New Furnisher Rules Effective July 1
The new rules for furnishers of credit reporting information take effect on July 1, 2010. Subject to several exceptions, the rules implement two significant changes for furnishers.
First, the rules require furnishers to implement reasonable written policies and procedures regarding the accuracy and integrity of consumer information. Second, the rules require furnishers to conduct a reasonable investigation into disputes related to credit reporting submitted to a furnisher directly by a consumer. The Fair Credit Reporting Act rules now in place require such an investigation only after a furnisher receives notice of dispute from a credit reporting agency. Significantly, if a furnisher provides a specific correspondence address for such disputes, the furnisher need only respond to disputes submitted to that address.
New Duties for Furnishers Under Credit Reporting Rules
Pursuant to final agency rules implementing revisions to credit reporting regulations mandated by the Fair and Accurate Credit Transactions Act of 2003 ("FACTA"), significant changes to credit reporting rules will take effect on July 1, 2010.
Subject to several exceptions, the final new credit reporting rules for furnishers require furnishers to conduct a reasonable investigation into disputes related to credit reporting submitted to a furnisher directly by a consumer. The Fair Credit Reporting Act rules now in place require such an investigation only after a furnisher receives notice of dispute from a credit reporting agency. Significantly, if a furnisher provides a specific correspondence address for such disputes, the furnisher need only respond to disputes submitted to that address.
FTC Clarifies FDCPA-FACTA Conflict
In an Advisory Opinion, the Federal Trade Commission has clarified a statutory conflict between the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq., and its regulations implementing the Fair and Accurate Credit Transactions Act of 2003 ("FACTA"), which added new sections to the Fair Credit Reporting Act, ("FCRA"), 15 U.S.C. § 1681 et seq.
Specifically, the the FDCPA provides that "if a consumer has notified a debt collector in writing that 'the consumer wishes the debt collector to cease further communication with the consumer, the debt collector shall not communicate with the consumer with respect to such debt' (with some exceptions not applicable here)." 15 U.S.C. § 1692c(c). Separately, FTC regulation implementing FACTA "requires furnishers of information to CRAs to report the results of a direct dispute to the consumer, 16 CFR § 660.4(e)(3), or notify the consumer if the furnisher determines the dispute is frivolous or irrelevant, 16 CFR § 660.4(f)(2)."
As written, a furnisher of credit information that contacts a debtor regarding a credit dispute investigation, as required by FTC FACTA regulations, could violate the cease-communication rules of the FDCPA. The FTC Opinion eliminates this conflict, providing:
a debt collector does not violate Section 805(c) of the FDCPA if the consumer directly disputes information after sending a written “cease communication” to the collector, and the collector complies with the Rule by means of a communication that has no purpose other than complying with the Rule by stating (1) the results of the investigation or (2) the collector’s belief that the communication is frivolous or irrelevant.
The Bell Tolls for Some FACTA Class Actions
On June 3, 2008, President Bush signed the Credit and Debit Card Receipt Clarification Act, retroactively amending the statute "to declare that any person who printed an expiration date on any receipt provided to a consumer cardholder at a point of sale (POS) or transaction between December 4, 2004, and the enactment of this Act, but otherwise complied with FCRA requirements for such receipt, shall not be in willful noncompliance by reason of printing such expiration date on it."
This revision does not remove all liability in this circumstance—a merchant may still be liable for actual damages for a negligent violation—but the amendment significantly reduces the prospect of onerous statutory penalties for a willful violation and, as a result, makes class certification in these cases less likely.
