Credit reports are used to make decisions that affect every facet of peoples’ lives. Credit reports compiled by consumer reporting companies are used by lenders, insurers, employers, landlords, and others—yet these reports frequently contain errors. By one estimate, one in five Americans has an error on at least one credit report. Accordingly, it is critical that people have a meaningful opportunity to correct inaccuracies on their reports. That’s why Congress—when it passed the Fair Credit Reporting Act (FCRA)—required credit reporting companies, and the companies that give them information, to respond appropriately when notified of errors.
As the federal government agency charged with implementing and administering the federal consumer financial laws, the CFPB is committed to ensuring that companies meet the obligations put on them by Congress in the law. For that reason, yesterday the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC), which both 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, to help ensure that companies that provide information to credit reporting companies comply with the law. Specifically, they must tell credit reporting companies to remove information that they cannot verify after someone identifies the information as wrong.
Companies’ responsibility to remove unverified information
The FCRA provides people multiple ways to dispute inaccurate information on their credit reports. Commonly, people dispute the accuracy of information on their credit reports with a credit reporting company, such as Experian, Equifax, or TransUnion. In response, the credit reporting company often refers the dispute to the company that provided the disputed information. When a person submits a dispute to a credit reporting company, and it is passed along to the company that originally provided the disputed information, the company is then required to conduct its own investigation into the disputed information.
If a company that provided disputed information to a credit reporting agency is unable to determine whether the information is true or not, the law requires them to tell the credit reporting company the information could not be verified so that the credit reporting company will stop reporting it. Nonetheless, some companies have argued that if they are unable to determine that the disputed information is false, they are free to tell the consumer reporting company to continue providing the information on reports.
That’s wrong, as the CFPB and FTC’s brief explains. In the FCRA, Congress put express requirements on companies with respect to information that “cannot be verified.” Those requirements would be meaningless if companies could continue providing unverified information and telling credit reporting companies that they could continue sharing it.
Ensuring that companies meet their obligations
Consumer reporting companies and companies that provide information to them have great power over consumers’ lives, and we’re committed to ensuring that those companies meet their legal obligations, including by responding appropriately to errors. We have accordingly filed friend-of-court briefs in several other recent FCRA cases to ensure that companies comply with the law. We have also taken action to safeguard the ability of state legislators and law enforcers to police the credit reporting markets, so that consumers have places to go and effective actions to take when they encounter problems.
The case is Suluki v. Credit One Bank, NA, No. 23-721 (2d Cir.).