An astute industry source reached out to me yesterday, pointing me in the direction of the consent order that was announced last week between the Bureau of Consumer Financial Protection and State Farm Bank, telling me that the information contained in the agreement is “valuable” because it details the expectations held by the BCFP for furnishers of information to the credit bureaus, which many collection agencies are.
State Farm Bank was found to have violated a number of laws and regulations, including the Fair Credit Reporting Act, by:
- obtaining consumer reports without a permissible purpose;
- furnishing to credit-reporting agencies (CRAs) information about consumers’ credit that the bank knew or had reasonable cause to believe was inaccurate;
- failing to promptly update or correct information furnished to CRAs;
- furnishing information to CRAs without providing notice that the information was disputed by the consumer; and
- failing to establish and implement reasonable written policies and procedures regarding the accuracy and integrity of information provided to CRAs
Among the violations detailed in the consent order that would normally apply to collection agencies, State Farm Bank was accused of taking “multiple months” to correct incomplete or inaccurate information that had been furnished to a credit reporting agency, after it had learned the information was incomplete or inaccurate. Also, the institution failed to make corrections even when “repeatedly” notified by consumers that the information it was providing to the credit bureaus was incorrect.
When individuals disputed information to State Farm Bank, the institution furnished information to the credit reporting agencies without providing notice that the information was in dispute, the BCFP found in its investigation.
In agreeing to the consent order, State Farm Bank committed to changing its policies and procedures with respect to the information it provides to the credit reporting agencies. For any agency that submits information to the credit bureaus, the consent order and what the BCFP focused on in its investigation should be required reading.