In June of 2009, the FACT Act Furnisher Rules were passed by federal banking agencies and the Federal Trade Commission. The rules regulate the accuracy and integrity of consumer information which furnishers of such information provide to consumer reporting agencies (the credit bureaus).
Companies that “furnish” information to the credit bureaus such as a lender, financial institution, debt collector, loan servicer must investigate disputes by consumers under the Direct Dispute Rule.
Direct Dispute Rule
The Direct Dispute Rule gives consumers the power to dispute directly with the furnishers of the information in their credit reports rather than disputing only with the credit bureaus. Formerly, the furnisher of information to the credit bureaus were only required to respond directly to the credit bureaus after the consumer submitted a credit dispute.
The Direct Dispute Rule requires furnishers of information to respond to disputes submitted to them by the consumer. Furnishers of information must conduct an investigation of consumer disputes regarding the accuracy of the information provided by that furnisher to the credit bureaus. The rule also forces the furnisher of information to review all documentation and proof the consumer submits along with their dispute.
Disputes should be submitted directly to the address the furnisher has provided in the consumer’s credit file, unless the furnisher has not provided an address. In the case, the furnisher has not provided an address, the consumer can submit the dispute to any address of the furnisher.
The furnisher will have 30 days to conduct an investigation, just as the credit bureaus. No longer will the credit bureaus and furnisher be able to solely rely upon the E-Oscar method of handling disputes where most credit disputes are reduced to a numerical code through an automated electronic dispute system. With the E-Oscar automated system a consumer may submit documentation and proof along with a dispute and it is never reviewed or forwarded to the furnisher of information.
Accuracy and Integrity Rule
The accuracy of the information the furnisher provides to the consumer reporting agency must reflect the terms of liability of the account, the consumer’s performance regarding the account and whether or not information identifies the appropriate consumer. The rule encourages creditors to supply correct and accurate information of a consumer’s borrowing history to the credit bureaus. Essentially that means correct amounts, dates and payment history.
The integrity of the information provided by the furnisher must be substantiated by the furnisher’s records and furnished in a way which minimizes the likelihood the information could be incorrectly reflected in a consumer’s credit report.
What this law really means to the consumer
Previously consumers could dispute information directly with the creditors, however the creditor or furnisher of information was under no requirement to respond. Now, under the new law, original creditors must respond within 30 days just like the credit bureaus. The original creditor must investigate, not verify a dispute.
The chances an original creditor has maintained your records after 18 months of a charge-off, inactivity or closure is highly unlikely. This can work to your advantage as the original creditor may not be able to back up their negative reporting, such as late payments, of an account.
Some original creditors may not have any records at all as accounts age. During recent years there have been numerous bank mergers and consolidations, often consumer records do not get transferred in their entirety. Just like the credit bureaus, if the original creditor cannot prove your dispute, they must delete it from your credit report. The original creditor has (30) days in order to conduct an investigation.
Here is what the furnishers of information are required to do:
CONSUMER DISPUTES TO CREDIT BUREAUS
If a credit bureau notifies a furnisher of information that a consumer disputes information provided the furnisher, the furnisher must:
- investigate the dispute and review all relevant information provided by the credit bureaus about the dispute;
- report the findings to the credit bureaus;
- provide corrected information to every credit bureau that received the information if the investigation shows the information is incomplete or inaccurate; and
- modify the information, delete it, or permanently block its reporting if the information turns out to be inaccurate or incomplete or can’t be verified. FCRA 623(b)(1)
Disputes must be completed within the same time-frame allowed under the FCRA for the credit bureaus to resolve the dispute. Normally, this is 30 days after the credit bureau gets the dispute from the consumer. If the consumer provides additional relevant information during the 30‑day period, the credit bureau has 15 more days to resolve the dispute. The credit bureau must give the furnisher of information all the relevant information it gets within five business days of receipt, and must promptly give the furnisher additional relevant information provided by the consumer. If the furnisher of information does not investigate and respond to the notification of the dispute within the specified times, the credit bureaus must delete the disputed information from its files. FCRA 623(b)(2) and 611(a)(1)
CONSUMER DISPUTES TO FURNISHERS
Furnishers of information must investigate a consumer’s dispute if it relates to:
- the consumer’s liability for a credit account or other debt with you. For example, disputes relating to whether there is or has been identity theft or fraud against the consumer, whether there is individual or joint liability on an account, or whether the consumer is an authorized user of a credit account;
- the terms of a credit account or other debt with you. For example, disputes relating to the type of account, principal balance, scheduled payment amount on an account, or the amount of the credit limit on an open-end account;
- the consumer’s performance or other conduct concerning an account or other relationship with you. For example, disputes relating to the current payment status, high balance, date a payment was made, amount of a payment made, or date an account was opened or closed; or
- any other information in a consumer report about an account or relationship with you that affects the consumer’s creditworthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or lifestyle. Furnisher Rule 660.4(a)
- conduct a reasonable investigation
- review all relevant information provided by the consumer
- report results to the consumer, generally within 30 days
- notify each CRA to which you provided inaccurate information if the investigation finds the information was inaccurate. Furnisher Rule 660.4(e)
SAMPLE LETTER TO FURNISHER UNDER DIRECT DISPUTE RULES
This sample letter is one that challenges the accuracy of credit reporting by First Premier Bank. They are best known for extending credit to consumers with bad credit but they are also known for denying pay for delete offers if accounts are charged-off. While it is in their right not to accept a pay for delete offer, consumers with First Premier Bank negative accounts on their credit reports might want to dispute inaccurate reporting as they routinely report different dates, amounts and payment history to the credit bureaus which constitutes inaccurate reporting.
In order to properly dispute the account you will need to find a factual error in the way they are reporting to the credit bureaus. Get all three of your credit reports to review how they are reporting the account. Look for errors in the amount they are reporting, credit limit, opening dates, charge-off dates, open/closed status and even the payment history being reported. There are bound to be mistakes. First Premier should be reporting the same way to all 3 credit bureaus.
If you find even one mistake, for instance, Equifax is reporting something different than Experian then dispute it directly with First Premier Bank. They have the duty to investigate disputes, and not simply verify a debt. Furnishers of information must “investigate” as to the accuracy of the records on a debt. If your creditor does not have accurate records pertaining to the debt, then they must remove the negative information from your credit reports.
This is a notice of direct dispute under the provisions of FCRA 623(a)(8)(D). I hereby dispute the accuracy of information of account number XXXX you are currently reporting to my credit files at Experian, Equifax and Transunion.
The date of last activity, payment history, amount owed, charge-off date, status of account (whatever mistakes you find) does not align across all bureaus. After further investigation of the discrepancies reported to each credit bureau I am concerned that this account does not belong to me. For example Experian states: (insert whatever mistakes you find) while Transunion states: (…)
As a furnisher of information you have a duty to report accurate information under FCRA 623(a)(1)(A)(B). I have enclosed a copy of the credit reports showing discrepancies in reporting.
I dispute your reporting information in its entirety and request evidentiary documentation that substantiates the information you have furnished to Equifax, Transunion and Experian credit bureaus.
Should you not be able or willing to provide me with the substantiating documentation as verification to cure this violation, within the next 30 days, I hereby request the First Premier account be deleted from my Experian, Equifax and Transunion credit reports as the information being reported is inaccurate.
This is just a sample letter, please change the information to suit your direct dispute notice.