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Federal Register Publications

FDIC Federal Register Citations



Home > Regulation & Examinations > Laws & Regulations > FDIC Federal Register Citations




FDIC Federal Register Citations

[Federal Register: December 13, 2007 (Volume 72, Number 239)]

[Proposed Rules]

[Page 70943-70986]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr13de07-22]

[[Page 70943]]

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Part II

Department of the Treasury

Office of the Comptroller of the Currency

12 CFR Part 41

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Federal Reserve System

12 CFR Part 222

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Federal Deposit Insurance Corporation

12 CFR Part 334

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Department of the Treasury

Office of Thrift Supervision

12 CFR Part 571

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National Credit Union Administration

12 CFR Part 717

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Federal Trade Commission

16 CFR Part 660

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Section 312 of the Fair and Accurate Credit Transactions Act; Proposed

Rule

[[Page 70944]]

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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Part 41

[Docket ID OCC-2007-0019]

RIN 1557-AC89

FEDERAL RESERVE SYSTEM

12 CFR Part 222

[Docket No. R-1300]

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 334

RIN 3064-AC99

DEPARTMENT OF THE TREASURY

Office of Thrift Supervision

12 CFR Part 571

[Docket No. OTS-2007-0022]

RIN 1550-AC01

NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 717

FEDERAL TRADE COMMISSION

16 CFR Part 660

RIN 3084-AA94

Interagency Notice of Proposed Rulemaking: Procedures To Enhance

the Accuracy and Integrity of Information Furnished to Consumer

Reporting Agencies Under Section 312 of the Fair and Accurate Credit

Transactions Act

AGENCIES: Office of the Comptroller of the Currency, Treasury (OCC);

Board of Governors of the Federal Reserve System (Board); Federal

Deposit Insurance Corporation (FDIC); Office of Thrift Supervision,

Treasury (OTS); National Credit Union Administration (NCUA); and

Federal Trade Commission (FTC).

ACTION: Notice of proposed rulemaking.

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SUMMARY: The OCC, Board, FDIC, OTS, NCUA, and FTC (Agencies) are

publishing for comment proposed regulations and guidelines to implement

the accuracy and integrity provisions in section 312 of the Fair and

Accurate Credit Transactions Act of 2003 (FACT Act).\1\ The proposed

regulations and guidelines would implement the requirement that the

Agencies issue guidelines for use by furnishers regarding the accuracy

and integrity of the information about consumers that they furnish to

consumer reporting agencies and prescribe regulations requiring

furnishers to establish reasonable policies and procedures for

implementing the guidelines. The Agencies also are publishing for

comment proposed regulations to implement the direct dispute provisions

in section 312. The proposed regulations would implement the

requirement that the Agencies issue regulations identifying the

circumstances under which a furnisher must reinvestigate disputes about

the accuracy of information contained in a consumer report based on a

direct request from a consumer.

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\1\ Pub. L. 108-159, 117 Stat. 1952 (Dec. 4, 2003).

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DATES: Comments must be submitted by February 11, 2008.

ADDRESSES: Because paper mail in the Washington, DC area and at the

Agencies is subject to delay, commenters are encouraged to submit

comments by e-mail, if possible. Commenters are also encouraged to use

the title ``Procedures to Enhance the Accuracy and Integrity of

Information Furnished to Consumer Reporting Agencies'' to facilitate

the organization and distribution of the comments. Comments submitted

to one or more of the Agencies will be made available to all of the

Agencies. Interested parties are invited to submit comments to:

OCC: You may submit comments by any of the following methods:

Federal eRulemaking Portal--``Regulations.gov'': Go to

http://www.regulations.gov, select ``Comptroller of the Currency'' from

the agency drop-down menu, then click ``Submit.'' In the ``Docket ID''

column, select ``OCC-2007-0019'' to submit or view public comments and

to view supporting and related materials for this notice of proposed

rulemaking. The ``User Tips'' link at the top of the Regulations.gov

home page provides information on using Regulations.gov, including

instructions for submitting or viewing public comments, viewing other

supporting and related materials, and viewing the docket after the

close of the comment period.

Mail: Office of the Comptroller of the Currency, 250 E

Street, SW., Mail Stop 1-5, Washington, DC 20219.

E-mail: regs.comments@occ.treas.gov.

Fax: (202) 874-4448.

Hand Delivery/Courier: 250 E Street, SW., Attn: Public

Information Room, Mail Stop 1-5, Washington, DC 20219.

Instructions: You must include ``OCC'' as the agency name and

``Docket Number OCC-2007-0019'' in your comment. In general, OCC will

enter all comments received into the docket and publish them on

Regulations.gov without change, including any business or personal

information that you provide such as name and address information, e-

mail addresses, or phone numbers. Comments received, including

attachments and other supporting materials, are part of the public

record and subject to public disclosure. Do not enclose any information

in your comment or supporting materials that you consider confidential

or inappropriate for public disclosure.

You may review comments and other related materials by any of the

following methods:

Viewing Comments Electronically: Go to http://www.regulations.gov

, select the ``Search for All Documents (Open and

Closed for Comment)'' option, select ``Comptroller of the Currency''

from the agency drop-down menu, then click ``Submit.'' In the ``Docket

ID'' column, select ``OCC-2007-0019'' to view public comments for this

notice of proposed rulemaking.

Viewing Comments Personally: You may personally inspect

and photocopy comments at the OCC's Public Information Room, 250 E

Street, SW., Washington, DC. You can make an appointment to inspect

comments by calling (202) 874-5043.

Docket: You may also view or request available background

documents and project summaries using the methods described above.

Board: You may submit comments, identified by Docket No. R-1300, by

any of the following methods:

Agency Web site: http://www.federalreserve.gov Follow the instructions for submitting comments at http://www.federalreserve.gov/.

Federal eRulemaking Portal: http://www.regulations.gov.

Follow the instructions for submitting comments.

E-mail: regs.comments@federalreserve.gov. Include docket

number in the subject line of the message.

FAX: (202) 452-3819 or (202) 452-3102.

Mail: Jennifer J. Johnson, Secretary, Board of Governors

of the Federal Reserve System, 20th Street and Constitution Avenue,

NW., Washington, DC 20551.

All public comments are available from the Board's Web site at

http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as submitted,

[[Page 70945]]

unless modified for technical reasons. Accordingly, your comments will

not be edited to remove any identifying or contact information. Public

comments may also be viewed electronically or in paper in Room MP-500

of the Board's Martin Building (20th and C Streets, NW.) between 9 a.m.

and 5 p.m. on weekdays.

FDIC: You may submit comments, identified by the RIN for this

rulemaking, by any of the following methods:

Agency Web site: http://www.fdic.gov/regulations/laws/federal/propose.html.

Follow instructions for submitting comments on the Agency Web site.

Federal eRulemaking Portal: http://www.regulations.gov.

Follow the instructions for submitting comments.

E-Mail: Comments@FDIC.gov. Include the RIN number in the

subject line of the message.

Mail: Robert E. Feldman, Executive Secretary, Attention:

Comments, Federal Deposit Insurance Corporation, 550 17th Street, NW.,

Washington, DC 20429.

Hand Delivery/Courier: Guard station at the rear of the

550 17th Street Building (located on F Street) on business days between

7 a.m. and 5 p.m.

Public Inspection: All comments received will be posted without

change to http://www.fdic.gov/regulations/laws/federal/propose.html,

including any personal information provided. Comments may be inspected

and photocopied at the FDIC Public Information Center, Room E-1002,

3501 North Fairfax Drive, Arlington, VA 22226, between 9 a.m. and 5

p.m. (EST) on business days. Paper copies of public comments may be

ordered from the Public Information Center by telephone at (877) 275-

3342 or (703) 562-2200.

OTS: You may submit comments, identified by OTS-2007-0022, by any

of the following methods:

Federal eRulemaking Portal: Go to http://www.regulations.gov

, select ``Office of Thrift Supervision'' from the

agency drop-down menu, then click submit. Select Docket ID ``OTS-2007-

0022'' to submit or view public comments and to view supporting and

related materials for this notice of proposed rulemaking. The ``User

Tips'' link at the top of the page provides information on using

Regulations.gov, including instructions for submitting or viewing

public comments, viewing other supporting and related materials, and

viewing the docket after the close of the comment period.

Mail: Regulation Comments, Chief Counsel's Office, Office

of Thrift Supervision, 1700 G Street, NW., Washington, DC 20552,

Attention: OTS-2007-0022.

Fax: (202) 906-6518.

Hand Delivery/Courier: Guard's Desk, East Lobby Entrance,

1700 G Street, NW., from 9 a.m. to 4 p.m. on business days, Attention:

Regulation Comments, Chief Counsel's Office, Attention: OTS-2007-0022.

Instructions: All submissions received must include the

agency name and docket number for this rulemaking. All comments

received will be entered into the docket and posted on Regulations.gov

without change, including any personal information provided. Comments,

including attachments and other supporting materials received are part

of the public record and subject to public disclosure. Do not enclose

any information in your comment or supporting materials that you

consider confidential or inappropriate for public disclosure.

Viewing Comments Electronically: Go to http://www.regulations.gov

, select ``Office of Thrift Supervision'' from the

agency drop-down menu, then click ``Submit.'' Select Docket ID ``OTS-

2007-0022'' to view public comments for this notice of proposed

rulemaking.

Viewing Comments On-Site: You may inspect comments at the

Public Reading Room, 1700 G Street, NW., by appointment. To make an

appointment for access, call (202) 906-5922, send an e-mail to

public.info@ots.treas.gov, or send a facsimile transmission to (202)

906-6518. (Prior notice identifying the materials you will be

requesting will assist us in serving you.) We schedule appointments on

business days between 10 a.m. and 4 p.m. In most cases, appointments

will be available the next business day following the date we receive a

request.

NCUA: You may submit comments by any of the following methods

(please send comments by one method only):

Federal eRulemaking Portal: http://www.regulations.gov.

Follow the instructions for submitting comments.

NCUA Web Site: www.ncua.gov/RegulationsOpinionsLaws/proposed_regs/proposed_regs.html.

Follow the instructions for submitting comments.

E-mail: Address to regcomments@ncua.gov. Include ``[Your

name] Comments on Notice of Proposed Rulemaking Part 717, Procedures to

Enhance the Accuracy and Integrity of Information Furnished to Consumer

Reporting Agencies under Section 312 of the Fair and Accurate Credit

Transactions Act'' in the e-mail subject line.

Fax: (703) 518-6319. Use the subject line described above

for e-mail.

Mail: Address to Mary Rupp, Secretary of the Board,

National Credit Union Administration, 1775 Duke Street, Alexandria, VA

22314-3428.

Hand Delivery/Courier: Address to Mary Rupp, Secretary of

the Board, National Credit Union Administration. Deliver to guard

station in the lobby of 1775 Duke Street, Alexandria, VA 22314-3428, on

business days between 8 a.m. and 5 p.m.

All public comments are available on the agency's Web site at http://www.ncua.gov/RegulationsOpinionsLaws/comments

as submitted, except as

may not be possible for technical reasons. Public comments will not be

edited to remove any identifying or contact information. Paper copies

of comments may be inspected in NCUA's law library, at 1775 Duke

Street, Alexandria, VA 22314, by appointment weekdays between 9 a.m.

and 3 p.m. To make an appointment, call (703) 518-6546 or send an e-

mail to OGCMail@ncua.gov.

FTC: Comments should refer to ``Procedures to Enhance the Accuracy

and Integrity of Information Furnished to Consumer Reporting Agencies

under Section 312 of the Fair and Accurate Credit Transactions Act,

Project No. R611017,'' and may be submitted by any of the following

methods. Comments containing confidential material must be filed in

paper form, must be clearly labeled ``Confidential,'' and must comply

with Commission Rule 4.9(c).\2\

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\2\ The comment must be accompanied by an explicit request for

confidential treatment, including the factual and legal basis for

the request, and must identify the specific portions of the comment

to be withheld from the public record. The request will be granted

or denied by the Commission's General Counsel, consistent with

applicable law and the public interest. See Commission Rule 4.9(c),

16 CFR 4.9(c).

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E-mail: https://secure.commentworks.com/ftc-FACTAfurnishers.

To ensure that the Commission considers an electronic

comment, you must file it on the Web-based form found at this Web link

and follow the instructions on that form.

Federal eRulemaking Portal: http://www.regulations.gov.

You may visit this Web site to read this request for public comment and

to file an electronic comment. The Commission will consider all

comments that regulations.gov forwards to it.

Mail or Hand Delivery: A comment filed in paper form

should refer, both in the text and on the envelope, to the name and

project number identified above, and should be mailed or delivered to

the following address:

[[Page 70946]]

Federal Trade Commission/Office of the Secretary, Room 159-H (Annex C),

600 Pennsylvania Avenue, NW., Washington, DC 20580.

The FTC Act and other laws the Commission administers permit the

collection of public comments to consider and use in this proceeding as

appropriate. All timely and responsive public comments, whether filed

in paper or electronic form, will be considered by the Commission, and

will be available to the public on the FTC Web site, to the extent

practicable, at http://www.ftc.gov/os/publiccomments.htm. As a matter

of discretion, the FTC makes every effort to remove home contact

information for individuals from the public comments it receives before

placing those comments on the FTC Web site. More information, including

routine uses permitted by the Privacy Act, may be found in the FTC's

privacy policy, at http://www.ftc.gov/ftc/privacy.htm.

FOR FURTHER INFORMATION CONTACT:

OCC: Stephen Van Meter, Assistant Director, Community and Consumer

Law Division, (202) 874-5750; Patrick T. Tierney, Senior Attorney,

Legislative and Regulatory Activities Division, (202) 874-5090; or Paul

Utterback, National Bank Examiner, Compliance Policy, (202) 874-4428,

Office of the Comptroller of the Currency, 250 E Street, SW.,

Washington, DC 20219.

Board: David A. Stein, Counsel, Amy E. Burke, Attorney, or Jelena

McWilliams, Attorney, Division of Consumer and Community Affairs, (202)

452-3667 or (202) 452-2412; or Anne B. Zorc, Senior Attorney, (202)

452-3876, or Kara L. Handzlik, Attorney, (202) 452-3852, Legal

Division, Board of Governors of the Federal Reserve System, 20th and C

Streets, NW., Washington, DC 20551.

FDIC: David P. Lafleur, Policy Analyst, (202) 898-6569, or John

Jackwood, Senior Policy Analyst, (202) 898-3991, Division of

Supervision and Consumer Protection; Richard M. Schwartz, Counsel,

(202) 898-7424, or Richard B. Foley, Counsel, (202) 898-3784, Legal

Division; 550 17th St., NW., Washington, DC 20429.

OTS: Suzanne McQueen, Consumer Regulations Analyst, Compliance and

Consumer Protection Division, (202) 906-6459; or Richard Bennett,

Senior Compliance Counsel, Regulations and Legislation Division, (202)

906-7409, at 1700 G Street, NW., Washington, DC 20552.

NCUA: Linda Dent or Regina Metz, Attorneys, Office of General

Counsel, phone (703) 518-6540 or fax (703) 518-6569, National Credit

Union Administration, 1775 Duke Street, Alexandria, VA 22314.

FTC: Clarke W. Brinckerhoff and Pavneet Singh, Attorneys, (202)

326-2252, Bureau of Consumer Protection, Federal Trade Commission, 600

Pennsylvania Avenue, NW., Washington, DC 20580.

SUPPLEMENTARY INFORMATION:

I. Introduction

The Fair Credit Reporting Act (FCRA), which was enacted in 1970,

sets standards for the collection, communication, and use of

information bearing on a consumer's creditworthiness, credit standing,

credit capacity, character, general reputation, personal

characteristics, or mode of living.\3\ In 1996, the Consumer Credit

Reporting Reform Act extensively amended the FCRA.\4\ The FACT Act

further amended the FCRA for various purposes, including to increase

the accuracy of consumer reports.

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\3\ 15 U.S.C. 1681-1681x.

\4\ Pub. L. 104-208, 110 Stat. 3009 (Sept. 20, 1996).

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Section 623 of the FCRA describes the responsibilities of persons

that furnish information about consumers (furnishers) to consumer

reporting agencies (CRAs).\5\ Section 312 of the FACT Act amended

section 623 by requiring the Agencies to issue guidelines for use by

furnishers regarding the accuracy and integrity of the information

about consumers that they furnish to consumer reporting agencies and to

prescribe regulations requiring furnishers to establish reasonable

policies and procedures for implementing the guidelines (referred to in

this proposal as the accuracy and integrity regulations and

guidelines). Section 312 also requires the Agencies to issue

regulations identifying the circumstances under which a furnisher must

reinvestigate disputes concerning the accuracy of information provided

by a furnisher to a CRA and contained in a consumer report based on a

direct request from a consumer (referred to in this proposal as the

direct dispute regulations). The Agencies are proposing to adopt

accuracy and integrity regulations and guidelines and direct dispute

regulations to satisfy the requirements of section 312.\6\

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\5\ Section 623 is codified at 15 U.S.C. 1681s-2.

\6\ The FACT Act also directs the FTC to ``conduct an ongoing

study of the accuracy and completeness of information contained in

consumer reports prepared or maintained by consumer reporting

agencies and methods for improving the accuracy and completeness of

such information.'' See section 319 of the FACT Act. The FTC

submitted its first interim report to Congress on this study on

December 9, 2004, http://www.ftc.gov/reports/facta/041209factarpt.pdf

(last visited Oct. 4, 2007). The FTC submitted

its second interim report to Congress in December 2006, http://www.ftc.gov/reports/FACTACT/FACT_Act_Report_2006.pdf

(last visited Oct. 4, 2007).

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II. Statutory Requirements

Accuracy and Integrity Regulations and Guidelines

As added by section 312 of the FACT Act, section 623(e)(1)(A) of

the FCRA requires the Agencies to establish and maintain guidelines for

use by each furnisher ``regarding the accuracy and integrity of the

information relating to consumers'' that the furnisher provides to

CRAs. In developing the guidelines, section 623(e)(3) directs the

Agencies to:

Identify patterns, practices, and specific forms of

activity that can compromise the accuracy and integrity of information

furnished to CRAs;

Review the methods (including technological means) used to

furnish information relating to consumers to CRAs;

Determine whether furnishers maintain and enforce policies

to assure the accuracy and integrity of information furnished to CRAs;

and

Examine the policies and processes employed by furnishers

to conduct reinvestigations and correct inaccurate information relating

to consumers that has been furnished to CRAs.

The Agencies also are required to update the guidelines as often as

necessary.

Section 623(e)(1)(B) of the FCRA requires the Agencies to prescribe

regulations requiring furnishers to ``establish reasonable policies and

procedures for implementing the guidelines'' established pursuant to

section 623(e)(1)(A). Section 623(e)(2) of the FCRA provides that the

Agencies must consult and coordinate with one another so that, to the

extent possible, the regulations prescribed by each Agency are

consistent and comparable with the regulations prescribed by each of

the other Agencies.

Direct Disputes

As amended by section 312 of the FACT Act, section 623(a)(8) of the

FCRA directs the Agencies jointly to prescribe regulations that

identify the circumstances under which a furnisher is required to

reinvestigate a dispute concerning the accuracy of information

contained in a consumer report on the consumer, based on a direct

request by the consumer. In prescribing the direct dispute regulations,

section 623(a)(8) directs the Agencies to weigh the following specific

factors:

The benefits to consumers and the costs to furnishers and

the credit reporting system;

[[Page 70947]]

The impact on the overall accuracy and integrity of

consumer reports of any direct dispute requirements;

Whether direct contact by the consumer with the furnisher

would likely result in the most expeditious resolution of any dispute;

and

The potential impact on the credit reporting process if

credit repair organizations are able to circumvent the provisions in

subparagraph G of section 623(a)(8), which generally states that the

direct dispute rules shall not apply when credit repair organizations

provide notices of dispute on behalf of consumers.

III. The Agencies' Consideration of the Statutory Accuracy and

Integrity Criteria and Direct Dispute Factors

The Agencies' Advance Notice of Proposed Rulemaking

In order to obtain information pertaining to the criteria that

Congress directed the Agencies to consider in developing the accuracy

and integrity guidelines and the factors that Congress directed the

Agencies to weigh in prescribing the direct dispute regulations, the

Agencies issued an advance notice of proposed rulemaking (ANPR) in

March 2006.\7\ The ANPR contained detailed requests for comment on ten

issues related to the statutory criteria governing the development of

the accuracy and integrity guidelines, and on eight issues related to

the statutory factors that the Agencies must weigh when promulgating

the direct dispute regulations. The Agencies also specifically

requested comment on how the issues presented by the ANPR might differ

depending on the type of furnisher, the types of information furnished,

the frequency with which a furnisher reports information about

consumers to CRAs, or the type of CRA that receives the furnished

information.

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\7\ 71 FR 14,419 (March 22, 2006).

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The Agencies received a total of 197 comments. Commenters included

depository institutions, other financial services companies, trade

associations, a CRA, a credit score service provider, a mortgage

company, consumer groups, and individual consumers. Key issues

identified and comments received on the accuracy and integrity criteria

and on the direct dispute factors are summarized separately in the next

two sections.

Comments Pertaining to Accuracy and Integrity Regulations and

Guidelines

Burden of accuracy and integrity regulations and guidelines. A

consistent theme among industry commenters on the ANPR was that the

proposed guidelines and regulations should be sensitive to the

voluntary nature of the reporting of information about consumers by

furnishers to CRAs and not create undue burdens on furnishers that

would discourage reporting. These commenters asserted that imposing

burden on furnishers may result in furnishers reporting less

information than they do presently or ceasing to report at all, thereby

decreasing the effectiveness of the current credit reporting system for

both consumers and industry.

Types of errors, omissions, or other problems that may impair the

accuracy and integrity of furnished information. Many commenters

detailed the types of errors that may impair the accuracy of

information furnished to CRAs. Industry commenters, consumer groups,

and individuals stated that some furnishers do not report consumers'

positive payment histories, a practice that can lead to lower credit

scores than consumers may merit. Similarly, commenters also noted that

some furnishers do not report credit limits, which may likewise lead to

lower credit scores. Consumer groups reported that sales of consumer

accounts to collection agencies also result in accounts being ``re-

aged,'' meaning that a debt receives a new origination date when the

collection account is opened, resulting in the debt being included on a

consumer's credit file longer than legally permissible. In addition, a

number of industry commenters mentioned that data entry errors by

furnishers and different data processing procedures by the CRAs can

result in ``mixed files''--files that include information from two or

more consumers. Commenters noted that furnishing inaccurate information

can adversely affect consumer credit scores and result in higher costs

of credit for some consumers and increased credit risk for lenders.

Patterns, practices, and specific forms of activity that can

compromise the accuracy and integrity of furnished information.

Industry commenters and consumer groups stated that a number of

furnishers do not use the industry standard format for reporting

information about consumers to CRAs, which results in the reporting of

inaccurate information. In addition, industry and consumer groups

mentioned that sales of debt to collection agencies or to other

creditors results in inaccurate information reported to the CRAs (e.g.,

duplicative reporting of accounts and re-aged accounts). Consumer

groups and a trade association noted problems with inaccurate

bankruptcy information being reported--some furnishers continue to

report a debt as not included in bankruptcy, fail to record a debt as

discharged, or continue to show a balance owed after bankruptcy

discharge. Several industry commenters stated that some furnishers do

not provide data to CRAs in a timely manner, which may result in

delinquent debtors appearing as current on their loans.

Business, economic, or other reasons for the patterns, practices,

and specific forms of activity that can compromise the accuracy and

integrity of furnished information. A few consumer groups and trade

associations indicated that some creditors omit good payment history or

credit limit information in order to protect their proprietary

underwriting systems and prevent competitors from soliciting business

from their customers. Some commenters also asserted that collection

agencies have little economic incentive to report updated or accurate

information because they typically do not use consumer report

information to determine credit risk.

Recommendations and descriptions of policies and procedures that a

furnisher should implement and maintain to identify, prevent, or

mitigate patterns, practices, and specific forms of activity that can

compromise the accuracy and integrity of information furnished to a

CRA. Some individual and industry commenters recommended that

furnishers report all consumer account information to CRAs and not omit

information. Consumer groups and some industry commenters recommended

that furnishers should report using the Metro 2 format--a standard

reporting format created by the credit reporting industry--or a similar

standardized format. Some depository institutions and trade

associations suggested that the accuracy and integrity guidelines

should be flexible and take into consideration the diversity of

furnishers with regard to size and business complexity.

Methods (including technological means) used to furnish information

about consumers to CRAs. Industry commenters stated that most

furnishers are reporting to the three nationwide CRAs electronically

using the Metro 2 format, although some furnishers transmit information

via magnetic tape, disks, or paper. Some trade associations commented

that errors can be introduced into a consumer's credit file when a CRA

translates the furnisher's raw data into the CRA's database.

[[Page 70948]]

Maintenance and enforcement of policies and procedures to ensure

the accuracy and integrity of information furnished to CRAs. Industry

commenters stated that, in general, furnishers have policies and

procedures in place to ensure the accuracy of information and perform

internal audits to verify accuracy. Industry commenters also stated

that furnishers have a business incentive to maintain and report

accurate information in order to maintain good customer relations.

Methods (including any technological means) that a furnisher should

use to ensure the accuracy and integrity of information about consumers

furnished to CRAs. Industry commenters suggested that furnishers should

use internal reports to verify the accuracy of information transmitted

to the CRAs. Consumer groups recommended that furnishers take

appropriate steps to ensure that they report bankruptcy discharge

information accurately.

Descriptions of policies, procedures, and processes used by

furnishers to conduct reinvestigations and to correct inaccurately

furnished information and recommendations that furnishers should adopt.

Industry commenters indicated that most furnishers use an electronic

automated system (e-OSCAR) for receiving and transmitting consumer

dispute information from and to the three nationwide CRAs. Although

each furnisher has its own procedures for investigating disputes,

furnishers generally review the information provided by the CRA and

compare it to the information in the consumer's file at the furnisher.

A few industry commenters stated that using the e-OSCAR system to

conduct reinvestigations is adequate. One trade association stated that

furnishers should establish better reinvestigation procedures and

provide staff training for processing credit disputes.

Consumer groups commented that furnishers' reinvestigation

procedures are inadequate in that they only verify that the reported

information is consistent with the furnishers' records, not the

underlying accuracy of such information. Consumer groups recommended

that furnishers should perform in-depth investigations beyond verifying

that information reported to CRAs matches furnishers' records,

including contacting consumers to obtain additional information, if

necessary. Consumer groups also noted that CRAs do not provide

furnishers with documentation provided by consumers to support their

claims.

Description of the policies and procedures of CRAs for ensuring the

accuracy and integrity of furnished information and whether and to what

extent those policies, procedures, or other requirements address

particular problems that may affect information accuracy and integrity.

A few industry commenters noted that CRAs have implemented policies to

ensure the accuracy of information that they receive from furnishers.

One industry commenter asserted that once CRAs incorporate data into

their databases, furnishers do not know how CRAs actually apply the

data to consumer credit files or whether the data is applied to the

correct consumers.

Comments Pertaining to Direct Dispute Regulations

Circumstances under which a furnisher should be required to

investigate a dispute. Industry commenters indicated that furnishers

generally are voluntarily investigating disputes that are directly

submitted to them using a process that is similar to the one furnishers

use to investigate disputes that CRAs forward to the furnishers.

Industry commenters, however, also stated that investigations of direct

disputes should be required only in instances of fraud or identity

theft that can be documented by the consumer, or where the consumer has

provided a written detailed dispute to the furnisher. Other industry

commenters believe that investigations of direct disputes should only

be required if the consumer has already disputed the item with the CRA

and received a response. Consumer groups favored a broad application of

the direct dispute rule, noting that many furnishers already have an

obligation to investigate other types of disputes for major product

categories under other laws, such as the Truth in Lending Act, Real

Estate Settlement Procedures Act, and Electronic Fund Transfer Act.

Some individuals commented that furnishers should always be required to

reinvestigate a consumer's account upon the consumer's request.

Benefits or costs to consumers that may result from a direct

dispute right. Consumer groups commented that consumers would benefit

from direct disputes because the dispute requirement would eliminate

the problem of CRAs not forwarding disputes and supporting

documentation to furnishers and would provide furnishers with necessary

documentation to investigate errors or fraud. One individual noted that

consumers would benefit by being able to deal with one entity, the

furnisher, rather than the three nationwide CRAs. Some industry

commenters noted that consumers would benefit from direct disputes in

complex cases or where the consumer needs to provide the furnisher with

supporting documentation.

Benefits to furnishers, consumer reporting agencies, or the credit

reporting system that may result if furnishers are required to

investigate direct disputes. Consumer groups stated that direct

disputes will result in a more accurate credit reporting system and

would afford industry the opportunity to standardize the dispute

resolution process. A few industry commenters stated that direct

disputes would yield faster dispute resolution for consumers. Some

industry commenters mentioned that direct disputes may be beneficial

for providing to furnishers additional documentation for complex

disputes, noting that such information may not be forwarded by CRAs.

Costs to furnishers, consumer reporting agencies, or the credit

reporting system of implementing a direct dispute requirement. Industry

commenters believed that a direct dispute requirement would impose

significant costs on furnishers resulting from an expected increase in

the number of direct disputes. One depository institution reported that

the costs of resolving a direct dispute are related to whether the

disputed information contains derogatory information and the nature of

the consumer's dispute. Some industry commenters noted that reviewing

consumers' lengthy payment histories can be costly. One industry

commenter noted that a direct dispute requirement would shift costs

from CRAs to furnishers.

One consumer group commented that start-up costs should not be

burdensome as many furnishers already have direct dispute

responsibilities for their major products (such as credit cards). This

commenter asserted that the cost for processing a direct dispute ranges

from $25 to $200, and that this cost is exceeded by the harms to

consumers who are adversely affected due to reporting errors.

Impact on the overall accuracy and integrity of consumer reports if

furnishers are required to investigate direct disputes. Some industry

commenters stated that they expect an adverse impact on overall

accuracy and integrity of consumer reports as a result of an increase

in duplicate disputes and costs, decreased efficiency in processing

disputes, and the likelihood that some furnishers would stop reporting

or report less information than they currently do.

Whether direct contact by the consumer with the furnisher would

likely result in the most expeditious

[[Page 70949]]

resolution of a dispute. Industry commenters generally believed that

direct contact by the consumer is most appropriate in instances of

fraud, identity theft, or where detailed information is needed in order

to resolve the consumer dispute. Some industry commenters also stated

that direct contact by the consumer would not be appropriate where the

error lies with the CRA or an aggregator rather than with the

furnisher.

Potential impact on the credit reporting process if credit repair

organizations are able to circumvent the FCRA's prohibition of their

submission of direct disputes. Consumer groups and an individual

commented that attorneys should be permitted to assist consumers with

disputes and not be considered credit repair organizations. Industry

commenters predicted an increase in costs resulting from a significant

increase in the number of direct disputes that would be filed by credit

repair organizations, which, these commenters contended, are often

deliberately vague or overbroad.

Additional, specific comments are mentioned, as appropriate, in the

section-by-section analysis.

The Agencies have carefully considered the comments received in

response to the ANPR in developing the proposed accuracy and integrity

regulations and guidelines and the proposed direct dispute regulations.

The Agencies also reviewed a number of studies that have identified

potential issues that may affect the accuracy of consumer report

information. These studies indicate that consumer report accuracy may

be affected by the presence of stale account information, the practice

of furnishing only negative information about an account, inaccurate or

incomplete public record data, inaccurate or incomplete collection

account data, and unreported credit limits.\8\

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\8\ See Robert B. Avery, Raphael W. Bostic, Paul S. Calem &

Glenn B. Canner, An Overview of Consumer Data and Credit Reporting,

Federal Reserve Bulletin, vol. 89, at 47-73 (Feb. 2003); Robert B.

Avery, Paul S. Calem, Glenn B. Canner & Shannon C. Mok, Credit

Report Accuracy and Access to Credit, Federal Reserve Bulletin, vol.

90, at 297-322 (Summer 2004); Consumer Federation of America &

National Credit Reporting Association, Credit Score Accuracy and

Implications for Consumers (Dec. 17, 2002), http://www.consumerfed.org/pdfs/121702CFA_NCRA_Credit_Score_Report_Final.pdf

(last visited Oct. 4, 2007); Federal Trade Commission and

Board of Governors of the Federal Reserve System, Report to Congress

on the Fair Credit Reporting Act Dispute Process (Aug. 2006).

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IV. Section-by-Section Analysis \9\

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\9\ The OCC, Board, FDIC, OTS and NCUA would place the proposed

regulations and guidelines implementing section 312 in the part of

their regulations that implement the FCRA--12 CFR parts 41, 222,

334, 571, and 717, respectively. For ease of reference, the

discussion in the Supplementary Information section uses the shared

numerical suffix of each of these agency's regulations. The FTC also

would place the proposed regulations and guidelines in the part of

its regulations implementing the FCRA, specifically 16 CFR part 660.

However, the FTC uses different numerical suffixes that equate to

the numerical suffixes discussed in the Supplementary Information

section as follows: Suffix .40 = FTC suffix .1, suffix .41 = FTC

suffix .2, suffix .42 = FTC suffix .3, and suffix .43 = FTC suffix

.4. In addition, Appendix E referenced in the Supplementary

Information section is the FTC's Appendix A.

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The following describes the three components of this rulemaking:

the proposed accuracy and integrity regulations, the proposed accuracy

and integrity guidelines, and the proposed direct dispute regulations.

Proposed Accuracy and Integrity Regulations

Section --.40 Scope

Section --.40 sets forth the scope of each Agency's proposed

regulations requiring furnishers to establish reasonable policies and

procedures for implementing the accuracy and integrity guidelines. Each

of the Agencies has tailored this section to describe those entities to

which this subpart applies. The FDIC requests comment on whether it

would be useful to include a cross-reference in its proposed regulation

to the definition of ``subsidiary'' in the Federal Deposit Insurance

Act.\10\

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\10\ See 12 U.S.C. 1813(w)(4).

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Section --.41 Definitions.

Two approaches to defining the terms ``accuracy'' and

``integrity.''

Section 623(e) of the FCRA requires the Agencies to establish and

maintain guidelines for use by furnishers regarding the accuracy and

integrity of the information about consumers that they furnish to CRAs.

The statute does not define the terms ``accuracy'' or ``integrity.''

Consumer group and industry commenters on the ANPR provided

suggestions for defining the terms ``accuracy'' and ``integrity.''

Consumer groups proposed that the Agencies define the term ``accuracy''

to mean ``conformity to fact,'' rather than conformity to data records.

They said that an accuracy standard should rely not only upon a

furnisher's data records, but also upon original documents such as

credit agreements. Some consumer groups also said that information

should not be considered ``accurate'' if it is overly general,

incomplete, out-of-date, or misleading. Consumer groups also proposed

that the Agencies make clear that information lacks ``integrity'' if it

is technically accurate, but misleads users of consumer reports because

it does not include critical information.

Industry commenters, citing the legislative history of the FACT

Act, suggested that the term ``integrity'' does not mean completeness,

but rather, that the information a furnisher provides to a CRA is

factually correct.

In the Agencies' view, neither the text nor the legislative history

of the FACT Act resolves how the terms ``accuracy'' and ``integrity''

should be defined. Although the terms used in section 623(e) differ

from terms used in other provisions of the FCRA,\11\ the text of

section 623(e) provides no direction to the Agencies about the meaning

or significance of that difference.\12\ The Agencies have reviewed the

legislative history, and note that the Congressional Record includes

post-enrollment statements regarding section 623(e) made by the

Chairman of the House Financial Services Committee and by the Ranking

Member of the Senate Committee on Banking, Housing and Urban

Affairs.\13\ Those statements,

[[Page 70950]]

however, provide different views on the meaning of the terms.

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\11\ See FCRA section 623(b)(1), 15 U.S.C. 1681s-2(b)(1)

(requiring entities that furnish information to CRAs to conduct

investigations in response to complaints regarding the

``completeness or accuracy'' of furnished information); sections

FCRA 623(a)(2)(A)-(B), 15 U.S.C. 1681s-2(a)(2)(A)-(B) (requiring

furnishers to correct and update information that the furnisher

determines is ``not complete or accurate'' and to refrain from

refurnishing information that remains ``not complete or accurate'').

\12\ Earlier versions of the legislation that became the FACT

Act required the agencies to prescribe regulations and guidelines

regarding the ``accuracy and completeness'' of information relating

to consumers. This language also was contained in the bill passed by

the Senate and referred to the Conference Committee. However, the

bill reported by the Conference Committee used the phrase ``accuracy

and integrity.'' Compare 149 Cong. Rec. S13990 (Nov. 5, 2003) (bill

as passed by the Senate) with 149 Cong. Rec. H12198 (Nov. 21, 2003)

(bill as reported by the Conference Committee).

\13\ See 149 Cong. Rec. E2512, E2516 (Nov. 4, 2003) (extension

of remarks of Chairman Michael Oxley, entered into the Congressional

Record on Dec. 9, 2003) (`` `[a]ccuracy and integrity' was selected

[by the Congress] as the relevant standard rather than `accuracy and

completeness' as used in Sections 313 and 319 [of the FACT Act], to

focus on the quality of the information furnished rather than the

completeness of the information furnished.''); 149 Cong. Rec.

S15806-02 (Nov. 24, 2003) (statement of Ranking Member Paul

Sarbanes) (`` `[A]ccuracy' relates to whether the information that

is provided by data furnishers to credit reporting agencies is

factually correct. The term `integrity' relates to whether all

relevant information that is used to assess credit risk and to grant

credit is accurately provided. Integrity of information is not

achieved when furnishers do not fully provide data that, by its

absence, could have a positive or negative effect on a consumer's

credit score, or on his or her ability to obtain credit under the

most favorable terms for which he or she qualifies.'').

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In light of these considerations, the Agencies are proposing for

comment two alternative approaches to defining the terms ``accuracy''

and ``integrity'' in the text of the regulations and guidelines.

Although the definition of ``accuracy'' is the same under both

alternatives, the two approaches differ in terms of both the substance

of the definition of ``integrity'' and the placement of the

definitions. Accordingly, the Agencies request comment on which

definition of ``integrity'' should be adopted in the final rule, and on

whether the definitions of ``accuracy'' and ``integrity'' should be

placed in the regulations or in the guidelines.

A. Regulatory Definition Approach

Under the first approach, the Agencies would provide specific

definitions for the terms ``accuracy'' and ``integrity'' in the

regulations. This approach, labeled ``Regulatory Definition Approach,''

appears at Sec. Sec. --.41(a) and --.41(b) in the text of the proposed

regulations. Under proposed Sec. --.41(a), the term ``accuracy'' means

that any information that a furnisher provides to a CRA about an

account or other relationship with the consumer reflects without error

the terms of and liability for the account or other relationship and

the consumer's performance or other conduct with respect to the account

or other relationship. This proposed definition of ``accuracy'' is

intended to require that furnishers have reasonable procedures in place

to ensure that the information they provide to CRAs is factually

correct. The Agencies solicit comment on whether the definition of

accuracy should specifically provide that accuracy includes updating

information as necessary to ensure that information furnished is

current.

Under proposed Sec. --.41(b), the term ``integrity'' means that

any information that a furnisher provides to a CRA about an account or

other relationship with the consumer does not omit any term, such as a

credit limit or opening date, of that account or other relationship,

the absence of which can reasonably be expected to contribute to an

incorrect evaluation by a user of a consumer report of a consumer's

creditworthiness, credit standing, credit capacity, character, general

reputation, personal characteristics, or mode of living. Thus, the

Regulatory Definition Approach provides that information furnished to a

CRA may be technically ``accurate'' yet lack ``integrity'' because it

presents a misleading picture of the consumer's creditworthiness by

omitting critical information, such as a credit limit on a revolving

credit account.\14\

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\14\ ``A key factor that credit evaluators consider when they

assess the creditworthiness of an individual is credit utilization.

If a creditor fails to report a credit limit for an account, credit

evaluators must either ignore utilization or use a substitute

measure such as the highest-balance level--that is, the largest

amount ever owed on the account. Substituting the highest balance

level for the credit limit generally results in a higher estimate of

credit utilization because the highest-balance amount is typically

lower than the credit limit: the higher estimate leads, in turn, to

a higher perceived level of credit risk for affected consumers.''

Robert B. Avery, Paul S. Calem, Glenn B. Canner, Credit Report

Accuracy and Access to Credit; Federal Reserve Bulletin, Summer

2004, p. 306.

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Under the Regulatory Definition Approach--and as described in

further detail in the section-by-section analysis of the guidelines--

the Agencies would include in the guidelines six objectives that a

furnisher's policies and procedures should be designed to achieve. The

six objectives seek to ensure that: Information is furnished

accurately; information is furnished with integrity; the furnisher

conducts reasonable investigations of consumer disputes about the

accuracy or integrity of information in consumer reports and takes

appropriate actions based on the outcome of such investigations;

information is reported in a form and manner designed to minimize the

likelihood that it will be erroneously reflected in the consumer's

report; information furnished is substantiated by the furnisher's

records; and the furnisher updates information it furnishes as

necessary to reflect the current status of the consumer's account or

other relationship. The first two of these objectives would reflect the

regulatory definitions of ``accuracy'' and ``integrity.''

Thus, under the Regulatory Definition Approach, the guidelines

would provide that a furnisher should have written policies and

procedures reasonably designed to ensure that the information it

furnishes about accounts or other relationships with a consumer:

Accurately identifies the appropriate consumer;

Accurately reports the terms of those accounts or other

relationships; and

Accurately reports the consumer's performance and other

conduct with respect to the account or other relationship.

Further, the guidelines would provide that a furnisher should have

policies and procedures reasonably designed to ensure that the

information it furnishes about accounts or other relationships with a

consumer avoids misleading users of consumer reports about the

consumer's creditworthiness, credit standing, credit capacity,

character, general reputation, personal characteristics, or mode of

living.

Consistent with the FCRA, under which the furnishing of information

about consumers is voluntary, the proposed definitions would apply only

to information that the furnisher elects to report to CRAs. The

Agencies are aware that some furnishers may be subject to separate

obligations to report all available information about an account or

other relationship.\15\ These proposed definitions, however, are not

intended to require furnishers to do so.

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\15\ Furnishers that report information about consumers to CRAs

related to mortgage loans may be required by Freddie Mac, Fannie

Mae, and the Federal Housing Administration to report full-file

information. See Fannie Mae Servicing Guide, Part I, Section 304.09

and Part VII, Section 107; Freddie Mac Service Guide, Section 55.4:

Reports to credit repositories; and the Federal Housing

Administration Servicing Handbook, Section 4330.1(c) (Rev-5)

(incorporating by reference the Fannie Mae Servicing Guide).

Further, the Department of Housing and Urban Development has defined

``Mortgages contrary to good lending practices'' to include a

mortgage or a group or category of mortgages entered into by a

lender and purchased by Fannie Mae or Freddie Mac where it can be

shown that a lender engaged in a practice of failing to report

monthly on borrowers' repayment history to credit repositories on

the status of each loan purchased by Fannie Mae or Freddie Mac that

a lender is servicing. 24 CFR 81.2(b).

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B. Guidelines Definition Approach

The second approach contained in the proposal, labeled the

``Guidelines Definition Approach,'' would define the terms ``accuracy''

and ``integrity'' in the guidelines--rather than in the regulations--

with reference to the objectives that a furnisher's policies and

procedures should be designed to accomplish.

Under the Guidelines Definition Approach, the Agencies have

identified four objectives that pertain to the accuracy and integrity

of information furnished and related matters. Definitions for the terms

``accuracy'' and ``integrity'' would be incorporated into the first two

of these objectives. Thus, the guidelines would provide that a

furnisher should have written policies and procedures reasonably

designed to ensure that the information it furnishes about accounts or

other relationships with a consumer is accurate. The guidelines would

define ``accuracy'' to mean that any information that a furnisher

provides to a CRA about an account or other relationship with the

consumer reflects without error the terms of and liability for the

account or other relationship and the consumer's performance or other

conduct with

[[Page 70951]]

respect to the account or other relationship. This is the same

definition of ``accuracy'' used in the Regulatory Definition Approach.

Additionally, the guidelines would provide that a furnisher's

policies and procedures should ensure that the information it furnishes

about accounts or other relationships with a consumer is furnished with

integrity. The guidelines would define ``integrity'' to mean that any

information that a furnisher provides to a CRA about an account or

other relationship with the consumer: (1) Is reported in a form and

manner that is designed to minimize the likelihood that the

information, although accurate, may be erroneously reflected in a

consumer report; and (2) should be substantiated by the furnisher's own

records. In addition to being placed in a different location, this

definition is substantively different from that used in the Regulatory

Definition Approach.

Under the Guidelines Definition Approach, the definition of

``integrity'' does not address the omission of any term the absence of

which could contribute to an incorrect evaluation by a user of a

consumer's creditworthiness. Instead, the proposed definition of

``integrity'' addresses two potential issues with furnished

information. First, accurate information may be attributed to the wrong

consumer or the wrong account, or may be associated with an erroneous

date. Second, if the accuracy of the furnished information is disputed,

the furnisher should be able to substantiate, or verify, the

information through its own records. The Regulatory Definition Approach

also includes these two concepts in the guidelines as objectives that a

furnisher's policies and procedures should be designed to achieve. The

Guidelines Definition Approach, like the Regulatory Definition

Approach, also includes as objectives: Ensuring that the furnisher

conducts reasonable investigations of consumer disputes about the

accuracy or integrity of information in consumer reports and takes

appropriate actions based on the outcome of such investigations; and

ensuring that the furnisher updates information it furnishes as

necessary to reflect the current status of the consumer's account or

other relationship.

As noted above, the Agencies invite comment on these alternative

definitions of ``integrity,'' and on whether the definitions of

``accuracy'' and ``integrity'' should be placed in the regulatory text

or in the guidelines.

Furnisher

Proposed Sec. --.41(c) would define the term ``furnisher'' to mean

an entity other than an individual consumer that furnishes information

relating to consumers to one or more CRAs. An entity is not a furnisher

under the proposed definition when it provides information to a CRA

solely to obtain a consumer report under sections 604(a) and (f) of the

FCRA, which enumerate the circumstances under which a CRA may provide a

consumer report and prohibit persons from obtaining or using consumer

reports for impermissible purposes. Users of consumer reports may

provide information about consumers to CRAs in order to obtain such

reports, but they do not do so for the purpose of having such

information included in consumer reports. Although the user's request

for the report may be reflected in the consumer report as an inquiry,

the Agencies do not believe it would be appropriate to subject such

furnishing of information to the regulations and guidelines proposed

here. In addition, by defining the term ``furnisher'' in terms of an

entity other than an individual consumer, the proposal makes clear that

consumers are not furnishers, even if they self-report information

about themselves to a CRA.

Identity Theft

Proposed Sec. --.41(d) provides that the term ``identity theft''

has the same meaning as in the FTC's regulations at 16 CFR 603.2(a).

Section 603.2(a), which was adopted pursuant to section 111 of the FACT

Act,\16\ defines the term ``identity theft'' to mean ``a fraud

committed or attempted using the identifying information of another

person without authority.'' This definition also is used in the

interagency regulations implementing section 114 of the FACT Act (Red

Flags).

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\16\ Section 111 provides for a definition of the term

``identity theft,'' and authorizes the FTC to refine that

definition. See section 603(q)(3) of the FCRA, 15 U.S.C.

1681a(q)(3).

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Direct Dispute

Proposed Sec. --.41(e) defines ``direct dispute'' to mean a

dispute submitted directly to a furnisher by a consumer concerning the

accuracy of any information contained in a consumer report relating to

the consumer. Although the definition of ``direct dispute'' uses the

term accuracy, the proposed Regulatory Definition Approach provides a

definition of accuracy for purposes of the definition of ``direct

dispute,'' but the Guidelines Definition Approach does not.

The Agencies solicit comment on whether the definition of

``accuracy'' should be made applicable to direct disputes, if the

Guidelines Definition Approach is adopted. The Agencies also solicit

comment on whether the proposed definition of ``accuracy'' is

appropriate for the direct dispute provision.\17\

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\17\ The Agencies note that section 623(a)(8) only requires a

furnisher to handle direct disputes about ``accuracy.'' In contrast,

section 611(a) requires a CRA to handle disputes about

``completeness or accuracy'' and section 623(b) requires furnishers

to reinvestigate disputes about ``completeness or accuracy'' if the

disputes come through a CRA. The Agencies particularly request

comment on whether the definition of ``accuracy'' needs to be

clarified in order to more clearly delineate those disputes that,

while subject to the CRA dispute process, would not be subject to

the direct disputes rule.

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Section --.42 Reasonable Policies and Procedures Concerning the

Accuracy and Integrity of Furnished Information

Paragraph (a) of proposed Sec. --.42 would require each furnisher

to establish and implement reasonable written policies and procedures

regarding the accuracy and integrity of the information about consumers

that it furnishes to a CRA. The policies and procedures must be

appropriate to the nature, size, complexity, and scope of the

furnisher's activities.

The requirement that furnishers' policies and procedures be written

facilitates effective implementation and enables the Agencies to assess

furnishers' compliance with the rules. The Agencies do not believe that

the requirement for written policies and procedures will be unduly

burdensome, particularly since, under the guidelines, a furnisher may

include any of its existing policies and procedures that are relevant

and appropriate. As noted previously, industry commenters responding to

the ANPR noted that, in general, furnishers have policies and

procedures in place to ensure the accuracy of information furnished to

CRAs. The Agencies invite comment on any burden and effects on

furnishers, particularly small furnishers, regarding the requirement

that the policies and procedures be written.

The Agencies recognize that there is substantial diversity among

furnishers with respect to their structure, operations, and the types

of business they conduct, such that a ``one-size-fit-all'' approach to

the implementation of the guidelines is inappropriate. The requirement

that the furnisher's policies and procedures must be appropriate to the

nature, size, complexity, and scope of the furnisher's activities

permits furnishers to tailor their policies and procedures to their

business activities.

[[Page 70952]]

The Agencies expect, for example, that the policies and procedures for

a small retail entity would differ from those of a multi-billion dollar

financial services company.

Proposed Sec. --.42(b) requires each furnisher to consider the

accuracy and integrity guidelines in developing its policies and

procedures and to incorporate those guidelines that are appropriate.

Furnishers should consider the guidelines in the context of the nature,

size, complexity, and scope of their activities and incorporate the

guidelines that are appropriate to ensure the accuracy and integrity of

the information about consumers that they provide to CRAs.

Some of the commenters on the ANPR specifically suggested that the

Agencies require furnishers to review or audit their furnishing

policies and procedures in order to ensure that the information about

consumers continues to be furnished accurately and with integrity.

Proposed Sec. --.42(c) incorporates these commenters' suggestions and

would require each furnisher to review its policies and procedures

periodically and update them as necessary to ensure their continued

effectiveness.

Proposed Accuracy and Integrity Guidelines

The accuracy and integrity guidelines appear as Appendix E to the

appropriate part of each Agency's regulations. In the introductory

language to the guidelines, the Agencies encourage voluntary furnishing

of information about consumers to CRAs. This reflects the recognition

that the voluntary system of consumer reporting produces substantial

benefits for consumers, users of consumer reports, and the economy as a

whole. The introduction also reminds furnishers that Sec. --.42 of the

proposed regulations would require each furnisher to establish and

implement reasonable written policies and procedures concerning the

accuracy and integrity of the information about consumers it furnishes

to CRAs and to consider the guidelines in developing those policies and

procedures.

Section I--Nature, Scope, and Objectives of Policies and Procedures

The Nature and Scope section of the guidelines references the

requirement, at proposed Sec. --.42(a), that a furnisher's policies

and procedures must be appropriate to the nature, size, complexity, and

scope of the furnisher's activities and provides the following examples

of aspects of a furnisher's business activities that its policies and

procedures should reflect: The types of business activities in which

the furnisher engages; the nature and frequency of the information

about consumers the furnisher provides to CRAs; and the technology used

by the furnisher to provide information to CRAs.

The Objectives section of the guidelines provides that a furnisher

should have written policies and procedures reasonably designed to

accomplish the specified objectives. As described earlier in the

discussion of the terms ``accuracy'' and ``integrity,'' the wording of

some of the objectives set out in the guidelines is related to the

alternative approaches to construing the term ``integrity'' that the

Agencies are proposing in the text.

In connection with the Regulatory Definition Approach, the first

two objectives of the guidelines would provide that a furnisher should

have written policies and procedures reasonably designed to ensure that

the information it furnishes about accounts or other relationships with

a consumer accurately identifies the appropriate consumer; accurately

reports the terms of those accounts or other relationships; accurately

reports the consumer's performance and other conduct with respect to

the account or other relationship; and designed to ensure that the

information it furnishes about accounts or other relationships with a

consumer avoids misleading a consumer report user as to the consumer's

creditworthiness, credit standing, credit capacity, character, general

reputation, personal characteristics, or mode of living.

Under the Guidelines Definition Approach, definitions of

``accuracy'' and ``integrity'' would be incorporated into the first two

objectives. Thus, the guidelines would provide that a furnisher should

have written policies and procedures reasonably designed to ensure that

the information it furnishes about accounts or other relationships with

a consumer is accurate. The guidelines would define ``accuracy'' to

mean that with respect to any information that a furnisher provides

about an account or other relationship with the consumer to a CRA

reflects without error the terms of and liability for the account or

other relationship and the consumer's performance and other conduct

with respect to the account or other relationship.

Additionally, under the Guidelines Definition Approach, the

guidelines would provide that a furnisher's written policies and

procedures should be reasonably designed to ensure that the information

it furnishes about accounts or other relationships with a consumer is

furnished with integrity. The guidelines would define ``integrity'' to

mean, that any information that a furnisher provides to a CRA about an

account or other relationship with the consumer is:

Reported in a form and manner that is designed to minimize

the likelihood that the information, although accurate, may be

erroneously reflected in a consumer report, for example, by ensuring

that the information is: (A) Reported with appropriate identifying

information about the consumer to which it pertains; (B) reported in a

standardized and clearly understandable form and manner; and (C)

reported with a date specifying the time period to which the

information pertains; and

Substantiated by the furnisher's own records.

As indicated in the discussion of the proposed accuracy and

integrity regulations, the Agencies invite comment on the alternative

approaches to defining the term ``integrity'' and the appropriate

placement of the definitions. When responding to these issues raised by

the Agencies, commenters may wish to address, among other relevant

factors, how the approaches would impact the quality of information in

consumer reports, the burdens on furnishers, and the relative benefits

to consumers, the credit reporting system, and users of consumer

reports.

The third proposed objective under both approaches states that a

furnisher's policies and procedures should ensure that the furnisher

conducts reasonable investigations of consumer disputes about the

accuracy or integrity of information in consumer reports and takes

appropriate actions based on the outcome of such investigations. This

objective addresses concerns raised by commenters that some furnishers

perform perfunctory investigations of consumer disputes in cases where

a proper investigation would require reviewing information beyond the

account status listed in the furnisher's electronic records, and that

some furnishers do not update their own records when errors are

discovered, resulting in incorrect information being reported again to

the CRAs.

The fourth proposed objective under both approaches states that a

furnisher should have written policies and procedures reasonably

designed to ensure that the furnisher updates information it furnishes

as necessary to reflect the current status of the consumer's account or

other relationship, including: (a) Any transfer of an account (e.g., by

sale or assignment for collection) to a third

[[Page 70953]]

party; and (b) any cure of the consumer's failure to abide by the terms

of the account or other relationship.

The fifth proposed objective under the Regulatory Definition

Approach states that the information a furnisher furnishes about

accounts or other relationships with a consumer is reported in a form

and manner that is designed to minimize the likelihood that the

information, although accurate, may be erroneously reflected in a

consumer report, for example, by ensuring that the information is

reported with appropriate identifying information about the consumer to

which it pertains, in a standardized and clearly understandable form

and manner, with a date specifying the time period to which the

information pertains.

The sixth proposed objective under the Regulatory Definition

Approach states that the information a furnisher furnishes about

accounts or other relationships with a furnisher should be

substantiated by the furnisher's own records.

Section II--Accuracy and Integrity Duties of Furnishers Under the FCRA

This section reminds furnishers of their statutory duties that

relate to the accuracy and integrity of the information about consumers

they provide to CRAs. This section states that a furnisher's policies

and procedures should address compliance with all applicable

requirements imposed on the furnisher under the FCRA and lists certain

of those requirements, including the duty to investigate direct

disputes as required by proposed Sec. --.43 and section 623(a)(8) of

the FCRA. This section also lists requirements such as the duty to

provide to CRAs corrections or additional information necessary to make

furnished information complete and accurate under the circumstances

specified under section 623(a)(2) of the FCRA.

Section III--Establishing and Implementing Policies and Procedures

This section identifies three steps that furnishers should take

when establishing accuracy and integrity policies and procedures.

First, a furnisher should identify its practices or activities that can

compromise the accuracy and integrity of information about consumers

furnished to CRAs. Methods appropriate for this purpose include:

Reviewing the furnisher's existing practices and

activities;

Reviewing historical records relating to accuracy or

integrity or to disputes, or other information relating to the accuracy

and integrity of information provided by the furnisher to CRAs and the

types of errors, omissions, or other problems that may have affected

the accuracy and integrity of such information about consumers; and

Obtaining feedback from CRAs, consumers, the furnisher's

staff, or other appropriate parties.

Second, a furnisher should evaluate the effectiveness of its

existing policies and procedures regarding the accuracy and integrity

of information about consumers furnished to CRAs and consider whether

additions or modifications to the policies and procedures are

necessary. As is specifically mentioned in the introduction to the

guidelines, a furnisher may incorporate in its accuracy and integrity

policies and procedures any of its existing policies and procedures

that are relevant and appropriate.

Third, a furnisher should evaluate the effectiveness of specific

methods (including technological means) the furnisher uses to provide

information about consumers to CRAs and determine whether changes to

those methods are appropriate to enhance the accuracy and integrity of

that information.

Section IV--Specific Components of Policies and Procedures

This section serves to address specific problems raised by

commenters on the ANPR, studies regarding the consumer reporting

system, and other information gathered by the Agencies in the course of

developing this proposal. The proposed guidelines detail specific

components that should be addressed in a furnisher's policies and

procedures. These include:

Establishing and implementing a system for furnishing

information about consumers to CRAs that is appropriate to the nature,

size, complexity, and scope of the furnisher's business operations.

Using standard data reporting formats and standard

procedures for compiling and furnishing data, where feasible, such as

the electronic transmission of information about consumers to CRAs.

Ensuring that the furnisher maintains its own records for

a reasonable period of time, not less than any applicable recordkeeping

requirement, in order to substantiate the accuracy of any information

about consumers it furnishes that may be subject to a direct dispute.

Thus, a furnisher's policies and procedures should incorporate any

applicable recordkeeping requirements such as those contained in

regulations implementing the Truth in Lending Act and the Equal Credit

Opportunity Act,\18\ or agency-specific requirements.\19\ The Agencies

note that section 611(a)(5) of the FCRA contains no time limit on the

requirement that if a CRA reinvestigates a consumer dispute, it must

modify or delete items that cannot be verified. The Agencies seek

comment on whether a specific time period for recordkeeping should be

incorporated in the final regulations.

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\18\ See 12 CFR 226.25(a) and 12 CFR 202.11(b).

\19\ See, e.g., 12 CFR 561.2 (savings associations must retain

accurate and complete records of all business transactions) and OTS

Examination Handbook Sec. 310 (savings associations should retain

original business transaction records until the savings association

has two regular examinations and has resolved any supervisory

matters raised in the examinations).

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Establishing and implementing appropriate internal

controls regarding the accuracy and integrity of information about

consumers furnished to CRAs, such as by implementing standard

procedures, verifying random samples, and conducting regular reviews of

information provided to CRAs.

Training staff that participates in activities related to

the furnishing of information about consumers to CRAs to implement the

policies and procedures.

Providing for appropriate and effective oversight of

relevant service providers whose activities may affect the accuracy and

integrity of information about consumers furnished to CRAs to ensure

compliance with the policies and procedures.

Furnishing information about consumers to CRAs following

mergers, portfolio acquisitions or sales, or other acquisitions or

transfers of accounts or other debts, in a manner that prevents re-

aging of information, duplicative reporting, or other problems

affecting the accuracy or integrity of the information furnished.

Attempting to obtain the information listed in Sec.

--.43(d) from a consumer before determining that the consumer's dispute

is frivolous or irrelevant.

Ensuring that deletions, updates, and corrections

furnished to CRAs are reflected in business systems to avoid furnishing

erroneous information.

Conducting investigations of direct disputes in a manner

that promotes the efficient resolution of such disputes.

Ensuring that technological and other means of

communication with CRAs are designed to prevent duplicative reporting

of accounts, erroneous association of information with the wrong

consumer(s), and other

[[Page 70954]]

occurrences that may compromise the accuracy and integrity of

information contained in consumer reports.

Providing CRAs with sufficient identifying information in

the furnisher's possession about each consumer about whom information

is furnished to enable the CRA properly to identify the consumer.

Conducting a periodic evaluation of its own practices, CRA

practices of which the furnisher is aware, investigations of disputed

information, corrections of inaccurate information, means of

communication, and other factors that may affect the accuracy and

integrity of information furnished to CRAs.

Proposed Regulations Concerning Direct Disputes

The third component of this notice of proposed rulemaking comprises

the Agencies' proposed regulations implementing section 623(a)(8) of

the FCRA, which directs the Agencies jointly to prescribe regulations

that identify the circumstances under which a furnisher is required to

reinvestigate a dispute concerning the accuracy of information about

the consumer contained in a consumer report,\20\ based on a direct

request by the consumer. The statute sets forth procedural and other

requirements applicable to any such reinvestigations.

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\20\ For purposes of the proposed Sec. --.43(c) and (d) of the

direct disputes provision, a ``consumer report'' means a disclosure

a CRA provides to a consumer as referenced in section 609(a) of the

FCRA. CRAs may provide such disclosures in a different format than a

consumer report they provide to a third party and refer to them as

``file disclosures.''

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We note that a number of industry commenters on the ANPR indicated

that they are already voluntarily investigating direct disputes as a

matter of good customer relations and sound business practices. The

Agencies encourage furnishers to continue voluntary investigations of

consumer disputes as one way to enhance the accuracy and integrity of

the information about consumers they provide to CRAs.\21\

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\21\ The Agencies note that many entities, including depository

institutions and their affiliates, also investigate disputes about

information they furnish to CRAs that consumers raise through the

consumer complaint processes established by their respective

supervisory agencies. See generally FRB, ``How to File a Consumer

Complaint Against a Bank,'' http://www.federalreserveconsumerhelp.gov

(last visited October 26, 2007);

FDIC, ``Consumer Affairs Brochure: Fostering Consumer Confidence in

Banking, How to file a Written Complaint'' (October 2005), http://www.fdic.gov/consumers/questions/consumer/complaint.html

(last visited November 1, 2007); OTS, ``How to Resolve a Consumer

Complaint'' (February 2007), http://www.ots.treas.gov/docs/4/480924.pdf

(last visited October 24, 2007); and OCC, ``Assistance

for Customers of National Banks'' (April 2005), http://www.occ.gov/customer.pdf

(last visited October 24, 2007).

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Section --.43(a) General Rule

The proposed general rule would require a furnisher to investigate

a direct dispute if it relates to:

The consumer's liability for a credit account or other

debt with the furnisher, such as direct disputes relating to whether

there is or has been identity theft or fraud against the consumer,

whether there is individual or joint liability on an account, or

whether the consumer is an authorized user of a credit account;

The terms of a credit account or other debt with the

furnisher, such as direct disputes relating to the type of account,

principal balance, scheduled payment amount on an account, or the

amount of the reported credit limit on an open-end account;

The consumer's performance or other conduct concerning a

credit account or other debt with the furnisher, such as direct

disputes relating to the current payment status, high balance, date a

payment was made, the amount of a payment made, or the date an account

was opened or closed; or

Any other information contained in a consumer report

regarding an account or other relationship with the furnisher that

bears on the consumer's creditworthiness, credit standing, credit

capacity, character, general reputation, personal characteristics, or

mode of living attributed to the furnisher on the consumer report.

The proposed rule is designed to permit direct disputes in

virtually all circumstances involving disputes with respect to the

types of information typically provided by the furnisher to a CRA,

while excepting out certain types of information from the direct

dispute process. The Agencies are proposing this approach in light of

the considerations set forth in the statute to be weighed by the

Agencies, including the benefits to consumers, the impact on the

overall accuracy and integrity of consumer reports, and whether direct

disputes would lead to the most expeditious resolutions of consumer

disputes. The exceptions in the proposed rule relate to information

where the disputes are more appropriately directed to the CRA, such as

information derived from public records, which may be obtained directly

from public sources,\22\ and information about requests for consumer

reports (``inquiries''). The Agencies specifically request comment on

whether this approach appropriately weighs all of the relevant

considerations.

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\22\ The public records exception applies only to information

``derived'' by the CRA from public records. It would not exempt a

consumer's dispute of the accuracy of a furnisher's reference to a

particular account being included in bankruptcy, for example.

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In developing the proposed rule, the Agencies considered more

targeted approaches based, for example, on commenters' suggestions that

fraud and identity theft should be the only circumstances when a

furnisher must investigate a direct dispute. The Agencies also

considered other commenters' suggestions about when investigations of a

direct dispute would be appropriate, such as for disputing account

ownership and complex issues requiring analysis of supporting

documentation. The Agencies are not proposing these approaches,

however, as these approaches would likely present at least one

disadvantage, namely, that it would be difficult for consumers and

furnishers to know whether there is a direct dispute right in any

particular circumstance.

In addition, the Agencies considered another commenter's suggestion

to require investigation of direct disputes only where the consumer

first raises the dispute with a CRA, but that process does not resolve

the matter to the consumer's satisfaction. The Agencies are not

proposing such an approach, however, because it could impose

unnecessary barriers and delays for consumers wishing to avoid the CRA

dispute process and bring disputes immediately to the furnisher.\23\

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\23\ The Agencies note further that section 623(a)(8)(F) states

that the obligation to reinvestigate direct disputes shall not apply

if the dispute is ``frivolous or irrelevant'' because the consumer

submitted a dispute that is substantially the same as a dispute

previously submitted to a furnisher or through a CRA. The Agencies

note that under the proposed rule, a direct dispute is not

substantially the same if a consumer's dispute includes information

listed in Sec. --.43(d) that had not previously been provided to

the furnisher.

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The Agencies believe that the approach adopted by the proposed rule

more closely comports with consumer expectations that they be able to

submit a dispute directly to the furnisher (with certain exceptions)

when the issue in dispute relates to information for which the

furnisher is responsible. The Agencies request comment on whether a

more targeted approach would represent a more appropriate balancing of

relevant policy considerations.

The Agencies also specifically invite comment on how direct dispute

requirements would affect furnishers to smaller and specialty CRAs,

such as CRAs that report medical information,

[[Page 70955]]

check writing history, apartment rental history, or insurance claim

filings.

Section --.43(b) Exceptions

A consumer report may include identifying information about a

consumer (e.g., names, addresses), trade line information (e.g., name

of creditor, payment history, loan amount), past and present employer

information, and public record information (e.g., information received

from courts or other governmental authorities that are related to

bankruptcies, judgments, or liens). Any given furnisher is the source

of some, but not all, of the information included on a consumer report.

A furnisher should only be responsible for investigating disputes about

information regarding an account or other relationship between the

furnisher and the consumer. Accordingly, the proposal requires a

furnisher to investigate direct disputes only with respect to the types

of information that it typically provides to CRAs. In most cases, the

information subject to direct dispute will be part of a furnisher's

trade line entry or entries on a consumer report.

Proposed Sec. --.43(b) excepts from the investigation requirement

any direct dispute that relates to:

The consumer's identifying information (other than a

direct dispute relating to a consumer's liability for a credit account

or other debt with the furnisher, as provided in Sec.

--.43(a)(1)),\24\ such as name(s), date of birth, Social Security

number, telephone number(s), or address(es);

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\24\ A direct dispute that relates both to identifying

information and a consumer's liability for a credit account or other

debt with the furnisher, such as in cases of identity theft, must be

investigated by a furnisher pursuant to Sec. --.43(a)(1).

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The identity of past or present employers; \25\

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\25\ For this category of information concerning the identity of

past or present employers, the Agencies believe that direct contact

by the consumer would be unlikely to result in the most expeditious

resolution of an employer identity-related dispute. For example,

consumer reports sometimes contain certain ``employment history''

information, which is typically obtained from sources other than

employers (such as credit applications). In those cases, an

identified employer would be unable to correct disputed information

because it was provided by another source.

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Inquiries or requests for a consumer report;

Information derived from public records, such as

judgments, bankruptcies, liens, and other legal matters (unless

provided by a furnisher having a relationship with the consumer); or

Information related to fraud alerts or active duty alerts.

Proposed Sec. --.43(b) also excepts from the investigation

requirement any direct dispute if the notice of dispute is submitted

by, is prepared on behalf of the consumer by, or is submitted on a form

supplied to the consumer by, a credit repair organization as defined in

15 U.S.C. 1679a(3),\26\ or an entity that would be a credit repair

organization but for 15 U.S.C. 1679a(3)(B)(i), which excludes tax-

exempt section 501(c)(3) organizations.

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\26\ Under this provision of the Credit Repair Organizations

Act, the term ``credit repair organization''--

(A) means any person who uses any instrumentality of interstate

commerce or the mails to sell, provide, or perform (or represent

that such person can or will sell, provide, or perform) any service,

in return for the payment of money or other valuable consideration,

for the express or implied purpose of--

(i) improving any consumer's credit record, credit history, or

credit rating; or

(ii) providing advice or assistance to any consumer with regard

to any activity or service described in clause (i).

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Section --.43(c) Direct Dispute Address

As added by section 312 of the FACT Act, section 623(a)(8)(D) of

the FCRA requires a consumer to provide a direct dispute notice ``at

the address specified'' by the furnisher. The statute and legislative

history provide no guidance about how this address is to be specified

by furnishers and effectively communicated to consumers. The Agencies

believe that, in order for the direct dispute right to be implemented

and to operate as Congress intended, it is necessary to clarify how a

furnisher's direct dispute address is to be specified and communicated

to consumers.

Proposed Sec. --.43(c) would require a furnisher to investigate a

direct dispute only if a consumer submits a dispute notice to the

furnisher at:

The address of the furnisher provided by a furnisher and

set forth on a consumer report relating to the consumer (i.e., the

disclosure under section 609(a) of the FCRA);

An address clearly and conspicuously specified by the

furnisher for submitting direct disputes that is provided in writing or

electronically (if the consumer has agreed to the electronic delivery

of information from the furnisher); or

Any business address of the furnisher, if the furnisher

has not so specified and provided an address for submitting direct

disputes.

Thus, a consumer would always be able to submit a direct dispute to the

appropriate address appearing on the consumer report. The consumer

would also be able to submit a direct dispute to any other business

address of the furnisher unless the furnisher has separately specified

an address to the consumer in accordance with the regulation. A

furnisher choosing to specify an address must do so in a manner that is

both reasonably understandable and designed to call the consumer's

attention to the fact that the address is the one to use for submitting

direct disputes about the accuracy of information in a consumer report.

The Agencies note that a furnisher that specifies such an address for

this purpose will not be deemed to have specified an address for

purposes of section 623(a)(1)(B) of the FCRA, relating to the general

duty to provide accurate information to the CRAs.

The Agencies believe that it will benefit consumers and be

operationally feasible to allow consumers to submit a dispute notice to

the address of the furnisher specified on the consumer report. The

Agencies understand that in a large majority of cases, the consumer

report includes an address supplied by the furnisher and the furnisher

can control such address.\27\ In addition, the Agencies believe that

allowing consumers to submit dispute notices to the address of the

furnisher set forth on the consumer report will increase the likelihood

that the consumers will know where to send that dispute (because that

address will be seen by consumers contemporaneous in time and location

with the disputed information) and will encourage consumers to obtain

and review their consumer reports prior to submitting a dispute to a

furnisher. A furnisher will not be in violation of this provision for

failure to investigate a dispute submitted to the address set forth on

the consumer report if that address is incorrect due to an error by the

CRA and does not reflect any business address of the furnisher.

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\27\ Allowing consumers to submit dispute notices to the address

of the furnisher set forth on the consumer report is consistent with

existing Federal and some state laws because these laws already

impose related obligations. Section 611(a)(6)(B)(iii) of the FCRA

requires the CRA to provide, upon the consumer's request, the

business name and address, and phone number if reasonably available,

of any furnisher the CRA contacts in connection with information

reinvestigated in response to a consumer complaint filed with the

CRA. California law requires that upon request of the consumer, the

CRA must provide the consumer with the ``names, addresses and, if

provided by the sources of information, the telephone numbers

identified for customer service for the sources of information.''

Cal. Civil Code Sec. 1785.10(c). It is the Agencies' understanding

that CRAs commonly include the furnisher's business name, address,

and telephone number on the consumer report (where the furnisher

provides it) so that consumers will automatically learn how to

contact the furnisher about a dispute upon receipt of the consumer

report without the need to request that information from the CRA.

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[[Page 70956]]

The Agencies request comment on whether there are circumstances

under which it would not be appropriate for a consumer to submit a

dispute notice to the address of the furnisher set forth on the

consumer report. The Agencies also invite comment on whether Sec.

--.43(c)(3) should exclude certain types of business addresses, such as

a business address that is used for reasons other than for receiving

correspondence from consumers or business locations where business is

not conducted with consumers.

In addition, the Agencies request comment on whether Sec.

--.43(c)(2) should be amended to permit furnishers to notify consumers

orally of the address for direct disputes. The agencies also request

comment on whether and, if so, how an oral notice can be provided

clearly and conspicuously.

Section --.43(d) Direct Dispute Notice Contents

Section 623(a)(8)(D) of the FCRA provides that a furnisher is not

required to investigate a dispute unless a consumer provides the

furnisher with a notice of dispute that:

Identifies the specific information that is being

disputed;

Explains the basis for the dispute; and

Includes all supporting documentation required by the

furnisher to substantiate the basis of the dispute.

Proposed Sec. --.43(d) would implement 623(a)(8)(D) by requiring

that a notice of dispute include:

The name, address, and telephone number of the consumer;

Sufficient information to identify the account or other

relationship that is in dispute, such as an account number;

The specific information that the consumer is disputing

and an explanation of the basis for the dispute; and

All supporting documentation or other information

reasonably required by the furnisher to substantiate the basis of the

dispute, such as a copy of the consumer report that contains the

allegedly inaccurate information, a police report, a fraud or identity

theft affidavit, a court order, or account statements.

Section 609(c)(2) of the FCRA requires the FTC to promulgate, and

CRAs to disseminate with their provision of consumer reports to

consumers, a ``General Summary of Consumer Rights.'' The FTC intends to

update the existing General Summary of Consumer Rights to reflect

additional rights provided to consumers by the FACT Act and the

implementing rules, including consumers' direct dispute rights. The

Agencies invite comment on what additional mechanisms should be

required, if any, for informing consumers of their direct dispute

rights.

Section --.43(e) Frivolous or Irrelevant Disputes

Section 623(a)(8)(F) of the FCRA provides that a furnisher is not

required to investigate a dispute that a furnisher reasonably

determines to be frivolous or irrelevant. That statutory provision

states that a frivolous or irrelevant dispute includes situations

involving:

The failure of a consumer to provide sufficient

information to investigate the disputed information; or

The submission by a consumer of a dispute that is

substantially the same as a dispute previously submitted by or on

behalf of the consumer, either directly to the furnisher or through a

CRA under section 623(b) of the FCRA, with respect to which the

furnisher already completed its investigation duties.

Proposed Sec. --.43(e) implements these statutory provisions,

including these two types of frivolous or irrelevant disputes. Under

the statute, when a furnisher determines that a dispute is frivolous or

irrelevant, it must send a notice of that determination (including the

reasons for the determination) to the consumer. In cases involving

insufficient information, furnishers should make a good faith attempt

to obtain sufficient information from a consumer before sending such a

notice to the consumer as noted in section IV(I) of the guidelines.

The Agencies note that the language of section 623(a)(8)(F)

specifies two situations, but does not limit frivolous or irrelevant

disputes solely to those two situations. The Agencies are proposing to

specify a third situation involving a frivolous or irrelevant dispute.

Under proposed Sec. --.43(e)(1)(iii), a dispute would be frivolous or

irrelevant if the furnisher is not otherwise required to investigate

the direct dispute under the proposed regulation.\28\ This provision is

intended to provide clarity for furnishers regarding their duty to

investigate direct disputes and their responsibilities when no such

investigation is required. This provision also would ensure that

consumers in this situation receive notice from the furnisher that

their dispute was deemed frivolous or irrelevant, as required by the

FCRA in sections 623(a)(8)(F)(ii) and (iii).\29\

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\28\ For example, under proposed Sec. --.43(b)(2), a furnisher

would not be required to investigate a direct dispute that is

submitted by, is prepared on behalf of the consumer by, or is

submitted on a form supplied to the consumer by, a credit repair

organization. Thus, such a dispute would be frivolous or irrelevant

under proposed Sec. --.43(e)(1)(iii).

\29\ 15 U.S.C. 1681s-2(a)(8)(F)(ii) and (iii). Those provisions

of the FCRA generally set out a furnisher's responsibilities

regarding the notice it must provide to a consumer once it

determines that a dispute is frivolous or irrelevant.

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Section --.43(e)(2) would incorporate the FCRA's section

623(a)(8)(F)(ii) requirement that a furnisher must notify a consumer of

its determination that a dispute is frivolous or irrelevant not later

than five business days after making the determination. Section

--.43(e)(3) likewise would incorporate from section 623(a)(8)(F)(iii)

of the FCRA the content requirements for a notice of determination that

a dispute is frivolous or irrelevant. Such notices are to include the

reasons for the determination and identify any information required to

investigate the disputed information.

V. Request for Comment

The Agencies invite comment on all aspects of the proposed accuracy

and integrity regulations and guidelines and of the proposed direct

dispute regulations, on the factors to be considered by the Agencies

under sections 623(a)(8) and 623(e) of the FCRA, and on the specific

issues on which comment is solicited elsewhere in the Supplementary

Information, including the following:

The alternative definitions of ``integrity'' and the

alternative placement of the definitions of ``accuracy'' and

``integrity'' in regulatory text or in the guidelines;

Whether the definition of accuracy should specifically

provide that ``accuracy'' includes updating information as necessary to

ensure that information furnished is current;

Whether the definition of ``accuracy'' should be made

applicable to direct disputes if the Guidelines Definition Approach is

adopted;

Whether the proposed definition of ``accuracy'' is

appropriate for the direct dispute rule, and, in particular, whether

the definition of ``accuracy'' needs to be clarified in order to more

clearly delineate those disputes that, while subject to the CRA dispute

process, would not be subject to the direct dispute rule;

Whether the Agencies' approach to direct disputes

appropriately reflects the relevant considerations, or whether a more

targeted approach would represent a more appropriate balancing of

relevant policy considerations;

Whether proposed Sec. --.43(c)(2) should be amended to

permit furnishers to notify consumers orally of the

[[Page 70957]]

address for direct disputes and, if so, how an oral notice can be

provided clearly and conspicuously;

What additional mechanisms should be required, if any, for

informing consumers of their direct dispute rights;

How direct dispute requirements would affect furnishers to

smaller and specialty CRAs, such as CRAs that report medical

information, check writing history, apartment rental history, or

insurance claim filings;

Whether the guidelines should incorporate a specific time

period for retaining records in order to provide for meaningful

investigations of direct disputes, and, if so, what record retention

time period would be appropriate; and

Whether Sec. --.42(c)(2) should exclude certain types of

business addresses, such as a business address that is used for reasons

other than for receiving correspondence from consumers or business

locations where business is not conducted with consumers.

In addition, the Agencies specifically invite comment as follows:

The Agencies invite comment from individuals and public interest

and consumer advocacy organizations on the effect this proposal may

have on consumers and the credit reporting industry.

The Agencies recognize that small institutions operate with more

limited resources than larger institutions. Thus, the Agencies

specifically request comment on the impact of this proposal on small

institutions' current resources, including personnel resources, and

whether the goals of the proposal could be achieved for small

institutions through an alternative approach.

The Agencies invite comment from businesses other than depository

institutions that furnish information about consumers to CRAs,

including non-depository institution mortgage lenders, debt collectors,

consumer finance companies, and retailers. The Agencies also invite

comment from persons who furnish information about consumers to

specialized types of CRAs, such as CRAs that collect information for

the purpose of making decisions regarding insurance, employment or

tenant screening, or check verification. Similarly, the Agencies

request comments from CRAs, including nontraditional CRAs that may only

provide information to a limited class of businesses (e.g., medical

information providers and tenant screening services).

The Agencies also invite comment on ways to minimize the burden of

the final rule.

VI. Regulatory Analysis

A. Paperwork Reduction Act

Request for Comment on Proposed Information Collection

In accordance with section 3512 of the Paperwork Reduction Act of

1995, 44 U.S.C. 3501-3521 (``PRA''), the Agencies may not conduct or

sponsor, and the respondent is not required to respond to, an

information collection unless it displays a currently valid Office of

Management and Budget (``OMB'') control number. The information

collection requirements contained in this joint notice of proposed

rulemaking have been submitted by the OCC, FDIC, OTS, NCUA, and FTC to

OMB for review and approval under section 3506 of the PRA and Sec.

1320.11 of OMB's implementing regulations (5 CFR Part 1320). The review

and authorization information for the Board is provided later in this

section along with the Board's burden estimates. The proposed rule

contains requirements subject to the PRA. The requirements are found in

12 CFR Sec. Sec. --.42(a), --.43(e)(2), and --.43(e)(3) and 16 CFR

Sec. Sec. 660.3(a), 660.4(e)(2), and 660.4(e)(3).

Comments are invited on:

(a) Whether the collection of information is necessary for the

proper performance of the Agencies' functions, including whether the

information has practical utility;

(b) The accuracy of the estimates of the burden of the information

collection, including the validity of the methodology and assumptions

used;

(c) Ways to enhance the quality, utility, and clarity of the

information to be collected;

(d) Ways to minimize the burden of the information collection on

respondents, including through the use of automated collection

techniques or other forms of information technology; and

(e) Estimates of capital or start up costs and costs of operation,

maintenance, and purchase of services to provide information.

All comments will become a matter of public record.

Comments should be addressed to:

OCC: Communications Division, Office of the Comptroller of the

Currency, Public Information Room, Mailstop 1-5, Attention: 1557-NEW,

250 E Street, SW., Washington, DC 20219. In addition, comments may be

sent by fax to (202) 874-4448, or by electronic mail to

regs.comments@occ.treas.gov. You can inspect and photocopy comments at

the OCC's Public Information Room, 250 E Street, SW., Washington, DC

20219. For security reasons, the OCC requires that visitors make an

appointment to inspect comments. You may do so by calling (202) 874-

5043. Upon arrival, visitors will be required to present valid

government-issued photo identification and submit to security screening

in order to inspect and photocopy comments.

Board: You may submit comments, identified by R-1300, by any of the

following methods:

Agency Web Site: http://www.federalreserve.gov Follow the instructions for submitting comments on the http://.

http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.

Federal eRulemaking Portal: http://www.regulations.gov.

Follow the instructions for submitting comments.

E-mail: regs.comments@federalreserve.gov. Include docket

number in the subject line of the message.

Fax: 202-452-3819 or 202-452-3102.

Mail: Jennifer J. Johnson, Secretary, Board of Governors

of the Federal Reserve System, 20th Street and Constitution Avenue,

NW., Washington, DC 20551.

All public comments are available from the Board's Web site at

http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as

submitted, unless modified for technical reasons. Accordingly, your

comments will not be edited to remove any identifying or contact

information. Public comments may also be viewed electronically or in

paper in Room MP-500 of the Board's Martin Building (20th and C

Streets, NW.) between 9 a.m. and 5 p.m. on weekdays.

FDIC: You may submit written comments, which should refer to 3064-

AC99, by any of the following methods:

Agency Web Site: http://www.fdic.gov/regulations/laws/federal/propose.html.

Follow the instructions for submitting comments

on the FDIC Web site.

Federal eRulemaking Portal: http://www.regulations.gov.

Follow the instructions for submitting comments.

E-mail: Comments@FDIC.gov.

Mail: Robert E. Feldman, Executive Secretary, Attention:

Comments, FDIC, 550 17th Street, NW., Washington, DC 20429.

Hand Delivery/Courier: Guard station at the rear of the

550 17th Street Building (located on F Street) on business days between

7 a.m. and 5 p.m.

Public Inspection: All comments received will be posted without

change to http://www.fdic.gov/regulations/laws/federal/propose/html

including any

[[Page 70958]]

personal information provided. Comments may be inspected at the FDIC

Public Information Center, Room E-1007, 3501 North Fairfax Drive,

Arlington, Virginia, between 9 a.m. and 4:30 p.m. on business days.

OTS: Information Collection Comments, Chief Counsel's Office,

Office of Thrift Supervision, 1700 G Street, NW., Washington, DC 20552;

send a facsimile transmission to (202) 906-6518; or send an e-mail to

infocollection.comments@ots.treas.gov. OTS will post comments and the

related index on the OTS Internet site at http://www.ots.treas.gov. In

addition, interested persons may inspect the comments at the Public

Reading Room, 1700 G Street, NW., by appointment. To make an

appointment, call (202) 906-5922, send an e-mail to

public.info@ots.treas.gov, or send a facsimile transmission to (202)

906-7755.

NCUA: You may submit comments by any of the following methods

(Please send comments by one method only):

Federal eRulemaking Portal: http://www.regulations.gov.

Follow the instructions for submitting comments.

NCUA Web Site: http://www.ncua.gov/RegulationsOpinionsLaws/proposedregs/proposedregs.html.

Follow the

instructions for submitting comments.

E-mail: Address to regcomments@ncua.gov. Include ``[Your

name] Comments on Notice of Proposed Rulemaking Part 717, Procedures to

Enhance the Accuracy and Integrity of Information Furnished to Consumer

Reporting Agencies under Section 312 of the Fair and Accurate Credit

Transactions Act'' in the e-mail subject line.

Fax: (703) 518-6319. Use the subject line described above

for e-mail.

Mail: Address to Neil McNamara, Deputy Chief Information

Officer, National Credit Union Administration, 1775 Duke Street,

Alexandria, VA 22314-3428.

Hand Delivery/Courier: Same as mail address.

Additionally, you should send a copy of your comments to the OMB Desk

Officer for the Agencies, by mail to U.S. Office of Management and

Budget, 725 17th Street, NW., 10235, Washington, DC 20503, or by fax to

(202) 395-6974.

FTC: Comments should refer to ``Furnisher Rules, Project No.

R611017,'' and may be submitted by any of the following methods.

However, if the comment contains any material for which confidential

treatment is requested, it must be filed in paper form, and the first

page of the document must be clearly labeled ``Confidential.'' \30\

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\30\ Commission Rule 4.2(d), 16 CFR 4.2(d). The comment must be

accompanied by an explicit request for confidential treatment,

including the factual and legal basis for the request, and must

identify the specific portions of the comment to be withheld from

the public record. The request will be granted or denied by the

Commission's General Counsel, consistent with applicable law and the

public interest. See Commission Rule 4.9(c), 16 CFR 4.9(c).

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E-mail: Comments filed in electronic form should be

submitted by clicking on the following Web link: https://secure.commentworks.com/ftc-FACTAfurnishers

and following the

instructions on the Web-based form. To ensure that the Commission

considers an electronic comment, you must file it on the Web-based form

at https://secure.commentworks.com/ftc-FACTAfurnishers.

Federal eRulemaking Portal: If this notice appears at

http://www.regulations.gov, you may also file an electronic comment

through that Web site. The Commission will consider all comments that

regulations.gov forwards to it.

Mail or Hand Delivery: A comment filed in paper form

should include ``Furnisher Rules: Project No. R611017,'' both in the

text and on the envelope and should be mailed or delivered, with two

complete copies, to the following address: Federal Trade Commission/

Office of the Secretary, Room H-135 (Annex M), 600 Pennsylvania Avenue,

NW., Washington, DC 20580. Because paper mail in the Washington area

and at the Commission is subject to delay, please consider submitting

your comments in electronic form, as prescribed above. The FTC is

requesting that any comment filed in paper form be sent by courier or

overnight service, if possible.

Comments on any proposed filing, recordkeeping, or disclosure

requirements that are subject to paperwork burden review under the

Paperwork Reduction Act should additionally be submitted to: Office of

Management and Budget, Attention: Desk Officer for the Federal Trade

Commission. Comments should be submitted via facsimile to (202) 395-

6974 because U.S. Postal Mail is subject to lengthy delays due to

heightened security precautions.

The FTC Act and other laws the Commission administers permit the

collection of public comments to consider and use in this proceeding as

appropriate. All timely and responsive public comments, whether filed

in paper or electronic form, will be considered by the Commission, and

will be available to the public on the FTC Web site, to the extent

practicable, at http://www.ftc.gov/os/publiccomments.htm. As a matter

of discretion, the FTC makes every effort to remove home contact

information for individuals from the public comments it receives before

placing those comments on the FTC Web site. More information, including

routine uses permitted by the Privacy Act, may be found in the FTC's

privacy policy, at http://www.ftc.gov/ftc/privacy.htm.

Proposed Information Collection

Title of Information Collection: Accuracy and Integrity of

Information Furnished to Consumer Reporting Agencies.

Frequency of Response: On occasion.

Affected Public:

OCC: National banks, Federal branches and agencies of foreign

banks, and their respective operating subsidiaries that are not

functionally regulated within the meaning of section 5(c)(5) of the

Bank Holding Company Act of 1956, as amended (12 U.S.C. 1844(c)(5)).

Board: State member banks, uninsured state agencies and branches of

foreign banks, commercial lending companies owned or controlled by

foreign banks, and Edge and agreement corporations.

FDIC: Insured nonmember banks, insured state branches of foreign

banks, and certain subsidiaries of these entities.

OTS: Savings associations and certain of their subsidiaries.

NCUA: Federally-chartered credit unions.

FTC: Businesses that furnish information to a consumer reporting

agency, and are subject to administrative enforcement by the FTC

pursuant to section 621(a)(1) of the FCRA (15 U.S.C. 1681s(a)(1).

Abstract: Proposed section .42(a) \31\ would require a furnisher to

implement reasonable written policies and procedures regarding the

accuracy and integrity of information relating to consumers that it

provides to a CRA. Furnishers already have an ongoing responsibility

under section 623 of the FCRA for accurate reporting, which has been in

place for several years, long before the FACT Act. This proposed rule

would require furnishers to put into writing policies and procedures

that address their section 312 responsibilities regarding the accuracy

and integrity of information. Furnishers' accuracy and integrity

policies and

[[Page 70959]]

procedures may include their existing policies and procedures that are

reasonable and appropriate. The Agencies estimate it would take

furnishers a total of 21 hours per institution to comply with this

requirement.

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\31\ For purposes of the FTC regulations, this proposed section

is 16 CFR 660.3(a).

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Proposed section .43(a) \32\ would allow consumers to initiate

disputes directly with the furnishers, instead of using the existing

FCRA process through the CRAs. This gives consumers a new way to

dispute consumer report information; instead of having to go through a

CRA, consumers would have the right to go directly to the furnisher in

certain circumstances. Furnishers already have affirmative

responsibilities to research and respond and, if necessary, make any

corrections when a dispute is initiated by consumers through a CRA.

Under this proposed rule, furnishers would have to follow a

substantially similar process for disputes consumers submit directly to

furnishers. Furnishers would need to amend their procedures to ensure

that disputes received directly from consumers are handled the same way

as complaints from CRAs. The Agencies estimate that furnishers would

have to devote four hours per institution to amend their procedures in

this manner. Proposed section --.43(e)(2) \33\ incorporates the section

312 requirement that a furnisher must notify a consumer by mail or

other means (if authorized by the consumer) within five business days

after making a determination that a dispute is frivolous or irrelevant.

Proposed section --.43(e)(3) \34\ incorporates the content requirements

of such notices as specified by section 312. The Agencies estimate that

furnishers would have to devote four hours per institution to implement

this notice requirement, including the time necessary to develop

policies and procedures regarding the provision of the notices to

consumers and to initially prepare the notices.

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\32\ 16 CFR 660.4(a) in the FTC regulations.

\33\ 16 CFR 660.4(e)(2) in the FTC regulations.

\34\ CFR 660.4(e)(3) in the FTC regulations.

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With respect to estimating the potential burden associated with

providing the notices to consumers, the Agencies received one comment

on the ANPR from a financial institution stating that it is estimated

that 50% of disputes received are frivolous or irrelevant. In contrast,

one trade association commented that in only 25% of disputes is the

information in the consumer report being challenged verified as

correct; thus, even assuming that every time the information in the

consumer report is verified as correct the underlying dispute was

frivolous or irrelevant, a maximum of 25% of disputes could be

frivolous or irrelevant. The Agencies are also aware that a significant

number of furnishers are already providing consumers with a written

notice in response to direct disputes. Further, commenters from both

industry and consumer groups observed that disputes filed with CRAs

from credit repair organizations have been particularly likely to be

rejected, though they disagreed on the reasons. Considering all of

these comments and information, and taking into account that direct

disputes from credit repair organizations are prohibited by section

623(a)(8)(G) of the FCRA, the Agencies believe it is reasonable to

estimate that the number of written notices that furnishers provide to

consumers in response to direct disputes that are frivolous or

irrelevant would increase by 10%. The Agencies estimate that furnishers

would devote five minutes per notice to provide a notice to a consumer.

Estimated Burden: \35\

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\35\ The Estimated Burden section reflects the views of all of

the Agencies except the FTC, which has prepared a separate analysis.

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Thus, the burden associated with this collection of information may

be summarized as follows.

OCC

Number of respondents: 1,800.

Number of frivolous or irrelevant dispute notices: 312,335.

Estimated burden per notice: 5 minutes.

Estimated burden per respondent: 21 hours to implement written

policies and procedures and training associated with the written

policies and procedures, 4 hours to amend procedures for handling

complaints received directly from consumers, 4 hours to implement the

new dispute notice requirement.

Total estimated annual burden: 78,228 hours.

Board

In accordance with the PRA (44 U.S.C. 3506; 5 CFR part 1320,

Appendix A.1), the Board has reviewed the proposed rule under its

authority delegated by OMB. The proposed information collections

associated with this rulemaking, if approved, will be incorporated into

the Recordkeeping and Disclosure Requirements Associated with

Regulation V (Fair Credit Reporting) and will be assigned OMB No. 7100-

0308. The burden estimates provided below pertain only to the

information collections associated with this proposed rulemaking.

Number of respondents: 1,172.

Number of frivolous or irrelevant dispute notices: 116,582.

Estimated burden per respondent: 21 hours to implement written

policies and procedures and training associated with the written

policies and procedures, 4 hours to amend procedures for handling

complaints received directly from consumers, 4 hours to implement the

new dispute notice requirement, and 5 minutes per notice for

distribution.

Total estimated annual burden: 43,703 hours.

FDIC

Number of respondents: 5,260.

Number of frivolous or irrelevant dispute notices: 24,198.

Estimated burden per respondent to implement written policies and

procedures regarding accuracy and integrity and the frivolous or

irrelevant dispute notice: 29 hours.

Estimated burden per frivolous or irrelevant dispute notice: 5

minutes.

Total estimated annual burden: 154,557 hours.

OTS

Number of respondents: 829.

Number of frivolous or irrelevant dispute notices: 15,001.

Estimated burden per respondent: 21 hours to implement written

policies and procedures and training associated with the written

policies and procedures, 4 hours to amend procedures for handling

complaints received directly from consumers, 4 hours to implement the

new dispute notice requirement, and 5 minutes per notice for

distribution.

Total estimated annual burden: 25,286 hours.

NCUA

Number of respondents: 5,103.

Estimated burden per respondent: 29 hours.

Number of frivolous or irrelevant dispute notices: 3,044.

Estimated burden per notice: 5 minutes.

Total estimated annual burden: 148,241 hours.

FTC \36\

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\36\ Due to the varied nature of the entities subject to the

jurisdiction of the FTC, this Estimated Burden section reflects only

the view of the FTC. The banking regulatory agencies have jointly

prepared a separate analysis.

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Section 660.3:

Estimated Hours Burden:

As discussed above, the proposed regulations would require

furnishers to establish and implement reasonable written policies and

procedures regarding the accuracy and integrity of

[[Page 70960]]

the information relating to consumers that it furnishes to a CRA. The

proposed regulations would define ``furnisher'' to mean an entity other

than an individual consumer that furnishes information relating to

consumers to one or more CRAs, except when it provides information to a

CRA solely to obtain a consumer report for a permissible purpose under

the FCRA.\37\ Given the broad scope of furnishers, it is difficult to

determine precisely the number of furnishers that are subject to the

FTC's jurisdiction. Nonetheless, FTC staff estimates that the proposed

regulations in section 660.3 will affect approximately 6,133 furnishers

subject to the FTC's jurisdiction.\38\ The Commission invites comment

and information about the categories and number of furnishers subject

to its jurisdiction. As detailed below, FTC staff estimates that the

average annual information collection burden during the three-year

period for which OMB clearance is sought will be 51,000 hours (rounded

to the nearest thousand). The estimated annual labor cost associated

with this burden is $1,985,000 (rounded to the nearest thousand).

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\37\ 15 U.S.C. 1681b(a).

\38\ This estimate is derived from the number of furnishers

reporting to the three nationwide CRAs (approximately 18,000), minus

the number of entities subject to jurisdiction by the federal

financial agencies and the NCUA (14,167 combined), and adding the

number of furnishers to medical information bureaus (approximately

500) and the number of insurance companies furnishing information to

other types of CRAs (approximately 1,800).

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The proposed regulations are drafted in a flexible manner that

allows entities to establish and implement different types of written

policies and procedures based upon the nature, size, complexity, and

scope of their activities. A furnisher may include any of its existing

policies and procedures in place to ensure the accuracy of information.

The Commission believes that many entities have already implemented a

significant portion of the policies and procedures required by the

proposed rule. Entities have had an ongoing requirement under Section

623 of the FCRA to provide accurate information when they choose to

furnish data to consumer reporting agencies. The written policies and

procedures proposed in the rule would formalize the processes and

controls necessary for accurate reporting. Accordingly, FTC staff

estimates that entities will require 21 hours to establish and

implement written policies and procedures, including the incremental

time to train staff to implement these policies and procedures, with an

annual recurring burden of 2 hours.

FTC staff estimates that the proposed regulations implementing

section 623(e) affect 6,133 furnishers subject to the FTC's

jurisdiction at an average annual burden of 8.33 hours per entity

[average annual burden over 3-year clearance period for establishment

and implementation of written policies and procedures (25 hours/3)],

for a cumulative total of 51,000 hours (rounded to the nearest

thousand).

Estimated Cost Burden:

The FTC staff derived labor costs by applying appropriate estimated

hourly cost figures to the burden hours described above. It is

difficult to calculate with precision the labor costs associated with

the proposed regulations, as they entail varying compensation levels of

management and/or technical staff among companies of different sizes.

In calculating the cost figures, staff assumes that managerial and/or

professional technical personnel will draft the written policies and

procedures and train staff, at an hourly rate of $38.93.\39\

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\39\ This cost is derived from the median hourly wage from the

2006 National Occupational Employment and Wage Estimates by the

Bureau of Labor Statistics for management occupations.

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Based on the above estimates and assumptions, the total annual

labor costs for all categories of covered entities under the proposed

regulations in section 660.3 are $1,985,000 (rounded to the nearest

thousand) [(51,000 hours x $38.93)].

Section 660.4:

Estimated Hours Burden:

The proposed regulations would also require entities that furnish

information about consumers to respond to direct disputes from

consumers. FTC staff estimates that the proposed regulations in section

660.4 will also affect approximately 6,133 furnishers subject to the

FTC's jurisdiction. As detailed below, FTC staff estimates that the

average annual information collection burden during the three-year

period for which OMB clearance is sought will be 17,000 hours (rounded

to the nearest thousand). The estimated annual labor cost associated

with this burden is $641,000 (rounded to the nearest thousand).

FTC staff estimates that it will take furnishers four hours to

amend their procedures to ensure that disputes received directly from

consumers are handled the same way as complaints from CRAs. FTC staff

believes that furnishers of information to CRAs will have automated the

process of responding to direct disputes in the first year of the

clearance, therefore, there will be no annual recurring burden. FTC

staff estimates that it will take furnishers four hours in the first

year to implement the requirement to notify a consumer by mail or other

means (if authorized by the consumer) within five business days after

making a determination that a dispute is frivolous or irrelevant. FTC

staff believes that furnishers will also automate this process in the

first year of clearance, so there will be no annual recurring burden.

FTC staff further estimates that to prepare and distribute a notice

to a consumer after a furnisher determines that a dispute is frivolous

or irrelevant will require approximately five minutes per notice. FTC

staff projects that furnishers under its jurisdiction would receive

5,430 frivolous or irrelevant disputes requiring a notice each

year.\40\ Accordingly, FTC staff estimates it will take furnishers 452

hours for each of the three years for which OMB clearance is sought.

The estimated annual labor cost associated with this burden is $6,102.

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\40\ This number is derived from an estimate of disputes per

year that relate to information provided by an entity under the

FTC's jurisdiction and the Agencies' estimated 10% increase of the

number of written notices that furnishers will provide to consumers

in response to direct disputes that are frivolous or irrelevant.

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Estimated Cost Burden:

The FTC staff derived labor costs by applying appropriate estimated

hourly cost figures to the burden hours described above. It is

difficult to calculate with precision the labor costs associated with

the proposed regulations, as they entail varying compensation levels of

different types of support staff among companies of different sizes.

Nonetheless, in calculating the cost figures, staff assumes managerial

and/or professional technical personnel will amend procedures to ensure

that disputes received directly from consumers are handled the same way

as complaints from CRAs and will implement the requirement to notify a

consumer by mail or other means, after making a determination that a

dispute is frivolous or irrelevant, at an hourly rate of $38.93.\41\

Staff assumes that administrative support personnel will provide the

required notices to consumers, at an hourly rate of $13.50.\42\

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\41\ This cost is derived from the median hourly wage from the

2006 National Occupational Employment and Wage Estimates by the

Bureau of Labor Statistics for management occupations.

\42\ This cost is derived from the median hourly wage from the

2006 National Occupational Employment and Wage Estimates by the

Bureau of Labor Statistics for office and administrative support

occupations.

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Based on the above estimates and assumptions, the total average

annual labor costs for all categories of covered

[[Page 70961]]

entities under the proposed regulations in section 660.4 are $641,000

(rounded to the nearest thousand) [((1.33 + 1.33 hours) x 6,133 x

$38.93) + $6102].

B. Regulatory Flexibility Act

OCC: The Regulatory Flexibility Act (5 U.S.C. 601--612) (RFA)

requires an agency to either provide an Initial Regulatory Flexibility

Analysis with a proposed rule or certify that the proposed rule will

not have a significant economic impact on a substantial number of small

entities. For purposes of the RFA and OCC-regulated entities, a ``small

entity'' is a national bank with assets of $165 million or less (small

national bank). Based on its analysis and for the reason stated below,

OCC certifies that this proposed rule will not have a significant

economic impact on a substantial number of small entities. Based on two

tests used to evaluate the impact of the proposed rule (compliance

costs as a percent of labor costs and compliance costs as a percent of

non-interest expenses) the OCC estimates that the proposed rule would

have a significant economic impact on 7 of 948 small national banks

(.074 percent); the OCC does not consider this to be a substantial

number of small entities.

1. Reasons for Proposed Rule

The FACT Act amends the FCRA and was enacted, in part, for the

purpose of enhancing the accuracy and integrity of information

furnished to CRAs. Section 312 of the FACT Act generally requires the

Agencies to issue guidelines for use by furnishers regarding the

accuracy and integrity of the information about consumers that they

furnish to consumer reporting agencies and prescribe regulations

requiring furnishers to establish reasonable policies and procedures

for implementing the guidelines. Section 312 also requires the Agencies

to prescribe regulations identifying the circumstances under which a

furnisher must reinvestigate disputes about the accuracy of information

contained in a consumer report based on a direct request from a

consumer. OCC is issuing this proposed rule to implement section 312 of

the FACT Act.

2. Statement of Objectives and Legal Basis

The objectives of the proposed rule are described in the

SUPPLEMENTARY INFORMATION section. In sum, the objectives are: (1) To

implement the general statutory provision that requires the Agencies to

issue guidelines for use by furnishers regarding the accuracy and

integrity of the information about consumers that they furnish to

consumer reporting agencies and prescribe regulations requiring

furnishers to establish reasonable policies and procedures for

implementing the guidelines and (2) to fulfill the statutory mandate

requiring the Agencies to prescribe regulations identifying the

circumstances under which a furnisher must reinvestigate disputes about

the accuracy of information contained in a consumer report based on a

direct request from a consumer. The legal bases for the proposed rule

are the National Bank Act found at 12 U.S.C. 1 et seq., 24 (Seventh),

481, and 484; the Depository Institutions Deregulation and Monetary

Control Act of 1980 found at 12 U.S.C. 93a; the Federal Deposit

Insurance Act found at 12 U.S.C. 1818; and the Fair Credit Reporting

Act found at 15 U.S.C. 1681 et seq.

3. Description and Estimate of Small Entities Affected by the Final

Rule

The proposed rule would apply to national banks, Federal branches

and agencies of foreign banks, and any of their operating subsidiaries

that are not functionally regulated within the meaning of section

5(c)(5) of the Bank Holding Company Act of 1956, as amended (12 U.S.C.

1844(c)(5)) (national banks).

OCC estimates that its proposed rule would apply to 948 small

national banks with assets of $165 million or less.

4. Projected Recordkeeping, Reporting, and Other Compliance

Requirements

The compliance requirements of the proposed rules are described in

the SUPPLEMENTARY INFORMATION above.

In general, the proposal would require each furnisher subject to

the rule to establish and implement reasonable policies and procedures

regarding the accuracy and integrity of the information relating to

consumers that it furnishes to a consumer reporting agency. Furnishers

would be required to consider the guidelines in Appendix E to the

proposed rule in developing these policies and procedures and to

incorporate those guidelines that are appropriate. The Agencies have

sought to reduce the burden associated with these proposed accuracy and

integrity regulations and guidelines in several ways. First, the

proposed guidelines provide that a furnisher may include in its

policies and procedures concerning the accuracy and integrity of

information it furnishes to consumer reporting agencies any of its

existing policies and procedures that are relevant and appropriate.

Furnishers have a preexisting obligation under Section 623 of the FCRA

to provide accurate information when they furnish data to consumer

reporting agencies. The OCC believes that many furnishers are likely to

have existing policies and procedures regarding accurate reporting in

order to satisfy their obligations under section 623, and that these

policies and procedures could be incorporated in the policies and

procedures required by the proposed rule.

Furnishers subject to the proposed rule also would be required,

under certain circumstances, to investigate disputes concerning the

accuracy of information about the consumer contained in a consumer

report based on a direct request of a consumer. While the rule would

require new procedural requirements, the OCC believes that

investigating direct disputes will not create significant additional

burdens on small institutions, for a number of reasons.

First, most furnishers already investigate similar disputes that

are provided to them by a consumer reporting agency pursuant to the

existing dispute provisions contained in section 611 of the FCRA.

Second, commenters on the ANPR noted that many furnishers already

investigate direct disputes as a matter of good customer relations,

sound business practices, or because they are required to do so under

other consumer protection laws. National banks also investigate

disputes referred to them by the OCC's Customer Assistance Group as

well as other state and Federal regulators.

Finally, the proposed rule does not require investigation of direct

disputes when such disputes are frivolous or irrelevant.

The OCC seeks information and comment on any costs, compliance

requirements, or changes in operating procedures arising from the

application of the proposed rule to small national banks.

5. Identification of Duplicative, Overlapping, or Conflicting Federal

Rules

The OCC is unable to identify any statutes or rules, which would

overlap or conflict with the proposed regulation. The OCC seeks comment

and information about any such statutes or rules, as well as any other

state, local, or industry rules or policies that require a covered

institution to implement business practices that would comply with the

requirements of the proposed rule.

[[Page 70962]]

6. Discussion of Significant Alternatives

As required by the FACT Act, the proposed rules and guidelines

apply to all covered institutions, regardless of the size of the

institution. One approach to minimizing the burden on small entities

would be to provide a specific exemption for small institutions. The

OCC has no authority under section 312 of the FACT Act to grant an

exception that would remove small institutions from the scope of the

rule.

The proposed rule does, however, provide substantial flexibility so

that any national bank, regardless of size, may tailor its practices to

its individual needs. For example, to minimize burden the proposal

would permit institutions to include in their accuracy and integrity

policies and procedures their existing policies and procedures that are

relevant and appropriate. Furthermore, OCC and the other Agencies have

attempted to minimize burden by: Adopting consistent rules; proposing

and soliciting comment on two approaches for defining the terms

``accuracy'' and ``integrity''; incorporating into the proposed rule at

Sec. 41.42(a) a statement that policies and procedures should be

appropriate to the nature, size, complexity, and scope of a furnisher's

activities; and providing furnishers with three options for providing

their direct disputes address to consumers under proposed Sec.

41.43(c).

The OCC welcomes comments on any significant alternatives that are

consistent with section 312 of the FACT Act.

Board: The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.)

requires an agency either to provide an initial regulatory flexibility

analysis with a proposed rule or certify that the proposed rule will

not have a significant economic impact on a substantial number of small

entities (defined for purposes of the RFA to include commercial banks

and other depository institutions with $165 million or less in assets).

The Board requests public comment in the following areas.

1. Reasons for the Proposed Rule

Section 312 of the FACT Act (which amends section 623 of the FCRA)

requires the Agencies to issue regulations and guidelines relating to

the responsibilities of furnishers of information about consumers to

consumer reporting agencies for the purpose of enhancing the accuracy

and integrity of the information furnished. Specifically, the Agencies

must: (i) Establish and maintain guidelines for use by furnishers

regarding the accuracy and integrity of the information relating to

consumers that they furnish to consumer reporting agencies, and update

those guidelines as often as necessary; and (ii) prescribe regulations

requiring furnishers to establish reasonable policies and procedures

for implementing the guidelines. In addition, the Agencies must

prescribe joint regulations that identify the circumstances, if any,

under which furnishers must investigate disputes about the accuracy of

the information contained in a consumer report on the consumer based on

a direct request by a consumer, rather than requiring consumers to

initiate a dispute through a consumer reporting agency.

2. Statement of Objectives and Legal Basis

The SUPPLEMENTARY INFORMATION above contains this information. The

legal basis for the proposed rule is section 312 of the FACT Act.

3. Description of Small Entities to Which the Rule Applies

The proposed regulations would apply to all banks that are members

of the Federal Reserve System (other than national banks) and their

respective operating subsidiaries, branches and Agencies of foreign

banks (other than Federal branches, Federal Agencies, and insured State

branches of foreign banks), commercial lending companies owned or

controlled by foreign banks, and organizations operating under section

25 or 25A of the Federal Reserve Act (12 U.S.C. 601 et seq., and 611 et

seq.). The Board's proposed regulations would apply to the following

institutions (numbers approximate): State member banks (881), operating

subsidiaries that are not functionally regulated with in the meaning of

section 5(c)(5) of the Bank Holding Company Act of 1956, as amended

(877), U.S. branches and agencies of foreign banks (219), commercial

lending companies owned or controlled by foreign banks (3), and Edge

and agreement corporations (64), for a total of approximately 2,044

institutions. The Board estimates that more than 1,448 of these

institutions could be considered small entities with assets of $165

million or less.

All small entities covered by the Board's rule potentially could be

subject to the proposed rule. However, the proposed rule would not

impose any requirements on small entities that do not furnish

information about consumers to consumer reporting agencies.

4. Projected Reporting, Recordkeeping and Other Compliance Requirements

The compliance requirements of the proposed rules are described in

the SUPPLEMENTARY INFORMATION above.

In general, the proposal would require each furnisher subject to

the rule to establish and implement reasonable policies and procedures

regarding the accuracy and integrity of the information relating to

consumers that it furnishes to a consumer reporting agency. Such

furnishers would be required to consider the guidelines in Appendix E

to the proposed rule in developing these policies and procedures, and

to incorporate those guidelines that are appropriate. The Agencies have

sought to reduce the burden associated with these proposed accuracy and

integrity regulations and guidelines in several ways. First, the

proposed guidelines provide that a furnisher may include in its

policies and procedures concerning the accuracy and integrity of

information it furnishes to consumer reporting agencies any of its

existing policies and procedures that are relevant and appropriate.

Furnishers have a preexisting obligation under Section 623 of the FCRA

to provide accurate information when they furnish data to consumer

reporting agencies. The Board believes that many furnishers are likely

to have existing policies and procedures regarding accurate reporting

in order to satisfy their obligations under section 623, and that these

policies and procedures could be incorporated in the policies and

procedures required by the proposed rule.

Furnishers subject to the proposed rule also would be required,

under the circumstances described in the proposed rule, to investigate

disputes concerning the accuracy of information about the consumer

contained in a consumer report based on a direct request of a consumer.

While the rule would require new procedural requirements, the Board

believes that investigating direct disputes will not create significant

additional burdens on small institutions, for a number of reasons.

First, most furnishers already investigate similar disputes upon

receipt from the relevant consumer reporting agency pursuant to the

existing dispute provisions contained in section 611 of the FCRA.

Second, commenters on the ANPR noted that many furnishers already

investigate direct disputes as a matter of good customer relations and

sound business practices or because they are required to under other

consumer protection laws. Finally, the proposed rule does not

[[Page 70963]]

require investigation of direct disputes when such disputes are

frivolous or irrelevant.

The Board seeks information and comment on any costs, compliance

requirements, or changes in operating procedures arising from the

application of the proposed rule to small institutions.

5. Identification of Duplicative, Overlapping, or Conflicting Federal

Rules

The Board has not identified any federal statutes or regulations

that would duplicate, overlap, or conflict with the proposed rule. The

Board seeks comment regarding any statutes or regulations, including

state or local statutes or regulations, that would duplicate, overlap,

or conflict with the proposed rule.

6. Discussion of Significant Alternatives

The proposed rule provides substantial flexibility so that each

institution, regardless of its size, may tailor its practices to its

individual needs. For example, as discussed above, in order to minimize

burden the proposal would permit institutions to include in their

accuracy and integrity policies and procedures any of their existing

policies and procedures that are relevant and appropriate.

The Board welcomes comments on any significant alternatives,

consistent with the requirements of section 312 of the FACT Act, that

would minimize the impact of the proposed rule on small entities.

FDIC: In accordance with the Regulatory Flexibility Act (5 U.S.C.

601-612) (RFA), an agency must publish an initial regulatory

flexibility analysis with its proposed rule, unless the agency

certifies that the rule will not have a significant economic impact on

a substantial number of small entities (defined for purposes of the RFA

to include banks with less than $165 million in assets). The FDIC

hereby certifies that the proposed rule would not have a significant

economic impact on a substantial number of small entities.

The proposed rule would apply to most FDIC-insured state nonmember

banks, approximately 3,400 of which are small entities. Under the

proposed rule, financial institutions that furnish information about

consumers to one or more consumer reporting agencies must have written

policies and procedures regarding the accuracy and integrity of that

information. The program must be appropriate to the nature, size,

complexity and scope of the furnishing activities. A furnisher may

include any of its existing policies and procedures in place to ensure

the accuracy of information. Institutions have had an ongoing

requirement under Section 623 of the FCRA to provide accurate

information when they choose to furnish data to consumer reporting

agencies. The written policies and procedures proposed in the rule

would formalize the processes and controls necessary for accurate

reporting. Similarly, the proposed guidelines in Section II of Appendix

E of the Regulation contain requirements that were already in the FCRA.

Federal Financial Institutions Examination Council examination

procedures exist and have been used for years to evaluate compliance

with the aspects of Section 623 of the FCRA. Based on our examination

of the financial institutions we supervise, the FDIC believes that many

of these institutions have already implemented a significant portion of

the policies and procedures required by the proposed rule, whether

under the definition of ``integrity'' proposed in the Regulatory

Definition Approach or the definition in the Guidelines Definition

Approach, as discussed in the Supplementary Information above. The

process of furnishing information to consumer reporting agencies is

largely automated. With regard to the two alternatives concerning the

``integrity'' of information, the automated furnishing systems already

support for the type of information that a furnisher would provide

under either approach.

Nonetheless, the FDIC specifically requests comment and specific

data on the size of the incremental burden on small banks in

formalizing the policies and procedures not currently included, given

the banks' current practices and compliance with existing requirements.

The proposed rule would also require financial institutions that

furnish information about consumers to respond to direct dispute

requests from consumers with regard to certain perceived inaccuracies.

While the rule would require new procedural requirements, including

direct dispute notices, the FDIC believes that investigating direct

disputes will not create significant additional burdens on small banks,

for a number of reasons.

First, most furnishers are already investigating similar disputes,

which under the current law are brought directly to the relevant

consumer reporting agency, which then contacts the furnisher for an

investigation. Under this procedure, furnishers are already required to

review all relevant information provided by the consumer reporting

agency along with the notice; report the results of the investigation

to the consumer reporting agency; if the disputed information is found

to be incomplete or inaccurate, report those results to all nationwide

consumer reporting agencies to which the financial institution

previously provided the information; and if the disputed information is

incomplete, inaccurate, or not verifiable by the financial institution,

promptly, for purposes of reporting to the consumer reporting agency

modify the item of information, delete the item of information, or

permanently block the reporting of that item of information.

Second, many of these furnishers are already investigating direct

disputes as a matter of good customer relations and sound business

practices or under other consumer protection laws.

Third, the proposed rule does not require investigation in cases

that are frivolous or irrelevant. Nonetheless, the FDIC again

specifically requests comment and specific data on the size of the

incremental burden creating a program would have on small banks, given

their current practices and compliance with existing requirements.

OTS: The Regulatory Flexibility Act (5 U.S.C. 601-612) (RFA)

requires an agency to either provide an Initial Regulatory Flexibility

Analysis with a proposed rule or certify that the proposed rule will

not have a significant economic impact on a substantial number of small

entities. For purposes of the RFA and OTS-regulated entities, a ``small

entity'' is a savings association with assets of $165 million or less

(small savings association). Based on its analysis and for the reason

stated below, OTS certifies that this proposed rule will not have a

significant economic impact on a substantial number of small entities.

1. Reasons for Proposed Rule

The FACT Act amends the FCRA and was enacted, in part, for the

purpose of enhancing the accuracy and integrity of information

furnished to CRAs. Section 312 of the FACT Act generally requires the

Agencies to issue guidelines for use by furnishers regarding the

accuracy and integrity of the information about consumers that they

furnish to consumer reporting agencies and prescribe regulations

requiring furnishers to establish reasonable policies and procedures

for implementing the guidelines. Section 312 also requires the Agencies

to prescribe regulations identifying the circumstances under which a

furnisher must reinvestigate disputes about the accuracy of information

contained in a consumer report based on a direct request from a

consumer. OTS is issuing

[[Page 70964]]

this proposed rule to implement section 312 of the FACT Act.

2. Statement of Objectives and Legal Basis

The objectives of the proposed rule are described in the

SUPPLEMENTARY INFORMATION section. In sum, the objectives are: (1) To

implement the general statutory provision that requires the Agencies to

issue guidelines for use by furnishers regarding the accuracy and

integrity of the information about consumers that they furnish to

consumer reporting agencies and prescribe regulations requiring

furnishers to establish reasonable policies and procedures for

implementing the guidelines and (2) to fulfill the statutory mandate

requiring the Agencies to prescribe regulations identifying the

circumstances under which a furnisher must reinvestigate disputes about

the accuracy of information contained in a consumer report based on a

direct request from a consumer. The primary legal basis for the

proposed rule is the Fair Credit Reporting Act found at 15 U.S.C. 1681

et seq.

3. Description and Estimate of Small Entities Affected by the Final

Rule

The proposed rule would apply to savings associations and operating

subsidiaries of federal savings associations that are not functionally

regulated within the meaning of section 5(c)(5) of the Bank Holding

Company Act of 1956, as amended (12 U.S.C. 1844(c)(5)).

OTS estimates that its proposed rule would apply to 412 small

savings associations with assets of $165 million or less.

4. Projected Recordkeeping, Reporting, and Other Compliance

Requirements

Under the proposed rule, financial institutions that furnish

information about consumers to one or more consumer reporting agencies

must have written policies and procedures regarding the accuracy and

integrity of that information. The program must be appropriate to the

nature, size, complexity and scope of the furnishing activities. A

furnisher may include any of its existing policies and procedures in

place to ensure the accuracy of information. Institutions have had an

ongoing requirement under Section 623 of the FCRA to provide accurate

information when they choose to furnish data to consumer reporting

agencies. The written policies and procedures proposed in the rule

would formalize the processes and controls necessary for accurate

reporting. Similarly, the proposed guidelines in Section II of Appendix

E of the Regulation contain requirements that were already in the FCRA.

Federal Financial Institutions Examination Council examination

procedures exist and have been used for years to evaluate compliance

with the aspects of Section 623 of the FCRA. Based on our examination

of the financial institutions we supervise, OTS believes that many of

these institutions have already implemented a significant portion of

the policies and procedures required by the proposed rule, whether

under the definition of ``integrity'' proposed in the Regulatory

Definition Approach or the definition in the Guidelines Definition

Approach, as discussed in the Supplementary Information above. The

process of furnishing information to consumer reporting agencies is

largely automated. With regard to the two alternatives concerning the

``integrity'' of information, the automated furnishing systems already

support the type of information that a furnisher would provide under

either approach.

Nonetheless, OTS specifically requests comment and specific data on

the size of the incremental burden on small savings associations in

formalizing the policies and procedures not currently included, given

the associations' current practices and compliance with existing

requirements.

The proposed rule would also require financial institutions that

furnish information about consumers to respond to direct dispute

requests from consumers with regard to certain perceived inaccuracies.

While the rule would require new procedural requirements, including

direct dispute notices, OTS believes that investigating direct disputes

will not create significant additional burdens on small savings

associations, for a number of reasons.

First, most furnishers are already investigating similar disputes,

which under the current law are brought directly to the relevant

consumer reporting agency, which then contacts the furnisher for an

investigation. Under this procedure, furnishers are already required to

review all relevant information provided by the consumer reporting

agency along with the notice; report the results of the investigation

to the consumer reporting agency; if the disputed information is found

to be incomplete or inaccurate, report those results to all nationwide

consumer reporting agencies to which the financial institution

previously provided the information; and if the disputed information is

incomplete, inaccurate, or not verifiable by the financial institution,

promptly, for purposes of reporting to the consumer reporting agency

modify the item of information, delete the item of information, or

permanently block the reporting of that item of information.

Second, many of these furnishers are already investigating direct

disputes as a matter of good customer relations and sound business

practices. Many are also investigating disputes brought to the

institution through OTS's customer complaint system.

Third, the proposed rule does not require investigation for

disputes that are frivolous or irrelevant.

Fourth, savings associations already have mechanisms and processes

in place to handle consumer complaints brought under other laws such as

the Truth in Lending Act, Real Estate Settlement Procedures Act, and

Electronic Funds Transfer Act. OTS believes many of these mechanisms

and processes can be readily adapted to handle consumer disputes about

their consumer reports.

Nonetheless, OTS specifically requests comment and specific data on

the size of the incremental burden creating a program would have on

small savings associations, given their current practices and

compliance with existing requirements.

5. Identification of Duplicative, Overlapping, or Conflicting Federal

Rules

OTS is unable to identify any statutes or rules, which would

overlap or conflict with the proposed regulation. OTS seeks comment and

information about any such statutes or rules, as well as any other

state, local, or industry rules or policies that require a covered

institution to implement business practices that would comply with the

requirements of the proposed rule.

6. Discussion of Significant Alternatives

As required by the FACT Act, the proposed rules and guidelines

apply to all covered institutions, regardless of the size of the

institution. One approach to minimizing the burden on small entities

would be to provide a specific exemption for small institutions. OTS

has no authority under section 312 of the FACT Act to grant an

exception that would remove small institutions from the scope of the

rule.

The proposed rule does, however, provide substantial flexibility so

that any savings association, regardless of size, may tailor its

practices to its individual needs. For example, to minimize burden the

proposal would permit institutions to include in their accuracy and

integrity policies and

[[Page 70965]]

procedures their existing policies and procedures that are relevant and

appropriate. Furthermore, OTS and the other Agencies have attempted to

minimize burden by: Adopting consistent rules; proposing and soliciting

comment on two approaches for defining the terms ``accuracy'' and

``integrity''; incorporating into the proposed rule at Sec. --.42(a) a

statement that policies and procedures must be appropriate to the

nature, size, complexity, and scope of a furnisher's activities; and

providing furnishers with a three options for providing their direct

disputes address to consumers under proposed Sec. --.43(c).

OTS welcomes comments on any significant alternatives that are

consistent with section 312.

NCUA: Under the RFA, NCUA must publish an initial regulatory

flexibility analysis with its proposed rule, unless NCUA certifies the

rule will not have a significant economic impact on a substantial

number of small entities. For NCUA, these are federal credit unions

with less than $10 million in assets. NCUA certifies this proposed rule

would not have a significant economic impact on a substantial number of

small entities.

Under the proposed rule, federal credit unions furnishing

information about consumers to consumer reporting agencies (CRAs) must

have a written program on the information's accuracy and integrity. The

program must be appropriate to the nature, size, complexity and scope

of the furnishing activities. The federal credit union can include its

existing policies and procedures in its program under the proposed

rule. Federal credit unions already are required under FCRA section 623

to provide accurate information when they furnish data to CRAs. The

proposed rule would formalize the processes and controls for accurate

reporting. Likewise, the proposed guidelines contain requirements

already in the FCRA section 623.

Accordingly, NCUA requests comment and specific data on any

additional burden on small federal credit unions in making their

current accuracy and integrity programs consistent with existing

requirements.

The proposed rule would also require federal credit unions that

furnish consumer information to CRAs to respond to consumers' direct

dispute requests to correct credit report inaccuracies. The rule would

require new procedural requirements, including direct dispute notices,

but the NCUA believes that investigating direct disputes will not

create significant additional burdens on small federal credit unions,

for the following reasons.

First, most furnishers already investigate consumer dispute

requests, even if under the current law, the consumers complain

directly to the relevant CRA, which then contacts the federal credit

union to investigate. Currently, furnishers must review all relevant

information the CRA provides with the notice; report the investigation

results to the CRA; if the disputed information is determined to be

incomplete or inaccurate, report this to all nationwide CRAs to which

the federal credit union previously provided the information; and if

the disputed information is incomplete, inaccurate, or not verifiable

by the federal credit union, promptly, for purposes of reporting to the

CRA, modify the item of information, delete the item of information, or

permanently block the reporting of that item of information.

Second, many federal credit unions already investigate direct

disputes as part of good member relations and sound business practices

or under other consumer protection laws.

Third, the proposed rule does not require investigation in cases

that are frivolous or irrelevant. Nonetheless, NCUA specifically

requests comment and specific data on the size of the incremental

burden creating a program would have on small federal credit unions,

given their current practices and compliance with existing

requirements.

FTC: The Regulatory Flexibility Act (``RFA''), 5 U.S.C. 601-612,

requires that the Commission provide an Initial Regulatory Flexibility

Analysis (``IRFA'') with a proposed rule and a Final Regulatory

Flexibility Analysis (``FRFA'') with the final rule, unless the

Commission certifies that the rule will not have a significant economic

impact on a substantial number of small entities. See 5 U.S.C. 603-605.

Based on its analysis and for the reasons stated below, the

Commission does not anticipate that the proposed regulations will have

a significant economic impact on a substantial number of small

entities. This document serves as notice to the Small Business

Administration of the FTC's certification of no effect. To ensure the

accuracy of this certification, however, the Commission requests

comments on whether the proposed regulations will have a significant

impact on a substantial number of small entities, including specific

information on the number of entities that would be covered by the

proposed regulations, the number of these companies that are ``small

entities,'' and the average annual burden for each entity. Although the

Commission certifies under the RFA that the regulations proposed in

this notice would not, if promulgated, have a significant economic

impact on a substantial number of small entities, the Commission has

determined, nonetheless, that it is appropriate to publish an IRFA in

order to inquire into the impact of the proposed regulations on small

entities. Therefore, the Commission has prepared the following

analysis:

1. Description of the Reasons That Action by the Agency Is Being Taken

The Federal Trade Commission is charged with enforcing the

requirements of section 312 of the Fair and Accurate Credit

Transactions Act of 2003 (FACT Act) (15 U.S.C. 1681a-2(a)(8) and 1681a-

2(e)), which require the agency to issue these proposed regulations.

2. Statement of the Objectives of, and Legal Basis for, the Proposed

Regulations

The objectives of the proposed rule are described in the

SUPPLEMENTARY INFORMATION section. In sum, the objectives are: (1) To

implement the general statutory provision that requires the Agencies to

issue guidelines for use by furnishers regarding the accuracy and

integrity of the information about consumers that they furnish to

consumer reporting agencies and prescribe regulations requiring

furnishers to establish reasonable policies and procedures for

implementing the guidelines and (2) to fulfill the statutory mandate

requiring the Agencies to prescribe regulations identifying the

circumstances under which a furnisher must reinvestigate disputes about

the accuracy of information contained in a consumer report based on a

direct request from a consumer. The legal basis for the proposed

regulations is 15 U.S.C. 1681a-2(a)(8) and 1681a-2(e).

3. Small Entities To Which the Proposed Rule Will Apply

The proposed rule would apply to ``an entity other than an

individual consumer that furnishes information relating to consumers to

one or more consumer reporting agencies,'' except when it ``provides

information to a consumer reporting agency solely to obtain a consumer

report in accordance with sections 604(a) and (f) of the FCRA.'' In

short, the rule would apply to any entity that (1) is under the FTC's

jurisdiction pursuant to the FCRA and (2) furnishes information

relating to consumers to one or more consumer reporting agencies.

[[Page 70966]]

Generally, the proposed regulations would apply to financial

institutions, creditors, and other entities that furnish information

relating to consumers to consumer reporting agencies. In particular,

entities under FTC's jurisdiction covered by section 312 include state-

chartered credit unions, non-bank lenders, insurers, debt collectors,

and any other entity other than an individual consumer that furnishes

information relating to consumers to one or more consumer reporting

agencies. The available data is not sufficient for the Commission to

realistically estimate the number of entities the Commission regulates

that would be subject to the proposed rule and that are small as

defined by the Small Business Administration.\43\ The Commission

invites comment and information on the number and type of small

entities affected by the proposed rule.

---------------------------------------------------------------------------

\43\ The size standard to be considered a small business for the

majority of the non-bank creditors, insurers, and debt collectors

that are subject to the Commission's jurisdiction is to have average

annual receipts that are $6.5 million or less. A list of the SBA's

size standards for all industries can be found at

http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf

.

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4. Projected Reporting, Recordkeeping and Other Compliance Requirements

Under the proposed rule, entities that furnish information about

consumers to one or more consumer reporting agencies must have written

policies and procedures regarding the accuracy and integrity of that

information. The program must be appropriate to the nature, size,

complexity, and scope of the furnishing activities. A furnisher may

include any of its existing policies and procedures in place to ensure

the accuracy of information. Entities have had an ongoing requirement

under Section 623 of the FCRA to provide accurate information when they

choose to furnish data to consumer reporting agencies. The written

policies and procedures proposed in the rule would formalize the

processes and controls necessary for accurate reporting. Similarly, the

proposed guidelines in Section II of Appendix A of the Regulation

contain requirements that are already included in the FCRA.

Entities under the FTC's jurisdiction covered by this rule include

state-chartered credit unions, non-bank lenders, insurers, debt

collectors, and any other entity other than an individual consumer that

furnishes information relating to consumers to one or more consumer

reporting agencies. In calculating costs, FTC staff assumes that for

all entities, managerial and/or professional technical personnel will

draft the written policies and procedures regarding the accuracy and

integrity of furnished information.

The Commission believes that many entities have already implemented

a significant portion of the policies and procedures required by the

proposed rule, whether under the definition of ``integrity'' proposed

in the Regulatory Definition Approach or the definition in the

Guidelines Definition Approach, as discussed in the SUPPLEMENTARY

INFORMATION above. The process of furnishing information to consumer

reporting agencies is often automated. With regard to the two

alternatives concerning the ``integrity'' of information, the automated

furnishing systems already support the type of information that a

furnisher would provide under either approach.

Nonetheless, the Commission specifically requests comment and

specific data on the size of the incremental burden on small entities

in formalizing the policies and procedures not currently included,

given the entities' current practices and compliance with existing

requirements.

The proposed rule would also require entities that furnish

information about consumers to respond to direct disputes from

consumers. The rule would require new procedural requirements,

including direct dispute notices.

Entities under the FTC's jurisdiction covered by this rule include

state-chartered credit unions, non-bank lenders, insurers, debt

collectors, and any other entity other than an individual consumer that

furnishes information relating to consumers to one or more consumer

reporting agencies. In calculating costs, FTC staff assumes that

managerial and/or professional technical personnel will adapt

mechanisms and processes to handle consumer disputes about their

consumer reports and administrative support personnel will provide any

required notices to consumers.

The Commission believes that investigating direct disputes will not

create significant additional burdens on covered entities for a number

of reasons.

First, most furnishers are already investigating similar disputes,

which under the current law are brought directly to the relevant

consumer reporting agency, which then contacts the furnisher for an

investigation. Under this procedure, furnishers are already required to

review all relevant information provided by the consumer reporting

agency along with the notice of dispute; report the results of the

investigation to the consumer reporting agency; if the disputed

information is found to be incomplete or inaccurate, report those

results to all nationwide consumer reporting agencies to which the

furnisher previously provided the information; and if the disputed

information is incomplete, inaccurate, or not verifiable by the

financial institution, promptly, for the purposes of reporting to the

consumer reporting agency to modify the item of information, delete the

item of information, or permanently block the reporting of that item of

information.

Second, many of these furnishers are already investigating direct

disputes as a matter of good customer relations and sound business

practices.

Third, the proposed rule does not require investigation for

disputes that are frivolous or irrelevant.

Fourth, many furnishers already have mechanisms and processes in

place to handle consumer disputes brought under other laws such as the

Fair Debt Collection Practices Act (15 U.S.C. 1692-1692p), Truth in

Lending Act (15 U.S.C. 1601-1665b), Fair Credit Billing Act (15 U.S.C.

1666-1666j), Real Estate Settlement Procedures Act (12 U.S.C. 2601-

2627), and Electronic Funds Transfer Act (15 U.S.C. 1693-1693r). The

Commission believes that many of these mechanisms and processes can be

readily adapted to handle consumer disputes about their consumer

reports.

Nonetheless, the Commission specifically requests comment and

specific data on the size of the incremental burden that creating a

program would have on small entities, given their current practices and

compliance with existing requirements.

5. Duplicative, Overlapping, or Conflicting Federal Rules

The Commission has not identified any federal statutes, rules, or

policies that would duplicate, overlap, or conflict with the proposed

Rule. As noted in Section 4, however, compliance with some provisions

of other federal statutes will facilitate compliance with the proposed

rule by furnishers of information to consumer reporting agencies. The

Commission invites comment and information about any statutes or rules

that may duplicate, overlap, or conflict with the proposed Rule.

6. Significant Alternatives to the Proposed Rule

The standards in the proposed Rule are flexible so that a covered

entity, regardless of size, may tailor its practices to its individual

needs. For example, to minimize the burden the proposal would permit

entities to include in their accuracy and integrity

[[Page 70967]]

policies and procedures their existing policies and procedures that are

relevant and appropriate. Furthermore, the FTC and other Agencies have

attempted to minimize the burden by: adopting consistent rules;

incorporating into the proposed rule at Sec. 660.3 a statement that

policies and procedures should be appropriate to the nature, size,

complexity, and scope of a furnisher's activities; and providing

furnishers with three options for providing their direct disputes

address to consumers under proposed Sec. 660.4. Nevertheless, the

Commission seeks comment and information on the need, if any, for

alternative compliance methods that, consistent with the statutory

requirement, would reduce the economic impact of the rule on small

entities.

If the comments filed in response to this notice identify small

entities that are affected by the rule, as well as alternative methods

of compliance that would reduce the economic impact of the rule on such

entities, the Commission will consider the feasibility of such

alternatives and determine whether they should be incorporated into the

final rule.

C. OCC and OTS Executive Order 12866 Determinations

The OCC and OTS each determined that its portion of the proposed

rulemaking is not a significant regulatory action under Executive Order

12866.

D. OCC and OTS Executive Order 13132 Determinations

The OCC and the OTS each determined that its portion of the

proposed rulemaking does not have any federalism implications for

purposes of Executive Order 13132.

E. NCUA Executive Order 13132 Determination

Executive Order 13132 encourages independent regulatory agencies to

consider the impact of their actions on State and local interests. In

adherence to fundamental federalism principles, the NCUA, an

independent regulatory agency as defined in 44 U.S.C. 3502(5)

voluntarily complies with the Executive Order. The proposed rules and

guidelines apply only to federally chartered credit unions and would

not have substantial direct effects on the States, on the connection

between the national government and the States, or on the distribution

of power and responsibilities among the various levels of government.

The NCUA has determined that these proposed rules and guidelines do not

constitute a policy that has federalism implications for purposes of

the Executive Order.

F. OCC and OTS Unfunded Mandates Reform Act of 1995 Determinations

Section 202 of the Unfunded Mandates Reform Act of 1995, Public Law

104-4 (Unfunded Mandates Act) requires that an agency prepare a

budgetary impact statement before promulgating a rule that includes a

Federal mandate that may result in expenditure by State, local, and

tribal governments, in the aggregate, or by the private sector, of $100

million or more in any one year. If a budgetary impact statement is

required, section 205 of the Unfunded Mandates Act also requires an

agency to identify and consider a reasonable number of regulatory

alternatives before promulgating a rule. The OCC and OTS each

determined that this proposed rule will not result in expenditures by

State, local, and tribal governments, or by the private sector, of $100

million or more. Accordingly, neither the OCC nor the OTS has prepared

a budgetary impact statement or specifically addressed the regulatory

alternatives considered.

G. NCUA: The Treasury and General Government Appropriations Act, 1999--

Assessment of Federal Regulations and Policies on Families

The NCUA has determined that this proposed rule would not affect

family well-being within the meaning of section 654 of the Treasury and

General Government Appropriations Act, 1999, Pub. L. 105-277, 112 Stat.

2681 (1998).

VII. Solicitation of Comments on Use of Plain Language

Section 722 of the Gramm-Leach-Bliley Act, Pub. L. 106-102, sec.

722, 113 Stat. 1338, 1471 (Nov. 12, 1999), requires the OCC, Board,

FDIC, and OTS to use plain language in all proposed and final rules

published after January 1, 2000. Therefore, these agencies specifically

invite your comments on how to make this proposal easier to understand.

For example:

Have we organized the material to suit your needs? If not,

how could this material be better organized?

Are the requirements in the proposed regulations and

guidelines clearly stated? If not, how could the regulations and

guidelines be more clearly stated?

Do the proposed regulations and guidelines contain

language or jargon that is not clear? If so, which language requires

clarification?

Would a different format (grouping and order of sections,

use of headings, paragraphing) make the regulations and guidelines

easier to understand? If so, what changes to the format would make them

easier to understand?

What else could we do to make the regulations and

guidelines easier to understand?

VIII. Communications by Outside Parties to FTC Commissioners or Their

Advisors

Written communications and summaries or transcripts of oral

communications respecting the merits of this proceeding from any

outside party to any FTC Commissioner or FTC Commissioner's advisor

will be placed on the public record. See 16 CFR 1.26(b)(5).

List of Subjects

12 CFR Part 41

Banks, banking, Consumer protection, National Banks, Reporting and

recordkeeping requirements.

12 CFR Part 222

Banks, banking, Holding companies, state member banks.

12 CFR Part 334

Administrative practice and procedure, Bank deposit insurance,

Banks, banking, Reporting and recordkeeping requirements, Safety and

soundness.

12 CFR Part 571

Consumer protection, Credit, Fair credit reporting, Privacy,

Reporting and recordkeeping requirements, Savings associations.

12 CFR Part 717

Consumer protection, Credit unions, Fair credit reporting, Privacy,

Reporting and recordkeeping requirements.

16 CFR Part 660

Consumer reports, Consumer reporting agencies, Fair credit

reporting, Information furnishers, Identity theft, Trade practices.

Department of the Treasury

Office of the Comptroller of the Currency

12 CFR Chapter I

Authority and Issuance

For the reasons discussed in the joint preamble, the Office of the

Comptroller of the Currency proposes to amend chapter I of title 12 of

the Code of Federal Regulations by amending 12 CFR part 41 as follows:

PART 41--FAIR CREDIT REPORTING

1. Revise the authority citation for part 41 to read as follows:

[[Page 70968]]

Authority: 12 U.S.C. 1 et seq., 24 (Seventh), 93a, 481, 484, and

1818; 15 U.S.C. 1681a, 1681b, 1681c, 1681m, 1681s, 1681s-2, 1681s-3,

1681t, and 1681w; Sec. 214, Pub. L. 108-159, 117 Stat. 1952.

2. Add a new subpart E to part 41 to read as follows:

Subpart E--Duties of Furnishers of Information

Sec.

41.40 Scope.

41.41 Definitions.

41.42 Reasonable policies and procedures concerning the accuracy and

integrity of furnished information.

41.43 Direct disputes.

Subpart E--Duties of Furnishers of Information

Sec. 41.40 Scope.

This subpart applies to a national bank, Federal branch and agency

of a foreign bank, and their respective operating subsidiaries that are

not functionally regulated within the meaning of section 5(c)(5) of the

Bank Holding Company Act of 1956, as amended (12 U.S.C. 1844(c)(5)).

Sec. 41.41 Definitions.

For purposes of this subpart and Appendix E of this part, the

following definitions apply:

Regulatory Definition Approach for Defining ``Accuracy'' and

``Integrity'' Follows

(a) Accuracy means that any information that a furnisher provides

to a consumer reporting agency about an account or other relationship

with the consumer reflects without error the terms of and liability for

the account or other relationship and the consumer's performance and

other conduct with respect to the account or other relationship.

(b) Integrity means that any information that a furnisher provides

to a consumer reporting agency about an account or other relationship

with the consumer does not omit any term, such as a credit limit or

opening date, of that account or other relationship, the absence of

which can reasonably be expected to contribute to an incorrect

evaluation by a user of a consumer report of a consumer's

creditworthiness, credit standing, credit capacity, character, general

reputation, personal characteristics, or mode of living.

(c) Furnisher means an entity other than an individual consumer

that furnishes information relating to consumers to one or more

consumer reporting agencies. An entity is not a furnisher when it

provides information to a consumer reporting agency solely to obtain a

consumer report in accordance with sections 604(a) and (f) of the FCRA.

(d) Identity theft has the same meaning as in 16 CFR 603.2(a).

(e) Direct dispute means a dispute submitted directly to a

furnisher by a consumer concerning the accuracy of any information

contained in a consumer report relating to the consumer.

Sec. 41.42 Reasonable policies and procedures concerning the accuracy

and integrity of furnished information.

(a) Policies and procedures. Each furnisher must establish and

implement reasonable written policies and procedures regarding the

accuracy and integrity of the information relating to consumers that it

furnishes to a consumer reporting agency. The policies and procedures

must be appropriate to the nature, size, complexity, and scope of each

furnisher's activities.

(b) Guidelines. Each furnisher must consider the guidelines in

Appendix E of this part in developing its policies and procedures

required by this section, and incorporate those guidelines that are

appropriate.

(c) Reviewing and updating policies and procedures. Each furnisher

must review its policies and procedures required by this section

periodically and update them as necessary to ensure their continued

effectiveness.

Sec. 41.43 Direct disputes.

(a) General rule. Except as otherwise provided in this section, a

furnisher must investigate a direct dispute if it relates to:

(1) The consumer's liability for a credit account or other debt

with the furnisher, such as direct disputes relating to whether there

is or has been identity theft or fraud against the consumer, whether

there is individual or joint liability on an account, or whether the

consumer is an authorized user of a credit account;

(2) The terms of a credit account or other debt with the furnisher,

such as direct disputes relating to the type of account, principal

balance, scheduled payment amount on an account, or the amount of the

reported credit limit on an open-end account;

(3) The consumer's performance or other conduct concerning an

account or other relationship with the furnisher, such as direct

disputes relating to the current payment status, high balance, date a

payment was made, the amount of a payment made, or the date an account

was opened or closed; or

(4) Any other information contained in a consumer report regarding

an account or other relationship with the furnisher that bears on the

consumer's creditworthiness, credit standing, credit capacity,

character, general reputation, personal characteristics, or mode of

living.

(b) Exceptions. The requirements of paragraph (a) of this section

do not apply to a furnisher if:

(1) The direct dispute relates to:

(i) The consumer's identifying information (other than a direct

dispute relating to a consumer's liability for a credit account or

other debt with the furnisher, as provided in paragraph (a)(1) of this

section) such as name(s), date of birth, Social Security number,

telephone number(s), or address(es);

(ii) The identity of past or present employers;

(iii) Inquiries or requests for a consumer report;

(iv) Information derived from public records, such as judgments,

bankruptcies, liens, and other legal matters (unless provided by a

furnisher with an account or other relationship with the consumer); or

(v) Information related to fraud alerts or active duty alerts; or

(2) The direct dispute is submitted by, is prepared on behalf of

the consumer by, or is submitted on a form supplied to the consumer by,

a credit repair organization, as defined in 15 U.S.C. 1679a(3), or an

entity that would be a credit repair organization, but for 15 U.S.C.

1679a(3)(B)(i).

(c) Direct dispute address. A furnisher is required to investigate

a direct dispute only if a consumer submits a dispute notice to the

furnisher at:

(1) The address of a furnisher provided by a furnisher and set

forth on a consumer report relating to the consumer;

(2) An address clearly and conspicuously specified by the furnisher

for submitting direct disputes that is provided to the consumer in

writing or electronically (if the consumer has agreed to the electronic

delivery of information from the furnisher); or

(3) Any business address of the furnisher if the furnisher has not

so specified and provided an address for submitting direct disputes

under paragraph (c)(2) of this section.

(d) Direct dispute notice contents. A dispute notice must include:

(1) The name, address, and telephone number of the consumer;

(2) Sufficient information to identify the account or other

relationship that is in dispute, such as an account number;

(3) The specific information that the consumer is disputing and an

explanation of the basis for the dispute; and

(4) All supporting documentation or other information reasonably

required

[[Page 70969]]

by the furnisher to substantiate the basis of the dispute. This

documentation may include, for example: A copy of the consumer report

that contains the allegedly inaccurate information; a police report; a

fraud or identity theft affidavit; a court order; or account

statements.

(e) Frivolous or irrelevant disputes. (1) A furnisher is not

required to investigate a direct dispute if the furnisher has

reasonably determined that the dispute is frivolous or irrelevant. A

dispute may be frivolous or irrelevant if:

(i) The consumer did not provide sufficient information to

investigate the disputed information as required by paragraph (d) of

this section;

(ii) The direct dispute is substantially the same as a dispute

previously submitted by or on behalf of the consumer, either directly

to the furnisher or through a consumer reporting agency, with respect

to which the furnisher has already satisfied the applicable

requirements of the Act or this section; provided, however, that a

direct dispute is not substantially the same as a dispute previously

submitted if the dispute includes information listed in paragraph (d)

of this section that had not previously been provided to the furnisher;

or

(iii) The furnisher is not required to investigate the direct

dispute under this section.

(2) Notice of determination. Upon making a determination that a

dispute is frivolous or irrelevant, the furnisher must notify the

consumer of the determination not later than five business days after

making the determination, by mail or, if authorized by the consumer for

that purpose, by any other means available to the furnisher.

(3) Contents of notice of determination that a dispute is frivolous

or irrelevant. A notice of determination that a dispute is frivolous or

irrelevant must include the reasons for such determination and identify

any information required to investigate the disputed information, which

notice may consist of a standardized form describing the general nature

of such information.

3. Add a new appendix E to read as follows:

Appendix E to Part 41--Interagency Guidelines Concerning the Accuracy

and Integrity of Information Furnished to Consumer Reporting Agencies

The OCC encourages voluntary furnishing of information to

consumer reporting agencies. Section 41.42 of this part requires

each furnisher to establish and implement reasonable written

policies and procedures concerning the accuracy and integrity of the

information it furnishes to consumer reporting agencies. Under Sec.

41.42(b), the furnisher must consider the guidelines set forth below

in developing these policies and procedures. In establishing these

policies and procedures, a furnisher may include any of its existing

policies and procedures that are relevant and appropriate.

I. Nature, Scope, and Objectives of Policies and Procedures

A. Nature and Scope. Section 41.42(a) of this part requires that

a furnisher's policies and procedures be appropriate to the nature,

size, complexity, and scope of the furnisher's activities. The

furnisher's policies and procedures should reflect, for example:

1. The types of business activities in which the furnisher

engages;

2. The nature and frequency of the information the furnisher

provides to consumer reporting agencies; and

3. The technology used by the furnisher to furnish information

to consumer reporting agencies.

Regulatory Definition Approach for Paragraph B Follows

B. Objectives. A furnisher should have written policies and

procedures reasonably designed to accomplish the following

objectives:

1. Ensure that the information it furnishes about accounts or

other relationships with a consumer:

(a) Accurately identifies the appropriate consumer;

(b) Accurately reports the terms of those accounts or other

relationships; and

(c) Accurately reports the consumer's performance and other

conduct with respect to the account or other relationship with the

consumer;

2. Ensure that the information it furnishes about accounts or

other relationships with a consumer avoids misleading a consumer

report user as to the consumer's creditworthiness, credit standing,

credit capacity, character, general reputation, personal

characteristics, or mode of living;

3. Ensure that it conducts reasonable investigations of consumer

disputes about the accuracy or integrity of information in consumer

reports and takes appropriate actions based on the outcome of such

investigations;

4. Ensure that it updates information it furnishes as necessary

to reflect the current status of the consumer's account or other

relationship, including:

(a) Any transfer of an account (e.g., by sale or assignment for

collection) to a third party; and

(b) Any cure of the consumer's failure to abide by the terms of

the account or other relationship;

5. Ensure that the information it furnishes about accounts or

other relationships with a consumer is reported in a form and manner

that is designed to minimize the likelihood that the information,

although accurate, may be erroneously reflected in a consumer

report, for example, by ensuring that the information is reported

with appropriate identifying information about the consumer to whom

it pertains, in a standardized and clearly understandable form and

manner, and with a date specifying the time period to which the

information pertains; and

6. Ensure that the information it furnishes about accounts or

other relationships with a consumer is substantiated by the

furnisher's own records.

Guidelines Definition Approach for Paragraph B Follows

B. Objectives. A furnisher should have written policies and

procedures reasonably designed to accomplish the following

objectives:

1. Ensure that the information it furnishes about accounts or

other relationships with a consumer is accurate. Accuracy means that

any information that a furnisher provides to a consumer reporting

agency about an account or other relationship with the consumer

reflects without error the terms of and liability for the account or

other relationship and the consumer's performance and other conduct

with respect to the account or other relationship;

2. Ensure that the information it furnishes about accounts or

other relationships with a consumer is furnished with integrity.

Integrity means that any information that a furnisher provides to a

consumer reporting agency about an account or other relationship

with the consumer is:

(i) Reported in a form and manner that is designed to minimize

the likelihood that the information, although accurate, may be

erroneously reflected in a consumer report, for example, by ensuring

that the information is:

(A) Reported with appropriate identifying information about the

consumer to whom it pertains;

(B) Reported in a standardized and clearly understandable form

and manner; and

(C) Reported with a date specifying the time period to which the

information pertains; and

(ii) Substantiated by the furnisher's own records;

3. Ensure that it conducts reasonable investigations of consumer

disputes about the accuracy or integrity of information in consumer

reports and takes appropriate actions based on the outcome of such

investigations; and

4. Ensure that it updates information it furnishes as necessary

to reflect the current status of the consumer's account or other

relationship, including:

(a) Any transfer of an account (e.g., by sale or assignment for

collection) to a third party; and

(b) Any cure of the consumer's failure to abide by the terms of

the account or other relationship.

II. Accuracy and Integrity Duties of Furnishers Under the FCRA

A furnisher's policies and procedures should address compliance

with all applicable requirements imposed on the furnisher under the

FCRA, including the duties to:\1\

---------------------------------------------------------------------------

\1\ This is not a complete listing of furnisher duties relating

to accuracy and integrity. Furnishers should consult the FCRA to

determine what additional duties may apply.

---------------------------------------------------------------------------

[[Page 70970]]

A. Promptly notify the consumer reporting agency of the

furnisher's determination that furnished information is not complete

or accurate, for a furnisher that regularly and in the ordinary

course of business furnishes information; provide any corrections,

or any additional information, that is necessary to make the

furnished information complete and accurate; and not thereafter

furnish information that remains incomplete or inaccurate. 15 U.S.C.

1681s-2(a)(2).

B. Provide notice of a dispute by a consumer about the accuracy

or completeness of information furnished to a consumer reporting

agency. 15 U.S.C. 1681s-2(a)(3).

C. Report voluntary closure of a credit account by the consumer

in information regularly furnished for the period in which the

credit account is closed, for a furnisher that regularly and in the

ordinary course of business furnishes information about consumer

credit accounts. 15 U.S.C. 1681s-2(a)(4).

D. Notify the consumer reporting agency of the date of

delinquency on an account not later than 90 days after the furnisher

furnishes information to the consumer reporting agency regarding

action taken on the delinquent account (including placement for

collection, charge to profit or loss, or any similar action). Date

of delinquency means the month and year of the commencement of the

delinquency on the account that immediately preceded the action. 15

U.S.C. 1681s-2(a)(5).

E. Have in place reasonable procedures to respond to any

notification that the furnisher receives from a consumer reporting

agency under section 605B of the FCRA, relating to the blocking of

information resulting from identity theft and to prevent the

refurnishing of such blocked information. 15 U.S.C. 1681s-

2(a)(6)(A).

F. Not furnish to a consumer reporting agency information that

purports to relate to the consumer if the consumer submits an

identity theft report to the furnisher (at the address specified by

that furnisher for receiving such reports) stating that such

information maintained by that furnisher resulted from identity

theft. (This restriction does not apply if the furnisher

subsequently knows or is informed by the consumer that the

information is correct.) 15 U.S.C. 1681s-2(a)(6)(B).

G. After receiving a notice of dispute from a consumer reporting

agency, in a timely manner: Conduct an investigation; review all

relevant information the consumer reporting agency provides; report

the results of the investigation to the consumer reporting agency;

report incomplete or inaccurate information to all nationwide

consumer reporting agencies to which it reported the information;

and modify, delete, or permanently block incomplete or inaccurate

information or information that cannot be verified. 15 U.S.C. 1681s-

2(b).

H. Investigate direct disputes as required by 12 CFR 41.43 and

15 U.S.C. 1681s-2(a)(8).

III. Establishing and Implementing Policies and Procedures

In establishing and implementing its policies and procedures, a

furnisher should:

A. Identify practices or activities of the furnisher that can

compromise the accuracy and integrity of information furnished to

consumer reporting agencies, such as by:

1. Reviewing its existing practices and activities, including

the technological means and other methods it uses to furnish

information to consumer reporting agencies and the frequency and

timing of its furnishing of information, such as through an audit;

2. Reviewing historical records relating to accuracy or

integrity or to disputes, or other information relating to the

accuracy and integrity of information provided by the furnisher to

consumer reporting agencies and the types of errors, omissions, or

other problems that may have affected the accuracy and integrity of

information it has furnished about consumers to consumer reporting

agencies; and

3. Obtaining feedback from consumer reporting agencies,

consumers, the furnisher's staff, or other appropriate parties.

B. Evaluate the effectiveness of existing policies and

procedures of the furnisher regarding the accuracy and integrity of

information furnished to consumer reporting agencies; consider

whether new, additional, or different policies and procedures are

necessary; and consider whether implementation of existing policies

and procedures should be modified to enhance the accuracy and

integrity of information about consumers furnished to consumer

reporting agencies.

C. Evaluate the effectiveness of specific methods (including

technological means) the furnisher uses to provide information to

consumer reporting agencies; how those methods may affect the

accuracy and integrity of the information it provides to consumer

reporting agencies; and whether new, additional, or different

methods (including technological means) should be used to provide

information to consumer reporting agencies to enhance the accuracy

and integrity of that information.

IV. Specific Components of Policies and Procedures

A furnisher's policies and procedures should address the

following:

A. Establishing and implementing a system for furnishing

information about consumers to consumer reporting agencies that is

appropriate to the nature, size, complexity, and scope of the

furnisher's business operations.

B. Using standard data reporting formats and standard procedures

for compiling and furnishing data, where feasible, such as the

electronic transmission of information about consumers to consumer

reporting agencies.

C. Ensuring that the furnisher maintains its own records for a

reasonable period of time, not less than any applicable

recordkeeping requirement, in order to substantiate the accuracy of

any information about consumers it furnishes that is subject to a

direct dispute.

D. Establishing and implementing appropriate internal controls

regarding the accuracy and integrity of information about consumers

furnished to consumer reporting agencies, such as by implementing

standard procedures, verifying random samples, and conducting

regular reviews of information provided to consumer reporting

agencies.

E. Training staff that participates in activities related to the

furnishing of information about consumers to consumer reporting

agencies to implement the policies and procedures.

F. Providing for appropriate and effective oversight of relevant

service providers whose activities may affect the accuracy and

integrity of information about consumers furnished to consumer

reporting agencies to ensure compliance with the policies and

procedures.

G. Furnishing information about consumers to consumer reporting

agencies following mergers, portfolio acquisitions or sales, or

other acquisitions or transfers of accounts or other debts in a

manner that prevents re-aging of information, duplicative reporting,

or other problems affecting the accuracy or integrity of the

information furnished.

H. Attempting to obtain the information listed in Sec. 41.43(d)

from a consumer before determining that the consumer's dispute is

frivolous or irrelevant.

I. Ensuring that deletions, updates, and corrections furnished

to consumer reporting agencies are reflected in business systems to

avoid furnishing erroneous information.

J. Conducting investigations of direct disputes in a manner that

promotes the efficient resolution of such disputes.

K. Ensuring that technological and other means of communication

with consumer reporting agencies are designed to prevent duplicative

reporting of accounts, erroneous association of information with the

wrong consumer(s), and other occurrences that may compromise the

accuracy and integrity of information contained in consumer reports.

L. Providing consumer reporting agencies with sufficient

identifying information in the furnisher's possession about each

consumer about whom information is furnished to enable the consumer

reporting agency properly to identify the consumer.

M. Conducting a periodic evaluation of its own practices,

consumer reporting agency practices of which the furnisher is aware,

investigations of disputed information, corrections of inaccurate

information, means of communication, and other factors that may

affect the accuracy and integrity of information furnished to

consumer reporting agencies.

Board of Governors of the Federal Reserve System

12 CFR Chapter II

Authority and Issuance

For the reasons set forth in the joint preamble, part 222 of title

12, chapter II, of the Code of Federal Regulations is proposed to be

amended as follows:

PART 222--FAIR CREDIT REPORTING (REGULATION V)

1. The authority citation for part 222 continues to read as

follows:

Authority: 15 U.S.C. 1681a, 1681b, 1681c, 1681m, 1681s, 1681s-2,

1681s-3, 1681t, and

[[Page 70971]]

1681w; Secs. 3 and 214, Pub. L. 108-159, 117 Stat. 1952.

2. A new Subpart E is added to part 222 to read as follows:

Subpart E--Duties of Furnishers of Information

Sec.

222.40 Scope.

222.41 Definitions.

222.42 Reasonable policies and procedures concerning the accuracy

and integrity of furnished information.

222.43 Direct disputes.

Subpart E--Duties of Furnishers of Information

Sec. 222.40 Scope.

Subpart E of this part applies to member banks of the Federal

Reserve System (other than national banks) and their respective

operating subsidiaries that are not functionally regulated within the

meaning of section 5(c)(5) of the Bank Holding Company Act, as amended

(12 U.S.C. 1844(c)(5)), branches and Agencies of foreign banks (other

than Federal branches, Federal Agencies, and insured State branches of

foreign banks), commercial lending companies owned or controlled by

foreign banks, and organizations operating under section 25 or 25A of

the Federal Reserve Act (12 U.S.C. 601 et seq., and 611 et seq.).

Sec. 222.41 Definitions.

For purposes of this subpart and Appendix E of this part, the

following definitions apply:

Regulatory Definition Approach for Defining ``Accuracy'' and

``Integrity'' Follows:

(a) Accuracy means that any information that a furnisher provides

to a consumer reporting agency about an account or other relationship

with the consumer reflects without error the terms of and liability for

the account or other relationship and the consumer's performance and

other conduct with respect to the account or other relationship.

(b) Integrity means that any information that a furnisher provides

to a consumer reporting agency about an account or other relationship

with the consumer does not omit any term, such as a credit limit or

opening date, of that account or other relationship, the absence of

which can reasonably be expected to contribute to an incorrect

evaluation by a user of a consumer report of a consumer's

creditworthiness, credit standing, credit capacity, character, general

reputation, personal characteristics, or mode of living.

(c) Furnisher means an entity other than an individual consumer

that furnishes information relating to consumers to one or more

consumer reporting agencies. An entity is not a furnisher when it

provides information to a consumer reporting agency solely to obtain a

consumer report in accordance with sections 604(a) and (f) of the FCRA.

(d) Identity theft has the same meaning as in 16 CFR 603.2(a).

(e) Direct dispute means a dispute submitted directly to a

furnisher by a consumer concerning the accuracy of any information

contained in a consumer report relating to the consumer.

Sec. 222.42 Reasonable policies and procedures concerning the

accuracy and integrity of furnished information.

(a) Policies and procedures. Each furnisher must establish and

implement reasonable written policies and procedures regarding the

accuracy and integrity of the information relating to consumers that it

furnishes to a consumer reporting agency. The policies and procedures

must be appropriate to the nature, size, complexity, and scope of each

furnisher's activities.

(b) Guidelines. Each furnisher must consider the guidelines in

Appendix E of this part in developing its policies and procedures

required by this section, and incorporate those guidelines that are

appropriate.

(c) Reviewing and updating policies and procedures. Each furnisher

must review its policies and procedures required by this section

periodically and update them as necessary to ensure their continued

effectiveness.

Sec. 222.43 Direct disputes.

(a) General rule. Except as otherwise provided in this section, a

furnisher must investigate a direct dispute if it relates to:

(1) The consumer's liability for a credit account or other debt

with the furnisher, such as direct disputes relating to whether there

is or has been identity theft or fraud against the consumer, whether

there is individual or joint liability on an account, or whether the

consumer is an authorized user of a credit account;

(2) The terms of a credit account or other debt with the furnisher,

such as direct disputes relating to the type of account, principal

balance, scheduled payment amount on an account, or the amount of the

reported credit limit on an open-end account;

(3) The consumer's performance or other conduct concerning an

account or other relationship with the furnisher, such as direct

disputes relating to the current payment status, high balance, date a

payment was made, the amount of a payment made, or the date an account

was opened or closed; or

(4) Any other information contained in a consumer report regarding

an account or other relationship with the furnisher that bears on the

consumer's creditworthiness, credit standing, credit capacity,

character, general reputation, personal characteristics, or mode of

living.

(b) Exceptions. The requirements of paragraph (a) of this section

do not apply to a furnisher if:

(1) The direct dispute relates to:

(i) The consumer's identifying information (other than a direct

dispute relating to a consumer's liability for a credit account or

other debt with the furnisher, as provided in paragraph (a)(1) of this

section) such as name(s), date of birth, Social Security number,

telephone number(s), or address(es);

(ii) The identity of past or present employers;

(iii) Inquiries or requests for a consumer report;

(iv) Information derived from public records, such as judgments,

bankruptcies, liens, and other legal matters (unless provided by a

furnisher with an account or other relationship with the consumer); or

(v) Information related to fraud alerts or active duty alerts; or

(2) The direct dispute is submitted by, is prepared on behalf of

the consumer by, or is submitted on a form supplied to the consumer by,

a credit repair organization, as defined in 15 U.S.C. 1679a(3), or an

entity that would be a credit repair organization, but for 15 U.S.C.

1679a(3)(B)(i).

(c) Direct dispute address. A furnisher is required to investigate

a direct dispute only if a consumer submits a dispute notice to the

furnisher at:

(1) The address of a furnisher provided by a furnisher and set

forth on a consumer report relating to the consumer;

(2) An address clearly and conspicuously specified by the furnisher

for submitting direct disputes that is provided to the consumer in

writing or electronically (if the consumer has agreed to the electronic

delivery of information from the furnisher); or

(3) Any business address of the furnisher if the furnisher has not

so specified and provided an address for submitting direct disputes

under paragraph (c)(2) of this section.

(d) Direct dispute notice contents. A dispute notice must include:

(1) The name, address, and telephone number of the consumer;

(2) Sufficient information to identify the account or other

relationship that is in dispute, such as an account number;

[[Page 70972]]

(3) The specific information that the consumer is disputing and an

explanation of the basis for the dispute; and

(4) All supporting documentation or other information reasonably

required by the furnisher to substantiate the basis of the dispute.

This documentation may include, for example: a copy of the consumer

report that contains the allegedly inaccurate information; a police

report; a fraud or identity theft affidavit; a court order; or account

statements.

(e) Frivolous or irrelevant disputes. (1) A furnisher is not

required to investigate a direct dispute if the furnisher has

reasonably determined that the dispute is frivolous or irrelevant. A

dispute may be frivolous or irrelevant if:

(i) The consumer did not provide sufficient information to

investigate the disputed information as required by paragraph (d) of

this section;

(ii) The direct dispute is substantially the same as a dispute

previously submitted by or on behalf of the consumer, either directly

to the furnisher or through a consumer reporting agency, with respect

to which the furnisher has already satisfied the applicable

requirements of the Act or this section; provided, however, that a

direct dispute is not substantially the same as a dispute previously

submitted if the dispute includes information listed in paragraph (d)

of this section that had not previously been provided to the furnisher;

or

(iii) The furnisher is not required to investigate the direct

dispute under this section.

(2) Notice of determination. Upon making a determination that a

dispute is frivolous or irrelevant, the furnisher must notify the

consumer of the determination not later than five business days after

making the determination, by mail or, if authorized by the consumer for

that purpose, by any other means available to the furnisher.

(3) Contents of notice of determination that a dispute is frivolous

or irrelevant. A notice of determination that a dispute is frivolous or

irrelevant must include the reasons for such determination and identify

any information required to investigate the disputed information, which

may notice consist of a standardized form describing the general nature

of such information.

3. A new Appendix E is added to part 222 to read as follows:

Appendix E to Part 222--Interagency Guidelines Concerning the Accuracy

and Integrity of Information Furnished to Consumer Reporting Agencies

The Board encourages voluntary furnishing of information to

consumer reporting agencies. Section 222.42 of this part requires

each furnisher to establish and implement reasonable written

policies and procedures concerning the accuracy and integrity of the

information it furnishes to consumer reporting agencies. Under Sec.

222.42(b), the furnisher must consider the guidelines set forth

below in developing these policies and procedures. In establishing

these policies and procedures, a furnisher may include any of its

existing policies and procedures that are relevant and appropriate.

I. Nature, Scope, and Objectives of Policies and Procedures

A. Nature and Scope. Section 222.42(a) of this part requires

that a furnisher's policies and procedures be appropriate to the

nature, size, complexity, and scope of the furnisher's activities.

The furnisher's policies and procedures should reflect, for example:

1. The types of business activities in which the furnisher

engages;

2. The nature and frequency of the information the furnisher

provides to consumer reporting agencies; and

3. The technology used by the furnisher to furnish information

to consumer reporting agencies.

Regulatory Definition Approach for Paragraph B Follows:

B. Objectives. A furnisher should have written policies and

procedures reasonably designed to accomplish the following

objectives:

1. Ensure that the information it furnishes about accounts or

other relationships with a consumer:

(a) Accurately identifies the appropriate consumer;

(b) Accurately reports the terms of those accounts or other

relationships; and

(c) Accurately reports the consumer's performance and other

conduct with respect to the account or other relationship with the

consumer;

2. Ensure that the information it furnishes about accounts or

other relationships with a consumer avoids misleading a consumer

report user as to the consumer's creditworthiness, credit standing,

credit capacity, character, general reputation, personal

characteristics, or mode of living;

3. Ensure that it conducts reasonable investigations of consumer

disputes about the accuracy or integrity of information in consumer

reports and takes appropriate actions based on the outcome of such

investigations;

4. Ensure that it updates information it furnishes as necessary

to reflect the current status of the consumer's account or other

relationship, including:

(a) Any transfer of an account (e.g., by sale or assignment for

collection) to a third party; and

(b) Any cure of the consumer's failure to abide by the terms of

the account or other relationship;

5. Ensure that the information it furnishes about accounts or

other relationships with a consumer is reported in a form and manner

that is designed to minimize the likelihood that the information,

although accurate, may be erroneously reflected in a consumer

report, for example, by ensuring that the information is reported

with appropriate identifying information about the consumer to whom

it pertains, in a standardized and clearly understandable form and

manner, and with a date specifying the time period to which the

information pertains; and

6. Ensure that the information it furnishes about accounts or

other relationships with a consumer is substantiated by the

furnisher's own records.

Guidelines Definition Approach for Paragraph B Follows:

B. Objectives. A furnisher should have written policies and

procedures reasonably designed to accomplish the following

objectives:

1. Ensure that the information it furnishes about accounts or

other relationships with a consumer is accurate. Accuracy means that

any information that a furnisher provides to a consumer reporting

agency about an account or other relationship with the consumer

reflects without error the terms of and liability for the account or

other relationship and the consumer's performance and other conduct

with respect to the account or other relationship;

2. Ensure that the information it furnishes about accounts or

other relationships with a consumer is furnished with integrity.

Integrity means that any information that a furnisher provides to a

consumer reporting agency about an account or other relationship

with the consumer is:

(i) Reported in a form and manner that is designed to minimize

the likelihood that the information, although accurate, may be

erroneously reflected in a consumer report, for example, by ensuring

that the information is:

(A) Reported with appropriate identifying information about the

consumer to whom it pertains;

(B) Reported in a standardized and clearly understandable form

and manner; and

(C) Reported with a date specifying the time period to which the

information pertains; and

(ii) Substantiated by the furnisher's own records;

3. Ensure that it conducts reasonable investigations of consumer

disputes about the accuracy or integrity of information in consumer

reports and takes appropriate actions based on the outcome of such

investigations; and

4. Ensure that it updates information it furnishes as necessary

to reflect the current status of the consumer's account or other

relationship, including:

(a) Any transfer of an account (e.g., by sale or assignment for

collection) to a third party; and

(b) Any cure of the consumer's failure to abide by the terms of

the account or other relationship.

[[Page 70973]]

II. Accuracy and Integrity Duties of Furnishers Under the FCRA

A furnisher's policies and procedures should address compliance

with all applicable requirements imposed on the furnisher under the

FCRA, including the duties to: \1\

---------------------------------------------------------------------------

\1\ This is not a complete listing of furnisher duties relating

to accuracy and integrity. Furnishers should consult the FCRA to

determine what additional duties may apply.

---------------------------------------------------------------------------

A. Promptly notify the consumer reporting agency of the

furnisher's determination that furnished information is not complete

or accurate, for a furnisher that regularly and in the ordinary

course of business furnishes information; provide any corrections,

or any additional information, that is necessary to make the

furnished information complete and accurate; and not thereafter

furnish information that remains incomplete or inaccurate. 15 U.S.C.

1681s-2(a)(2).

B. Provide notice of a dispute by a consumer about the accuracy

or completeness of information furnished to a consumer reporting

agency. 15 U.S.C. 1681s-2(a)(3).

C. Report voluntary closure of a credit account by the consumer

in information regularly furnished for the period in which the

credit account is closed, for a furnisher that regularly and in the

ordinary course of business furnishes information about consumer

credit accounts. 15 U.S.C. 1681s-2(a)(4).

D. Notify the consumer reporting agency of the date of

delinquency on an account not later than 90 days after the furnisher

furnishes information to the consumer reporting agency regarding

action taken on the delinquent account (including placement for

collection, charge to profit or loss, or any similar action). Date

of delinquency means the month and year of the commencement of the

delinquency on the account that immediately preceded the action. 15

U.S.C. 1681s-2(a)(5).

E. Have in place reasonable procedures to respond to any

notification that the furnisher receives from a consumer reporting

agency under section 605B of the FCRA, relating to the blocking of

information resulting from identity theft and to prevent the

refurnishing of such blocked information. 15 U.S.C. 1681s-

2(a)(6)(A).

F. Not furnish to a consumer reporting agency information that

purports to relate to the consumer if the consumer submits an

identity theft report to the furnisher (at the address specified by

that furnisher for receiving such reports) stating that such

information maintained by that furnisher resulted from identity

theft. (This restriction does not apply if the furnisher

subsequently knows or is informed by the consumer that the

information is correct.) 15 U.S.C. 1681s-2(a)(6)(B).

G. After receiving a notice of dispute from a consumer reporting

agency, in a timely manner: Conduct an investigation; review all

relevant information the consumer reporting agency provides; report

the results of the investigation to the consumer reporting agency;

report incomplete or inaccurate information to all nationwide

consumer reporting agencies to which it reported the information;

and modify, delete, or permanently block incomplete or inaccurate

information or information that cannot be verified. 15 U.S.C. 1681s-

2(b).

H. Investigate direct disputes as required by 12 CFR 222.43 and

15 U.S.C. 1681s-2(a)(8).

III. Establishing and Implementing Policies and Procedures

In establishing and implementing its policies and procedures, a

furnisher should:

A. Identify practices or activities of the furnisher that can

compromise the accuracy and integrity of information furnished to

consumer reporting agencies, such as by:

1. Reviewing its existing practices and activities, including

the technological means and other methods it uses to furnish

information to consumer reporting agencies and the frequency and

timing of its furnishing of information, such as through an audit;

2. Reviewing historical records relating to accuracy or

integrity or to disputes, or other information relating to the

accuracy and integrity of information provided by the furnisher to

consumer reporting agencies and the types of errors, omissions, or

other problems that may have affected the accuracy and integrity of

information it has furnished about consumers to consumer reporting

agencies; and

3. Obtaining feedback from consumer reporting agencies,

consumers, the furnisher's staff, or other appropriate parties.

B. Evaluate the effectiveness of existing policies and

procedures of the furnisher regarding the accuracy and integrity of

information furnished to consumer reporting agencies; consider

whether new, additional, or different policies and procedures are

necessary; and consider whether implementation of existing policies

and procedures should be modified to enhance the accuracy and

integrity of information about consumers furnished to consumer

reporting agencies.

C. Evaluate the effectiveness of specific methods (including

technological means) the furnisher uses to provide information to

consumer reporting agencies; how those methods may affect the

accuracy and integrity of the information it provides to consumer

reporting agencies; and whether new, additional, or different

methods (including technological means) should be used to provide

information to consumer reporting agencies to enhance the accuracy

and integrity of that information.

IV. Specific Components of Policies and Procedures

A furnisher's policies and procedures should address the

following:

A. Establishing and implementing a system for furnishing

information about consumers to consumer reporting agencies that is

appropriate to the nature, size, complexity, and scope of the

furnisher's business operations.

B. Using standard data reporting formats and standard procedures

for compiling and furnishing data, where feasible, such as the

electronic transmission of information about consumers to consumer

reporting agencies.

C. Ensuring that the furnisher maintains its own records for a

reasonable period of time, not less than any applicable

recordkeeping requirement, in order to substantiate the accuracy of

any information about consumers it furnishes that is subject to a

direct dispute.

D. Establishing and implementing appropriate internal controls

regarding the accuracy and integrity of information about consumers

furnished to consumer reporting agencies, such as by implementing

standard procedures, verifying random samples, and conducting

regular reviews of information provided to consumer reporting

agencies.

E. Training staff that participates in activities related to the

furnishing of information about consumers to consumer reporting

agencies to implement the policies and procedures.

F. Providing for appropriate and effective oversight of relevant

service providers whose activities may affect the accuracy and

integrity of information about consumers furnished to consumer

reporting agencies to ensure compliance with the policies and

procedures.

G. Furnishing information about consumers to consumer reporting

agencies following mergers, portfolio acquisitions or sales, or

other acquisitions or transfers of accounts or other debts in a

manner that prevents re-aging of information, duplicative reporting,

or other problems affecting the accuracy or integrity of the

information furnished.

H. Attempting to obtain the information listed in Sec.

222.43(d) of this part from a consumer before determining that the

consumer's dispute is frivolous or irrelevant.

I. Ensuring that deletions, updates, and corrections furnished

to consumer reporting agencies are reflected in business systems to

avoid furnishing erroneous information.

J. Conducting investigations of direct disputes in a manner that

promotes the efficient resolution of such disputes.

K. Ensuring that technological and other means of communication

with consumer reporting agencies are designed to prevent duplicative

reporting of accounts, erroneous association of information with the

wrong consumer(s), and other occurrences that may compromise the

accuracy and integrity of information contained in consumer reports.

L. Providing consumer reporting agencies with sufficient

identifying information in the furnisher's possession about each

consumer about whom information is furnished to enable the consumer

reporting agency properly to identify the consumer.

M. Conducting a periodic evaluation of its own practices,

consumer reporting agency practices of which the furnisher is aware,

investigations of disputed information, corrections of inaccurate

information, means of communication, and other factors that may

affect the accuracy and integrity of information furnished to

consumer reporting agencies.

Federal Deposit Insurance Corporation

12 CFR Chapter III

Authority and Issuance

For the reasons discussed in the joint preamble, the Federal

Deposit Insurance

[[Page 70974]]

Corporation proposes to amend chapter III of title 12 of the Code of

Federal Regulations by amending 12 CFR part 334 as follows:

PART 334--FAIR CREDIT REPORTING

1. The authority citation for part 334 is revised to read as

follows:

Authority: 12 U.S.C. 1818, 1819 (Tenth), and 1831p-1; 15 U.S.C.

1681a, 1681b, 1681c, 1681m, 1681s, 1681s-2, 1681s-3, 1681t, 1681w,

and 6801 et seq.; Pub. L. 108-159, 117 Stat. 1952.

2. Add subpart E to part 334 to read as follows:

Subpart E--Duties of Furnishers of Information

Sec.

334.40 Scope.

334.41 Definitions.

334.42 Reasonable policies and procedures concerning the accuracy

and integrity of furnished information.

334.43 Direct disputes.

Subpart E--Duties of Furnishers of Information

Sec. 334.40 Scope.

This subpart applies to a financial institution or creditor that is

an insured state nonmember bank, insured state licensed branch of a

foreign bank, or a subsidiary of such entities (except dealers, persons

providing insurance, investment companies, and investment advisers).

Sec. 334.41 Definitions.

For purposes of this subpart and Appendix E of this part, the

following definitions apply:

Regulatory Definition Approach for Defining ``Accuracy'' and

``Integrity'' Follows:

(a) Accuracy means that any information that a furnisher provides

to a consumer reporting agency about an account or other relationship

with the consumer that reflects without error the terms of and

liability for the account or other relationship and the consumer's

performance and other conduct with respect to the account or other

relationship.

(b) Integrity means that any information that a furnisher provides

to a consumer reporting agency about an account or other relationship

with the consumer does not omit any term, such as a credit limit or

opening date, of that account or other relationship, the absence of

which can reasonably be expected to contribute to an incorrect

evaluation by a user of a consumer report of a consumer's

creditworthiness, credit standing, credit capacity, character, general

reputation, personal characteristics, or mode of living.

(c) Furnisher means an entity that furnishes information relating

to consumers to one or more consumer reporting agencies. An entity is

not a furnisher when it provides information to a consumer reporting

agency solely to obtain a consumer report in accordance with sections

604(a) and (f) of the FCRA.

(d) Identity theft has the same meaning as in 16 CFR 603.2(a).

(e) Direct dispute means a dispute submitted directly to a

furnisher by a consumer concerning the accuracy of any information

contained in a consumer report relating to the consumer.

Sec. 334.42 Reasonable policies and procedures concerning the

accuracy and integrity of furnished information.

(a) Policies and procedures. Each furnisher must establish and

implement reasonable written policies and procedures regarding the

accuracy and integrity of the information relating to consumers that it

furnishes to a consumer reporting agency. The policies and procedures

must be appropriate to the nature, size, complexity, and scope of each

furnisher's activities.

(b) Guidelines. Each furnisher must consider the guidelines in

Appendix E of this part in developing its policies and procedures

required by this section, and incorporate those guidelines that are

appropriate.

(c) Reviewing and updating policies and procedures. Each furnisher

must review its policies and procedures required by this section

periodically and update them as necessary to ensure their continued

effectiveness.

Sec. 334.43 Direct disputes.

(a) General rule. Except as otherwise provided in this section, a

furnisher must investigate a direct dispute if it relates to:

(1) The consumer's liability for a credit account or other debt

with the furnisher, such as direct disputes relating to whether there

is or has been identity theft or fraud against the consumer, whether

there is individual or joint liability on an account, or whether the

consumer is an authorized user of a credit account;

(2) The terms of a credit account or other debt with the furnisher,

such as direct disputes relating to the type of account, principal

balance, scheduled payment amount on an account, or the amount of the

reported credit limit on an open-end account;

(3) The consumer's performance or other conduct concerning an

account or other relationship with the furnisher, such as direct

disputes relating to the current payment status, high balance, date a

payment was made, the amount of a payment made, or the date an account

was opened or closed; or

(4) Any other information contained in a consumer report regarding

an account or other relationship with the furnisher that bears on the

consumer's credit worthiness, credit standing, credit capacity,

character, general reputation, personal characteristics, or mode of

living.

(b) Exceptions. The requirements of paragraph (a) of this section

do not apply to a furnisher if:

(1) The direct dispute relates to:

(i) The consumer's identifying information (other than a direct

dispute relating to a consumer's liability for a credit account or

other debt with the furnisher, as provided in paragraph (a)(1) of this

section) such as name(s), date of birth, Social Security number,

telephone number(s), or address(es);

(ii) The identity of past or present employers;

(iii) Inquiries or requests for a consumer report;

(iv) Information derived from public records, such as judgments,

bankruptcies, liens, and other legal matters; or

(v) Information related to fraud alerts or active duty alerts; or

(2) The direct dispute is submitted by, is prepared on behalf of

the consumer by, or is submitted on a form supplied to the consumer by,

a credit repair organization, as defined in 15 U.S.C. 1679a(3), or an

entity that would be a credit repair organization, but for 15 U.S.C.

1679a(3)(B)(i).

(c) Direct dispute address. A furnisher is required to investigate

a direct dispute only if a consumer submits a dispute notice to the

furnisher at:

(1) The address of a furnisher provided by a furnisher and set

forth on a consumer report relating to the consumer;

(2) An address clearly and conspicuously specified by the furnisher

for submitting direct disputes that is provided to the consumer in

writing or electronically (if the consumer has agreed to the electronic

delivery of information from the furnisher); or

(3) Any business address of the furnisher if the furnisher has not

so specified and provided an address for submitting direct disputes

under paragraph (c)(2) of this section.

(d) Direct dispute notice contents. A dispute notice must include:

(1) The name, address, and telephone number of the consumer;

(2) Sufficient information to identify the account or other

relationship that is in dispute, such as an account number;

[[Page 70975]]

(3) The specific information that the consumer is disputing and an

explanation of the basis for the dispute; and

(4) All supporting documentation or other information reasonably

required by the furnisher to substantiate the basis of the dispute.

This documentation may include, for example: a copy of the consumer

report that contains the allegedly inaccurate information; a police

report; a fraud or identity theft affidavit; a court order; or account

statements.

(e) Frivolous or irrelevant disputes. (1) A furnisher is not

required to investigate a direct dispute if the furnisher has

reasonably determined that the dispute is frivolous or irrelevant. A

dispute may be frivolous or irrelevant if:

(i) The consumer did not provide sufficient information to

investigate the disputed information as required by paragraph (d) of

this section;

(ii) The direct dispute is substantially the same as a dispute

previously submitted by or on behalf of the consumer, either directly

to the furnisher or through a consumer reporting agency, with respect

to which the furnisher has already satisfied the applicable

requirements of the Act or this section; provided, however, that a

direct dispute is not substantially the same as a dispute previously

submitted if the dispute includes information listed in paragraph (d)

of this section that had not previously been provided to the furnisher;

or

(iii) The furnisher is not required to investigate the direct

dispute under this section.

(2) Notice of determination. Upon making a determination that a

dispute is frivolous or irrelevant, the furnisher must notify the

consumer of the determination not later than five business days after

making the determination, by mail or, if authorized by the consumer for

that purpose, by any other means available to the furnisher.

(3) Contents of notice of determination that a dispute is frivolous

or irrelevant. A notice of determination that a dispute is frivolous or

irrelevant must include the reasons for such determination and identify

any information required to investigate the disputed information, which

may consist of a standardized form describing the general nature of

such information.

3. Add Appendix E to part 334 to read as follows:

Appendix E to Part 334--Interagency Guidelines Concerning the Accuracy

and Integrity of Information Furnished to Consumer Reporting Agencies

The FDIC encourages voluntary furnishing of information to

consumer reporting agencies. Section 334.42 of this part requires

each furnisher to establish and implement reasonable written

policies and procedures concerning the accuracy and integrity of the

information it furnishes to consumer reporting agencies. Under Sec.

334.42(b), the furnisher must consider the guidelines set forth

below in developing these policies and procedures. In establishing

these policies and procedures, a furnisher may include any of its

existing policies and procedures that are relevant and appropriate.

I. Nature, Scope, and Objectives of Policies and Procedures

A. Nature and Scope. Section 334.42(a) of this part requires

that a furnisher's policies and procedures be appropriate to the

nature, size, complexity, and scope of the furnisher's activities.

The furnisher's policies and procedures should reflect, for example:

1. The types of business activities in which the furnisher

engages;

2. The nature and frequency of the information the furnisher

provides to consumer reporting agencies; and

3. The technology used by the furnisher to furnish information

to consumer reporting agencies.

Regulatory Definition Approach for Paragraph B Follows:

B. Objectives. A furnisher should have written policies and

procedures reasonably designed to accomplish the following

objectives:

1. Ensure that the information it furnishes about accounts or

other relationships with a consumer:

(a) Accurately identifies the appropriate consumer;

(b) Accurately reports the terms of those accounts or other

relationships;

(c) Accurately reports the consumer's performance and other

conduct with respect to the account or other relationship with the

consumer;

2. Ensure that the information it furnishes about accounts or

other relationships with a consumer avoids misleading a consumer

report user as to the consumer's creditworthiness, credit standing,

credit capacity, character, general reputation, personal

characteristics, or mode of living;

3. Ensure that it conducts reasonable investigations of consumer

disputes about the accuracy or integrity of information in consumer

reports and takes appropriate actions based on the outcome of such

investigations;

4. Ensure that it updates information it furnishes as necessary

to reflect the current status of the consumer's account or other

relationship, including:

(a) Any transfer of an account (e.g., by sale or assignment for

collection) to a third party; and

(b) Any cure of the consumer's failure to abide by the terms of

the account or other relationship;

5. Ensure that the information it furnishes about accounts or

other relationships with a consumer is reported in a form and manner

that is designed to minimize the likelihood that the information,

although accurate, may be erroneously reflected in a consumer

report, for example, by ensuring that the information is reported

with appropriate identifying information about the consumer to which

it pertains, in a standardized and clearly understandable form and

manner, with a date specifying the time period to which the

information pertains; and

6. Ensure that the information it furnishes about accounts or

other relationships with a furnisher is substantiated by the

furnisher's own records.

Guidelines Definition Approach for Paragraph B Follows:

B. Objectives. A furnisher should have written policies and

procedures reasonably designed to accomplish the following

objectives:

1. Ensure that the information it furnishes about accounts or

other relationships with a consumer is accurate. Accuracy means that

any information that a furnisher provides to a consumer reporting

agency about an account or other relationship with the consumer

reflects without error the terms of and liability for the account or

other relationship and the consumer's performance and other conduct

with respect to the account or other relationship;

2. Ensure that the information it furnishes about accounts or

other relationships with a consumer is furnished with integrity.

Integrity means that any information that a furnisher provides to a

consumer reporting agency about an account or other relationship

with the consumer is:

(i) Reported in a form and manner that is designed to minimize

the likelihood that the information, although accurate, may be

erroneously reflected in a consumer report, for example, by ensuring

that the information is:

(A) Reported with appropriate identifying information about the

consumer to whom it pertains;

(B) Reported in a standardized and clearly understandable form

and manner; and

(C) Reported with a date specifying the time period to which the

information pertains; and

(ii) Substantiated by the furnisher's own records;

3. Ensure that it conducts reasonable investigations of consumer

disputes about the accuracy or integrity of information in consumer

reports and takes appropriate actions based on the outcome of such

investigations; and

4. Ensure that it updates information it furnishes as necessary

to reflect the current status of the consumer's account or other

relationship, including:

(a) Any transfer of an account (e.g., by sale or assignment for

collection) to a third party; and

(b) Any cure of the consumer's failure to abide by the terms of

the account or other relationship.

[[Page 70976]]

II. Accuracy and Integrity Duties of Furnishers Under the FCRA

A furnisher's policies and procedures should address compliance

with all applicable requirements imposed on the furnisher under the

FCRA, including the duties to: \1\

---------------------------------------------------------------------------

\1\ This is not a complete listing of furnisher duties relating

to accuracy and integrity. Furnishers should consult the FCRA to

determine what additional duties may apply.

---------------------------------------------------------------------------

A. Promptly notify the consumer reporting agency of the

furnisher's determination that furnished information is not complete

or accurate, for a furnisher that regularly and in the ordinary

course of business furnishes information; provide any corrections,

or any additional information, that is necessary to make the

furnished information complete and accurate; and not thereafter

furnish information that remains incomplete or inaccurate. 15 U.S.C.

1681s-2(a)(2).

B. Provide notice of a dispute by a consumer about the accuracy

or completeness of information furnished to a consumer reporting

agency. 15 U.S.C. 1681s-2(a)(3).

C. Report voluntary closure of a credit account by the consumer

in information regularly furnished for the period in which the

credit account is closed, for a furnisher that regularly and in the

ordinary course of business furnishes information about consumer

credit accounts. 15 U.S.C. 1681s-2(a)(4).

D. Notify the consumer reporting agency of the date of

delinquency on an account not later than 90 days after the furnisher

furnishes information to the consumer reporting agency regarding

action taken on the delinquent account (including placement for

collection, charge to profit or loss, or any similar action). Date

of delinquency means the month and year of the commencement of the

delinquency on the account that immediately preceded the action. 15

U.S.C. 1681s-2(a)(5).

E. Have in place reasonable procedures to respond to any

notification that the furnisher receives from a consumer reporting

agency under section 605B of the FCRA, relating to the blocking of

information resulting from identity theft and to prevent the

refurnishing of such blocked information. 15 U.S.C. 1681s-

2(a)(6)(A).

F. Not furnish to a consumer reporting agency information that

purports to relate to the consumer if the consumer submits an

identity theft report to the furnisher (at the address specified by

that furnisher for receiving such reports) stating that such

information maintained by that furnisher resulted from identity

theft. (This restriction does not apply if the furnisher

subsequently knows or is informed by the consumer that the

information is correct.) 15 U.S.C. 1681s-2(a)(6)(B).

G. After receiving a notice of dispute from a consumer reporting

agency, in a timely manner: Conduct an investigation; review all

relevant information the consumer reporting agency provides; report

the results of the investigation to the consumer reporting agency;

report incomplete or inaccurate information to all nationwide

consumer reporting agencies to which it reported the information;

and modify, delete, or permanently block incomplete or inaccurate

information or information that cannot be verified. 15 U.S.C. 1681s-

2(b).

H. Investigate direct disputes as required by 12 CFR 334.43 and

15 U.S.C. 1681s-2(a)(8).

III. Establishing and Implementing Policies and Procedures

In establishing and implementing its policies and procedures, a

furnisher should:

A. Identify practices or activities of the furnisher that can

compromise the accuracy and integrity of information furnished to

consumer reporting agencies, such as by:

1. Reviewing its existing practices and activities, including

the technological means and other methods it uses to furnish

information to consumer reporting agencies and the frequency and

timing of its furnishing of information, such as through an audit;

2. Reviewing historical records relating to accuracy or

integrity or to disputes, or other information relating to the

accuracy and integrity of information provided by the furnisher to

consumer reporting agencies and the types of errors, omissions, or

other problems that may have affected the accuracy and integrity of

information it has furnished about consumers to consumer reporting

agencies; and

3. Obtaining feedback from consumer reporting agencies,

consumers, the furnisher's staff, or other appropriate parties.

B. Evaluate the effectiveness of existing policies and

procedures of the furnisher regarding the accuracy and integrity of

information furnished to consumer reporting agencies; consider

whether new, additional, or different policies and procedures are

necessary; and consider whether implementation of existing policies

and procedures should be modified to enhance the accuracy and

integrity of information about consumers furnished to consumer

reporting agencies.

C. Evaluate the effectiveness of specific methods (including

technological means) the furnisher uses to provide information to

consumer reporting agencies; how those methods may affect the

accuracy and integrity of the information it provides to consumer

reporting agencies; and whether new, additional, or different

methods (including technological means) should be used to provide

information to consumer reporting agencies to enhance the accuracy

and integrity of that information.

IV. Specific Components of Policies and Procedures

A furnisher's policies and procedures should address the

following:

A. Establishing and implementing a system for furnishing

information about consumers to consumer reporting agencies that is

appropriate to the nature, size, complexity, and scope of the

furnisher's business operations.

B. Using standard data reporting formats and standard procedures

for compiling and furnishing data, where feasible, such as the

electronic transmission of information about consumers to consumer

reporting agencies.

C. Ensuring that the furnisher maintains its own records for a

reasonable period of time, not less than any applicable

recordkeeping requirement, in order to substantiate the accuracy of

any information about consumers it furnishes that is subject to a

direct dispute.

D. Establishing and implementing appropriate internal controls

regarding the accuracy and integrity of information about consumers

furnished to consumer reporting agencies, such as by implementing

standard procedures, verifying random samples, and conducting

regular reviews of information provided to consumer reporting

agencies.

E. Training staff that participates in activities related to the

furnishing of information about consumers to consumer reporting

agencies to implement the policies and procedures.

F. Providing for appropriate and effective oversight of relevant

service providers whose activities may affect the accuracy and

integrity of information about consumers furnished to consumer

reporting agencies to ensure compliance with the policies and

procedures.

G. Furnishing information about consumers to consumer reporting

agencies following mergers, portfolio acquisitions or sales, or

other acquisitions or transfers of accounts or other debts in a

manner that prevents re-aging of information, duplicative reporting,

or other problems affecting the accuracy or integrity of the

information furnished.

H. Attempting to obtain the information listed in Sec. --.43(d)

from a consumer before determining that the consumer's dispute is

frivolous or irrelevant.

I. Ensuring that deletions, updates, and corrections furnished

to consumer reporting agencies are reflected in business systems to

avoid furnishing erroneous information.

J. Conducting investigations of direct disputes in a manner that

promotes the efficient resolution of such disputes.

K. Ensuring that technological and other means of communication

with consumer reporting agencies are designed to prevent duplicative

reporting of accounts, erroneous association of information with the

wrong consumer(s), and other occurrences that may compromise the

accuracy and integrity of information contained in consumer reports.

L. Providing consumer reporting agencies with sufficient

identifying information in the furnisher's possession about each

consumer about whom information is furnished to enable the consumer

reporting agency properly to identify the consumer.

M. Conducting a periodic evaluation of its own practices,

consumer reporting agency practices, investigations of disputed

information, corrections of inaccurate information, means of

communication, and other factors that may affect the accuracy and

integrity of information furnished to consumer reporting agencies.

Department of the Treasury

Office of Thrift Supervision

12 CFR Chapter V

Authority and Issuance

For the reasons discussed in the joint preamble, the Office of

Thrift

[[Page 70977]]

Supervision proposes to amend chapter V of title 12 of the Code of

Federal Regulations by amending 12 CFR part 571 as follows:

PART 571--FAIR CREDIT REPORTING

1. The authority citation for part 571 is revised to read as

follows:

Authority: 12 U.S.C. 1462a, 1463, 1464, 1467a, 1828, 1831p-1,

and 1881-1884; 15 U.S.C. 1681b, 1681c, 1681m, 1681s, 1681s-2, 1681s-

3, 1681t, and 1681w; 15 U.S.C. 6801 and 6805; Sec. 214 Pub. L. 108-

159, 117 Stat. 1952.

Subpart A--General Provisions

2. Amend Sec. 571.1 by adding a new paragraph (b)(5) to read as

follows:

Sec. 571.1 Purpose and scope.

* * * * *

(b) * * *

(5) The scope of subpart E of this part is stated in Sec. 571.40

of this part.

* * * * *

3. Add a new Subpart E to part 571 to read as follows:

Subpart E--Duties of Furnishers of Information

Sec.

571.40 Scope.

571.41 Definitions.

571.42 Reasonable policies and procedures concerning the accuracy

and integrity of furnished information.

571.43 Direct disputes.

Subpart E--Duties of Furnishers of Information

Sec. 571.40 Scope.

Subpart C of this part applies to savings associations whose

deposits are insured by the Federal Deposit Insurance Corporation or,

in accordance with Sec. 559.3(h)(1) of this chapter, federal savings

association operating subsidiaries that are not functionally regulated

within the meaning of section 5(c)(5) of the Bank Holding Company Act

of 1956, as amended (12 U.S.C. 1844(c)(5).

Sec. 571.41 Definitions.

For purposes of this subpart and Appendix E of this part, the

following definitions apply:

Regulatory Definition Approach for Defining ``Accuracy'' and

``Integrity'' Follows:

(a) Accuracy means that any information that a furnisher provides

to a consumer reporting agency about an account or other relationship

with the consumer reflects without error the terms of and liability for

the account or other relationship and the consumer's performance and

other conduct with respect to the account or other relationship.

(b) Integrity means that any information that a furnisher provides

to a consumer reporting agency about an account or other relationship

with the consumer does not omit any term, such as a credit limit or

opening date, of that account or other relationship, the absence of

which can reasonably be expected to contribute to an incorrect

evaluation by a user of a consumer report of a consumer's

creditworthiness, credit standing, credit capacity, character, general

reputation, personal characteristics, or mode of living.

(c) Furnisher means an entity other than an individual consumer

that furnishes information relating to consumers to one or more

consumer reporting agencies. An entity is not a furnisher when it

provides information to a consumer reporting agency solely to obtain a

consumer report in accordance with sections 604(a) and (f) of the FCRA.

(d) Identity theft has the same meaning as in 16 CFR 603.2(a).

(e) Direct dispute means a dispute submitted directly to a

furnisher by a consumer concerning the accuracy of any information

contained in a consumer report relating to the consumer.

Sec. 571.42 Reasonable policies and procedures concerning the

accuracy and integrity of furnished information.

(a) Policies and procedures. Each furnisher must establish and

implement reasonable written policies and procedures regarding the

accuracy and integrity of the information relating to consumers that it

furnishes to a consumer reporting agency. The policies and procedures

must be appropriate to the nature, size, complexity, and scope of each

furnisher's activities.

(b) Guidelines. Each furnisher must consider the guidelines in

Appendix E of this part in developing its policies and procedures

required by this section, and incorporate those guidelines that are

appropriate.

(c) Reviewing and updating policies and procedures. Each furnisher

must review its policies and procedures required by this section

periodically and update them as necessary to ensure their continued

effectiveness.

Sec. 571.43 Direct disputes.

(a) General rule. Except as otherwise provided in this section, a

furnisher must investigate a direct dispute if it relates to:

(1) The consumer's liability for a credit account or other debt

with the furnisher, such as direct disputes relating to whether there

is or has been identity theft or fraud against the consumer, whether

there is individual or joint liability on an account, or whether the

consumer is an authorized user of a credit account;

(2) The terms of a credit account or other debt with the furnisher,

such as direct disputes relating to the credit limit on an open-end

account, type of account, principal balance, scheduled payment amount

on an account, or the amount of the reported credit limit on an open-

end account;

(3) The consumer's performance or other conduct concerning an

account or other relationship with the furnisher, such as direct

disputes relating to the current payment status, high balance, date a

payment was made, the amount of a payment made, or the date an account

was opened or closed; or

(4) Any other information contained in a consumer report regarding

an account or other relationship with the furnisher that bears on the

consumer's creditworthiness, credit standing, credit capacity,

character, general reputation, personal characteristics, or mode of

living.

(b) Exceptions. The requirements of paragraph (a) of this section

do not apply to a furnisher if:

(1) The direct dispute relates to:

(i) The consumer's identifying information (other than a direct

dispute relating to a consumer's liability for a credit account or

other debt with the furnisher, as provided in paragraph (a)(1) of this

section) such as name(s), date of birth, Social Security number,

telephone number(s), or address(es);

(ii) The identity of past or present employers;

(iii) Inquiries or requests for a consumer report;

(iv) Information derived from public records, such as judgments,

bankruptcies, liens, and other legal matters (unless provided by a

furnisher with an account or other relationship with the consumer); or

(v) Information related to fraud alerts or active duty alerts; or

(2) The direct dispute is submitted by, is prepared on behalf of

the consumer by, or is submitted on a form supplied to the consumer by,

a credit repair organization, as defined in 15 U.S.C. 1679a(3), or an

entity that would be a credit repair organization, but for 15 U.S.C.

1679a(3)(B)(i).

(c) Direct dispute address. A furnisher is required to investigate

a direct dispute only if a consumer submits a dispute notice to the

furnisher at:

(1) The address of a furnisher provided by a furnisher and set

forth on a consumer report relating to the consumer;

[[Page 70978]]

(2) An address clearly and conspicuously specified by the furnisher

for submitting direct disputes that is provided to the consumer in

writing or electronically (if the consumer has agreed to the electronic

delivery of information from the furnisher); or

(3) Any business address of the furnisher if the furnisher has not

so specified and provided an address for submitting direct disputes

under paragraph (c)(2) of this section.

(d) Direct dispute notice contents. A dispute notice must include:

(1) The name, address, and telephone number of the consumer;

(2) Sufficient information to identify the account or other

relationship that is in dispute, such as an account number;

(3) The specific information that the consumer is disputing and an

explanation of the basis for the dispute; and

(4) All supporting documentation or other information reasonably

required by the furnisher to substantiate the basis of the dispute.

This documentation may include, for example: A copy of the consumer

report that contains the allegedly inaccurate information; a police

report; a fraud or identity theft affidavit; a court order; or account

statements.

(e) Frivolous or irrelevant disputes. (1) A furnisher is not

required to investigate a direct dispute if the furnisher has

reasonably determined that the dispute is frivolous or irrelevant. A

dispute may be frivolous or irrelevant if:

(i) The consumer did not provide sufficient information to

investigate the disputed information as required by paragraph (d) of

this section;

(ii) The direct dispute is substantially the same as a dispute

previously submitted by or on behalf of the consumer, either directly

to the furnisher or through a consumer reporting agency, with respect

to which the furnisher has already satisfied the applicable

requirements of the Act or this section; provided, however, that a

direct dispute is not substantially the same as a dispute previously

submitted if the dispute includes information listed in paragraph (d)

of this section that had not previously been provided to the furnisher;

or

(iii) The furnisher is not required to investigate the direct

dispute under this section.

(2) Notice of determination. Upon making a determination that a

dispute is frivolous or irrelevant, the furnisher must notify the

consumer of the determination not later than five business days after

making the determination by mail or, if authorized by the consumer for

that purpose, by any other means available to the furnisher.

(3) Contents of notice of determination that a dispute is frivolous

or irrelevant. A notice of determination that a dispute is frivolous or

irrelevant must include the reasons for such determination and identify

any information required to investigate the disputed information, which

may consist of a standardized form describing the general nature of

such information.

4. Add a new Appendix E to part 571 to read as follows:

Appendix E to Part 571--Interagency Guidelines Concerning the Accuracy

and Integrity of Information Furnished to Consumer Reporting Agencies

OTS encourages voluntary furnishing of information to consumer

reporting agencies. Section 571.42 of this part requires each

furnisher to establish and implement reasonable written policies and

procedures concerning the accuracy and integrity of the information

it furnishes to consumer reporting agencies. Under Sec. 571.42(b)

of this part, the furnisher must consider the guidelines set forth

below in developing these policies and procedures. In establishing

these policies and procedures, a furnisher may include any of its

existing policies and procedures that are relevant and appropriate.

I. Nature, Scope, and Objectives of Policies and Procedures

A. Nature and Scope. Section 571.42(a) of this part requires

that a furnisher's policies and procedures be appropriate to the

nature, size, complexity, and scope of the furnisher's activities.

The furnisher's policies and procedures should reflect, for example:

1. The types of business activities in which the furnisher

engages;

2. The nature and frequency of the information the furnisher

provides to consumer reporting agencies; and

3. The technology used by the furnisher to furnish information

to consumer reporting agencies.

Regulatory Definition Approach for Paragraph B Follows:

B. Objectives. A furnisher should have written policies and

procedures reasonably designed to accomplish the following

objectives:

1. Ensure that the information it furnishes about accounts or

other relationships with a consumer:

(a) Accurately identifies the appropriate consumer;

(b) Accurately reports the terms of those accounts or other

relationships; and

(c) Accurately reports the consumer's performance and other

conduct with respect to the account or other relationship with the

consumer;

2. Ensure that the information it furnishes about accounts or

other relationships with a consumer avoids misleading a consumer

report user as to the consumer's creditworthiness, credit standing,

credit capacity, character, general reputation, personal

characteristics, or mode of living;

3. Ensure that it conducts reasonable investigations of consumer

disputes about the accuracy or integrity of information in consumer

reports and takes appropriate actions based on the outcome of such

investigations;

4. Ensure that it updates information it furnishes as necessary

to reflect the current status of the consumer's account or other

relationship, including:

(a) Any transfer of an account (e.g., by sale or assignment for

collection) to a third party; and

(b) Any cure of the consumer's failure to abide by the terms of

the account or other relationship;

5. Ensure that the information it furnishes about accounts or

other relationships with a consumer is reported in a form and manner

that is designed to minimize the likelihood that the information,

although accurate, may be erroneously reflected in a consumer

report, for example, by ensuring that the information is reported

with appropriate identifying information about the consumer to whom

it pertains, in a standardized and clearly understandable form and

manner, and with a date specifying the time period to which the

information pertains; and

6. Ensure that the information it furnishes about accounts or

other relationships with a consumer is substantiated by the

furnisher's own records.

Guidelines Definition Approach for Paragraph B Follows:

B. Objectives. A furnisher should have written policies and

procedures reasonably designed to accomplish the following

objectives:

1. Ensure that the information it furnishes about accounts or

other relationships with a consumer is accurate. Accuracy means that

any information that a furnisher provides to a consumer reporting

agency about an account or other relationship with the consumer

reflects without error the terms of and liability for the account or

other relationship and the consumer's performance and other conduct

with respect to the account or other relationship;

2. Ensure that the information it furnishes about accounts or

other relationships with a consumer is furnished with integrity.

Integrity means that any information that a furnisher provides to a

consumer reporting agency about an account or other relationship

with the consumer is:

(i) Reported in a form and manner that is designed to minimize

the likelihood that the information, although accurate, may be

erroneously reflected in a consumer report, for example, by ensuring

that the information is:

(A) Reported with appropriate identifying information about the

consumer to whom it pertains;

(B) Reported in a standardized and clearly understandable form

and manner; and

(C) Reported with a date specifying the time period to which the

information pertains; and

(ii) Substantiated by the furnisher's own records;

3. Ensure that it conducts reasonable investigations of consumer

disputes about

[[Page 70979]]

the accuracy or integrity of information in consumer reports and

takes appropriate actions based on the outcome of such

investigations; and

4. Ensure that it updates information it furnishes as necessary

to reflect the current status of the consumer's account or other

relationship, including:

(a) Any transfer of an account (e.g., by sale or assignment for

collection) to a third party; and

(b) Any cure of the consumer's failure to abide by the terms of

the account or other relationship.

II. Accuracy and Integrity Duties of Furnishers Under the FCRA

A furnisher's policies and procedures should address compliance

with all applicable requirements imposed on the furnisher under the

FCRA, including the duties to: \1\

---------------------------------------------------------------------------

\1\ This is not a complete listing of furnisher duties relating

to accuracy and integrity. Furnishers should consult the FCRA to

determine what additional duties may apply.

---------------------------------------------------------------------------

A. Promptly notify the consumer reporting agency of the

furnisher's determination that furnished information is not complete

or accurate, for a furnisher that regularly and in the ordinary

course of business furnishes information; provide any corrections,

or any additional information, that is necessary to make the

furnished information complete and accurate; and not thereafter

furnish information that remains incomplete or inaccurate. 15 U.S.C.

1681s-2(a)(2).

B. Provide notice of a dispute by a consumer about the accuracy

or completeness of information furnished to a consumer reporting

agency. 15 U.S.C. 1681s-2(a)(3).

C. Report voluntary closure of a credit account by the consumer

in information regularly furnished for the period in which the

credit account is closed, for a furnisher that regularly and in the

ordinary course of business furnishes information about consumer

credit accounts. 15 U.S.C. 1681s-2(a)(4).

D. Notify the consumer reporting agency of the date of

delinquency on an account not later than 90 days after the furnisher

furnishes information to the consumer reporting agency regarding

action taken on the delinquent account (including placement for

collection, charge to profit or loss, or any similar action). Date

of delinquency means the month and year of the commencement of the

delinquency on the account that immediately preceded the action. 15

U.S.C. 1681s-2(a)(5).

E. Have in place reasonable procedures to respond to any

notification that the furnisher receives from a consumer reporting

agency under section 605B of the FCRA, relating to the blocking of

information resulting from identity theft and to prevent the

refurnishing of such blocked information. 15 U.S.C. 1681s-

2(a)(6)(A).

F. Not furnish to a consumer reporting agency information that

purports to relate to the consumer if the consumer submits an

identity theft report to the furnisher (at the address specified by

that furnisher for receiving such reports) stating that such

information maintained by that furnisher resulted from identity

theft. (This restriction does not apply if the furnisher

subsequently knows or is informed by the consumer that the

information is correct.) 15 U.S.C. 1681s-2(a)(6)(B).

G. After receiving a notice of dispute from a consumer reporting

agency, in a timely manner: Conduct an investigation; review all

relevant information the consumer reporting agency provides; report

the results of the investigation to the consumer reporting agency;

report incomplete or inaccurate information to all nationwide

consumer reporting agencies to which it reported the information;

and modify, delete, or permanently block incomplete or inaccurate

information or information that cannot be verified. 15 U.S.C. 1681s-

2(b).

H. Investigate direct disputes as required by Sec. 571.43 of

this part and 15 U.S.C. 1681s-2(a)(8).

III. Establishing and Implementing Policies and Procedures

In establishing and implementing its policies and procedures, a

furnisher should:

A. Identify practices or activities of the furnisher that can

compromise the accuracy and integrity of information furnished to

consumer reporting agencies, such as by:

1. Reviewing its existing practices and activities, including

the technological means and other methods it uses to furnish

information to consumer reporting agencies and the frequency and

timing of its furnishing of information, such as through an audit;

2. Reviewing historical records relating to accuracy or

integrity or to disputes, or other information relating to the

accuracy and integrity of information provided by the furnisher to

consumer reporting agencies and the types of errors, omissions, or

other problems that may have affected the accuracy and integrity of

information it has furnished about consumers to consumer reporting

agencies; and

3. Obtaining feedback from consumer reporting agencies,

consumers, the furnisher's staff, or other appropriate parties.

B. Evaluate the effectiveness of existing policies and

procedures of the furnisher regarding the accuracy and integrity of

information furnished to consumer reporting agencies; consider

whether new, additional, or different policies and procedures are

necessary; and consider whether implementation of existing policies

and procedures should be modified to enhance the accuracy and

integrity of information about consumers furnished to consumer

reporting agencies.

C. Evaluate the effectiveness of specific methods (including

technological means) the furnisher uses to provide information to

consumer reporting agencies; how those methods may affect the

accuracy and integrity of the information it provides to consumer

reporting agencies; and whether new, additional, or different

methods (including technological means) should be used to provide

information to consumer reporting agencies to enhance the accuracy

and integrity of that information.

IV. Specific Components of Policies and Procedures

A furnisher's policies and procedures should address the

following:

A. Establishing and implementing a system for furnishing

information about consumers to consumer reporting agencies that is

appropriate to the nature, size, complexity, and scope of the

furnisher's business operations.

B. Using standard data reporting formats and standard procedures

for compiling and furnishing data, where feasible, such as the

electronic transmission of information about consumers to consumer

reporting agencies.

C. Ensuring that the furnisher maintains its own records for a

reasonable period of time, not less than any applicable

recordkeeping requirement, in order to substantiate the accuracy of

any information about consumers it furnishes that is subject to a

direct dispute.

D. Establishing and implementing appropriate internal controls

regarding the accuracy and integrity of information about consumers

furnished to consumer reporting agencies, such as by implementing

standard procedures, verifying random samples, and conducting

regular reviews of information provided to consumer reporting

agencies.

E. Training staff that participates in activities related to the

furnishing of information about consumers to consumer reporting

agencies to implement the policies and procedures.

F. Providing for appropriate and effective oversight of relevant

service providers whose activities may affect the accuracy and

integrity of information about consumers furnished to consumer

reporting agencies to ensure compliance with the policies and

procedures.

G. Furnishing information about consumers to consumer reporting

agencies following mergers, portfolio acquisitions or sales, or

other acquisitions or transfers of accounts or other debts in a

manner that prevents re-aging of information, duplicative reporting,

or other problems affecting the accuracy or integrity of the

information furnished.

H. Attempting to obtain the information listed in Sec.

571.43(d) of this part from a consumer before determining that the

consumer's dispute is frivolous or irrelevant.

I. Ensuring that deletions, updates, and corrections furnished

to consumer reporting agencies are reflected in business systems to

avoid furnishing erroneous information.

J. Conducting investigations of direct disputes in a manner that

promotes the efficient resolution of such disputes.

K. Ensuring that technological and other means of communication

with consumer reporting agencies are designed to prevent duplicative

reporting of accounts, erroneous association of information with the

wrong consumer(s), and other occurrences that may compromise the

accuracy and integrity of information contained in consumer reports.

L. Providing consumer reporting agencies with sufficient

identifying information in the furnisher's possession about each

consumer about whom information is furnished to enable the consumer

reporting agency properly to identify the consumer.

M. Conducting a periodic evaluation of its own practices,

consumer reporting agency

[[Page 70980]]

practices of which the furnisher is aware, investigations of

disputed information, corrections of inaccurate information, means

of communication, and other factors that may affect the accuracy and

integrity of information furnished to consumer reporting agencies.

National Credit Union Administration

12 CFR Chapter VII

Authority and Issuance

For the reasons discussed in the joint preamble, the National

Credit Union Administration proposes to amend chapter VII of title 12

of the Code of Federal Regulations by amending 12 CFR part 717 as

follows:

PART 717--FAIR CREDIT REPORTING

1. Revise the authority citation for part 717 to read as follows:

Authority: 12 U.S.C. 1751 et seq.; 15 U.S.C. 1681a, 1681b,

1681c, 1681m, 1681s, 1681s-1, 1681t, 1681w, 6801 and 6805; Public

Law 108-159, 117 Stat. 1952.

2. Add a new subpart E to part 717 to read as follows:

Subpart E--Duties of Furnishers of Information

Sec.

717.40 Scope.

717.41 Definitions.

717.42 Reasonable policies and procedures concerning the accuracy

and integrity of furnished information.

717.43 Direct disputes.

Subpart E--Duties of Furnishers of Information

Sec. 717.40 Scope.

This subpart applies to a federal credit union that furnishes

information to a consumer reporting agency.

Sec. 717.41 Definitions.

For purposes of this subpart and Appendix E of this part, the

following definitions apply:

Regulatory Definition Approach for Defining ``Accuracy'' and

``Integrity'' Follows:

(a) Accuracy means that any information that a furnisher provides

to a consumer reporting agency about an account or other relationship

with the consumer reflects without error the terms of and liability for

the account or other relationship and the consumer's performance and

other conduct with respect to the account or other relationship.

(b) Integrity means that any information that a furnisher provides

to a consumer reporting agency about an account or other relationship

with the consumer does not omit any term, such as a credit limit or

opening date, of that account or other relationship, the absence of

which can reasonably be expected to contribute to an incorrect

evaluation by a user of a consumer report of a consumer's

creditworthiness, credit standing, credit capacity, character, general

reputation, personal characteristics, or mode of living.

(c) Furnisher means an entity other than an individual consumer

that furnishes information relating to consumers to one or more

consumer reporting agencies. An entity is not a furnisher when it

provides information to a consumer reporting agency solely to obtain a

consumer report in accordance with sections 604(a) and (f) of the FCRA.

(d) Identity theft has the same meaning as in 16 CFR 603.2(a).

(e) Direct dispute means a dispute submitted directly to a

furnisher by a consumer concerning the accuracy of any information

contained in a consumer report relating to the consumer.

Sec. 717.42 Reasonable policies and procedures concerning the

accuracy and integrity of furnished information.

(a) Policies and procedures. Each furnisher must establish and

implement reasonable written policies and procedures regarding the

accuracy and integrity of the information relating to consumers that it

furnishes to a consumer reporting agency. The policies and procedures

must be appropriate to the nature, size, complexity, and scope of each

furnisher's activities.

(b) Guidelines. Each furnisher must consider the guidelines in

Appendix E of this part in developing its policies and procedures

required by this section, and incorporate those guidelines that are

appropriate.

(c) Reviewing and updating policies and procedures. Each furnisher

must review its policies and procedures required by this section

periodically and update them as necessary to ensure their continued

effectiveness.

Sec. 717.43 Direct disputes.

(a) General rule. Except as otherwise provided in this section, a

furnisher must investigate a direct dispute if it relates to:

(1) The consumer's liability for a credit account or other debt

with the furnisher, such as direct disputes relating to whether there

is or has been identity theft or fraud against the consumer, whether

there is individual or joint liability on an account, or whether the

consumer is an authorized user of a credit account;

(2) The terms of a credit account or other debt with the furnisher,

such as direct disputes relating to the type of account, principal

balance, scheduled payment amount on an account, or the amount of the

reported credit limit on an open-end account;

(3) The consumer's performance or other conduct concerning an

account or other relationship with the furnisher, such as direct

disputes relating to the current payment status, high balance, date a

payment was made, the amount of a payment made, or the date an account

was opened or closed; or

(4) Any other information contained in a consumer report regarding

an account or other relationship with the furnisher that bears on the

consumer's creditworthiness, credit standing, credit capacity,

character, general reputation, personal characteristics, or mode of

living.

(b) Exceptions. The requirements of paragraph (a) of this section

do not apply to a furnisher if:

(1) The direct dispute relates to:

(i) The consumer's identifying information (other than a direct

dispute relating to a consumer's liability for a credit account or

other debt with the furnisher, as provided in paragraph (a)(1) of this

section) such as name(s), date of birth, Social Security number,

telephone number(s), or address(es);

(ii) The identity of past or present employers;

(iii) Inquiries or requests for a consumer report;

(iv) Information derived from public records, such as judgments,

bankruptcies, liens, and other legal matters (unless provided by a

furnisher with an account or other relationship with the consumer); or

(v) Information related to fraud alerts or active duty alerts; or

(2) The direct dispute is submitted by, is prepared on behalf of

the consumer by, or is submitted on a form supplied to the consumer by,

a credit repair organization, as defined in 15 U.S.C. 1679a(3), or an

entity that would be a credit repair organization, but for 15 U.S.C.

1679a(3)(B)(i).

(c) Direct dispute address. A furnisher is required to investigate

a direct dispute only if a consumer submits a dispute notice to the

furnisher at:

(1) The address of a furnisher provided by a furnisher and set

forth on a consumer report relating to the consumer;

(2) An address clearly and conspicuously specified by the furnisher

for submitting direct disputes that is provided to the consumer in

writing or electronically (if the consumer has agreed to the electronic

delivery of information from the furnisher); or

[[Page 70981]]

(3) Any business address of the furnisher if the furnisher has not

so specified and provided an address for submitting direct disputes

under paragraph (c)(2) of this section.

(d) Direct dispute notice contents. A dispute notice must include:

(1) The name, address, and telephone number of the consumer;

(2) Sufficient information to identify the account or other

relationship that is in dispute, such as an account number;

(3) The specific information that the consumer is disputing and an

explanation of the basis for the dispute; and

(4) All supporting documentation or other information reasonably

required by the furnisher to substantiate the basis of the dispute.

This documentation may include, for example: a copy of the consumer

report that contains the allegedly inaccurate information; a police

report; a fraud or identity theft affidavit; a court order; or account

statements.

(e) Frivolous or irrelevant disputes. (1) A furnisher is not

required to investigate a direct dispute if the furnisher has

reasonably determined that the dispute is frivolous or irrelevant. A

dispute may be frivolous or irrelevant if:

(i) The consumer did not provide sufficient information to

investigate the disputed information as required by paragraph (d) of

this section;

(ii) The direct dispute is substantially the same as a dispute

previously submitted by or on behalf of the consumer, either directly

to the furnisher or through a consumer reporting agency, with respect

to which the furnisher has already satisfied the applicable

requirements of the Act or this section; provided, however, that a

direct dispute is not substantially the same as a dispute previously

submitted if the dispute includes information listed in paragraph (d)

of this section that had not previously been provided to the furnisher;

or

(iii) The furnisher is not required to investigate the direct

dispute under this section.

(2) Notice of determination. Upon making a determination that a

dispute is frivolous or irrelevant, the furnisher must notify the

consumer of the determination not later than five business days after

making the determination by mail or, if authorized by the consumer for

that purpose, by any other means available to the furnisher.

(3) Contents of notice of determination that a dispute is frivolous

or irrelevant. A notice of determination that a dispute is frivolous or

irrelevant must include the reasons for such determination and identify

any information required to investigate the disputed information, which

notice may consist of a standardized form describing the general nature

of such information.

3. Add a new appendix E to read as follows:

Appendix E to Part 717--Interagency Guidelines Concerning the Accuracy

and Integrity of Information Furnished to Consumer Reporting Agencies

The NCUA encourages voluntary furnishing of information to

consumer reporting agencies. Section 717.42 of this part requires

each furnisher to establish and implement reasonable written

policies and procedures concerning the accuracy and integrity of the

information it furnishes to consumer reporting agencies. Under Sec.

717.42(b), the furnisher must consider the guidelines set forth

below in developing these policies and procedures. In establishing

these policies and procedures, a furnisher may include any of its

existing policies and procedures that are relevant and appropriate.

I. Nature, Scope, and Objectives of Policies and Procedures

A. Nature and Scope. Section 717.42(a) of this part requires

that a furnisher's policies and procedures be appropriate to the

nature, size, complexity, and scope of the furnisher's activities.

The furnisher's policies and procedures should reflect, for example:

1. The types of business activities in which the furnisher

engages;

2. The nature and frequency of the information the furnisher

provides to consumer reporting agencies; and

3. The technology used by the furnisher to furnish information

to consumer reporting agencies.

Regulatory Definition Approach for Paragraph B Follows:

B. Objectives. A furnisher should have written policies and

procedures reasonably designed to accomplish the following

objectives:

1. Ensure that the information it furnishes about accounts or

other relationships with a consumer:

(a) Accurately identifies the appropriate consumer;

(b) Accurately reports the terms of those accounts or other

relationships; and

(c) Accurately reports the consumer's performance and other

conduct with respect to the account or other relationship with the

consumer;

2. Ensure that the information it furnishes about accounts or

other relationships with a consumer avoids misleading a consumer

report user as to the consumer's creditworthiness, credit standing,

credit capacity, character, general reputation, personal

characteristics, or mode of living;

3. Ensure that it conducts reasonable investigations of consumer

disputes about the accuracy or integrity of information in consumer

reports and takes appropriate actions based on the outcome of such

investigations;

4. Ensure that it updates information it furnishes as necessary

to reflect the current status of the consumer's account or other

relationship, including:

(a) Any transfer of an account (e.g., by sale or assignment for

collection) to a third party; and

(b) Any cure of the consumer's failure to abide by the terms of

the account or other relationship;

5. Ensure that the information it furnishes about accounts or

other relationships with a consumer is reported in a form and manner

that is designed to minimize the likelihood that the information,

although accurate, may be erroneously reflected in a consumer

report, for example, by ensuring that the information is reported

with appropriate identifying information about the consumer to whom

it pertains, in a standardized and clearly understandable form and

manner, and with a date specifying the time period to which the

information pertains; and

6. Ensure that the information it furnishes about accounts or

other relationships with a consumer is substantiated by the

furnisher's own records.

Guidelines Definition Approach for Paragraph B Follows:

B. Objectives. A furnisher should have written policies and

procedures reasonably designed to accomplish the following

objectives:

1. Ensure that the information it furnishes about accounts or

other relationships with a consumer is accurate. Accuracy means that

any information that a furnisher provides to a consumer reporting

agency about an account or other relationship with the consumer

reflects without error the terms of and liability for the account or

other relationship and the consumer's performance and other conduct

with respect to the account or other relationship;

2. Ensure that the information it furnishes about accounts or

other relationships with a consumer is furnished with integrity.

Integrity means that any information that a furnisher provides to a

consumer reporting agency about an account or other relationship

with the consumer is:

(i) Reported in a form and manner that is designed to minimize

the likelihood that the information, although accurate, may be

erroneously reflected in a consumer report, for example, by ensuring

that the information is:

(A) Reported with appropriate identifying information about the

consumer to whom it pertains;

(B) Reported in a standardized and clearly understandable form

and manner; and

(C) Reported with a date specifying the time period to which the

information pertains; and

(ii) Substantiated by the furnisher's own records;

3. Ensure that it conducts reasonable investigations of consumer

disputes about the accuracy or integrity of information in consumer

reports and takes appropriate actions based on the outcome of such

investigations; and

4. Ensure that it updates information it furnishes as necessary

to reflect the current status of the consumer's account or other

relationship, including:

[[Page 70982]]

(a) Any transfer of an account (e.g., by sale or assignment for

collection) to a third party; and

(b) Any cure of the consumer's failure to abide by the terms of

the account or other relationship.

II. Accuracy and Integrity Duties of Furnishers Under the FCRA

A furnisher's policies and procedures should address compliance

with all applicable requirements imposed on the furnisher under the

FCRA, including the duties to: \1\

---------------------------------------------------------------------------

\1\ This is not a complete listing of furnisher duties relating

to accuracy and integrity. Furnishers should consult the FCRA to

determine what additional duties may apply.

---------------------------------------------------------------------------

A. Promptly notify the consumer reporting agency of the

furnisher's determination that furnished information is not complete

or accurate, for a furnisher that regularly and in the ordinary

course of business furnishes information; provide any corrections,

or any additional information, that is necessary to make the

furnished information complete and accurate; and not thereafter

furnish information that remains incomplete or inaccurate. 15 U.S.C.

1681s-2(a)(2).

B. Provide notice of a dispute by a consumer about the accuracy

or completeness of information furnished to a consumer reporting

agency. 15 U.S.C. 1681s-2(a)(3).

C. Report voluntary closure of a credit account by the consumer

in information regularly furnished for the period in which the

credit account is closed, for a furnisher that regularly and in the

ordinary course of business furnishes information about consumer

credit accounts. 15 U.S.C. 1681s-2(a)(4).

D. Notify the consumer reporting agency of the date of

delinquency on an account not later than 90 days after the furnisher

furnishes information to the consumer reporting agency regarding

action taken on the delinquent account (including placement for

collection, charge to profit or loss, or any similar action). Date

of delinquency means the month and year of the commencement of the

delinquency on the account that immediately preceded the action. 15

U.S.C. 1681s-2(a)(5).

E. Have in place reasonable procedures to respond to any

notification that the furnisher receives from a consumer reporting

agency under section 605B of the FCRA, relating to the blocking of

information resulting from identity theft and to prevent the

refurnishing of such blocked information. 15 U.S.C. 1681s-

2(a)(6)(A).

F. Not furnish to a consumer reporting agency information that

purports to relate to the consumer if the consumer submits an

identity theft report to the furnisher (at the address specified by

that furnisher for receiving such reports) stating that such

information maintained by that furnisher resulted from identity

theft. (This restriction does not apply if the furnisher

subsequently knows or is informed by the consumer that the

information is correct.) 15 U.S.C. 1681s-2(a)(6)(B).

G. After receiving a notice of dispute from a consumer reporting

agency, in a timely manner: Conduct an investigation; review all

relevant information the consumer reporting agency provides; report

the results of the investigation to the consumer reporting agency;

report incomplete or inaccurate information to all nationwide

consumer reporting agencies to which it reported the information;

and modify, delete, or permanently block incomplete or inaccurate

information or information that cannot be verified. 15 U.S.C. 1681s-

2(b).

H. Investigate direct disputes as required by 12 CFR 717.43 and

15 U.S.C. 1681s-2(a)(8).

III. Establishing and Implementing Policies and Procedures

In establishing and implementing its policies and procedures, a

furnisher should:

A. Identify practices or activities of the furnisher that can

compromise the accuracy and integrity of information furnished to

consumer reporting agencies, such as by:

1. Reviewing its existing practices and activities, including

the technological means and other methods it uses to furnish

information to consumer reporting agencies and the frequency and

timing of its furnishing of information, such as through an audit;

2. Reviewing historical records relating to accuracy or

integrity or to disputes, or other information relating to the

accuracy and integrity of information provided by the furnisher to

consumer reporting agencies and the types of errors, omissions, or

other problems that may have affected the accuracy and integrity of

information it has furnished about consumers to consumer reporting

agencies; and

3. Obtaining feedback from consumer reporting agencies,

consumers, the furnisher's staff, or other appropriate parties.

B. Evaluate the effectiveness of existing policies and

procedures of the furnisher regarding the accuracy and integrity of

information furnished to consumer reporting agencies; consider

whether new, additional, or different policies and procedures are

necessary; and consider whether implementation of existing policies

and procedures should be modified to enhance the accuracy and

integrity of information about consumers furnished to consumer

reporting agencies.

C. Evaluate the effectiveness of specific methods (including

technological means) the furnisher uses to provide information to

consumer reporting agencies; how those methods may affect the

accuracy and integrity of the information it provides to consumer

reporting agencies; and whether new, additional, or different

methods (including technological means) should be used to provide

information to consumer reporting agencies to enhance the accuracy

and integrity of that information.

IV. Specific Components of Policies and Procedures

A furnisher's policies and procedures should address the

following:

A. Establishing and implementing a system for furnishing

information about consumers to consumer reporting agencies that is

appropriate to the nature, size, complexity, and scope of the

furnisher's business operations.

B. Using standard data reporting formats and standard procedures

for compiling and furnishing data, where feasible, such as the

electronic transmission of information about consumers to consumer

reporting agencies.

C. Ensuring that the furnisher maintains its own records for a

reasonable period of time, not less than any applicable

recordkeeping requirement, in order to substantiate the accuracy of

any information about consumers it furnishes that is subject to a

direct dispute.

D. Establishing and implementing appropriate internal controls

regarding the accuracy and integrity of information about consumers

furnished to consumer reporting agencies, such as by implementing

standard procedures, verifying random samples, and conducting

regular reviews of information provided to consumer reporting

agencies.

E. Training staff that participates in activities related to the

furnishing of information about consumers to consumer reporting

agencies to implement the policies and procedures.

F. Providing for appropriate and effective oversight of relevant

service providers whose activities may affect the accuracy and

integrity of information about consumers furnished to consumer

reporting agencies to ensure compliance with the policies and

procedures.

G. Furnishing information about consumers to consumer reporting

agencies following mergers, portfolio acquisitions or sales, or

other acquisitions or transfers of accounts or other debts in a

manner that prevents re-aging of information, duplicative reporting,

or other problems affecting the accuracy or integrity of the

information furnished.

H. Attempting to obtain the information listed in Sec.

717.43(d) from a consumer before determining that the consumer's

dispute is frivolous or irrelevant.

I. Ensuring that deletions, updates, and corrections furnished

to consumer reporting agencies are reflected in business systems to

avoid furnishing erroneous information.

J. Conducting investigations of direct disputes in a manner that

promotes the efficient resolution of such disputes.

K. Ensuring that technological and other means of communication

with consumer reporting agencies are designed to prevent duplicative

reporting of accounts, erroneous association of information with the

wrong consumer(s), and other occurrences that may compromise the

accuracy and integrity of information contained in consumer reports.

L. Providing consumer reporting agencies with sufficient

identifying information in the furnisher's possession about each

consumer about whom information is furnished to enable the consumer

reporting agency properly to identify the consumer.

M. Conducting a periodic evaluation of its own practices,

consumer reporting agency practices of which the furnisher is aware,

investigations of disputed information, corrections of inaccurate

information, means of communication, and other factors that may

affect the accuracy and integrity of information furnished to

consumer reporting agencies.

[[Page 70983]]

Federal Trade Commission

16 CFR Chapter I

Authority and Issuance

For the reasons discussed in the joint preamble, the Federal Trade

Commission proposes to add part 660 to title 16 of the Code of Federal

Regulations as follows:

PART 660--DUTIES OF FURNISHERS OF INFORMATION TO CONSUMER REPORTING

AGENCIES

Sec.

660.1 Scope.

660.2 Definitions.

660.3 Reasonable policies and procedures concerning the accuracy and

integrity of furnisher information.

660.4 Direct disputes.

Appendix A to Part 660--Interagency Guidelines Concerning the

Accuracy and Integrity of Information Furnished to Consumer

Reporting Agencies

Authority: 15 U.S.C. 1681s-2(a)(8) and 1681s-2(e); Sec. 312,

Pub. L. 108-159, 117 Stat. 1989.

Sec. 660.1 Scope.

This part applies to furnishers of information to consumer

reporting agencies that are subject to administrative enforcement of

the FCRA by the Federal Trade Commission pursuant to 15 U.S.C.

1681s(a)(1)(referred to as ``furnishers'').

Sec. 660.2 Definitions.

For purposes of this part and Appendix A of this part, the

following definitions apply: Regulatory Definition Approach for

Defining ``Accuracy'' and ``Integrity'' Follows:

(a) Accuracy means that any information that a furnisher provides

to a consumer reporting agency about an account or other relationship

with the consumer reflects without error the terms of and liability for

the account or other relationship and the consumer's performance and

other conduct with respect to the account or other relationship.

(b) Integrity means that any information that a furnisher provides

to a consumer reporting agency about an account or other relationship

with the consumer does not omit any term, such as a credit limit or

opening date, of that account or other relationship, the absence of

which can reasonably be expected to contribute to an incorrect

evaluation by a user of a consumer report of a consumer's

creditworthiness, credit standing, credit capacity, character, general

reputation, personal characteristics, or mode of living.

(c) Furnisher means an entity other than an individual consumer

that furnishes information relating to consumers to one or more

consumer reporting agencies. An entity is not a furnisher when it

provides information to a consumer reporting agency solely to obtain a

consumer report in accordance with sections 604(a) and (f) of the FCRA.

(d) Identity theft has the same meaning as in 16 CFR 603.2(a).

(e) Direct dispute means a dispute submitted directly to a

furnisher by a consumer concerning the accuracy of any information

contained in a consumer report relating to the consumer.

Sec. 660.3 Reasonable policies and procedures concerning the accuracy

and integrity of furnished information.

(a) Policies and procedures. Each furnisher must establish and

implement reasonable written policies and procedures regarding the

accuracy and integrity of the information relating to consumers that it

furnishes to a consumer reporting agency. The policies and procedures

must be appropriate to the nature, size, complexity, and scope of each

furnisher's activities.

(b) Guidelines. Each furnisher must consider the guidelines in

Appendix A of this part in developing its policies and procedures

required by this section, and incorporate those guidelines that are

appropriate.

(c) Reviewing and updating policies and procedures. Each furnisher

must review its policies and procedures required by this section

periodically and update them as necessary to ensure their continued

effectiveness.

Sec. 660.4 Direct disputes.

(a) General rule. Except as otherwise provided in this section, a

furnisher must investigate a direct dispute if it relates to:

(1) The consumer's liability for a credit account or other debt

with the furnisher, such as direct disputes relating to whether there

is or has been identity theft or fraud against the consumer, whether

there is individual or joint liability on an account, or whether the

consumer is an authorized user of a credit account;

(2) The terms of a credit account or other debt with the furnisher,

such as direct disputes relating to the credit limit on an open-end

account, type of account, principal balance, scheduled payment amount

on an account, or the amount of the reported credit limit on an open-

end account;

(3) The consumer's performance or other conduct concerning an

account or other relationship with the furnisher, such as direct

disputes relating to the current payment status, high balance, date a

payment was made, the amount of a payment made, or the date an account

was opened or closed; or

(4) Any other information contained in a consumer report regarding

an account or other relationship with the furnisher that bears on the

consumer's creditworthiness, credit standing, credit capacity,

character, general reputation, personal characteristics, or mode of

living.

(b) Exceptions. The requirements of paragraph (a) of this section

do not apply to a furnisher if:

(1) The direct dispute relates to:

(i) The consumer's identifying information (other than a direct

dispute relating to a consumer's liability for a credit account or

other debt with the furnisher, as provided in paragraph (a)(1) of this

section) such as name(s), date of birth, Social Security number,

telephone number(s), or address(es);

(ii) The identity of past or present employers;

(iii) Inquiries or requests for a consumer report;

(iv) Information derived from public records, such as judgments,

bankruptcies, liens, and other legal matters (unless provided by a

furnisher with an account or other relationship with the consumer); or

(v) Information related to fraud alerts or active duty alerts; or

(2) The direct dispute is submitted by, is prepared on behalf of

the consumer by, or is submitted on a form supplied to the consumer by,

a credit repair organization, as defined in 15 U.S.C. 1679a(3), or an

entity that would be a credit repair organization, but for 15 U.S.C.

1679a(3)(B)(i).

(c) Direct dispute address. A furnisher is required to investigate

a direct dispute only if a consumer submits a dispute notice to the

furnisher at:

(1) The address of a furnisher provided by a furnisher and set

forth on a consumer report relating to the consumer;

(2) An address clearly and conspicuously specified by the furnisher

for submitting direct disputes that is provided to the consumer in

writing or electronically (if the consumer has agreed to the electronic

delivery of information from the furnisher); or

(3) Any business address of the furnisher if the furnisher has not

so specified and provided an address for submitting direct disputes

under paragraph (c)(2) of this section.

(d) Direct dispute notice contents. A dispute notice must include:

(1) The name, address, and telephone number of the consumer;

[[Page 70984]]

(2) Sufficient information to identify the account or other

relationship that is in dispute, such as an account number;

(3) The specific information that the consumer is disputing and an

explanation of the basis for the dispute; and

(4) All supporting documentation or other information reasonably

required by the furnisher to substantiate the basis of the dispute.

This documentation may include, for example: a copy of the consumer

report that contains the allegedly inaccurate information; a police

report; a fraud or identity theft affidavit; a court order; or account

statements.

(e) Frivolous or irrelevant disputes. (1) A furnisher is not

required to investigate a direct dispute if the furnisher has

reasonably determined that the dispute is frivolous or irrelevant. A

dispute may be frivolous or irrelevant if:

(i) The consumer did not provide sufficient information to

investigate the disputed information as required by paragraph (d) of

this section;

(ii) The direct dispute is substantially the same as a dispute

previously submitted by or on behalf of the consumer, either directly

to the furnisher or through a consumer reporting agency, with respect

to which the furnisher has already satisfied the applicable

requirements of the Act or this section; provided, however, that a

direct dispute is not substantially the same as a dispute previously

submitted if the dispute includes information listed in paragraph (d)

of this section that had not previously been provided to the furnisher;

or

(iii) The furnisher is not required to investigate the direct

dispute under this section.

(2) Notice of determination. Upon making a determination that a

dispute is frivolous or irrelevant, the furnisher must notify the

consumer of the determination not later than five business days after

making the determination, by mail or, if authorized by the consumer for

that purpose, by any other means available to the furnisher.

(3) Contents of notice of determination that a dispute is frivolous

or irrelevant. A notice of determination that a dispute is frivolous or

irrelevant must include the reasons for such determination and identify

any information required to investigate the disputed information, which

may consist of a standardized form describing the general nature of

such information.

Appendix A to Part 660--Interagency Guidelines Concerning the Accuracy

and Integrity of Information Furnished to Consumer Reporting Agencies

The Commission encourages voluntary furnishing of information to

consumer reporting agencies. Section 660.3 of this part requires

each furnisher to establish and implement reasonable written

policies and procedures concerning the accuracy and integrity of the

information it furnishes to consumer reporting agencies. Under Sec.

660.3(b) of this part, the furnisher must consider the guidelines

set forth below in developing these policies and procedures. In

establishing these policies and procedures, a furnisher may include

any of its existing policies and procedures that are relevant and

appropriate.

I. Nature, Scope, and Objectives of Policies and Procedures

A. Nature and Scope. Section 660.3(a) of this part requires that

a furnisher's policies and procedures be appropriate to the nature,

size, complexity, and scope of the furnisher's activities. The

furnisher's policies and procedures should reflect, for example:

1. The types of business activities in which the furnisher

engages;

2. The nature and frequency of the information the furnisher

provides to consumer reporting agencies; and

3. The technology used by the furnisher to furnish information

to consumer reporting agencies.

Regulatory Definition Approach for Paragraph B Follows:

B. Objectives. A furnisher should have written policies and

procedures reasonably designed to accomplish the following

objectives:

1. Ensure that the information it furnishes about accounts or

other relationships with a consumer:

(a) Accurately identifies the appropriate consumer;

(b) Accurately reports the terms of those accounts or other

relationships; and

(c) Accurately reports the consumer's performance and other

conduct with respect to the account or other relationship with the

consumer;

2. Ensure that the information it furnishes about accounts or

other relationships with a consumer avoids misleading a consumer

report user as to the consumer's creditworthiness, credit standing,

credit capacity, character, general reputation, personal

characteristics, or mode of living;

3. Ensure that it conducts reasonable investigations of consumer

disputes about the accuracy or integrity of information in consumer

reports and takes appropriate actions based on the outcome of such

investigations;

4. Ensure that it updates information it furnishes as necessary

to reflect the current status of the consumer's account or other

relationship, including:

(a) Any transfer of an account (e.g., by sale or assignment for

collection) to a third party; and

(b) Any cure of the consumer's failure to abide by the terms of

the account or other relationship;

5. Ensure that the information it furnishes about accounts or

other relationships with a consumer is reported in a form and manner

that is designed to minimize the likelihood that the information,

although accurate, may be erroneously reflected in a consumer

report, for example, by ensuring that the information is reported

with appropriate identifying information about the consumer to whom

it pertains, in a standardized and clearly understandable form and

manner, and with a date specifying the time period to which the

information pertains; and

6. Ensure that the information it furnishes about accounts or

other relationships with a consumer is substantiated by the

furnisher's own records.

Guidelines Definition Approach for Paragraph B Follows:

B. Objectives. A furnisher should have written policies and

procedures reasonably designed to accomplish the following

objectives:

1. Ensure that the information it furnishes about accounts or

other relationships with a consumer is accurate. Accuracy means that

any information that a furnisher provides to a consumer reporting

agency about an account or other relationship with the consumer

reflects without error the terms of and liability for the account or

other relationship and the consumer's performance and other conduct

with respect to the account or other relationship;

2. Ensure that the information it furnishes about accounts or

other relationships with a consumer is furnished with integrity.

Integrity means that any information that a furnisher provides to a

consumer reporting agency about an account or other relationship

with the consumer is:

(i) Reported in a form and manner that is designed to minimize

the likelihood that the information, although accurate, may be

erroneously reflected in a consumer report, for example, by ensuring

that the information is:

(A) Reported with appropriate identifying information about the

consumer to whom it pertains;

(B) Reported in a standardized and clearly understandable form

and manner; and

(C) Reported with a date specifying the time period to which the

information pertains; and

(ii) Substantiated by the furnisher's own records;

3. Ensure that it conducts reasonable investigations of consumer

disputes about the accuracy or integrity of information in consumer

reports and takes appropriate actions based on the outcome of such

investigations; and

4. Ensure that it updates information it furnishes as necessary

to reflect the current status of the consumer's account or other

relationship, including:

(a) Any transfer of an account (e.g., by sale or assignment for

collection) to a third party; and

(b) Any cure of the consumer's failure to abide by the terms of

the account or other relationship.

[[Page 70985]]

II. Accuracy and Integrity Duties of Furnishers Under the FCRA

A furnisher's policies and procedures should address compliance

with all applicable requirements imposed on the furnisher under the

FCRA, including the duties to: \1\

---------------------------------------------------------------------------

\1\ This is not a complete listing of furnisher duties relating

to accuracy and integrity. Furnishers should consult the FCRA to

determine what additional duties may apply.

---------------------------------------------------------------------------

A. Promptly notify the consumer reporting agency of the

furnisher's determination that furnished information is not complete

or accurate, for a furnisher that regularly and in the ordinary

course of business furnishes information; provide any corrections,

or any additional information, that is necessary to make the

furnished information complete and accurate; and not thereafter

furnish information that remains incomplete or inaccurate. 15 U.S.C.

1681s-2(a)(2).

B. Provide notice of a dispute by a consumer about the accuracy

or completeness of information furnished to a consumer reporting

agency. 15 U.S.C. 1681s-2(a)(3).

C. Report voluntary closure of a credit account by the consumer

in information regularly furnished for the period in which the

credit account is closed, for a furnisher that regularly and in the

ordinary course of business furnishes information about consumer

credit accounts. 15 U.S.C. 1681s-2(a)(4).

D. Notify the consumer reporting agency of the date of

delinquency on an account not later than 90 days after the furnisher

furnishes information to the consumer reporting agency regarding

action taken on the delinquent account (including placement for

collection, charge to profit or loss, or any similar action). Date

of delinquency means the month and year of the commencement of the

delinquency on the account that immediately preceded the action. 15

U.S.C. 1681s-2(a)(5).

E. Have in place reasonable procedures to respond to any

notification that the furnisher receives from a consumer reporting

agency under section 605B of the FCRA, relating to the blocking of

information resulting from identity theft and to prevent the

refurnishing of such blocked information. 15 U.S.C. 1681s-

2(a)(6)(A).

F. Not furnish to a consumer reporting agency information that

purports to relate to the consumer if the consumer submits an

identity theft report to the furnisher (at the address specified by

that furnisher for receiving such reports) stating that such

information maintained by that furnisher resulted from identity

theft. (This restriction does not apply if the furnisher

subsequently knows or is informed by the consumer that the

information is correct.) 15 U.S.C. 1681s-2(a)(6)(B).

G. After receiving a notice of dispute from a consumer reporting

agency, in a timely manner: Conduct an investigation; review all

relevant information the consumer reporting agency provides; report

the results of the investigation to the consumer reporting agency;

report incomplete or inaccurate information to all nationwide

consumer reporting agencies to which it reported the information;

and modify, delete, or permanently block incomplete or inaccurate

information or information that cannot be verified. 15 U.S.C. 1681s-

2(b).

H. Investigate direct disputes as required by section 660.4 of

this part and 15 U.S.C. 1681s-2(a)(8).

III. Establishing and Implementing Policies and Procedures

In establishing and implementing its policies and procedures, a

furnisher should:

A. Identify practices or activities of the furnisher that can

compromise the accuracy and integrity of information furnished to

consumer reporting agencies, such as by:

1. Reviewing its existing practices and activities, including

the technological means and other methods it uses to furnish

information to consumer reporting agencies and the frequency and

timing of its furnishing of information, such as through an audit;

2. Reviewing historical records relating to accuracy or

integrity or to disputes, or other information relating to the

accuracy and integrity of information provided by the furnisher to

consumer reporting agencies and the types of errors, omissions, or

other problems that may have affected the accuracy and integrity of

information it has furnished about consumers to consumer reporting

agencies; and

3. Obtaining feedback from consumer reporting agencies,

consumers, the furnisher's staff, or other appropriate parties.

B. Evaluate the effectiveness of existing policies and

procedures of the furnisher regarding the accuracy and integrity of

information furnished to consumer reporting agencies; consider

whether new, additional, or different policies and procedures are

necessary; and consider whether implementation of existing policies

and procedures should be modified to enhance the accuracy and

integrity of information about consumers furnished to consumer

reporting agencies.

C. Evaluate the effectiveness of specific methods (including

technological means) the furnisher uses to provide information to

consumer reporting agencies; how those methods may affect the

accuracy and integrity of the information it provides to consumer

reporting agencies; and whether new, additional, or different

methods (including technological means) should be used to provide

information to consumer reporting agencies to enhance the accuracy

and integrity of that information.

IV. Specific Components of Policies and Procedures

A furnisher's policies and procedures should address the

following:

A. Establishing and implementing a system for furnishing

information about consumers to consumer reporting agencies that is

appropriate to the nature, size, complexity, and scope of the

furnisher's business operations.

B. Using standard data reporting formats and standard procedures

for compiling and furnishing data, where feasible, such as the

electronic transmission of information about consumers to consumer

reporting agencies.

C. Ensuring that the furnisher maintains its own records for a

reasonable period of time, not less than any applicable

recordkeeping requirement, in order to substantiate the accuracy of

any information about consumers it furnishes that is subject to a

direct dispute.

D. Establishing and implementing appropriate internal controls

regarding the accuracy and integrity of information about consumers

furnished to consumer reporting agencies, such as by implementing

standard procedures, verifying random samples, and conducting

regular reviews of information provided to consumer reporting

agencies.

E. Training staff that participates in activities related to the

furnishing of information about consumers to consumer reporting

agencies to implement the policies and procedures.

F. Providing for appropriate and effective oversight of relevant

service providers whose activities may affect the accuracy and

integrity of information about consumers furnished to consumer

reporting agencies to ensure compliance with the policies and

procedures.

G. Furnishing information about consumers to consumer reporting

agencies following mergers, portfolio acquisitions or sales, or

other acquisitions or transfers of accounts or other debts in a

manner that prevents re-aging of information, duplicative reporting,

or other problems affecting the accuracy or integrity of the

information furnished.

H. Attempting to obtain the information listed in Sec. 660.4(d)

of this part from a consumer before determining that the consumer's

dispute is frivolous or irrelevant.

I. Ensuring that deletions, updates, and corrections furnished

to consumer reporting agencies are reflected in business systems to

avoid furnishing erroneous information.

J. Conducting investigations of direct disputes in a manner that

promotes the efficient resolution of such disputes.

K. Ensuring that technological and other means of communication

with consumer reporting agencies are designed to prevent duplicative

reporting of accounts, erroneous association of information with the

wrong consumer(s), and other occurrences that may compromise the

accuracy and integrity of information contained in consumer reports.

L. Providing consumer reporting agencies with sufficient

identifying information in the furnisher's possession about each

consumer about whom information is furnished to enable the consumer

reporting agency properly to identify the consumer.

M. Conducting a periodic evaluation of its own practices,

consumer reporting agency practices of which the furnisher is aware,

investigations of disputed information, corrections of inaccurate

information, means of communication, and other factors that may

affect the accuracy and integrity of information furnished to

consumer reporting agencies.

[[Page 70986]]

Dated: November 2, 2007.

John C. Dugan,

Comptroller of the Currency.

By order of the Board of Governors of the Federal Reserve

System, November 28th, 2007.

Jennifer J. Johnson,

Secretary of the Board.

By order of the Board of Directors.

Dated at Washington, DC, the 5th day of November, 2007.

Federal Deposit Insurance Corporation.

Valerie J. Best,`Assistant Executive Secretary.

Dated: November 2, 2007.

By the Office of Thrift Supervision.

John M. Reich,

Director.

By the National Credit Union Administration Board on November 5, 2007.

Mary Rupp,

Secretary of the Board.

By Direction of the Commission.

Donald S. Clark,

Secretary.

[FR Doc. E7-23549 Filed 12-12-07; 8:45 am]

BILLING CODE 4810-33-P

 


Last Updated 12/13/2007 Regs@fdic.gov

Last Updated: August 4, 2024