this part requires 
that a furnisher's policies and procedures be appropriate to the 
nature, size, complexity, and scope of the furnisher's activities. 
In developing its policies and procedures, a furnisher should 
consider, for example:
    (1) The types of business activities in which the furnisher 
engages;
    (2) The nature and frequency of the information the furnisher 
provides to consumer reporting agencies; and
    (3) The technology used by the furnisher to furnish information 
to consumer reporting agencies.
    (b) Objectives. A furnisher's policies and procedures should be 
reasonably designed to promote the following objectives:
    (1) To furnish information about accounts or other relationships 
with a consumer that is accurate, such that the furnished 
information:
    (i) Identifies the appropriate consumer;
    (ii) Reflects the terms of and liability for those accounts or 
other relationships; and
    (iii) Reflects the consumer's performance and other conduct with 
respect to the account or other relationship;
    (2) To furnish information about accounts or other relationships 
with a consumer that has integrity, such that the furnished 
information:
    (i) Is substantiated by the furnisher's records at the time it 
is furnished;
    (ii) Is furnished in a form and manner that is designed to 
minimize the likelihood that the information may be incorrectly 
reflected in a consumer report; thus, the furnished information 
should:
    (A) Include appropriate identifying information about the 
consumer to whom it pertains; and
    (B) Be furnished in a standardized and clearly understandable 
form and manner and with a date specifying the time period to which 
the information pertains; and
    (iii) Includes the credit limit, if applicable and in the 
furnisher's possession;
    (3) To conduct reasonable investigations of consumer disputes 
and take appropriate actions based on the outcome of such 
investigations; and
    (4) To update the information it furnishes as necessary to 
reflect the current status of the consumer's account or other 
relationship, including, for example:
    (i) Any transfer of an account (e.g., by sale or assignment for 
collection) to a third party; and
    (ii) Any cure of the consumer's failure to abide by the terms of 
the account or other relationship.

[[Page 31514]]

II. Establishing and Implementing Policies and Procedures

    In establishing and implementing its policies and procedures, a 
furnisher should:
    (a) Identify practices or activities of the furnisher that can 
compromise the accuracy or integrity of information furnished to 
consumer reporting agencies, such as by:
    (1) Reviewing its existing practices and activities, including 
the technological means and other methods it uses to furnish 
information to consumer reporting agencies and the frequency and 
timing of its furnishing of information;
    (2) Reviewing its historical records relating to accuracy or 
integrity or to disputes; reviewing other information relating to 
the accuracy or integrity of information provided by the furnisher 
to consumer reporting agencies; and considering the types of errors, 
omissions, or other problems that may have affected the accuracy or 
integrity of information it has furnished about consumers to 
consumer reporting agencies;
    (3) Considering any feedback received from consumer reporting 
agencies, consumers, or other appropriate parties;
    (4) Obtaining feedback from the furnisher's staff; and
    (5) Considering the potential impact of the furnisher's policies 
and procedures on consumers.
    (b) Evaluate the effectiveness of existing policies and 
procedures of the furnisher regarding the accuracy and integrity of 
information furnished to consumer reporting agencies; consider 
whether new, additional, or different policies and procedures are 
necessary; and consider whether implementation of existing policies 
and procedures should be modified to enhance the accuracy and 
integrity of information about consumers furnished to consumer 
reporting agencies.
    (c) Evaluate the effectiveness of specific methods (including 
technological means) the furnisher uses to provide information to 
consumer reporting agencies; how those methods may affect the 
accuracy and integrity of the information it provides to consumer 
reporting agencies; and whether new, additional, or different 
methods (including technological means) should be used to provide 
information to consumer reporting agencies to enhance the accuracy 
and integrity of that information.

III. Specific Components of Policies and Procedures

    In developing its policies and procedures, a furnisher should 
address the following, as appropriate:
    (a) Establishing and implementing a system for furnishing 
information about consumers to consumer reporting agencies that is 
appropriate to the nature, size, complexity, and scope of the 
furnisher's business operations.
    (b) Using standard data reporting formats and standard 
procedures for compiling and furnishing data, where feasible, such 
as the electronic transmission of information about consumers to 
consumer reporting agencies.
    (c) Maintaining records for a reasonable period of time, not 
less than any applicable recordkeeping requirement, in order to 
substantiate the accuracy of any information about consumers it 
furnishes that is subject to a direct dispute.
    (d) Establishing and implementing appropriate internal controls 
regarding the accuracy and integrity of information about consumers 
furnished to consumer reporting agencies, such as by implementing 
standard procedures and verifying random samples of information 
provided to consumer reporting agencies.
    (e) Training staff that participates in activities related to 
the furnishing of information about consumers to consumer reporting 
agencies to implement the policies and procedures.
    (f) Providing for appropriate and effective oversight of 
relevant service providers whose activities may affect the accuracy 
or integrity of information about consumers furnished to consumer 
reporting agencies to ensure compliance with the policies and 
procedures.
    (g) Furnishing information about consumers to consumer reporting 
agencies following mergers, portfolio acquisitions or sales, or 
other acquisitions or transfers of accounts or other obligations in 
a manner that prevents re-aging of information, duplicative 
reporting, or other problems that may similarly affect the accuracy 
or integrity of the information furnished.
    (h) Deleting, updating, and correcting information in the 
furnisher's records, as appropriate, to avoid furnishing inaccurate 
information.
    (i) Conducting reasonable investigations of disputes.
    (j) Designing technological and other means of communication 
with consumer reporting agencies to prevent duplicative reporting of 
accounts, erroneous association of information with the wrong 
consumer(s), and other occurrences that may compromise the accuracy 
or integrity of information provided to consumer reporting agencies.
    (k) Providing consumer reporting agencies with sufficient 
identifying information in the furnisher's possession about each 
consumer about whom information is furnished to enable the consumer 
reporting agency properly to identify the consumer.
    (l) Conducting a periodic evaluation of its own practices, 
consumer reporting agency practices of which the furnisher is aware, 
investigations of disputed information, corrections of inaccurate 
information, means of communication, and other factors that may 
affect the accuracy or integrity of information furnished to 
consumer reporting agencies.
    (m) Complying with applicable requirements under the Fair Credit 
Reporting Act and its implementing regulations.

Board of Governors of the Federal Reserve System

12 CFR Chapter II

Authority and Issuance

0
For the reasons set forth in the joint preamble, part 222 of title 12, 
chapter II, of the Code of Federal Regulations is amended as follows:

PART 222--FAIR CREDIT REPORTING (REGULATION V)

0
1. The authority citation for part 222 is revised to read as follows:

    Authority:  15 U.S.C. 1681b, 1681c, 1681m, 1681s, 1681s-2, and 
1681w; Secs. 3 and 214, Pub. L. 108-159, 117 Stat. 1952.


0
2. A new subpart E is added to part 222 to read as follows:
Subpart E--Duties of Furnishers of Information
Sec.
222.40 Scope.
222.41 Definitions.
222.42 Reasonable policies and procedures concerning the accuracy 
and integrity of furnished information.
222.43 Direct disputes.

Subpart E--Duties of Furnishers of Information


Sec.  222.40  Scope.

    Subpart E of this part applies to member banks of the Federal 
Reserve System (other than national banks) and their respective 
operating subsidiaries that are not functionally regulated within the 
meaning of section 5(c)(5) of the Bank Holding Company Act, as amended 
(12 U.S.C. 1844(c)(5)), branches and Agencies of foreign banks (other 
than Federal branches, Federal Agencies, and insured State branches of 
foreign banks), commercial lending companies owned or controlled by 
foreign banks, and organizations operating under section 25 or 25A of 
the Federal Reserve Act (12 U.S.C. 601 et seq., and 611 et seq.).


Sec.  222.41  Definitions.

    For purposes of this subpart and Appendix E of this part, the 
following definitions apply:
    (a) Accuracy means that information that a furnisher provides to a 
consumer reporting agency about an account or other relationship with 
the consumer correctly:
    (1) Reflects the terms of and liability for the account or other 
relationship;
    (2) Reflects the consumer's performance and other conduct with 
respect to the account or other relationship; and
    (3) Identifies the appropriate consumer.
    (b) Direct dispute means a dispute submitted directly to a 
furnisher (including a furnisher that is a debt collector) by a 
consumer concerning the accuracy of any information contained in a 
consumer report and pertaining to an account or other relationship that 
the furnisher has or had with the consumer.
    (c) Furnisher means an entity that furnishes information relating 
to

[[Page 31515]]

consumers to one or more consumer reporting agencies for inclusion in a 
consumer report. An entity is not a furnisher when it:
    (1) Provides information to a consumer reporting agency solely to 
obtain a consumer report in accordance with sections 604(a) and (f) of 
the Fair Credit Reporting Act;
    (2) Is acting as a ``consumer reporting agency'' as defined in 
section 603(f) of the Fair Credit Reporting Act;
    (3) Is a consumer to whom the furnished information pertains; or
    (4) Is a neighbor, friend, or associate of the consumer, or another 
individual with whom the consumer is acquainted or who may have 
knowledge about the consumer, and who provides information about the 
consumer's character, general reputation, personal characteristics, or 
mode of living in response to a specific request from a consumer 
reporting agency.
    (d) Identity theft has the same meaning as in 16 CFR 603.2(a).
    (e) Integrity means that information that a furnisher provides to a 
consumer reporting agency about an account or other relationship with 
the consumer:
    (1) Is substantiated by the furnisher's records at the time it is 
furnished;
    (2) Is furnished in a form and manner that is designed to minimize 
the likelihood that the information may be incorrectly reflected in a 
consumer report; and
    (3) Includes the information in the furnisher's possession about 
the account or other relationship that the Board has:
    (i) Determined that the absence of which would likely be materially 
misleading in evaluating a consumer's creditworthiness, credit 
standing, credit capacity, character, general reputation, personal 
characteristics, or mode of living; and
    (ii) Listed in section I.(b)(2)(iii) of Appendix E of this part.


Sec.  222.42  Reasonable policies and procedures concerning the 
accuracy and integrity of furnished information.

    (a) Policies and procedures. Each furnisher must establish and 
implement reasonable written policies and procedures regarding the 
accuracy and integrity of the information relating to consumers that it 
furnishes to a consumer reporting agency. The policies and procedures 
must be appropriate to the nature, size, complexity, and scope of each 
furnisher's activities.
    (b) Guidelines. Each furnisher must consider the guidelines in 
Appendix E of this part in developing its policies and procedures 
required by this section, and incorporate those guidelines that are 
appropriate.
    (c) Reviewing and updating policies and procedures. Each furnisher 
must review its policies and procedures required by this section 
periodically and update them as necessary to ensure their continued 
effectiveness.


Sec.  222.43  Direct disputes.

    (a) General rule. Except as otherwise provided in this section, a 
furnisher must conduct a reasonable investigation of a direct dispute 
if it relates to:
    (1) The consumer's liability for a credit account or other debt 
with the furnisher, such as direct disputes relating to whether there 
is or has been identity theft or fraud against the consumer, whether 
there is individual or joint liability on an account, or whether the 
consumer is an authorized user of a credit account;
    (2) The terms of a credit account or other debt with the furnisher, 
such as direct disputes relating to the type of account, principal 
balance, scheduled payment amount on an account, or the amount of the 
credit limit on an open-end account;
    (3) The consumer's performance or other conduct concerning an 
account or other relationship with the furnisher, such as direct 
disputes relating to the current payment status, high balance, date a 
payment was made, the amount of a payment made, or the date an account 
was opened or closed; or
    (4) Any other information contained in a consumer report regarding 
an account or other relationship with the furnisher that bears on the 
consumer's creditworthiness, credit standing, credit capacity, 
character, general reputation, personal characteristics, or mode of 
living.
    (b) Exceptions. The requirements of paragraph (a) of this section 
do not apply to a furnisher if:
    (1) The direct dispute relates to:
    (i) The consumer's identifying information (other than a direct 
dispute relating to a consumer's liability for a credit account or 
other debt with the furnisher, as provided in paragraph (a)(1) of this 
section) such as name(s), date of birth, Social Security number, 
telephone number(s), or address(es);
    (ii) The identity of past or present employers;
    (iii) Inquiries or requests for a consumer report;
    (iv) Information derived from public records, such as judgments, 
bankruptcies, liens, and other legal matters (unless provided by a 
furnisher with an account or other relationship with the consumer);
    (v) Information related to fraud alerts or active duty alerts; or
    (vi) Information provided to a consumer reporting agency by another 
furnisher; or
    (2) The furnisher has a reasonable belief that the direct dispute 
is submitted by, is prepared on behalf of the consumer by, or is 
submitted on a form supplied to the consumer by, a credit repair 
organization, as defined in 15 U.S.C. 1679a(3), or an entity that would 
be a credit repair organization, but for 15 U.S.C. 1679a(3)(B)(i).
    (c) Direct dispute address. A furnisher is required to investigate 
a direct dispute only if a consumer submits a dispute notice to the 
furnisher at:
    (1) The address of a furnisher provided by a furnisher and set 
forth on a consumer report relating to the consumer;
    (2) An address clearly and conspicuously specified by the furnisher 
for submitting direct disputes that is provided to the consumer in 
writing or electronically (if the consumer has agreed to the electronic 
delivery of information from the furnisher); or
    (3) Any business address of the furnisher if the furnisher has not 
so specified and provided an address for submitting direct disputes 
under paragraphs (c)(1) or (2) of this section.
    (d) Direct dispute notice contents. A dispute notice must include:
    (1) Sufficient information to identify the account or other 
relationship that is in dispute, such as an account number and the 
name, address, and telephone number of the consumer, if applicable;
    (2) The specific information that the consumer is disputing and an 
explanation of the basis for the dispute; and
    (3) All supporting documentation or other information reasonably 
required by the furnisher to substantiate the basis of the dispute. 
This documentation may include, for example: a copy of the relevant 
portion of the consumer report that contains the allegedly inaccurate 
information; a police report; a fraud or identity theft affidavit; a 
court order; or account statements.
    (e) Duty of furnisher after receiving a direct dispute notice. 
After receiving a dispute notice from a consumer pursuant to paragraphs 
(c) and (d) of this section, the furnisher must:
    (1) Conduct a reasonable investigation with respect to the disputed 
information;
    (2) Review all relevant information provided by the consumer with 
the dispute notice;
    (3) Complete its investigation of the dispute and report the 
results of the investigation to the consumer before the expiration of 
the period under section

[[Page 31516]]

611(a)(1) of the Fair Credit Reporting Act (15 U.S.C. 1681i(a)(1)) 
within which a consumer reporting agency would be required to complete 
its action if the consumer had elected to dispute the information under 
that section; and
    (4) If the investigation finds that the information reported was 
inaccurate, promptly notify each consumer reporting agency to which the 
furnisher provided inaccurate information of that determination and 
provide to the consumer reporting agency any correction to that 
information that is necessary to make the information provided by the 
furnisher accurate.
    (f) Frivolous or irrelevant disputes. (1) A furnisher is not 
required to investigate a direct dispute if the furnisher has 
reasonably determined that the dispute is frivolous or irrelevant. A 
dispute qualifies as frivolous or irrelevant if:
    (i) The consumer did not provide sufficient information to 
investigate the disputed information as required by paragraph (d) of 
this section;
    (ii) The direct dispute is substantially the same as a dispute 
previously submitted by or on behalf of the consumer, either directly 
to the furnisher or through a consumer reporting agency, with respect 
to which the furnisher has already satisfied the applicable 
requirements of the Act or this section; provided, however, that a 
direct dispute is not substantially the same as a dispute previously 
submitted if the dispute includes information listed in paragraph (d) 
of this section that had not previously been provided to the furnisher; 
or
    (iii) The furnisher is not required to investigate the direct 
dispute because one or more of the exceptions listed in paragraph (b) 
of this section applies.
    (2) Notice of determination. Upon making a determination that a 
dispute is frivolous or irrelevant, the furnisher must notify the 
consumer of the determination not later than five business days after 
making the determination, by mail or, if authorized by the consumer for 
that purpose, by any other means available to the furnisher.
    (3) Contents of notice of determination that a dispute is frivolous 
or irrelevant. A notice of determination that a dispute is frivolous or 
irrelevant must include the reasons for such determination and identify 
any information required to investigate the disputed information, which 
notice may consist of a standardized form describing the general nature 
of such information.

0
3. A new appendix E to part 222 is added to read as follows:

Appendix E to Part 222--Interagency Guidelines Concerning the Accuracy 
and Integrity of Information Furnished to Consumer Reporting Agencies

    The Board encourages voluntary furnishing of information to 
consumer reporting agencies. Section 222.42 of this part requires 
each furnisher to establish and implement reasonable written 
policies and procedures concerning the accuracy and integrity of the 
information it furnishes to consumer reporting agencies. Under Sec.  
222.42(b) of this part, a furnisher must consider the guidelines set 
forth below in developing its policies and procedures. In 
establishing these policies and procedures, a furnisher may include 
any of its existing policies and procedures that are relevant and 
appropriate. Section 222.42(c) requires each furnisher to review its 
policies and procedures periodically and update them as necessary to 
ensure their continued effectiveness.

I. Nature, Scope, and Objectives of Policies and Procedures

    (a) Nature and Scope. Section 222.42(a) of this part requires 
that a furnisher's policies and procedures be appropriate to the 
nature, size, complexity, and scope of the furnisher's activities. 
In developing its policies and procedures, a furnisher should 
consider, for example:
    (1) The types of business activities in which the furnisher 
engages;
    (2) The nature and frequency of the information the furnisher 
provides to consumer reporting agencies; and
    (3) The technology used by the furnisher to furnish information 
to consumer reporting agencies.
    (b) Objectives. A furnisher's policies and procedures should be 
reasonably designed to promote the following objectives:
    (1) To furnish information about accounts or other relationships 
with a consumer that is accurate, such that the furnished 
information:
    (i) Identifies the appropriate consumer;
    (ii) Reflects the terms of and liability for those accounts or 
other relationships; and
    (iii) Reflects the consumer's performance and other conduct with 
respect to the account or other relationship;
    (2) To furnish information about accounts or other relationships 
with a consumer that has integrity, such that the furnished 
information:
    (i) Is substantiated by the furnisher's records at the time it 
is furnished;
    (ii) Is furnished in a form and manner that is designed to 
minimize the likelihood that the information may be incorrectly 
reflected in a consumer report; thus, the furnished information 
should:
    (A) Include appropriate identifying information about the 
consumer to whom it pertains; and
    (B) Be furnished in a standardized and clearly understandable 
form and manner and with a date specifying the time period to which 
the information pertains; and
    (iii) Includes the credit limit, if applicable and in the 
furnisher's possession;
    (3) To conduct reasonable investigations of consumer disputes 
and take appropriate actions based on the outcome of such 
investigations; and
    (4) To update the information it furnishes as necessary to 
reflect the current status of the consumer's account or other 
relationship, including, for example:
    (i) Any transfer of an account (e.g., by sale or assignment for 
collection) to a third party; and
    (ii) Any cure of the consumer's failure to abide by the terms of 
the account or other relationship.

II. Establishing and Implementing Policies and Procedures

    In establishing and implementing its policies and procedures, a 
furnisher should:
    (a) Identify practices or activities of the furnisher that can 
compromise the accuracy or integrity of information furnished to 
consumer reporting agencies, such as by:
    (1) Reviewing its existing practices and activities, including 
the technological means and other methods it uses to furnish 
information to consumer reporting agencies and the frequency and 
timing of its furnishing of information;
    (2) Reviewing its historical records relating to accuracy or 
integrity or to disputes; reviewing other information relating to 
the accuracy or integrity of information provided by the furnisher 
to consumer reporting agencies; and considering the types of errors, 
omissions, or other problems that may have affected the accuracy or 
integrity of information it has furnished about consumers to 
consumer reporting agencies;
    (3) Considering any feedback received from consumer reporting 
agencies, consumers, or other appropriate parties;
    (4) Obtaining feedback from the furnisher's staff; and
    (5) Considering the potential impact of the furnisher's policies 
and procedures on consumers.
    (b) Evaluate the effectiveness of existing policies and 
procedures of the furnisher regarding the accuracy and integrity of 
information furnished to consumer reporting agencies; consider 
whether new, additional, or different policies and procedures are 
necessary; and consider whether implementation of existing policies 
and procedures should be modified to enhance the accuracy and 
integrity of information about consumers furnished to consumer 
reporting agencies.
    (c) Evaluate the effectiveness of specific methods (including 
technological means) the furnisher uses to provide information to 
consumer reporting agencies; how those methods may affect the 
accuracy and integrity of the information it provides to consumer 
reporting agencies; and whether new, additional, or different 
methods (including technological means) should be used to provide 
information to consumer reporting agencies to enhance the accuracy 
and integrity of that information.

III. Specific Components of Policies and Procedures

    In developing its policies and procedures, a furnisher should 
address the following, as appropriate:
    (a) Establishing and implementing a system for furnishing 
information about consumers

[[Page 31517]]

to consumer reporting agencies that is appropriate to the nature, 
size, complexity, and scope of the furnisher's business operations.
    (b) Using standard data reporting formats and standard 
procedures for compiling and furnishing data, where feasible, such 
as the electronic transmission of information about consumers to 
consumer reporting agencies.
    (c) Maintaining records for a reasonable period of time, not 
less than any applicable recordkeeping requirement, in order to 
substantiate the accuracy of any information about consumers it 
furnishes that is subject to a direct dispute.
    (d) Establishing and implementing appropriate internal controls 
regarding the accuracy and integrity of information about consumers 
furnished to consumer reporting agencies, such as by implementing 
standard procedures and verifying random samples of information 
provided to consumer reporting agencies.
    (e) Training staff that participates in activities related to 
the furnishing of information about consumers to consumer reporting 
agencies to implement the policies and procedures.
    (f) Providing for appropriate and effective oversight of 
relevant service providers whose activities may affect the accuracy 
or integrity of information about consumers furnished to consumer 
reporting agencies to ensure compliance with the policies and 
procedures.
    (g) Furnishing information about consumers to consumer reporting 
agencies following mergers, portfolio acquisitions or sales, or 
other acquisitions or transfers of accounts or other obligations in 
a manner that prevents re-aging of information, duplicative 
reporting, or other problems that may similarly affect the accuracy 
or integrity of the information furnished.
    (h) Deleting, updating, and correcting information in the 
furnisher's records, as appropriate, to avoid furnishing inaccurate 
information.
    (i) Conducting reasonable investigations of disputes.
    (j) Designing technological and other means of communication 
with consumer reporting agencies to prevent duplicative reporting of 
accounts, erroneous association of information with the wrong 
consumer(s), and other occurrences that may compromise the accuracy 
or integrity of information provided to consumer reporting agencies.
    (k) Providing consumer reporting agencies with sufficient 
identifying information in the furnisher's possession about each 
consumer about whom information is furnished to enable the consumer 
reporting agency properly to identify the consumer.
    (l) Conducting a periodic evaluation of its own practices, 
consumer reporting agency practices of which the furnisher is aware, 
investigations of disputed information, corrections of inaccurate 
information, means of communication, and other factors that may 
affect the accuracy or integrity of information furnished to 
consumer reporting agencies.
    (m) Complying with applicable requirements under the Fair Credit 
Reporting Act and its implementing regulations.

Federal Deposit Insurance Corporation

12 CFR Chapter III

Authority and Issuance

0
For the reasons discussed in the joint preamble, the Federal Deposit 
Insurance Corporation amends chapter III of title 12 of the Code of 
Federal Regulations by amending 12 CFR part 334 as follows:

PART 334--FAIR CREDIT REPORTING

0
1. The authority citation for part 334 is revised to read as follows:

    Authority:  12 U.S.C. 1818, 1819 (Tenth), and 1831p-1; 15 U.S.C. 
1681a, 1681b, 1681c, 1681m, 1681s, 1681s-2, 1681s-3, 1681t, 1681w, 
6801 et seq., Pub. L. 108-159, 117 Stat. 1952.


0
2. Add subpart E to part 334 to read as follows:
Subpart E--Duties of Furnishers of Information
Sec.
334.40 Scope.
334.41 Definitions.
334.42 Reasonable policies and procedures concerning the accuracy 
and integrity of furnished information.
334.43 Direct disputes.

Subpart E--Duties of Furnishers of Information


Sec.  334.40  Scope.

    This subpart applies to a financial institution or creditor that is 
an insured state nonmember bank, insured state licensed branch of a 
foreign bank, or a subsidiary of such entities (except dealers, persons 
providing insurance, investment companies, and investment advisers).


Sec.  334.41  Definitions.

    For purposes of this subpart and Appendix E of this part, the 
following definitions apply:
    (a) Accuracy means that information that a furnisher provides to a 
consumer reporting agency about an account or other relationship with 
the consumer correctly:
    (1) Reflects the terms of and liability for the account or other 
relationship;
    (2) Reflects the consumer's performance and other conduct with 
respect to the account or other relationship; and
    (3) Identifies the appropriate consumer.
    (b) Direct dispute means a dispute submitted directly to a 
furnisher (including a furnisher that is a debt collector) by a 
consumer concerning the accuracy of any information contained in a 
consumer report and pertaining to an account or other relationship that 
the furnisher has or had with the consumer.
    (c) Furnisher means an entity that furnishes information relating 
to consumers to one or more consumer reporting agencies for inclusion 
in a consumer report. An entity is not a furnisher when it:
    (1) Provides information to a consumer reporting agency solely to 
obtain a consumer report in accordance with sections 604(a) and (f) of 
the Fair Credit Reporting Act;
    (2) Is acting as a ``consumer reporting agency'' as defined in 
section 603(f) of the Fair Credit Reporting Act;
    (3) Is a consumer to whom the furnished information pertains; or
    (4) Is a neighbor, friend, or associate of the consumer, or another 
individual with whom the consumer is acquainted or who may have 
knowledge about the consumer, and who provides information about the 
consumer's character, general reputation, personal characteristics, or 
mode of living in response to a specific request from a consumer 
reporting agency.
    (d) Identity theft has the same meaning as in 16 CFR 603.2(a).
    (e) Integrity means that information that a furnisher provides to a 
consumer reporting agency about an account or other relationship with 
the consumer:
    (1) Is substantiated by the furnisher's records at the time it is 
furnished;
    (2) Is furnished in a form and manner that is designed to minimize 
the likelihood that the information may be incorrectly reflected in a 
consumer report; and
    (3) Includes the information in the furnisher's possession about 
the account or other relationship that the FDIC has:
    (i) Determined that the absence of which would likely be materially 
misleading in evaluating a consumer's creditworthiness, credit 
standing, credit capacity, character, general reputation, personal 
characteristics, or mode of living; and
    (ii) Listed in section I.(b)(2)(iii) of Appendix E of this part.


Sec.  334.42  Reasonable policies and procedures concerning the 
accuracy and integrity of furnished information.

    (a) Policies and procedures. Each furnisher must establish and 
implement reasonable written policies and procedures regarding the 
accuracy and integrity of the information relating to consumers that it 
furnishes to a consumer reporting agency. The policies and procedures 
must be appropriate to the nature, size, complexity, and scope of each 
furnisher's activities.
    (b) Guidelines. Each furnisher must consider the guidelines in 
Appendix E of this part in developing its policies and procedures 
required by this section,

[[Page 31518]]

and incorporate those guidelines that are appropriate.
    (c) Reviewing and updating policies and procedures. Each furnisher 
must review its policies and procedures required by this section 
periodically and update them as necessary to ensure their continued 
effectiveness.


Sec.  334.43  Direct disputes.

    (a) General rule. Except as otherwise provided in this section, a 
furnisher must conduct a reasonable investigation of a direct dispute 
if it relates to:
    (1) The consumer's liability for a credit account or other debt 
with the furnisher, such as direct disputes relating to whether there 
is or has been identity theft or fraud against the consumer, whether 
there is individual or joint liability on an account, or whether the 
consumer is an authorized user of a credit account;
    (2) The terms of a credit account or other debt with the furnisher, 
such as direct disputes relating to the type of account, principal 
balance, scheduled payment amount on an account, or the amount of the 
credit limit on an open-end account;
    (3) The consumer's performance or other conduct concerning an 
account or other relationship with the furnisher, such as direct 
disputes relating to the current payment status, high balance, date a 
payment was made, the amount of a payment made, or the date an account 
was opened or closed; or
    (4) Any other information contained in a consumer report regarding 
an account or other relationship with the furnisher that bears on the 
consumer's creditworthiness, credit standing, credit capacity, 
character, general reputation, personal characteristics, or mode of 
living.
    (b) Exceptions. The requirements of paragraph (a) of this section 
do not apply to a furnisher if:
    (1) The direct dispute relates to:
    (i) The consumer's identifying information (other than a direct 
dispute relating to a consumer's liability for a credit account or 
other debt with the furnisher, as provided in paragraph (a)(1) of this 
section) such as name(s), date of birth, Social Security number, 
telephone number(s), or address(es);
    (ii) The identity of past or present employers;
    (iii) Inquiries or requests for a consumer report;
    (iv) Information derived from public records, such as judgments, 
bankruptcies, liens, and other legal matters (unless provided by a 
furnisher with an account or other relationship with the consumer);
    (v) Information related to fraud alerts or active duty alerts; or
    (vi) Information provided to a consumer reporting agency by another 
furnisher; or
    (2) The furnisher has a reasonable belief that the direct dispute 
is submitted by, is prepared on behalf of the consumer by, or is 
submitted on a form supplied to the consumer by, a credit repair 
organization, as defined in 15 U.S.C. 1679a(3), or an entity that would 
be a credit repair organization, but for 15 U.S.C. 1679a(3)(B)(i).
    (c) Direct dispute address. A furnisher is required to investigate 
a direct dispute only if a consumer submits a dispute notice to the 
furnisher at:
    (1) The address of a furnisher provided by a furnisher and set 
forth on a consumer report relating to the consumer;
    (2) An address clearly and conspicuously specified by the furnisher 
for submitting direct disputes that is provided to the consumer in 
writing or electronically (if the consumer has agreed to the electronic 
delivery of information from the furnisher); or
    (3) Any business address of the furnisher if the furnisher has not 
so specified and provided an address for submitting direct disputes 
under paragraphs (c)(1) or (2) of this section.
    (d) Direct dispute notice contents. A dispute notice must include:
    (1) Sufficient information to identify the account or other 
relationship that is in dispute, such as an account number and the 
name, address, and telephone number of the consumer, if applicable;
    (2) The specific information that the consumer is disputing and an 
explanation of the basis for the dispute; and
    (3) All supporting documentation or other information reasonably 
required by the furnisher to substantiate the basis of the dispute. 
This documentation may include, for example: a copy of the relevant 
portion of the consumer report that contains the allegedly inaccurate 
information; a police report; a fraud or identity theft affidavit; a 
court order; or account statements.
    (e) Duty of furnisher after receiving a direct dispute notice. 
After receiving a dispute notice from a consumer pursuant to paragraphs 
(c) and (d) of this section, the furnisher must:
    (1) Conduct a reasonable investigation with respect to the disputed 
information;
    (2) Review all relevant information provided by the consumer with 
the dispute notice;
    (3) Complete its investigation of the dispute and report the 
results of the investigation to the consumer before the expiration of 
the period under section 611(a)(1) of the Fair Credit Reporting Act (15 
U.S.C. 1681i(a)(1)) within which a consumer reporting agency would be 
required to complete its action if the consumer had elected to dispute 
the information under that section; and
    (4) If the investigation finds that the information reported was 
inaccurate, promptly notify each consumer reporting agency to which the 
furnisher provided inaccurate information of that determination and 
provide to the consumer reporting agency any correction to that 
information that is necessary to make the information provided by the 
furnisher accurate.
    (f) Frivolous or irrelevant disputes. (1) A furnisher is not 
required to investigate a direct dispute if the furnisher has 
reasonably determined that the dispute is frivolous or irrelevant. A 
dispute qualifies as frivolous or irrelevant if:
    (i) The consumer did not provide sufficient information to 
investigate the disputed information as required by paragraph (d) of 
this section;
    (ii) The direct dispute is substantially the same as a dispute 
previously submitted by or on behalf of the consumer, either directly 
to the furnisher or through a consumer reporting agency, with respect 
to which the furnisher has already satisfied the applicable 
requirements of the Act or this section; provided, however, that a 
direct dispute is not substantially the same as a dispute previously 
submitted if the dispute includes information listed in paragraph (d) 
of this section that had not previously been provided to the furnisher; 
or
    (iii) The furnisher is not required to investigate the direct 
dispute because one or more of the exceptions listed in paragraph (b) 
of this section applies.
    (2) Notice of determination. Upon making a determination that a 
dispute is frivolous or irrelevant, the furnisher must notify the 
consumer of the determination not later than five business days after 
making the determination, by mail or, if authorized by the consumer for 
that purpose, by any other means available to the furnisher.
    (3) Contents of notice of determination that a dispute is frivolous 
or irrelevant. A notice of determination that a dispute is frivolous or 
irrelevant must include the reasons for such determination and identify 
any information required to investigate the disputed information, which 
notice may consist of a standardized form describing the general nature 
of such information.

0
3. Add a new appendix E to part 334 to read as follows:

[[Page 31519]]

Appendix E to Part 334--Interagency Guidelines Concerning the Accuracy 
and Integrity of Information Furnished to Consumer Reporting Agencies

    The FDIC encourages voluntary furnishing of information to 
consumer reporting agencies. Section 334.42 of this part requires 
each furnisher to establish and implement reasonable written 
policies and procedures concerning the accuracy and integrity of the 
information it furnishes to consumer reporting agencies. Under Sec.  
334.42(b), a furnisher must consider the guidelines set forth below 
in developing its policies and procedures. In establishing these 
policies and procedures, a furnisher may include any of its existing 
policies and procedures that are relevant and appropriate. Section 
334.42(c) requires each furnisher to review its policies and 
procedures periodically and update them as necessary to ensure their 
continued effectiveness.

I. Nature, Scope, and Objectives of Policies and Procedures

    (a) Nature and Scope. Section 334.42(a) of this part requires 
that a furnisher's policies and procedures be appropriate to the 
nature, size, complexity, and scope of the furnisher's activities. 
In developing its policies and procedures, a furnisher should 
consider, for example:
    (1) The types of business activities in which the furnisher 
engages;
    (2) The nature and frequency of the information the furnisher 
provides to consumer reporting agencies; and
    (3) The technology used by the furnisher to furnish information 
to consumer reporting agencies.
    (b) Objectives. A furnisher's policies and procedures should be 
reasonably designed to promote the following objectives:
    (1) To furnish information about accounts or other relationships 
with a consumer that is accurate, such that the furnished 
information:
    (i) Identifies the appropriate consumer;
    (ii) Reflects the terms of and liability for those accounts or 
other relationships; and
    (iii) Reflects the consumer's performance and other conduct with 
respect to the account or other relationship;
    (2) To furnish information about accounts or other relationships 
with a consumer that has integrity, such that the furnished 
information:
    (i) Is substantiated by the furnisher's records at the time it 
is furnished;
    (ii) Is furnished in a form and manner that is designed to 
minimize the likelihood that the information may be incorrectly 
reflected in a consumer report; thus, the furnished information 
should:
    (A) Include appropriate identifying information about the 
consumer to whom it pertains; and
    (B) Be furnished in a standardized and clearly understandable 
form and manner and with a date specifying the time period to which 
the information pertains; and
    (iii) Includes the credit limit, if applicable and in the 
furnisher's possession;
    (3) To conduct reasonable investigations of consumer disputes 
and take appropriate actions based on the outcome of such 
investigations; and
    (4) To update the information it furnishes as necessary to 
reflect the current status of the consumer's account or other 
relationship, including, for example:
    (i) Any transfer of an account (e.g., by sale or assignment for 
collection) to a third party; and
    (ii) Any cure of the consumer's failure to abide by the terms of 
the account or other relationship.

II. Establishing and Implementing Policies and Procedures

    In establishing and implementing its policies and procedures, a 
furnisher should:
    (a) Identify practices or activities of the furnisher that can 
compromise the accuracy or integrity of information furnished to 
consumer reporting agencies, such as by:
    (1) Reviewing its existing practices and activities, including 
the technological means and other methods it uses to furnish 
information to consumer reporting agencies and the frequency and 
timing of its furnishing of information;
    (2) Reviewing its historical records relating to accuracy or 
integrity or to disputes; reviewing other information relating to 
the accuracy or integrity of information provided by the furnisher 
to consumer reporting agencies; and considering the types of errors, 
omissions, or other problems that may have affected the accuracy or 
integrity of information it has furnished about consumers to 
consumer reporting agencies;
    (3) Considering any feedback received from consumer reporting 
agencies, consumers, or other appropriate parties;
    (4) Obtaining feedback from the furnisher's staff; and
    (5) Considering the potential impact of the furnisher's policies 
and procedures on consumers.
    (b) Evaluate the effectiveness of existing policies and 
procedures of the furnisher regarding the accuracy and integrity of 
information furnished to consumer reporting agencies; consider 
whether new, additional, or different policies and procedures are 
necessary; and consider whether implementation of existing policies 
and procedures should be modified to enhance the accuracy and 
integrity of information about consumers furnished to consumer 
reporting agencies.
    (c) Evaluate the effectiveness of specific methods (including 
technological means) the furnisher uses to provide information to 
consumer reporting agencies; how those methods may affect the 
accuracy and integrity of the information it provides to consumer 
reporting agencies; and whether new, additional, or different 
methods (including technological means) should be used to provide 
information to consumer reporting agencies to enhance the accuracy 
and integrity of that information.

III. Specific Components of Policies and Procedures

    In developing its policies and procedures, a furnisher should 
address the following, as appropriate:
    (a) Establishing and implementing a system for furnishing 
information about consumers to consumer reporting agencies that is 
appropriate to the nature, size, complexity, and scope of the 
furnisher's business operations.
    (b) Using standard data reporting formats and standard 
procedures for compiling and furnishing data, where feasible, such 
as the electronic transmission of information about consumers to 
consumer reporting agencies.
    (c) Maintaining records for a reasonable period of time, not 
less than any applicable recordkeeping requirement, in order to 
substantiate the accuracy of any information about consumers it 
furnishes that is subject to a direct dispute.
    (d) Establishing and implementing appropriate internal controls 
regarding the accuracy and integrity of information about consumers 
furnished to consumer reporting agencies, such as by implementing 
standard procedures and verifying random samples of information 
provided to consumer reporting agencies.
    (e) Training staff that participates in activities related to 
the furnishing of information about consumers to consumer reporting 
agencies to implement the policies and procedures.
    (f) Providing for appropriate and effective oversight of 
relevant service providers whose activities may affect the accuracy 
or integrity of information about consumers furnished to consumer 
reporting agencies to ensure compliance with the policies and 
procedures.
    (g) Furnishing information about consumers to consumer reporting 
agencies following mergers, portfolio acquisitions or sales, or 
other acquisitions or transfers of accounts or other obligations in 
a manner that prevents re-aging of information, duplicative 
reporting, or other problems that may similarly affect the accuracy 
or integrity of the information furnished.
    (h) Deleting, updating, and correcting information in the 
furnisher's records, as appropriate, to avoid furnishing inaccurate 
information.
    (i) Conducting reasonable investigations of disputes.
    (j) Designing technological and other means of communication 
with consumer reporting agencies to prevent duplicative reporting of 
accounts, erroneous association of information with the wrong 
consumer(s), and other occurrences that may compromise the accuracy 
or integrity of information provided to consumer reporting agencies.
    (k) Providing consumer reporting agencies with sufficient 
identifying information in the furnisher's possession about each 
consumer about whom information is furnished to enable the consumer 
reporting agency properly to identify the consumer.
    (l) Conducting a periodic evaluation of its own practices, 
consumer reporting agency practices of which the furnisher is aware, 
investigations of disputed information, corrections of inaccurate 
information, means of communication, and other factors that may 
affect the accuracy or integrity of information furnished to 
consumer reporting agencies.
    (m) Complying with applicable requirements under the Fair Credit 
Reporting Act and its implementing regulations.

[[Page 31520]]

Department of the Treasury

Office of Thrift Supervision

12 CFR Chapter V

Authority and Issuance

0
For the reasons discussed in the joint preamble, the Office of Thrift 
Supervision amends chapter V of title 12 of the Code of Federal 
Regulations by amending 12 CFR Part 571 as follows:

PART 571--FAIR CREDIT REPORTING

0
1. The authority citation for part 571 is revised to read as follows:

    Authority: 12 U.S.C. 1462a, 1463, 1464, 1467a, 1828, 1831p-1, 
and 1881-1884; 15 U.S.C. 1681b, 1681c, 1681m, 1681s, 1681s-2, 1681s-
3, 1681t, and 1681w; 15 U.S.C. 6801 and 6805; Sec. 214 Pub. L. 108-
159, 117 Stat. 1952.

Subpart A--General Provisions

0
2. Amend Sec.  571.1 by adding a new paragraph (b)(5) to read as 
follows:


Sec.  571.1  Purpose and scope.

* * * * *
    (b) * * *
    (5) The scope of subpart E of this part is stated in Sec.  571.40 
of this part.
* * * * *

0
3. Add a new subpart E to part 571 to read as follows:
Subpart E--Duties of Furnishers of Information
Sec.
571.40 Scope.
571.41 Definitions.
571.42 Reasonable policies and procedures concerning the accuracy 
and integrity of furnished information.
571.43 Direct disputes.

Subpart E--Duties of Furnishers of Information


Sec.  571.40  Scope.

    Subpart E of this part applies to savings associations whose 
deposits are insured by the Federal Deposit Insurance Corporation or, 
in accordance with Sec.  559.3(h)(1) of this chapter, Federal savings 
association operating subsidiaries that are not functionally regulated 
within the meaning of section 5(c)(5) of the Bank Holding Company Act 
of 1956, as amended (12 U.S.C. 1844(c)(5)).


Sec.  571.41  Definitions.

    For purposes of this subpart and Appendix E of this part, the 
following definitions apply:
    (a) Accuracy means that information that a furnisher provides to a 
consumer reporting agency about an account or other relationship with 
the consumer correctly:
    (1) Reflects the terms of and liability for the account or other 
relationship;
    (2) Reflects the consumer's performance and other conduct with 
respect to the account or other relationship; and
    (3) Identifies the appropriate consumer.
    (b) Direct dispute means a dispute submitted directly to a 
furnisher (including a furnisher that is a debt collector) by a 
consumer concerning the accuracy of any information contained in a 
consumer report and pertaining to an account or other relationship that 
the furnisher has or had with the consumer.
    (c) Furnisher means an entity that furnishes information relating 
to consumers to one or more consumer reporting agencies for inclusion 
in a consumer report. An entity is not a furnisher when it:
    (1) Provides information to a consumer reporting agency solely to 
obtain a consumer report in accordance with sections 604(a) and (f) of 
the Fair Credit Reporting Act;
    (2) Is acting as a ``consumer reporting agency'' as defined in 
section 603(f) of the Fair Credit Reporting Act;
    (3) Is a consumer to whom the furnished information pertains; or
    (4) Is a neighbor, friend, or associate of the consumer, or another 
individual with whom the consumer is acquainted or who may have 
knowledge about the consumer, and who provides information about the 
consumer's character, general reputation, personal characteristics, or 
mode of living in response to a specific request from a consumer 
reporting agency.
    (d) Identity theft has the same meaning as in 16 CFR 603.2(a).
    (e) Integrity means that information that a furnisher provides to a 
consumer reporting agency about an account or other relationship with 
the consumer:
    (1) Is substantiated by the furnisher's records at the time it is 
furnished;
    (2) Is furnished in a form and manner that is designed to minimize 
the likelihood that the information may be incorrectly reflected in a 
consumer report; and
    (3) Includes the information in the furnisher's possession about 
the account or other relationship that OTS has:
    (i) Determined that the absence of which would likely be materially 
misleading in evaluating a consumer's creditworthiness, credit 
standing, credit capacity, character, general reputation, personal 
characteristics, or mode of living; and
    (ii) Listed in section I.(b)(2)(iii) of Appendix E of this part.


Sec.  571.42  Reasonable policies and procedures concerning the 
accuracy and integrity of furnished information.

    (a) Policies and procedures. Each furnisher must establish and 
implement reasonable written policies and procedures regarding the 
accuracy and integrity of the information relating to consumers that it 
furnishes to a consumer reporting agency. The policies and procedures 
must be appropriate to the nature, size, complexity, and scope of each 
furnisher's activities.
    (b) Guidelines. Each furnisher must consider the guidelines in 
Appendix E of this part in developing its policies and procedures 
required by this section, and incorporate those guidelines that are 
appropriate.
    (c) Reviewing and updating policies and procedures. Each furnisher 
must review its policies and procedures required by this section 
periodically and update them as necessary to ensure their continued 
effectiveness.


Sec.  571.43  Direct disputes.

    (a) General rule. Except as otherwise provided in this section, a 
furnisher must conduct a reasonable investigation of a direct dispute 
if it relates to:
    (1) The consumer's liability for a credit account or other debt 
with the furnisher, such as direct disputes relating to whether there 
is or has been identity theft or fraud against the consumer, whether 
there is individual or joint liability on an account, or whether the 
consumer is an authorized user of a credit account;
    (2) The terms of a credit account or other debt with the furnisher, 
such as direct disputes relating to the type of account, principal 
balance, scheduled payment amount on an account, or the amount of the 
credit limit on an open-end account;
    (3) The consumer's performance or other conduct concerning an 
account or other relationship with the furnisher, such as direct 
disputes relating to the current payment status, high balance, date a 
payment was made, the amount of a payment made, or the date an account 
was opened or closed; or
    (4) Any other information contained in a consumer report regarding 
an account or other relationship with the furnisher that bears on the 
consumer's creditworthiness, credit standing, credit capacity, 
character, general reputation, personal characteristics, or mode of 
living.
    (b) Exceptions. The requirements of paragraph (a) of this section 
do not apply to a furnisher if:
    (1) The direct dispute relates to:
    (i) The consumer's identifying information (other than a direct 
dispute

[[Page 31521]]

relating to a consumer's liability for a credit account or other debt 
with the furnisher, as provided in paragraph (a)(1) of this section) 
such as name(s), date of birth, Social Security number, telephone 
number(s), or address(es);
    (ii) The identity of past or present employers;
    (iii) Inquiries or requests for a consumer report;
    (iv) Information derived from public records, such as judgments, 
bankruptcies, liens, and other legal matters (unless provided by a 
furnisher with an account or other relationship with the consumer);
    (v) Information related to fraud alerts or active duty alerts; or
    (vi) Information provided to a consumer reporting agency by another 
furnisher; or
    (2) The furnisher has a reasonable belief that the direct dispute 
is submitted by, is prepared on behalf of the consumer by, or is 
submitted on a form supplied to the consumer by, a credit repair 
organization, as defined in 15 U.S.C. 1679a(3), or an entity that would 
be a credit repair organization, but for 15 U.S.C. 1679a(3)(B)(i).
    (c) Direct dispute address. A furnisher is required to investigate 
a direct dispute only if a consumer submits a dispute notice to the 
furnisher at:
    (1) The address of a furnisher provided by a furnisher and set 
forth on a consumer report relating to the consumer;
    (2) An address clearly and conspicuously specified by the furnisher 
for submitting direct disputes that is provided to the consumer in 
writing or electronically (if the consumer has agreed to the electronic 
delivery of information from the furnisher); or
    (3) Any business address of the furnisher if the furnisher has not 
so specified and provided an address for submitting direct disputes 
under paragraphs (c)(1) or (2) of this section.
    (d) Direct dispute notice contents. A dispute notice must include:
    (1) Sufficient information to identify the account or other 
relationship that is in dispute, such as an account number and the 
name, address, and telephone number of the consumer, if applicable;
    (2) The specific information that the consumer is disputing and an 
explanation of the basis for the dispute; and
    (3) All supporting documentation or other information reasonably 
required by the furnisher to substantiate the basis of the dispute. 
This documentation may include, for example: A copy of the relevant 
portion of the consumer report that contains the allegedly inaccurate 
information; a police report; a fraud or identity theft affidavit; a 
court order; or account statements.
    (e) Duty of furnisher after receiving a direct dispute notice. 
After receiving a dispute notice from a consumer pursuant to paragraphs 
(c) and (d) of this section, the furnisher must:
    (1) Conduct a reasonable investigation with respect to the disputed 
information;
    (2) Review all relevant information provided by the consumer with 
the dispute notice;
    (3) Complete its investigation of the dispute and report the 
results of the investigation to the consumer before the expiration of 
the period under section 611(a)(1) of the Fair Credit Reporting Act (15 
U.S.C. 1681i(a)(1)) within which a consumer reporting agency would be 
required to complete its action if the consumer had elected to dispute 
the information under that section; and
    (4) If the investigation finds that the information reported was 
inaccurate, promptly notify each consumer reporting agency to which the 
furnisher provided inaccurate information of that determination and 
provide to the consumer reporting agency any correction to that 
information that is necessary to make the information provided by the 
furnisher accurate.
    (f) Frivolous or irrelevant disputes. (1) A furnisher is not 
required to investigate a direct dispute if the furnisher has 
reasonably determined that the dispute is frivolous or irrelevant. A 
dispute qualifies as frivolous or irrelevant if:
    (i) The consumer did not provide sufficient information to 
investigate the disputed information as required by paragraph (d) of 
this section;
    (ii) The direct dispute is substantially the same as a dispute 
previously submitted by or on behalf of the consumer, either directly 
to the furnisher or through a consumer reporting agency, with respect 
to which the furnisher has already satisfied the applicable 
requirements of the Act or this section; provided, however, that a 
direct dispute is not substantially the same as a dispute previously 
submitted if the dispute includes information listed in paragraph (d) 
of this section that had not previously been provided to the furnisher; 
or
    (iii) The furnisher is not required to investigate the direct 
dispute because one or more of the exceptions listed in paragraph (b) 
of this section applies.
    (2) Notice of determination. Upon making a determination that a 
dispute is frivolous or irrelevant, the furnisher must notify the 
consumer of the determination not later than five business days after 
making the determination, by mail or, if authorized by the consumer for 
that purpose, by any other means available to the furnisher.
    (3) Contents of notice of determination that a dispute is frivolous 
or irrelevant. A notice of determination that a dispute is frivolous or 
irrelevant must include the reasons for such determination and identify 
any information required to investigate the disputed information, which 
notice may consist of a standardized form describing the general nature 
of such information.


0
3. Add a new Appendix E to part 571 to read as follows:

Appendix E to Part 571--Interagency Guidelines Concerning the Accuracy 
and Integrity of Information Furnished to Consumer Reporting Agencies

    OTS encourages voluntary furnishing of information to consumer 
reporting agencies. Section 571.42 of this part requires each 
furnisher to establish and implement reasonable written policies and 
procedures concerning the accuracy and integrity of the information 
it furnishes to consumer reporting agencies. Under Sec.  571.42(b), 
a furnisher must consider the guidelines set forth below in 
developing its policies and procedures. In establishing these 
policies and procedures, a furnisher may include any of its existing 
policies and procedures that are relevant and appropriate. Section 
571.42(c) requires each furnisher to review its policies and 
procedures periodically and update them as necessary to ensure their 
continued effectiveness.

I. Nature, Scope, and Objectives of Policies and Procedures

    (a) Nature and Scope. Section 571.42(a) of this part requires 
that a furnisher's policies and procedures be appropriate to the 
nature, size, complexity, and scope of the furnisher's activities. 
In developing its policies and procedures, a furnisher should 
consider, for example:
    (1) The types of business activities in which the furnisher 
engages;
    (2) The nature and frequency of the information the furnisher 
provides to consumer reporting agencies; and
    (3) The technology used by the furnisher to furnish information 
to consumer reporting agencies.
    (b) Objectives. A furnisher's policies and procedures should be 
reasonably designed to promote the following objectives:
    (1) To furnish information about accounts or other relationships 
with a consumer that is accurate, such that the furnished 
information:
    (i) Identifies the appropriate consumer;
    (ii) Reflects the terms of and liability for those accounts or 
other relationships; and
    (iii) Reflects the consumer's performance and other conduct with 
respect to the account or other relationship;
    (2) To furnish information about accounts or other relationships 
with a consumer that

[[Page 31522]]

has integrity, such that the furnished information:
    (i) Is substantiated by the furnisher's records at the time it 
is furnished;
    (ii) Is furnished in a form and manner that is designed to 
minimize the likelihood that the information may be incorrectly 
reflected in a consumer report; thus, the furnished information 
should:
    (A) Include appropriate identifying information about the 
consumer to whom it pertains; and
    (B) Be furnished in a standardized and clearly understandable 
form and manner and with a date specifying the time period to which 
the information pertains; and
    (iii) Includes the credit limit, if applicable and in the 
furnisher's possession;
    (3) To conduct reasonable investigations of consumer disputes 
and take appropriate actions based on the outcome of such 
investigations; and
    (4) To update the information it furnishes as necessary to 
reflect the current status of the consumer's account or other 
relationship, including, for example:
    (i) Any transfer of an account (e.g., by sale or assignment for 
collection) to a third party; and
    (ii) Any cure of the consumer's failure to abide by the terms of 
the account or other relationship.

II. Establishing and Implementing Policies and Procedures

    In establishing and implementing its policies and procedures, a 
furnisher should:
    (a) Identify practices or activities of the furnisher that can 
compromise the accuracy or integrity of information furnished to 
consumer reporting agencies, such as by:
    (1) Reviewing its existing practices and activities, including 
the technological means and other methods it uses to furnish 
information to consumer reporting agencies and the frequency and 
timing of its furnishing of information;
    (2) Reviewing its historical records relating to accuracy or 
integrity or to disputes; reviewing other information relating to 
the accuracy or integrity of information provided by the furnisher 
to consumer reporting agencies; and considering the types of errors, 
omissions, or other problems that may have affected the accuracy or 
integrity of information it has furnished about consumers to 
consumer reporting agencies;
    (3) Considering any feedback received from consumer reporting 
agencies, consumers, or other appropriate parties;
    (4) Obtaining feedback from the furnisher's staff; and
    (5) Considering the potential impact of the furnisher's policies 
and procedures on consumers.
    (b) Evaluate the effectiveness of existing policies and 
procedures of the furnisher regarding the accuracy and integrity of 
information furnished to consumer reporting agencies; consider 
whether new, additional, or different policies and procedures are 
necessary; and consider whether implementation of existing policies 
and procedures should be modified to enhance the accuracy and 
integrity of information about consumers furnished to consumer 
reporting agencies.
    (c) Evaluate the effectiveness of specific methods (including 
technological means) the furnisher uses to provide information to 
consumer reporting agencies; how those methods may affect the 
accuracy and integrity of the information it provides to consumer 
reporting agencies; and whether new, additional, or different 
methods (including technological means) should be used to provide 
information to consumer reporting agencies to enhance the accuracy 
and integrity of that information.

III. Specific Components of Policies and Procedures

    In developing its policies and procedures, a furnisher should 
address the following, as appropriate:
    (a) Establishing and implementing a system for furnishing 
information about consumers to consumer reporting agencies that is 
appropriate to the nature, size, complexity, and scope of the 
furnisher's business operations.
    (b) Using standard data reporting formats and standard 
procedures for compiling and furnishing data, where feasible, such 
as the electronic transmission of information about consumers to 
consumer reporting agencies.
    (c) Maintaining records for a reasonable period of time, not 
less than any applicable recordkeeping requirement, in order to 
substantiate the accuracy of any information about consumers it 
furnishes that is subject to a direct dispute.
    (d) Establishing and implementing appropriate internal controls 
regarding the accuracy and integrity of information about consumers 
furnished to consumer reporting agencies, such as by implementing 
standard procedures and verifying random samples of information 
provided to consumer reporting agencies.
    (e) Training staff that participates in activities related to 
the furnishing of information about consumers to consumer reporting 
agencies to implement the policies and procedures.
    (f) Providing for appropriate and effective oversight of 
relevant service providers whose activities may affect the accuracy 
or integrity of information about consumers furnished to consumer 
reporting agencies to ensure compliance with the policies and 
procedures.
    (g) Furnishing information about consumers to consumer reporting 
agencies following mergers, portfolio acquisitions or sales, or 
other acquisitions or transfers of accounts or other obligations in 
a manner that prevents re-aging of information, duplicative 
reporting, or other problems that may similarly affect the accuracy 
or integrity of the information furnished.
    (h) Deleting, updating, and correcting information in the 
furnisher's records, as appropriate, to avoid furnishing inaccurate 
information.
    (i) Conducting reasonable investigations of disputes.
    (j) Designing technological and other means of communication 
with consumer reporting agencies to prevent duplicative reporting of 
accounts, erroneous association of information with the wrong 
consumer(s), and other occurrences that may compromise the accuracy 
or integrity of information provided to consumer reporting agencies.
    (k) Providing consumer reporting agencies with sufficient 
identifying information in the furnisher's possession about each 
consumer about whom information is furnished to enable the consumer 
reporting agency properly to identify the consumer.
    (l) Conducting a periodic evaluation of its own practices, 
consumer reporting agency practices of which the furnisher is aware, 
investigations of disputed information, corrections of inaccurate 
information, means of communication, and other factors that may 
affect the accuracy or integrity of information furnished to 
consumer reporting agencies.
    (m) Complying with applicable requirements under the Fair Credit 
Reporting Act and its implementing regulations.

National Credit Union Administration

12 CFR Chapter VII

Authority and Issuance

0
For the reasons discussed in the joint preamble, the National Credit 
Union Administration amends chapter VII of title 12 of the Code of 
Federal Regulations by amending 12 CFR part 717 as follows:

PART 717--FAIR CREDIT REPORTING

0
1. Revise the authority citation for part 717 to read as follows:

    Authority:  12 U.S.C. 1751 et seq.; 15 U.S.C. 1681a, 1681b, 
1681c, 1681m, 1681s, 1681s-1, 1681t, 1681w, 6801 and 6805, Public 
Law 108-159, 117 Stat. 1952.


0
2. Add a new subpart E to part 717 to read as follows:
Subpart E--Duties of Furnishers of Information
717.40 Scope.
717.41 Definitions.
717.42 Reasonable policies and procedures concerning the accuracy 
and integrity of furnished information.
717.43 Direct disputes.

Subpart E--Duties of Furnishers of Information


Sec.  717.40  Scope.

This subpart applies to a Federal credit union that furnishes 
information to a consumer reporting agency.


Sec.  717.41  Definitions.

    For purposes of this subpart and Appendix E of this part, the 
following definitions apply:
    (a) Accuracy means that information that a furnisher provides to a 
consumer reporting agency about an account or other relationship with 
the consumer correctly:
    (1) Reflects the terms of and liability for the account or other 
relationship;
    (2) Reflects the consumer's performance and other conduct with 
respect to the account or other relationship; and

[[Page 31523]]

    (3) Identifies the appropriate consumer.
    (b) Direct dispute means a dispute submitted directly to a 
furnisher (including a furnisher that is a debt collector) by a 
consumer concerning the accuracy of any information contained in a 
consumer report and pertaining to an account or other relationship that 
the furnisher has or had with the consumer.
    (c) Furnisher means an entity that furnishes information relating 
to consumers to one or more consumer reporting agencies for inclusion 
in a consumer report. An entity is not a furnisher when it:
    (1) Provides information to a consumer reporting agency solely to 
obtain a consumer report in accordance with sections 604(a) and (f) of 
the Fair Credit Reporting Act;
    (2) Is acting as a ``consumer reporting agency'' as defined in 
section 603(f) of the Fair Credit Reporting Act;
    (3) Is a consumer to whom the furnished information pertains; or
    (4) Is a neighbor, friend, or associate of the consumer, or another 
individual with whom the consumer is acquainted or who may have 
knowledge about the consumer, and who provides information about the 
consumer's character, general reputation, personal characteristics, or 
mode of living in response to a specific request from a consumer 
reporting agency.
    (d) Identity theft has the same meaning as in 16 CFR 603.2(a).
    (e) Integrity means that information that a furnisher provides to a 
consumer reporting agency about an account or other relationship with 
the consumer:
    (1) Is substantiated by the furnisher's records at the time it is 
furnished;
    (2) Is furnished in a form and manner that is designed to minimize 
the likelihood that the information may be incorrectly reflected in a 
consumer report; and
    (3) Includes the information in the furnisher's possession about 
the account or other relationship that the NCUA has:
    (i) Determined that the absence of which would likely be materially 
misleading in evaluating a consumer's creditworthiness, credit 
standing, credit capacity, character, general reputation, personal 
characteristics, or mode of living; and
    (ii) Listed in section I.(b)(2)(iii) of Appendix E of this part.


Sec.  717.42  Reasonable policies and procedures concerning the 
accuracy and integrity of furnished information.

    (a) Policies and procedures. Each furnisher must establish and 
implement reasonable written policies and procedures regarding the 
accuracy and integrity of the information relating to consumers that it 
furnishes to a consumer reporting agency. The policies and procedures 
must be appropriate to the nature, size, complexity, and scope of each 
furnisher's activities.
    (b) Guidelines. Each furnisher must consider the guidelines in 
Appendix E of this part in developing its policies and procedures 
required by this section, and incorporate those guidelines that are 
appropriate.
    (c) Reviewing and updating policies and procedures. Each furnisher 
must review its policies and procedures required by this section 
periodically and update them as necessary to ensure their continued 
effectiveness.


Sec.  717.43   Direct disputes.

    (a) General rule. Except as otherwise provided in this section, a 
furnisher must conduct a reasonable investigation of a direct dispute 
if it relates to:
    (1) The consumer's liability for a credit account or other debt 
with the furnisher, such as direct disputes relating to whether there 
is or has been identity theft or fraud against the consumer, whether 
there is individual or joint liability on an account, or whether the 
consumer is an authorized user of a credit account;
    (2) The terms of a credit account or other debt with the furnisher, 
such as direct disputes relating to the type of account, principal 
balance, scheduled payment amount on an account, or the amount of the 
credit limit on an open-end account;
    (3) The consumer's performance or other conduct concerning an 
account or other relationship with the furnisher, such as direct 
disputes relating to the current payment status, high balance, date a 
payment was made, the amount of a payment made, or the date an account 
was opened or closed; or
    (4) Any other information contained in a consumer report regarding 
an account or other relationship with the furnisher that bears on the 
consumer's creditworthiness, credit standing, credit capacity, 
character, general reputation, personal characteristics, or mode of 
living.
    (b) Exceptions. The requirements of paragraph (a) of this section 
do not apply to a furnisher if:
    (1) The direct dispute relates to:
    (i) The consumer's identifying information (other than a direct 
dispute relating to a consumer's liability for a credit account or 
other debt with the furnisher, as provided in paragraph (a)(1) of this 
section) such as name(s), date of birth, Social Security number, 
telephone number(s), or address(es);
    (ii) The identity of past or present employers;
    (iii) Inquiries or requests for a consumer report;
    (iv) Information derived from public records, such as judgments, 
bankruptcies, liens, and other legal matters (unless provided by a 
furnisher with an account or other relationship with the consumer);
    (v) Information related to fraud alerts or active duty alerts; or
    (vi) Information provided to a consumer reporting agency by another 
furnisher; or
    (2) The furnisher has a reasonable belief that the direct dispute 
is submitted by, is prepared on behalf of the consumer by, or is 
submitted on a form supplied to the consumer by, a credit repair 
organization, as defined in 15 U.S.C. 1679a(3), or an entity that would 
be a credit repair organization, but for 15 U.S.C. 1679a(3)(B)(i).
    (c) Direct dispute address. A furnisher is required to investigate 
a direct dispute only if a consumer submits a dispute notice to the 
furnisher at:
    (1) The address of a furnisher provided by a furnisher and set 
forth on a consumer report relating to the consumer;
    (2) An address clearly and conspicuously specified by the furnisher 
for submitting direct disputes that is provided to the consumer in 
writing or electronically (if the consumer has agreed to the electronic 
delivery of information from the furnisher); or
    (3) Any business address of the furnisher if the furnisher has not 
so specified and provided an address for submitting direct disputes 
under paragraphs (c)(1) or (2) of this section.
    (d) Direct dispute notice contents. A dispute notice must include:
    (1) Sufficient information to identify the account or other 
relationship that is in dispute, such as an account number and the 
name, address, and telephone number of the consumer, if applicable;
    (2) The specific information that the consumer is disputing and an 
explanation of the basis for the dispute; and
    (3) All supporting documentation or other information reasonably 
required by the furnisher to substantiate the basis of the dispute. 
This documentation may include, for example: a copy of the relevant 
portion of the consumer report that contains the allegedly inaccurate 
information; a police report; a fraud or identity theft affidavit; a 
court order; or account statements.
    (e) Duty of furnisher after receiving a direct dispute notice. 
After receiving a dispute notice from a consumer

[[Page 31524]]

pursuant to paragraphs (c) and (d) of this section, the furnisher must:
    (1) Conduct a reasonable investigation with respect to the disputed 
information;
    (2) Review all relevant information provided by the consumer with 
the dispute notice;
    (3) Complete its investigation of the dispute and report the 
results of the investigation to the consumer before the expiration of 
the period under section 611(a)(1) of the Fair Credit Reporting Act (15 
U.S.C. 1681i(a)(1)) within which a consumer reporting agency would be 
required to complete its action if the consumer had elected to dispute 
the information under that section; and
    (4) If the investigation finds that the information reported was 
inaccurate, promptly notify each consumer reporting agency to which the 
furnisher provided inaccurate information of that determination and 
provide to the consumer reporting agency any correction to that 
information that is necessary to make the information provided by the 
furnisher accurate.
    (f) Frivolous or irrelevant disputes. (1) A furnisher is not 
required to investigate a direct dispute if the furnisher has 
reasonably determined that the dispute is frivolous or irrelevant. A 
dispute qualifies as frivolous or irrelevant if:
    (i) The consumer did not provide sufficient information to 
investigate the disputed information as required by paragraph (d) of 
this section;
    (ii) The direct dispute is substantially the same as a dispute 
previously submitted by or on behalf of the consumer, either directly 
to the furnisher or through a consumer reporting agency, with respect 
to which the furnisher has already satisfied the applicable 
requirements of the Act or this section; provided, however, that a 
direct dispute is not substantially the same as a dispute previously 
submitted if the dispute includes information listed in paragraph (d) 
of this section that had not previously been provided to the furnisher; 
or
    (iii) The furnisher is not required to investigate the direct 
dispute because one or more of the exceptions listed in paragraph (b) 
of this section applies.
    (2) Notice of determination. Upon making a determination that a 
dispute is frivolous or irrelevant, the furnisher must notify the 
consumer of the determination not later than five business days after 
making the determination, by mail or, if authorized by the consumer for 
that purpose, by any other means available to the furnisher.
    (3) Contents of notice of determination that a dispute is frivolous 
or irrelevant. A notice of determination that a dispute is frivolous or 
irrelevant must include the reasons for such determination and identify 
any information required to investigate the disputed information, which 
notice may consist of a standardized form describing the general nature 
of such information.

0
3. Add a new appendix E to part 717 to read as follows:

Appendix E to Part 717--Interagency Guidelines Concerning the Accuracy 
and Integrity of Information Furnished to Consumer Reporting Agencies

    The NCUA encourages voluntary furnishing of information to 
consumer reporting agencies. Section 717.42 of this part requires 
each furnisher to establish and implement reasonable written 
policies and procedures concerning the accuracy and integrity of the 
information it furnishes to consumer reporting agencies. Under Sec.  
717.42(b), a furnisher must consider the guidelines set forth below 
in developing its policies and procedures. In establishing these 
policies and procedures, a furnisher may include any of its existing 
policies and procedures that are relevant and appropriate. Section 
717.42(c) requires each furnisher to review its policies and 
procedures periodically and update them as necessary to ensure their 
continued effectiveness.

I. Nature, Scope, and Objectives of Policies and Procedures

    (a) Nature and Scope. Section 717.42(a) of this part requires 
that a furnisher's policies and procedures be appropriate to the 
nature, size, complexity, and scope of the furnisher's activities. 
In developing its policies and procedures, a furnisher should 
consider, for example:
    (1) The types of business activities in which the furnisher 
engages;
    (2) The nature and frequency of the information the furnisher 
provides to consumer reporting agencies; and
    (3) The technology used by the furnisher to furnish information 
to consumer reporting agencies.
    (b) Objectives. A furnisher's policies and procedures should be 
reasonably designed to promote the following objectives:
    (1) To furnish information about accounts or other relationships 
with a consumer that is accurate, such that the furnished 
information:
    (i) Identifies the appropriate consumer;
    (ii) Reflects the terms of and liability for those accounts or 
other relationships; and
    (iii) Reflects the consumer's performance and other conduct with 
respect to the account or other relationship;
    (2) To furnish information about accounts or other relationships 
with a consumer that has integrity, such that the furnished 
information:
    (i) Is substantiated by the furnisher's records at the time it 
is furnished;
    (ii) Is furnished in a form and manner that is designed to 
minimize the likelihood that the information may be incorrectly 
reflected in a consumer report; thus, the furnished information 
should:
    (A) Include appropriate identifying information about the 
consumer to whom it pertains; and
    (B) Be furnished in a standardized and clearly understandable 
form and manner and with a date specifying the time period to which 
the information pertains; and
    (iii) Includes the credit limit, if applicable and in the 
furnisher's possession;
    (3) To conduct reasonable investigations of consumer disputes 
and take appropriate actions based on the outcome of such 
investigations; and
    (4) To update the information it furnishes as necessary to 
reflect the current status of the consumer's account or other 
relationship, including, for example:
    (i) Any transfer of an account (e.g., by sale or assignment for 
collection) to a third party; and
    (ii) Any cure of the consumer's failure to abide by the terms of 
the account or other relationship.

II. Establishing and Implementing Policies and Procedures

    In establishing and implementing its policies and procedures, a 
furnisher should:
    (a) Identify practices or activities of the furnisher that can 
compromise the accuracy or integrity of information furnished to 
consumer reporting agencies, such as by:
    (1) Reviewing its existing practices and activities, including 
the technological means and other methods it uses to furnish 
information to consumer reporting agencies and the frequency and 
timing of its furnishing of information;
    (2) Reviewing its historical records relating to accuracy or 
integrity or to disputes; reviewing other information relating to 
the accuracy or integrity of information provided by the furnisher 
to consumer reporting agencies; and considering the types of errors, 
omissions, or other problems that may have affected the accuracy or 
integrity of information it has furnished about consumers to 
consumer reporting agencies;
    (3) Considering any feedback received from consumer reporting 
agencies, consumers, or other appropriate parties;
    (4) Obtaining feedback from the furnisher's staff; and
    (5) Considering the potential impact of the furnisher's policies 
and procedures on consumers.
    (b) Evaluate the effectiveness of existing policies and 
procedures of the furnisher regarding the accuracy and integrity of 
information furnished to consumer reporting agencies; consider 
whether new, additional, or different policies and procedures are 
necessary; and consider whether implementation of existing policies 
and procedures should be modified to enhance the accuracy and 
integrity of information about consumers furnished to consumer 
reporting agencies.
    (c) Evaluate the effectiveness of specific methods (including 
technological means) the furnisher uses to provide information to 
consumer reporting agencies; how those methods may affect the 
accuracy and integrity of the information it provides to

[[Page 31525]]

consumer reporting agencies; and whether new, additional, or 
different methods (including technological means) should be used to 
provide information to consumer reporting agencies to enhance the 
accuracy and integrity of that information.

III. Specific Components of Policies and Procedures

    In developing its policies and procedures, a furnisher should 
address the following, as appropriate:
    (a) Establishing and implementing a system for furnishing 
information about consumers to consumer reporting agencies that is 
appropriate to the nature, size, complexity, and scope of the 
furnisher's business operations.
    (b) Using standard data reporting formats and standard 
procedures for compiling and furnishing data, where feasible, such 
as the electronic transmission of information about consumers to 
consumer reporting agencies.
    (c) Maintaining records for a reasonable period of time, not 
less than any applicable recordkeeping requirement, in order to 
substantiate the accuracy of any information about consumers it 
furnishes that is subject to a direct dispute.
    (d) Establishing and implementing appropriate internal controls 
regarding the accuracy and integrity of information about consumers 
furnished to consumer reporting agencies, such as by implementing 
standard procedures and verifying random samples of information 
provided to consumer reporting agencies.
    (e) Training staff that participates in activities related to 
the furnishing of information about consumers to consumer reporting 
agencies to implement the policies and procedures.
    (f) Providing for appropriate and effective oversight of 
relevant service providers whose activities may affect the accuracy 
or integrity of information about consumers furnished to consumer 
reporting agencies to ensure compliance with the policies and 
procedures.
    (g) Furnishing information about consumers to consumer reporting 
agencies following mergers, portfolio acquisitions or sales, or 
other acquisitions or transfers of accounts or other obligations in 
a manner that prevents re-aging of information, duplicative 
reporting, or other problems that may similarly affect the accuracy 
or integrity of the information furnished.
    (h) Deleting, updating, and correcting information in the 
furnisher's records, as appropriate, to avoid furnishing inaccurate 
information.
    (i) Conducting reasonable investigations of disputes.
    (j) Designing technological and other means of communication 
with consumer reporting agencies to prevent duplicative reporting of 
accounts, erroneous association of information with the wrong 
consumer(s), and other occurrences that may compromise the accuracy 
or integrity of information provided to consumer reporting agencies.
    (k) Providing consumer reporting agencies with sufficient 
identifying information in the furnisher's possession about each 
consumer about whom information is furnished to enable the consumer 
reporting agency properly to identify the consumer.
    (l) Conducting a periodic evaluation of its own practices, 
consumer reporting agency practices of which the furnisher is aware, 
investigations of disputed information, corrections of inaccurate 
information, means of communication, and other factors that may 
affect the accuracy or integrity of information furnished to 
consumer reporting agencies.
    (m) Complying with applicable requirements under the Fair Credit 
Reporting Act and its implementing regulations.

Federal Trade Commission

16 CFR Chapter I

Authority and Issuance

0
For the reasons discussed in the joint preamble, the Federal Trade 
Commission adds a new part 660 to title 16 of the Code of Federal 
Regulations to read as follows:

PART 660--DUTIES OF FURNISHERS OF INFORMATION TO CONSUMER REPORTING 
AGENCIES

Sec.
660.1 Scope.
660.2 Definitions.
660.3 Reasonable policies and procedures concerning the accuracy and 
integrity of furnisher information.
660.4 Direct disputes.
Appendix A to Part 660--Interagency Guidelines Concerning the 
Accuracy and Integrity of Information Furnished to Consumer 
Reporting Agencies

    Authority: 15 U.S.C. 1681s-2(a)(8) and 1681s-2(e); Sec. 312, 
Pub. L. 108-159, 117 Stat. 1989.


Sec.  660.1  Scope.

    This part applies to furnishers of information to consumer 
reporting agencies that are subject to administrative enforcement of 
the FCRA by the Federal Trade Commission pursuant to 15 U.S.C. 
1681s(a)(1) (referred to as ``furnishers'').


Sec.  660.2  Definitions.

    For purposes of this part and Appendix A of this part, the 
following definitions apply:
    (a) Accuracy means that information that a furnisher provides to a 
consumer reporting agency about an account or other relationship with 
the consumer correctly:
    (1) Reflects the terms of and liability for the account or other 
relationship;
    (2) Reflects the consumer's performance and other conduct with 
respect to the account or other relationship; and
    (3) Identifies the appropriate consumer.
    (b) Direct dispute means a dispute submitted directly to a 
furnisher (including a furnisher that is a debt collector) by a 
consumer concerning the accuracy of any information contained in a 
consumer report and pertaining to an account or other relationship that 
the furnisher has or had with the consumer.
    (c) Furnisher means an entity that furnishes information relating 
to consumers to one or more consumer reporting agencies for inclusion 
in a consumer report. An entity is not a furnisher when it:
    (1) Provides information to a consumer reporting agency solely to 
obtain a consumer report in accordance with sections 604(a) and (f) of 
the Fair Credit Reporting Act;
    (2) Is acting as a ``consumer reporting agency'' as defined in 
section 603(f) of the Fair Credit Reporting Act;
    (3) Is a consumer to whom the furnished information pertains; or
    (4) Is a neighbor, friend, or associate of the consumer, or another 
individual with whom the consumer is acquainted or who may have 
knowledge about the consumer, and who provides information about the 
consumer's character, general reputation, personal characteristics, or 
mode of living in response to a specific request from a consumer 
reporting agency.
    (d) Identity theft has the same meaning as in 16 CFR 603.2(a).
    (e) Integrity means that information that a furnisher provides to a 
consumer reporting agency about an account or other relationship with 
the consumer:
    (1) Is substantiated by the furnisher's records at the time it is 
furnished;
    (2) Is furnished in a form and manner that is designed to minimize 
the likelihood that the information may be incorrectly reflected in a 
consumer report; and
    (3) Includes the information in the furnisher's possession about 
the account or other relationship that the Commission has:
    (i) Determined that the absence of which would likely be materially 
misleading in evaluating a consumer's creditworthiness, credit 
standing, credit capacity, character, general reputation, personal 
characteristics, or mode of living; and (ii) Listed in section 
I.(b)(2)(iii) of Appendix A of this part.


Sec.  660.3  Reasonable policies and procedures concerning the accuracy 
and integrity of furnished information.

    (a) Policies and procedures. Each furnisher must establish and 
implement reasonable written policies and procedures regarding the 
accuracy and integrity of the information relating to consumers that it 
furnishes to a consumer reporting agency. The policies and procedures 
must be appropriate to the nature, size, complexity, and scope of each 
furnisher's activities.
    (b) Guidelines. Each furnisher must consider the guidelines in 
Appendix A

[[Page 31526]]

of this part in developing its policies and procedures required by this 
section, and incorporate those guidelines that are appropriate.
    (c) Reviewing and updating policies and procedures. Each furnisher 
must review its policies and procedures required by this section 
periodically and update them as necessary to ensure their continued 
effectiveness.


Sec.  660.4  Direct disputes.

    (a) General rule. Except as otherwise provided in this section, a 
furnisher must conduct a reasonable investigation of a direct dispute 
if it relates to:
    (1) The consumer's liability for a credit account or other debt 
with the furnisher, such as direct disputes relating to whether there 
is or has been identity theft or fraud against the consumer, whether 
there is individual or joint liability on an account, or whether the 
consumer is an authorized user of a credit account;
    (2) The terms of a credit account or other debt with the furnisher, 
such as direct disputes relating to the type of account, principal 
balance, scheduled payment amount on an account, or the amount of the 
credit limit on an open-end account;
    (3) The consumer's performance or other conduct concerning an 
account or other relationship with the furnisher, such as direct 
disputes relating to the current payment status, high balance, date a 
payment was made, the amount of a payment made, or the date an account 
was opened or closed; or
    (4) Any other information contained in a consumer report regarding 
an account or other relationship with the furnisher that bears on the 
consumer's creditworthiness, credit standing, credit capacity, 
character, general reputation, personal characteristics, or mode of 
living.
    (b) Exceptions. The requirements of paragraph (a) of this section 
do not apply to a furnisher if:
    (1) The direct dispute relates to:
    (i) The consumer's identifying information (other than a direct 
dispute relating to a consumer's liability for a credit account or 
other debt with the furnisher, as provided in paragraph (a)(1) of this 
section) such as name(s), date of birth, Social Security number, 
telephone number(s), or address(es);
    (ii) The identity of past or present employers;
    (iii) Inquiries or requests for a consumer report;
    (iv) Information derived from public records, such as judgments, 
bankruptcies, liens, and other legal matters (unless provided by a 
furnisher with an account or other relationship with the consumer);
    (v) Information related to fraud alerts or active duty alerts; or
    (vi) Information provided to a consumer reporting agency by another 
furnisher; or
    (2) The furnisher has a reasonable belief that the direct dispute 
is submitted by, is prepared on behalf of the consumer by, or is 
submitted on a form supplied to the consumer by, a credit repair 
organization, as defined in 15 U.S.C. 1679a(3), or an entity that would 
be a credit repair organization, but for 15 U.S.C. 1679a(3)(B)(i).
    (c) Direct dispute address. A furnisher is required to investigate 
a direct dispute only if a consumer submits a dispute notice to the 
furnisher at:
    (1) The address of a furnisher provided by a furnisher and set 
forth on a consumer report relating to the consumer;
    (2) An address clearly and conspicuously specified by the furnisher 
for submitting direct disputes that is provided to the consumer in 
writing or electronically (if the consumer has agreed to the electronic 
delivery of information from the furnisher); or
    (3) Any business address of the furnisher if the furnisher has not 
so specified and provided an address for submitting direct disputes 
under paragraphs (c)(1) or (2) of this section.
    (d) Direct dispute notice contents. A dispute notice must include:
    (1) Sufficient information to identify the account or other 
relationship that is in dispute, such as an account number and the 
name, address, and telephone number of the consumer, if applicable;
    (2) The specific information that the consumer is disputing and an 
explanation of the basis for the dispute; and
    (3) All supporting documentation or other information reasonably 
required by the furnisher to substantiate the basis of the dispute. 
This documentation may include, for example: a copy of the relevant 
portion of the consumer report that contains the allegedly inaccurate 
information; a police report; a fraud or identity theft affidavit; a 
court order; or account statements.
    (e) Duty of furnisher after receiving a direct dispute notice. 
After receiving a dispute notice from a consumer pursuant to paragraphs 
(c) and (d) of this section, the furnisher must:
    (1) Conduct a reasonable investigation with respect to the disputed 
information;
    (2) Review all relevant information provided by the consumer with 
the dispute notice;
    (3) Complete its investigation of the dispute and report the 
results of the investigation to the consumer before the expiration of 
the period under section 611(a)(1) of the Fair Credit Reporting Act (15 
U.S.C. 1681i(a)(1)) within which a consumer reporting agency would be 
required to complete its action if the consumer had elected to dispute 
the information under that section; and
    (4) If the investigation finds that the information reported was 
inaccurate, promptly notify each consumer reporting agency to which the 
furnisher provided inaccurate information of that determination and 
provide to the consumer reporting agency any correction to that 
information that is necessary to make the information provided by the 
furnisher accurate.
    (f) Frivolous or irrelevant disputes. (1) A furnisher is not 
required to investigate a direct dispute if the furnisher has 
reasonably determined that the dispute is frivolous or irrelevant. A 
dispute qualifies as frivolous or irrelevant if:
    (i) The consumer did not provide sufficient information to 
investigate the disputed information as required by paragraph (d) of 
this section;
    (ii) The direct dispute is substantially the same as a dispute 
previously submitted by or on behalf of the consumer, either directly 
to the furnisher or through a consumer reporting agency, with respect 
to which the furnisher has already satisfied the applicable 
requirements of the Act or this section; provided, however, that a 
direct dispute is not substantially the same as a dispute previously 
submitted if the dispute includes information listed in paragraph (d) 
of this section that had not previously been provided to the furnisher; 
or
    (iii) The furnisher is not required to investigate the direct 
dispute because one or more of the exceptions listed in paragraph (b) 
of this section applies.
    (2) Notice of determination. Upon making a determination that a 
dispute is frivolous or irrelevant, the furnisher must notify the 
consumer of the determination not later than five business days after 
making the determination, by mail or, if authorized by the consumer for 
that purpose, by any other means available to the furnisher.
    (3) Contents of notice of determination that a dispute is frivolous 
or irrelevant. A notice of determination that a dispute is frivolous or 
irrelevant must include the reasons for such determination and identify 
any information required to investigate the disputed information, which 
notice may consist of a standardized form

[[Page 31527]]

describing the general nature of such information.

Appendix A to Part 660--Interagency Guidelines Concerning the Accuracy 
and Integrity of Information Furnished to Consumer Reporting Agencies

    The Commission encourages voluntary furnishing of information to 
consumer reporting agencies. Section 660.3 of this part requires 
each furnisher to establish and implement reasonable written 
policies and procedures concerning the accuracy and integrity of the 
information it furnishes to consumer reporting agencies. Under Sec.  
660.3(b), a furnisher must consider the guidelines set forth below 
in developing its policies and procedures. In establishing these 
policies and procedures, a furnisher may include any of its existing 
policies and procedures that are relevant and appropriate. Section 
660.3(c) requires each furnisher to review its policies and 
procedures periodically and update them as necessary to ensure their 
continued effectiveness.

I. Nature, Scope, and Objectives of Policies and Procedures

    (a) Nature and Scope. Section 660.3(a) of this part requires 
that a furnisher's policies and procedures be appropriate to the 
nature, size, complexity, and scope of the furnisher's activities. 
In developing its policies and procedures, a furnisher should 
consider, for example:
    (1) The types of business activities in which the furnisher 
engages;
    (2) The nature and frequency of the information the furnisher 
provides to consumer reporting agencies; and
    (3) The technology used by the furnisher to furnish information 
to consumer reporting agencies.
    (b) Objectives. A furnisher's policies and procedures should be 
reasonably designed to promote the following objectives:
    (1) To furnish information about accounts or other relationships 
with a consumer that is accurate, such that the furnished 
information:
    (i) Identifies the appropriate consumer;
    (ii) Reflects the terms of and liability for those accounts or 
other relationships; and
    (iii) Reflects the consumer's performance and other conduct with 
respect to the account or other relationship;
    (2) To furnish information about accounts or other relationships 
with a consumer that has integrity, such that the furnished 
information:
    (i) Is substantiated by the furnisher's records at the time it 
is furnished;
    (ii) Is furnished in a form and manner that is designed to 
minimize the likelihood that the information may be incorrectly 
reflected in a consumer report; thus, the furnished information 
should:
    (A) Include appropriate identifying information about the 
consumer to whom it pertains; and
    (B) Be furnished in a standardized and clearly understandable 
form and manner and with a date specifying the time period to which 
the information pertains; and
    (iii) Includes the credit limit, if applicable and in the 
furnisher's possession;
    (3) To conduct reasonable investigations of consumer disputes 
and take appropriate actions based on the outcome of such 
investigations; and
    (4) To update the information it furnishes as necessary to 
reflect the current status of the consumer's account or other 
relationship, including, for example:
    (i) Any transfer of an account (e.g., by sale or assignment for 
collection) to a third party; and
    (ii) Any cure of the consumer's failure to abide by the terms of 
the account or other relationship.

II. Establishing and Implementing Policies and Procedures

    In establishing and implementing its policies and procedures, a 
furnisher should:
    (a) Identify practices or activities of the furnisher that can 
compromise the accuracy or integrity of information furnished to 
consumer reporting agencies, such as by:
    (1) Reviewing its existing practices and activities, including 
the technological means and other methods it uses to furnish 
information to consumer reporting agencies and the frequency and 
timing of its furnishing of information;
    (2) Reviewing its historical records relating to accuracy or 
integrity or to disputes; reviewing other information relating to 
the accuracy or integrity of information provided by the furnisher 
to consumer reporting agencies; and considering the types of errors, 
omissions, or other problems that may have affected the accuracy or 
integrity of information it has furnished about consumers to 
consumer reporting agencies;
    (3) Considering any feedback received from consumer reporting 
agencies, consumers, or other appropriate parties;
    (4) Obtaining feedback from the furnisher's staff; and
    (5) Considering the potential impact of the furnisher's policies 
and procedures on consumers.
    (b) Evaluate the effectiveness of existing policies and 
procedures of the furnisher regarding the accuracy and integrity of 
information furnished to consumer reporting agencies; consider 
whether new, additional, or different policies and procedures are 
necessary; and consider whether implementation of existing policies 
and procedures should be modified to enhance the accuracy and 
integrity of information about consumers furnished to consumer 
reporting agencies.
    (c) Evaluate the effectiveness of specific methods (including 
technological means) the furnisher uses to provide information to 
consumer reporting agencies; how those methods may affect the 
accuracy and integrity of the information it provides to consumer 
reporting agencies; and whether new, additional, or different 
methods (including technological means) should be used to provide 
information to consumer reporting agencies to enhance the accuracy 
and integrity of that information.

III. Specific Components of Policies and Procedures

    In developing its policies and procedures, a furnisher should 
address the following, as appropriate:
    (a) Establishing and implementing a system for furnishing 
information about consumers to consumer reporting agencies that is 
appropriate to the nature, size, complexity, and scope of the 
furnisher's business operations.
    (b) Using standard data reporting formats and standard 
procedures for compiling and furnishing data, where feasible, such 
as the electronic transmission of information about consumers to 
consumer reporting agencies.
    (c) Maintaining records for a reasonable period of time, not 
less than any applicable recordkeeping requirement, in order to 
substantiate the accuracy of any information about consumers it 
furnishes that is subject to a direct dispute.
    (d) Establishing and implementing appropriate internal controls 
regarding the accuracy and integrity of information about consumers 
furnished to consumer reporting agencies, such as by implementing 
standard procedures and verifying random samples of information 
provided to consumer reporting agencies.
    (e) Training staff that participates in activities related to 
the furnishing of information about consumers to consumer reporting 
agencies to implement the policies and procedures.
    (f) Providing for appropriate and effective oversight of 
relevant service providers whose activities may affect the accuracy 
or integrity of information about consumers furnished to consumer 
reporting agencies to ensure compliance with the policies and 
procedures.
    (g) Furnishing information about consumers to consumer reporting 
agencies following mergers, portfolio acquisitions or sales, or 
other acquisitions or transfers of accounts or other obligations in 
a manner that prevents re-aging of information, duplicative 
reporting, or other problems that may similarly affect the accuracy 
or integrity of the information furnished.
    (h) Deleting, updating, and correcting information in the 
furnisher's records, as appropriate, to avoid furnishing inaccurate 
information.
    (i) Conducting reasonable investigations of disputes.
    (j) Designing technological and other means of communication 
with consumer reporting agencies to prevent duplicative reporting of 
accounts, erroneous association of information with the wrong 
consumer(s), and other occurrences that may compromise the accuracy 
or integrity of information provided to consumer reporting agencies.
    (k) Providing consumer reporting agencies with sufficient 
identifying information in the furnisher's possession about each 
consumer about whom information is furnished to enable the consumer 
reporting agency properly to identify the consumer.
    (l) Conducting a periodic evaluation of its own practices, 
consumer reporting agency practices of which the furnisher is aware, 
investigations of disputed information, corrections of inaccurate 
information, means of communication, and other factors that may 
affect the accuracy or integrity of information furnished to 
consumer reporting agencies.
    (m) Complying with applicable requirements under the Fair Credit 
Reporting Act and its implementing regulations.


[[Page 31528]]


    Dated: May 15, 2009.
John C. Dugan,
Comptroller of the Currency.

    By order of the Board of Governors of the Federal Reserve System 
June 4, 2009.
Jennifer J. Johnson,
Secretary of the Board.

    By order of the Board of Directors.

    Dated at Washington, DC, the 29th day of May 2009.

Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.

    Dated: April 2, 2009.

    By the Office of Thrift Supervision,
John E. Bowman,
Acting Director.

    By the National Credit Union Administration Board on May 21, 
2009.
Mary Rupp,
Secretary of the Board.

    By Direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. E9-15323 Filed 6-30-09; 8:45 am]
BILLING CODE 4810-33-P, 6210-01-P, 6714-10-P, 6720-01-P, 7535-01-P, 
6750-01-P