Reinsertion of Deleted Information

One of the most pernicious reporting abuses has been the repeated reintroduction of inaccurate information into one consumer report after it has already been deleted once. As a result of a reinvestigation triggered by consumer disputes, any agency may have deleted inaccurate information. However, agencies nevertheless routinely recapture the old inaccurate information from monthly or periodic computer tapes or transmissions from creditors who never corrected their files, and the errors reinserted into the consumer's file. Consumers have been routinely frustrated in their attempts to have inaccurate information permanently removed.

Congress now explicitly requires credit reporting agencies to maintain procedures to prevent the reappearance of disputed information deleted because it was inaccurate, incomplete, or unverifiable. While this adds little to the general accuracy standards of the prior law, it is more explicit.

More importantly, the new law requires that before deleted information can be reinserted, the person who furnishes the information must now certify to the federal reporting agency that it is complete and accurate.

Moreover, if information is reinserted, the credit reporting agency must notify the consumer within five days, in writing, that the disputed information has been reinserted) all the name and address and phone number of the furnisher of the information, if reasonably available) and that the consumer has a right to add a statement to file about the disputed information.

Voluntarily Closed Accounts

Reporting agencies, and creditors who furnish information, must improve record keeping to avoid having accounts which are closed by consumers in good standing confused with accounts terminated by the creditor. Until now, reports have closed accounts often have failed to distinguish between the two. Furnishers are required to notify agencies of the voluntary closure of an account by a consumer as part of their regular, timely reports of information to agencies. The agency in turn must report the account was closed voluntarily by the consumer whenever it reports information related to that account.

Seven Year Period for Obsolete Information about Debt

The legislation narrows the opportunity for reporting a debt for more than seven years after delinquency. While the delinquency may be reported for seven years from the date of the last regularly scheduled payment, under the prior law version, a defaulted account could also be reported for seven years from the beginning of the collection or the charge-off, often months and sometimes years later. Under the new law, the seven year period for any delinquent account that is placed for collection (internally or with a third party), charged to the profit or loss, or subject to any similar action, commences upon 180 days from the delinquency itself. More like a 7.5 year limit, wouldn't you say? This change is effective September 30, 1996, before other parts of the new law.

Dollar Ceilings are Raised

The rules for determining what information is obsolete and cannot be reported apply only to transactions below certain threshold dollar amounts. The new law raises the dollar limits so that fewer transactions escape the prohibition against reporting stale information. Obsolete information may not be reported for credit transactions involving a principal amount under $150, 000i for underwriting life insurance involving a principal under $150,000 and for employment purposes for people with annual salaries under $75,000.

Reporting Bankruptcies

The law codifies earlier legislative history requiring consumer reports to distinguish between Chapter 7 Bankruptcies and Chapter 13 Bankruptcies, a distinction often of importance to consumers and to creditors. However, the reporting of a bankruptcy chapter is required only "if provided by the source of the information", suggesting that disputes over incomplete reporting may continue. The same provision also now requires if a bankruptcy filing is withdrawn by a consumer, prior to the final judgement, the reporting agency must report the withdrawal "upon receipt of documentation certifying" the withdrawal.

CREDITORS & OTHERS WHO FURNISH INFORMATION NOW REINVESTIGATE INFORMATION DISPUTED BY THE CONSUMER

If anyone who furnished information to a consumer reporting agency is informed by the agency that the information has been disputed by the consumer, that person (usually a creditor), must investigate the accuracy of the disputed information. This investigation is triggered not by consumer complaint to the creditor, but only by consumer complaint to the reporting agency.

REINVESTIGATION PROCEDURES

The earlier provisions of the law are replaced in their entirety, although many provisions are similar.

When the accuracy's of completeness of information is disputed by the consumer, the credit reporting agency must conduct a reinvestigation free of charge.

The new statute provides that the reinvestigation will be completed within 30 days, to avoid unnecessary delays. While a new statutory provision, this change merely codifies current practice. Moreover, the reinvestigation may be extended an additional 15 days if during the initial 30 day period, the consumer supplies additional relevant information for consideration. The addition 15 day extension does not apply, however, if the agency has already determined the information to be inaccurate or incomplete.

One of the first steps the agency must take upon receipt of a consumer complaint, is to notify the creditor, or other person, who originally supplied the disputed information, and to do so within five business days. This notice must include all relevant information regarding the dispute received from the consumer. These requirements are intended to assure that the furnisher can report the results of its own investigation within 30 or 45 day period, as the case may be.

The new amendment also explicitly states that credit reporting agencies must review and consider all relevant information provided by the consumer. It is hard to imagine how this adds to requirements not already required of agencies (who, after all, must maintain procedures to assure maximum possible accuracy), but the tradition implicitly acknowledges the inadequacy of past investigations and may help raise standards in the future.

As before, inaccurate or incomplete information must be promptly deleted or corrected. More importantly, once the information is deleted, a consumer reporting agency must safeguard against its reinsertion into its reports.

REINVESTIGATICN RESULTS REPORTED TO CONSUMERS

Once a reinvestigation is complete, and regardless of the outcome, the agency must now notify the consumer of the results and do so within five business days. In addition, another provision requires that the agency must provide the consumer the following written information within the same five day period:

A statement that the reinvestigation is completed

A revised consumer report

A notice that upon request a description will be provided of procedures used by the agency to determine the accuracy and completeness of the information, including the name, address and phone number (if reasonably available) of any furnisher contacted. If requested it must be provided within 15 days.

A notice of the right to add a statement of dispute to the file and

For the first time a notice of the consumers right to require the agency to notify previous users of disputed information.

New Expedited Dispute Resolution