Tuesday, September 7, 2010

OTS: Updates FCRA Compliance Exam

On August 31, 2010, the OTS updated Section 1300 of the OTS Handbook, which outlines FCRA compliance requirements reviewed in examinations. The OTS, the Office of the Comptroller of the Currency, the Federal Reserve Board, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Federal Trade Commission implemented the FACT Act changes through final rules that were effective July 1, 2009.

Section 623 of the Fair Credit Reporting Act (FCRA) was amended by the Fair and Accurate Credit Transactions Act of 2003 (FACT Act) to improve the way that institutions furnish information to consumer reporting agencies (CRAs) and handle direct disputes from consumers.

Section 1300 of the OTS's Examination Handbook contains procedures used by OTS examiners to assess compliance with the FCRA. The module on financial institutions as being "furnishers of information" (Module 4) has been revised to include the requirements of the new rules.

Furnishing information to CRAs is voluntary. However, under the new rules, institutions that do so must have policies and procedures for furnishing information with accuracy and integrity.

The rules also lay out the duties of institutions that receive disputes directly from consumers. The attached examination procedures address both of these areas.

If you have any questions about this matter,

please contact Jonathan Foxx.

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Summary of Key Regulatory Provisions

Policies and Procedures

In developing the required policies and procedures, furnishers must:

  • consider the guidelines that are in Appendix E to the rule
  • develop policies and procedures that fit the institution's activities
  • provide for reasonable investigations of disputes
  • use standard data reporting formats
  • maintain records for enough time to respond to direct disputes
  • review procedures upon transfers of accounts to prevent re-aging of information
  • periodically review and update practices and procedures for investigating and correcting information
  • review and update their procedures periodically

Direct Disputes

  • When a consumer disputes information reported to a CRA directly with an institution, the institution must conduct a reasonable investigation of a direct dispute if it relates to consumer liability on the account, the terms of the account, the consumer's performance, or other information in a credit report regarding the account with the furnisher that bears on the consumer's creditworthiness and reputation.
  • When an institution receives a direct dispute, it must review all relevant information that the consumer provided and report investigation results to the consumer.
  • If the institution finds that it provided incorrect information to a CRA, it must provide the correct information to each affected CRA.
  • An investigation is not required if the institution determines that the dispute is frivolous or irrelevant and sends the consumer a notice within five days of making that determination.
  • The notice may be on a standard form and must include the reasons for the determination and identify information that the institution needs to investigate the dispute.

Visit Library for Issuances

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  • Furnishing Information to Consumer Reporting Agencies and Direct Disputes Regulation: FCRA Examination Procedures, OTS Letter 363 (8/31/10)
  • Regulatory Bulletin, RB 37-60, Handbook: Examination, Subject: Fair Credit Reporting Act, Section 1300 (8/31/10)
  • Final Rule/Guidelines on Furnishing Consumer Information to Credit Reporting Agencies and Direct Disputes; and Advance Notice of Proposed Rulemaking (ANPR) Seeking Comment on Additions to Guidelines, OTS Letter 313, (7/17/09) .
  • Guidelines for Furnishers of Information to Consumer Reporting Agencies, Proposed rule, Federal Register, Vol. 74, No. 125, pp 31529-31533 (7/1/09)
  • 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 rules, Federal Register, Vol. 74, No. 125, pp 31484-31528 (7/1/09)