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What to do if an FCRA investigation is not conducted fairly

A lender is not required to investigate a dispute that a credit repair agency submits on your behalf

Summary

If you submit a dispute about information on your credit report, the FCRA has set up processes a lender should follow to investigate the matter.

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Credit reporting matters tend to lead other sorts of consumer complaints, in sheer numbers, submitted to the Consumer Financial Protection Bureau.

If you feel that your information is incorrectly reported, you can initiate disputes about the matter with either the lender that provided the credit information to the three major credit bureaus or with the credit bureaus themselves. The Fair Credit Reporting Act provides for such a dispute process.

If you file a dispute directly with the lender, the FCRA requires that it conduct a “reasonable investigation” into the disputed matter and look into all the relevant information that you provide with your dispute letter. If you file your dispute with the credit reporting agency, the lender will be notified about it by the credit bureau and will then have to carry out an investigation and review the relevant information forwarded to it by the credit bureau.

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FCRA dispute investigation is not always done fairly

The CFPB has found that such FCRA investigations are not always conducted fairly. The consumer protection agency’s examiners have found instances, both in cases where consumers filed the dispute directly with the lenders and in cases where they resorted to filing with the credit bureaus, in which “the furnishers failed to review underlying account information and documentation, account history notes or dispute-related correspondence provided by the consumer to assess what reasonable investigative steps would be necessary.”

According to the CFPB, in a report issued last summer when the coronavirus pandemic no doubt impacted operations at many lenders, the lenders’ failures to conduct proper investigations were tied to insufficient staffing and the high volume of daily dispute resolutions required.

According to the FCRA, dispute investigations should be completed within 30 days, but taking into account the delays that the pandemic has brought about, the CFPB has been taking a lenient view of late in case these investigations have extended beyond that mandated timeframe.

See related: Credit card issuers offer cardholders relief amid coronavirus outbreak

When an FCRA investigation should be done

In order to get the dispute investigation started, it is the consumer’s responsibility to provide a proper notice to the lender or credit bureau. You should send this notice to either the address the lender provides that is on your credit report; an address that the lender “clearly and conspicuously” specifies for submitting disputes that it communicates to the consumer; or any business address of the lender in case it has not specified an address for dispute-related correspondence.

And your notice about the dispute should provide adequate detail so that the lender can identify the information that you are disputing, the basis for your dispute claim and any supporting information that would aid the investigation.

The FCRA requires lenders to investigate cases relating to:

  • Your liability for a credit account with the lender
  • The terms of a credit account with the lender
  • Your conduct relating to an account or relationship with the lender. For instance, this could involve a dispute relating to your payment status or date you made a payment, among other matters
  • Any information they provide about your account or relationship that is in a credit report and impacts your creditworthiness, lifestyle or reputation, for instance

See related: When do credit card companies report to credit bureaus?

Exceptions to the requirement for FCRA investigation

The FCRA also provides some exceptions that don’t require a lender to conduct a dispute investigation. These include:

  • Disputes relating to a consumer’s identifying information on a credit report, such as name, date of birth or Social Security number
  • Names of employers, previous or current
  • Requests for consumer reports
  • Input from public records, including about judgments or bankruptcies, liens or fraud alerts
  • Information provided to a credit bureau by a different lender
  • Cases where the lender has reasonable cause to believe that the dispute was submitted by a credit repair agency
  • Cases of “frivolous or irrelevant” dispute submissions

The FCRA deems a dispute submission as frivolous or irrelevant if you do not provide adequate information for the lender to investigate the case. If you submit a dispute that is “substantially the same” as one that you submitted earlier – or was submitted on your behalf – that the lender has already looked into, that too could be deemed a frivolous submission.

If the lender decides your submission is a frivolous one that it will not investigate, it should inform you within five business days of coming to that conclusion.

See related: Why is a disputed collection account still on my credit report?

What to do if your FCRA investigation was not conducted fairly

There are three potential ways the FCRA provides for a lender to end an FCRA investigation. These are:

  1. Verifying the accuracy of the information.
  2. Determining that the information is not accurate or incomplete.
  3. Concluding that the information cannot be verified.

Lenders are required to notify each credit bureau they provided inaccurate information to in case their investigation establishes that the information is indeed inaccurate. And in case a lender decides the information is inaccurate or incomplete,  or that it cannot be verified, it must “promptly modify, delete or permanently block the reporting of that information.”

If you feel that your FCRA investigation was not conducted fairly, you can file a lawsuit against the lender. Attorneys Amy Drushal and Marissa Elordi explain in an online posting for the Florida Bar Journal that “historically courts have evaluated a furnisher’s investigation based on reasonableness.” This means they can’t get away with just a “cursory investigation.”

You can also take up your issue with the Federal Trade Commission, the CFPB or with your state attorney general.

If you do win your case, a lender could face substantial penalties, and you will get compensation for the damages you sustained.

Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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