On November 29, 2012, the Consumer Financial Protection Bureau ("CFPB") issued a bulletin ("Bulletin") warning that Nationwide Specialty Consumer Reporting Agencies ("NSCRA") who are not compliant with the Fair Credit Reporting Act's ("FCRA") Regulation V must "take immediate steps to comply."1 In particular, the Bulletin stresses the importance placed by the CFPB on the free annual credit report and reminds NSCRA's regarding their compliance obligation under Section 1022.137 of Regulation V requiring a "streamlined process for requesting annual file disclosures from nationwide specialty consumer reporting agencies."2
Background
The FCRA "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."3 The Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank") made substantive amendments to the FCRA and also transferred rulemaking authority from several federal agencies – the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Federal Trade Commission, National Credit Union Administration, Office of the Comptroller of the Currency, and Office of Thrift Supervision – to the CFPB.4 The CFPB is authorized to issue regulations as "necessary or appropriate to administer and carry out the purposes and objectives of [the FCRA], and to prevent evasions thereof or to facilitate compliance therewith."5 Pursuant to this authority, the CFPB published for comment an interim final rule in December 2011 establishing a new Regulation V implementing the FCRA.6 The rule did not impose any new substantive obligations on persons subject to the existing FCRA regulations.7
The CFPB's Admonition
An NSCRA is a "consumer reporting agency that compiles and maintains files on consumers on a nationwide basis relating to (1) medical records or payments; (2) residential or tenant history; (3) check writing history; (4) employment history; or (5) insurance claims."8 In issuing the Bulletin, the CFPB noted, "It has come to the attention of the CFPB that some NSCRAs may not have established the required streamlined process for consumers to request copies of their annual file disclosures."9 The Bulletin is intended "to remind the NSCRAs of their obligation to comply with the streamlined process requirement," which the agency views as "an important consumer protection."10 "In light of the range and frequency of decisions that rely on NSCRA reports," the Bulletin emphasizes, "the accuracy of these reports is critical," as access to them "enables consumers to detect and dispute inaccuracies contained in their files."11
The CFPB announced that it would "evaluate compliance with the streamlined process requirements by NSCRAs subject to its supervisory and enforcement authority." In advising that each NSCRA must comply with the FCRA and Regulation V,12 the agency outlined the following expectations:
1. Toll-Free Number. The streamlined process should enable customers to request their credit report information via a toll-free telephone number that "[p]rovides clear and prominent instructions for requesting disclosures by any additional available request methods," "[i]s published, in conjunction with all other published numbers for the [NSCRA]," and "[i]s clearly and prominently posted on any website owned or maintained by the [NSCRA] that is related to consumer reporting."13
2. Adequate Capacity. Each NSCRA must "implement reasonable procedures to anticipate, and respond to, the volume of consumers who will contact the nationwide specialty consumer reporting agency through the streamlined process."14
3. Information Collection. Each NSCRA may collect "only as much personal information as is reasonably necessary to properly identify the consumer."15
4. Information to Consumers. The streamlined process must provide "clear and easily understandable information and instructions to consumers," including information on the status of a consumer's request, a "help" or "frequently asked questions" screen for a website, and a specific process to follow in the event that a consumer requesting a file disclosure cannot be properly identified.16
5. Information Use and Disclosure. Personally identifiable information may be used or disclosed only as specified in Regulation V.17
6. Redirect Requests. Consumer requests for an annual file disclosure outside of the streamlined process must be accepted or redirected to the streamlined process.18
Other Considerations
While the Bulletin does not address other provisions of Regulation V related to the streamlined processing requirements, it is worth highlighting two additional free annual consumer report requirements under Regulation V that the CFPB will certainly be monitoring in connection with its oversight of this area. The first is the obligation imposed on the NSCRAs to participate in and provide for a centralized source to enable consumers to make a single request to obtain their annual credit report from all of the NSCRAs.19 The other provision outlined in Regulation V is the prohibition on deceptive marketing of free credit reports.20 Again, while the Bulletin does not highlight these issues, credit reporting agencies should be mindful of the requirements and, given the emphasis that the CFPB is placing on the annual credit report disclosure, remain vigilant to maintain compliance with all requirements relating to the free annual report set forth in Regulation V.
Action
NSCRAs should take steps to ensure that they have programs in
place to remain compliant with the requirements of Regulation V
pertaining to credit reporting standards. Paul Hastings attorneys
are actively assisting clients with a variety of matters involving
CFPB regulatory and supervisory matters.
Footnotes
1 CFPB Bulletin 2012-09 (Nov. 29, 2012), Re: Nationwide specialty consumer reporting agencies' compliance with Regulation V, available at http://files.consumerfinance.gov/f/201211_cfpb_NSCRA_Bulletin.pdf (the "Bulletin").
2 12 C.F.R. § 1022.137.
3 15 U.S.C. §§ 1681–1681x.
4 12 C.F.R. Part 1022 (2011); 76 Fed. Reg. 79308.
5 See 15 U.S.C. § 1681s(e).
6 12 C.F.R. Part 1022; 76 Fed. Reg. 79308.
7 Id.
8 15 U.S.C. § 1681a(x). 9 Bulletin, supra n. 1.
10 Id.
11 Id.
12 Id.
13 12 C.F.R. § 1022.137(a)(1).
14 12 C.F.R. § 1022.137(b)-(c).
15 12 C.F.R. § 1022.137(a)(2)(ii).
16 12 C.F.R. § 1022.137(a)(2)(iii).
17 12 C.F.R. § 1022.137(d).
18 12 C.F.R. § 1022.137(e).
19 12 C.F.R. § 1022.136.
20 12 C.F.R. § 1022.138.
The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.
