CFPB’s Supervisory Highlights Reveal an Emphasis on Quality Control Issues in Credit Reporting (Part 1)

The CFPB published its Supervisory Highlights this week, highlighting examinations across various financial products that were conducted between January and April of this year.  The Report highlights key findings made by the CFPB and provides insight into the current focus of the examiners.  The current edition of Highlights provides insights on consumer reporting, fair debt and student lending, but the centerpiece of the Report are the key findings regarding the mortgage industry.  Today’s post will focus on the consumer reporting with future posts to focus on the findings with respect to debt collection, student lending and mortgage.

With regard to consumer reporting, examinations of consumer reporting agencies (“CRAs”) focusing on compliance management systems, oversight of third parties involved in credit reporting, and quality control of the accuracy of consumer reports produced. 

Information Collection

The CFPB Report emphasizes the CFPB’s expectation that CRAs insure the information they are provided is accurate.  The examiners focused on two data entry points: furnishers and public record providers.   Key takeaways from the January through April examinations:

• CRAs are expected to maintain policies and procedures to vet and monitor their furnishers of information for compliance with the CRA’s requirements;
• CRAs are expected to have formal programs to oversee and manage the data supplied by furnishers; 
• CRAs are expected to conduct regular monitoring of their furnishers to ensure adherence to the CRA’s vetting requirements;
• CRAs are expected to have formal programs to oversee and manage the data supplied by furnishers;
• CRAs are expected to have written policies and procedures in place to provide feedback to furnishers as to the quality of data furnished;
• CRAs are expected to formally audit their public record providers; and
• CRAs are expected to have defined processes in place to verify the accuracy of the public information provided.

Quality Control

No surprise to those that have followed the CFPB’s recent reports on credit reporting, the examinations focused on quality control.  The Report notes that, “with certain exceptions, there were no quality control policies and procedures to test complied consumer reports for accuracy.”  The CFPB’s expectation is that processes to analyze and improve the quality of incoming data are not enough.  CRAs are expected to regularly assess the accuracy and integrity of consumer reports and consumer file disclosures and review and sample the accuracy of consumer reports.