Credit reports play a crucial role in various aspects of individuals’ lives, as they are used by lenders, insurers, employers, landlords, and others. However, these reports often contain errors, with an estimated one in five Americans having at least one error on their credit report. It is therefore essential for people to have a meaningful opportunity to correct inaccuracies. Congress recognized this need when it passed the Fair Credit Reporting Act (FCRA), which requires credit reporting companies and the entities providing them with information to appropriately respond to error notifications.
As the federal agency responsible for implementing and administering consumer financial laws, the Consumer Financial Protection Bureau (CFPB) is dedicated to ensuring that companies fulfill their obligations under the law. In line with this commitment, on September 28, 2023, the CFPB and the Federal Trade Commission (FTC), both of which enforce fair credit reporting laws, filed an amicus brief in the U.S. Court of Appeals for the Second Circuit in Suluki v. Credit One Bank. This action aimed to ensure that companies supplying information to credit reporting agencies comply with the law by instructing them to remove unverified information identified as incorrect.
The FCRA provides individuals with multiple avenues to dispute inaccurate information on their credit reports. Typically, individuals dispute such information with a credit reporting company like Experian, Equifax, or TransUnion, which then forwards the dispute to the entity that provided the information. Upon receiving a dispute, the supplying company is obligated to conduct its own investigation into the disputed information.
If the supplying company cannot verify the accuracy of the disputed information, the law mandates them to inform the credit reporting company that the information could not be verified, prompting the credit reporting company to cease reporting it. Despite this requirement, some companies have argued that if they cannot confirm the disputed information as false, they are entitled to instruct the credit reporting company to continue including it in reports.
This interpretation is incorrect, as explained in the CFPB and FTC’s brief. Congress explicitly outlined requirements for companies regarding unverifiable information in the FCRA. These requirements would lose their meaning if companies could persist in supplying unverified information and instructing credit reporting companies to continue disseminating it.
The CFPB and FTC are committed to ensuring that companies fulfill their legal obligations, including responding appropriately to errors. They have filed amicus briefs in several recent FCRA cases to ensure compliance with the law. Additionally, they have taken action to protect the ability of state legislators and law enforcement agencies to regulate credit reporting markets, thereby providing consumers with effective recourse when encountering issues.