CFPB Releases Exam Procedures for Consumer Reporting Market

The Consumer Financial Protection Bureau (CFPB) this took another step in implementing its nonbank supervision program by releasing the procedures it will use in examining credit bureaus and other consumer reporting companies. These procedures are a field guide for CFPB examiners looking to check that these companies are following the law.

The procedures include details on how to handle credit report notifications from debt collection agencies.

“Consumer reporting, and especially credit reporting, plays a significant role in a consumer’s life. It can dictate whether or not a consumer is able to get a credit card, a mortgage, or a student loan,” said CFPB Director Richard Cordray. “Our supervision program will benefit hundreds of millions of consumers by making sure these companies are playing fairly and by the rules, and our field guide will ensure that all companies are held to the same standards.”

Under the supervision rules, “larger participants” with revenue over $7 million will be subject to examination. The CFPB’s supervisory authority will cover an estimated 30 companies that account for about 94 percent of the consumer credit reporting market’s annual receipts.

Principally, the exam procedures walk examiners through the Fair Credit Reporting Act (FCRA) as it pertains to companies defined as “consumer reporting agencies.” For example, the examiners will be checking to make sure such agencies don’t allow prohibited information on a consumer’s credit report, like old debt, which is defined as:

Accounts placed for collection or charged to profit and loss that are more than seven years old as of the date of the report

Further, the seven-year period is specifically defined as:

the seven-year period begins 180 days after the date of delinquency that immediately preceded the collection activity, charge to profit and loss, or similar action

The procedures also note that companies must comply with rules regarding the free disclosure of certain report information to consumers. For example, a consumer is allowed a free credit report disclosure if they make a request to the reporting agency within 60 days of receiving a notification from a debt collection agency affiliated with the entity stating that the consumer’s credit rating may be or has been adversely affected.