report companies, they often initiate disputes with the consumer report company, which usually gets passed down to the furnisher, the business that reports the information to the reporting company in the first place; this is called an indirect dispute. Consumers also have the option to file their dispute directly with the furnisher, which is called a direct dispute. Any time a furnisher receives a dispute, the furnisher must investigate the dispute and report the investigation findings back to the consumer report company. However, disputes get lost in this process because furnishers, usually businesses, have adopted the notion that they are free to dismiss these disputes based on whether they believe the dispute is legitimate. Due to this discretion that furnishers believe they have, one can probably see why consumers could feel powerless and hopeless when trying to resolve errors on their credit reports. The CFPB made three arguments to try to close any gaps in the dispute process: • The first argument is that there is no provision in the FCRA stating furnishers are only obligated to investigate bona fide disputes. The regulation makes no exception or removes any furnisher from fulfilling that obligation. Additionally, the CFPB takes the angle that the drafters of the regulation knew what they were doing by making no exception to the obligation to investigate. Nothing in the statute exempts a furnisher from investigating frivolous disputes forwarded from consumer report companies. • The second argument the CFPB makes focuses more on the transparency of the investigation/dispute process. It argues that consumers are entitled to receive notice from furnishers of the findings and conclusions of their investigation and that the notice informs the consumers of their options tends to propose that consumers should not be left high and dry and with no closure. Essentially, the argument suggests that if a furnisher has no remedy for the consumer after an investigation, the furnisher must inform the consumer of other avenues available to remedy the error. • The third argument the CFPB makes is that furnishers are already insulated from dealing with frivolous disputes, or disputes that are not bona fide, because the FCRA already requires consumer reporting companies to essentially do a preliminary investigation because the FCRA allows consumer report companies to not forward disputes to the furnisher if it discovers that the dispute is frivolous. In essence, the CFPB is saying that furnishers have little to no excuse not to investigate disputes due to them Callie Schlieman Call me at 701.433.7430 – Based in Fargo www.bell.bank Member FDIC 35410 Reg. O loans | Holding company loans & lines of credit | Equipment financing | Participation loans Whether your loan is large or small, get faster turnaround from our experienced correspondent team. Partner with Bell for: Participation loans Bank stock and ownership loans Holding company loans and lines of credit Reg. O loans to bank employees, insiders or directors Equipment financing 35410 AD Nebraska Independent Community Bankers 2022_Callie.indd 1 4/7/22 11:33 AM Know Your Role — Continued from page 27 being frivolous since the consumer reporting company has already filtered out that policy before handing the dispute to the furnisher, which means that the furnisher does have a bona fide dispute to investigate. In summary, the CFPB seeks to do away with a potential loophole that furnishers may try to take advantage of to evade their obligation to investigate disputes and merely write them off as frivolous at their own discretion. The CFPB has reiterated and reminded furnishers of their role in the dispute process not only as investigators in the dispute process but for them to be effective communicators that try to resolve disputes, to be a source of guidance to consumers who need to have their options laid out and not let consumers lives hang in limbo due to a faulty credit report that could have life-altering consequences. Regarding the litigated matter described above, the CFPB has asked the court to reverse its judgment because furnishers are only required to investigate bona fide disputes. Prince Girn, JD, serves Compliance Alliance as Associate General Counsel. He received his bachelor’s degree in political science from the University of California, Davis and received his Juris Doctor from San Joaquin College of Law. Prince’s main focus is as a member of our expert Hotline team at Compliance Alliance where his knowledge in areas of lending, real estate, and credit procedures makes him an asset for our member banks. He is also a writer for the Bankers Alliance monthly magazine and other state banker publications. 28
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