The FTC reached a settlement with a national consumer reporting agency and its debt collection affiliate for violations of the Fair Credit Reporting Act and Section 5 of the FTC Act. FCRA imposes obligations on consumer reporting agencies, including requirements to follow reasonable procedures to assure the accuracy of information reported to CRAs and to take certain measures with respect to consumer disputes of such information. According to the complaint, in violation of FCRA, the CRA did not follow proper dispute procedures, including refusing to investigate disputes, and failed to both follow reasonable procedures to assure maximum possible accuracy of the consumer report information it was providing and promptly correct errors on consumers’ reports. The FTC also alleged that the CRA’s debt collection affiliate violated the “furnisher rule,” which, among other things, requires entities furnishing information to CRAs to ensure the accuracy and integrity of the information provided. The FTC maintained that the CRA incorrectly informed consumers of reasons to dispute information in their file, shifted the burden of conducting reinvestigations to consumers and failed to meet certain procedural requirements for reinvestigation. The terms of the settlement require the CRA to pay civil money penalties, cease violations of FCRA, including, for example, by requiring consumers to contact third parties to resolve disputes, and submit to compliance monitoring.
The settlement comes just months after the FTC entered into a similar settlement agreement with another CRA also in the check authorization business (see August 20, 2013 Alert) and the CFPB’s December 2012 warning to CRAs for failure to comply with FCRA and its implementing regulation, Regulation V (see December 11, 2012 Alert).
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