CFPB sends out warning regarding credit report errors
Sep 08, 2013 Walt Wojciechowski
Errors on a consumer credit report can bring down an individual's score, potentially preventing them from successfully applying for loans. Although credit reporting procedures are complicated and some are bound to have mistakes, the Consumer Financial Protection Bureau (CFPB) is planning to crackdown on lenders and debt collectors that do not properly address error reports, The Wall Street Journal reported.
The source noted that CFPB officials recently warned financial institutions that they must showcase a higher level of dedication to fixing disputes brought up by consumers regarding credit reports. They stressed that collectors and credit bureaus need to establish more stringent practices to ensure all consumer complaint documents are closely analyzed and errors are brought to the attention of credit-reporting organizations.
The CFPB did state that many reporting firms have indeed improved the manner in which disputes are dealt with, but claimed the credit reporting industry still needs to take steps to provide better services. In particular, The Wall Street Journal indicated that the CFPB is concerned about the use of an automated, electronic dispute system adopted by sector leaders.
However, the major credit reporting companies outlined that they have already adopted a new system just last month that enables them to pass documents from consumers onto banks and collectors.
"Given the importance of these reports, consumers need to know that their documents are being reviewed when they dispute what they believe is a mistake on a report," said CFPB director Richard Cordray. "Today's bulletin helps ensure that the right people will be doing just that."
Although the CFPB did not outline specific steps it would take regarding punishment for failing to address disputes, it hinted that fines and consumer restitution could be in order for non-compliant organizations.
The debt collection landscape is becoming increasingly difficult to navigate. Aggressive steps taken by groups such as the CFPB have ensured that there are many legal considerations that must be consider when collection on outstanding accounts. Mistakes made during the collection process can affect consumer credit reports. Organizations that are responsible for the error could be on the hook for erroneous information.
For this reason, businesses that choose to conduct collection procedures on their own may run into litigious situations if they are not careful. There are so many specific, detailed regulations associated with account settlement that it's wise for enterprises to outsource the task to professionals.
Reputable collection agencies are experienced and proficient at resolving debts in a timely fashion. Also, they know about the various legal policies that make collection a challenge. From compliance with CFPB regulations to intimate knowledge of the Fair Debt Collection Practices Act, these professional organizations understand all applicable laws.