Monday, January 4, 2021

FYI: CFPB Announces FCRA Consent Order Involving "Internally Inconsistent" Reporting Data

The Consumer Financial Protection Bureau recently announced a consent order against a subprime automobile finance company for supposed violations of the federal Fair Credit Reporting Act resulting from allegedly systemic errors in data furnished to credit reporting agencies between January 2016 and August 2019.


The Bureau determined that the alleged errors "should have been readily apparent because the data for certain accounts was internally inconsistent."  Also, one CRA notified the company of certain reporting discrepancies, but this notification allegedly went unresolved.


A copy of the Consent Order is available at:  Link to Consent Order


The bulk of the Order alleges that the company engaged in a pattern of re-aging accounts.


During the affected time period, 35 percent of all instances in which the company furnished a date of first delinquency, this date equaled the date of account information.


The date of first delinquency is the field used in calculating when a tradeline should drop off of a consumer's credit report. Simply put, the date of first delinquency is the reporting date associated with the time the account first went into default and was not later cured. 


The Bureau explains the date of account information as the date the company "pulled information from its system of record each month in order to send" the information to credit reporting agencies.


According to the Bureau, "when furnishing in the Metro 2 format, furnishers like Respondent must provide the [date of account information] so that date is updated each month until the company stops reporting a tradeline."


While the Metro 2 reporting requirements are much more detailed and technical, essentially the consent order points out that these two dates are distinguishable and if an account is severely delinquent, then these dates should not match. In addition, it was noted that the company was reporting a date of first delinquency on accounts that were current.


The company was assessed a $4,750,000 civil money penalty. In addition to correcting the inaccuracies, the company is to establish a monthly audit process to assess the accuracy and integrity of the reporting information along with implementing policies and procedures.


The company consented to the issuance by stipulation without admitting or denying the findings.





Ralph T. Wutscher
Maurice Wutscher LLP
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