Recent FTC consent orders, as well as the CFPB’s continued focus on credit reporting, serve as good reminders for collection agencies and creditors to carefully scrutinize their FCRA policies and procedures to ensure compliance with the FCRA’s Furnisher Rule and the guidelines outlined in 12 CFR 1022, Appendix E.
The Furnisher Rule requires data furnishers to establish and implement reasonable written policies and procedures regarding the accuracy and integrity of the consumer information they furnish to a consumer reporting agency. It’s not enough to just establish policies and procedures. Furnishers should remain nimble reassessing their policies and procedures to ensure they remain relevant and reasonably tailored to address potential weaknesses and deficiencies.
KEY 1: A robust policy should be tailored to the nature, size and complexity of the furnisher. Furnishers need to make sure their policies match the nature, size, complexity, and scope of their business practice. Furnishers should consider the following questions and allow the answers to shape or revise your present policies and procedures:
KEY 2: A robust policy ensures information provided is accurate: Your policies and procedures should be designed to ensure that any information you furnish accurately:
KEY 3: A robust policy promotes reasonable investigative procedures and appropriate actions. Your procedures and actions should be based on investigation outcomes, including accurately updating information about the current status of the account. Your policy should:
KEY 4: A robust policy provides for updating information as necessary to accurately reflect the current status of the account or any changes in relationships (i.e., a sale or transfer of the account).
KEY 5: A robust policy prevents re-aging, duplicative reporting, or other problems that affect the accuracy or integrity of information furnished. Your policy should include an appropriate system to communicate with CRAS.
KEY 6: A robust policy provides for regular and stringent auditing of accounts to help identify and resolve any systemic weaknesses or trends.
KEY 7: A robust policy provides for a regular and periodic evaluation of:
KEY 8: A robust policy requires the use of standard data reporting formats and procedures
KEY 9: A robust policy establishes and implements internal controls regarding the accuracy and integrity of furnished information
The key to any robust compliance management system is to remember that it is similar to an ecosystem. It is imperative never to allow policies to grow stagnant. Instead, furnishers must remain flexible and adjust policies and procedures in a timely fashion so they can address environmental changes as they occur.
Caren Enloe leads Smith Debnam’ s consumer financial services litigation and compliance group. In her practice, she defends consumer financial service providers and members of the collection industry in state and federal court, as well as in regulatory matters involving a variety of consumer protection laws. Caren also advises fintech companies, law firms, and collection agencies regarding an array of consumer finance issues. An active writer and speaker, Caren currently serves as chair of the Debt Collection Practices and Bankruptcy subcommittee for the American Bar Association’s Consumer Financial Services Committee. She is also a member of the Defense Bar for the National Creditors Bar Association, the North Carolina State Chair for ACA International’s Member Attorney Program and a member of the Bank Counsel Committee of the North Carolina Bankers Association. Most recently, she was elected to the Governing Committee for the Conference on Consumer Finance Law. In 2018, Caren was named one of the “20 Most Powerful Women in Collections” by Collection Advisor, a national trade publication. Caren oversees a blog titled: Consumer Financial Services Litigation and Compliance dedicated to consumer financial services and has been published in a number of publications including the Journal of Taxation and Regulation of Financial Institutions, California State Bar Business Law News, Banking and Financial Services Policy Report and Carolina Banker....LEARN MORE