CUNA Regulatory Comment Call

April 3, 2006

FACT Act Guidelines and Rules on the Accuracy of Credit Information

EXECUTIVE SUMMARY

Please feel free to fax your responses to CUNA at 202-638-7052; e-mail them to Senior Vice President and Associate General Counsel Mary Dunn at mdunn@cuna.coop and to Senior Assistant General Counsel Jeff Bloch at jbloch@cuna.coop; or mail them to Mary and Jeff in c/o CUNA’s Regulatory Advocacy Department, 601 Pennsylvania Avenue, NW, South Building, Suite 600, Washington, DC 20004-2601. You may also contact us at 800-356-9655, ext. 6732, if you have questions or would like a copy of the ANPR. You may also access a copy of the ANPR at the following address:

http://www.federalreserve.gov/boarddocs/press/bcreg/2006/20060322/attachment.pdf

BACKGROUND

The FACT Act was enacted in December 2003 and permanently extends the federal preemptions for credit reporting under the Fair Credit Reporting Act (FCRA). It also enhances the ability of consumers to combat identity theft, increases accuracy of credit reports, and allows consumers to exercise greater control regarding the marketing solicitations they receive.

The provisions regarding the accuracy of credit reports require NCUA, the other Federal financial institution regulators, and the FTC to establish and maintain guidelines for use by those that furnish information to credit bureaus that address the accuracy and integrity of the information. These regulators are also required to issue rules requiring these furnishers to establish policies and procedures for implementing the guidelines and to issue rules identifying the circumstances in which a furnisher, based on a direct request from a consumer, must reinvestigate disputes about the accuracy of information in a credit report. The regulators are required to consult and coordinate with each other to ensure that, to the extent possible, these rules are consistent and comparable.

BRIEF DESCRIPTION OF THE ANPR

The FACT Act sets forth the criteria that the regulators must use in developing the accuracy and integrity guidelines, which requires them to:

The FACT Act also requires the regulators to assess the following when developing the rules for identifying the circumstances in which a furnisher, based on a direct request from a consumer, must reinvestigate disputes about the accuracy of information in a credit report:

As part of this rulemaking process, the regulators have issued the ANPR with a specific request that commenters provide information on the following specific issues:

1) The types of errors, omissions, or other problems that may impair the accuracy and integrity of information furnished to credit bureaus and their significance to consumers (particularly groups of consumers, the users of consumer reports, and the credit reporting system). These include problems that result in information that is incorrect, out of date, associated with the wrong consumer, omitted (such as credit limits or positive account information), duplicative, or misleading.

2) The patterns, practices and forms or specific activities that can compromise the accuracy and integrity of information furnished to credit bureaus, along with any business, economic, or other reasons for them. This may include sales of debt to collection agencies; conversion of the information into a standard form; and the frequency, timing, categories, and content of the information furnished to credit bureaus. This may relate to any aspect of the reporting process, such as how the information is collected, verified, edited, standardized, or transferred.

3) The policies and procedures that a furnisher should implement to identify, prevent, or mitigate these patterns, practices, or specific activities.

4) The methods used to furnish consumer information to credit bureaus and how they can either enhance or compromise the accuracy and integrity of consumer information that is furnished to credit bureaus.

5) Whether and to what extent furnishers maintain and enforce policies and procedures to ensure the accuracy and integrity of information furnished to credit bureaus, including a description of these policies and procedures, such as those relating to data controls, points of failure, account termination, the re-reporting of deleted consumer information, and the reporting of the deferral and suspension of payment obligations in unusual circumstances, as well as the frequency, timing, categories, and content of the information. This should also address the effectiveness of these polices and procedures, how they can be improved, and how they are monitored or evaluated to ensure their effectiveness.

6) The methods that a furnisher should use to ensure the accuracy and integrity of consumer information furnished to a credit bureau.

7) The policies and procedures used by furnishers to conduct reinvestigations and to correct inaccurate consumer information that has been furnished to credit bureaus. This includes the policies and procedures that furnishers use to comply with the requirement in the FCRA that they review all relevant information provided by the credit bureau.

8) The policies and procedures that furnishers should use to conduct reinvestigations and to correct inaccurate consumer information that has been furnished to credit bureaus.

9) The circumstances under which a furnisher should or should not be required to investigate a dispute concerning the accuracy of information furnished to a credit bureau, based upon a request from the consumer.

10) The benefits and costs to consumers from having the right to dispute information directly with the furnisher, rather than through a credit bureau.

11) The benefits to furnishers, credit bureaus, and the credit reporting system that may result if furnishers were required to investigate disputes based on direct requests from consumers.

12) The costs, including start-up costs, to furnishers and the credit reporting system of requiring furnishers to investigate disputes based on direct requests from consumers. This includes the circumstances in which these direct disputes with furnishers would cost more, less, or the same to process, as compared to disputes that are directed to credit bureaus and then routed to furnishers for investigation. This should also include information as to the percentage of disputes that: A) involve an error by the credit bureau; B) are determined to be frivolous or irrelevant (including the cost of providing the notice of this to the consumer within five days, as required under the FCRA); or C) result in changes to consumer credit files.

13) Whether it is the current practice of furnishers to investigate disputes about the accuracy of information furnished to credit bureaus based on direct requests by consumers and, if so, provide more information regarding:

14) The impact on the accuracy and integrity of consumer reports if the furnisher were required, under some or all circumstances, to investigate disputes about the accuracy of information furnished to credit bureaus based on direct requests by consumers.

15) The circumstances in which direct contact by the consumer with the furnisher would or would not likely result in the most expeditious resolution of a dispute concerning the accuracy of information furnished to a credit bureau.

16) The impact on small institutions of procedures that would enhance the accuracy and integrity of information furnished to credit bureaus, specifically the impact on the institution’s resources and the availability of personnel with the required expertise, and whether an alternative approach may be available for these institutions that would also achieve the goals of these new FACT Act guidelines and rules.

Eric Richard • General Counsel • (202) 508-6742 • erichard@cuna.com
Mary Mitchell Dunn • SVP & Associate General Counsel • (202) 508-6736 • mdunn@cuna.com
Jeffrey Bloch • Assistant General Counsel • (202) 508-6732 • jbloch@cuna.com
Lilly Thomas • Assistant General Counsel • (202) 508-6733 • lthomas@cuna.com
Catherine Orr • Senior Regulatory Counsel • (202) 508-6743 • corr@cuna.com