Senate Bill Targets Credit Furnisher Responsibilities Under FCRA

A bill introduced in the U.S. Senate this month by a coalition of Senators known for their consumer protection positions would amend the Fair Credit Reporting Act (FCRA) to place new requirements on both credit reporting agencies and companies that furnish information to those agencies.

U.S. Senators Brian Schatz (D-Hawai‘i), Sherrod Brown (D-Ohio), Bernie Sanders (I-Vt.), Elizabeth Warren (D-Mass.), and Richard Blumenthal (D-Conn.) introduced S.2224, the Stop Errors in Credit Use and Reporting (SECURE) Act of 2014. The bill has been referred to the Senate Committee on Banking, Housing, and Urban Affairs.

The legislation would make it easier for consumers to identify and dispute errors in their credit reports and builds on a proposal from Sen. Sanders to provide consumers with free credit scores.

According to the Senators, there are no minimum standards for credit reporting agencies (CRAs) and data furnishers to accurately match consumers’ names, addresses, or Social Security numbers, often resulting in incorrect information included in a consumer’s credit report. The SECURE Act would direct the CFPB to establish minimum procedures that a CRA must follow to ensure maximum possible accuracy of consumer reports. When errors are caught, the bill would require CRAs to gather and report information on consumer disputes and resolutions.

The legislation would provide injunctive relief as a remedy for consumers who sue CRAs under the FCRA and hold CRAs accountable to the FTC for negligent violations of the FCRA.

The text of the bill also focuses on new disclosure requirements for furnishers under the FCRA, with one new provision specifically targeting collection agencies.  A new section in the law, replacing the current “Free disclosure after adverse notice to consumer,” would read:

Not later than 14 days after the date on which a consumer reporting agency receives a notification under subsection (a)(2) or (h)(6) of section 615, or from a debt collection agency affiliated with the consumer reporting agency, the consumer reporting agency shall make, without charge to the consumer, all disclosures required in accordance with the rules prescribed by the Bureau under section 609(h).

The proposal comes nearly a year after the FTC testified before a U.S. Senate Commerce subcommittee on a study examining the accuracy of consumer credit reports, as well as the agency’s efforts to improve credit report accuracy through enforcement and education.

Other Senators have also focused on credit reporting issues recently, with Sen. Warren late last year proposing a new law to prohibit the use of consumer credit checks against prospective and current employees “for the purposes of making adverse employment decisions.”

For help with changing FCRA requirements, check out our Compliance Overview: Fair Credit Reporting Act (FCRA) in the insideARM.com Research Library.