I believe each consumer must be made aware of the legislative intent of this law to insure their rights are not impeded. The Congress made the following conclusions and they are enumerated below in its entirety:
(1) The banking system is dependent upon fair and accurate credit reporting. Inaccurate credit reports directly impair the efficiency of the banking system, and unfair credit reporting methods undermine the public confidence which is essential to the continued functioning of the banking system.
(2) An elaborate mechanism has been developed for investigation and evaluating the credit worthiness, credit standing, credit capacity, character, and general reputation of consumers.
(3) Consumer reporting agencies have assumed a vital role in assembling and evaluating consumer credit and other information on consumers.
(4) There is a need to insure that consumer reporting agencies exercise their grave responsibilities with fairness, impartiality, and a respect for the consumer’s right to privacy.
What is clear from this legislation is that, notwithstanding the powers provided to the consumer reporting agencies, the consumer– you and I, are all legally empowered to question and act accordingly if adverse and incorrect information is reflected in your credit. It is unequivocal that maintaining the “best” credit is critical for buying a home, obtaining credit and even employment or housing. As such, I will briefly detail the compliance procedures required from the agency and how you, the consumer, can dispute inaccurate and negative information erroneously reflected in your credit report.
COMPLIANCE PROCEDURES
(A) Identity and purposes of credit users: Every consumer reporting agency shall make a reasonable effort to verify the identity of a new prospective user and the uses certified by such prospective user prior to furnishing such user a consumer report. No consumer reporting agency may furnish a consumer report if it has reasonable grounds to believe that the report will not be used for a legitimate purpose. Therefore, they have a duty to insure that they are turning over your documents for valid use.
(B) Accuracy of report: Whenever a consumer reporting agency prepares a consumer report, it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates. They must perform such fiduciary act in a diligent and good faith manner.
(C) Disclosure of consumers reports by users are allowed: A consumer reporting agency may not prohibit a user of the report from disclosing the contents of the report to the consumer, if adverse action against the consumer has been taken by the user based in whole or part on the report.
INVESTIGATIONS OF DISPUTED INFORMATION
Every consumer has a right to dispute inaccurate information. Consumer’s must: specifically identify disputed information in their credit report; explain the basis for the dispute; and include all supporting documents to substantiate the basis of the dispute.
If the completeness or accuracy of any item of information contained in a credit report is disputed by the consumer and the consumer notifies the agency directly, or indirectly through a reseller, of such a dispute the agency must do the following:
(1) Free of charge, conduct a reasonable investigation to determine whether the disputed information is inaccurate;
(2) This investigation must be completed in 30 days upon which the agency receives notice of the dispute. It may only be extended for not more than 15 additional days if the agency receives information during the 30 day period which may be relevant to the investigation. At most, the agency has 45 days.
(3) Within 5 days upon receiving notice from the consumer of the dispute, the agency shall provide notice to the furnisher of the information in dispute and provide them with the documentation provided by the consumer.
(4) If the information is found to be inaccurate, incomplete or cannot be verified, the agency shall promptly delete or modify the report. It shall also notify the furnisher of the information that it has been modified or deleted.
(5) The agency shall maintain reasonable procedures to prevent the reappearance of the deleted information from future credit reports.
The credit agency may terminate an investigation of an inaccurate information if it reasonably determines that the dispute is frivolous or irrelevant, including by reason of a failure by a consumer to provide sufficient information in its investigation. Upon making this determination and is required to notify the consumer no later than 5 business days after making such determination.
A person shall not furnish any information to consumer reporting agencies if the person knows or has reasonable cause to believe that the information is inaccurate. For example, a mortgage company or a credit card company who regularly and in the ordinary course of business furnishes information to one or more agencies about the person’s transactions with consumers shall promptly notify the agency of corrections. It has a duty to provide all necessary information to insure that a complete and accurate report is reflected and not thereafter furnish information that is false and inaccurate.
If any financial institution that extends credit and regularly and in the ordinary course of business furnishes information to an agency, that financial institution must provide notice of providing negative information (meaning any information concerning a customer’s delinquencies, late payments, insolvency, or any form of default), in writing, to the customer. It must provide notice to the consumer, no later than 30 days, upon furnishing the negative information to the consumer reporting agency.
CIVIL LIABILITY FOR NONCOMPLIANCE
Any person who willfully fails to comply is liable for actual damages; punitive damages and attorney’s fees. A lawsuit may be brought in federal, state or any court of competent jurisdiction, not later 2 years after the discovery of the violation or 5 years after the date on which the violation that is the basis for such liability occurs, whichever is earlier.
In my client’s case, we are suing two major mortgage companies for their breach of duty and negligent failure to comply as furnishers of information to the consumer reporting agencies. As referenced above, furnishers of negative information have a duty to insure that information provided to the agencies are accurate and complete. Inaccurate and patently false information, as many knows, will have major impact on an individual’s credit. Congress was keenly aware that the sanctity of an individual’s credit reports (credit scores) are documents that must be held at a high standard since an individual’s credit worthiness, standing and general reputation, especially in America, depends on it.