Subject: FR Doc E7-23549
From: <Saved by Windows Internet Explorer 7>
Date: Thu, 20 Dec 2007 17:28:43 -0500

[Federal Register: December 13, 2007 (Volume 72, Number 239)]
[Proposed Rules]
[Page 70943-70986]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13de07-22]

[[Page 70943]]

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Part II

Department of the Treasury

Office of the Comptroller of the Currency

12 CFR Part 41

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Federal Reserve System

12 CFR Part 222

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Federal Deposit Insurance Corporation

12 CFR Part 334

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Department of the Treasury

Office of Thrift Supervision

12 CFR Part 571

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National Credit Union Administration

12 CFR Part 717

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Federal Trade Commission

16 CFR Part 660

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Section 312 of the Fair and Accurate Credit Transactions Act; Proposed
Rule

[[Page 70944]]

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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Part 41

[Docket ID OCC-2007-0019]
RIN 1557-AC89

FEDERAL RESERVE SYSTEM

12 CFR Part 222

[Docket No. R-1300]

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 334

RIN 3064-AC99

DEPARTMENT OF THE TREASURY

Office of Thrift Supervision

12 CFR Part 571

[Docket No. OTS-2007-0022]
RIN 1550-AC01

NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 717

FEDERAL TRADE COMMISSION

16 CFR Part 660

RIN 3084-AA94

Interagency Notice of Proposed Rulemaking: Procedures To Enhance
the Accuracy and Integrity of Information Furnished to Consumer
Reporting Agencies Under Section 312 of the Fair and Accurate Credit
Transactions Act

AGENCIES: Office of the Comptroller of the Currency, Treasury (OCC);
Board of Governors of the Federal Reserve System (Board); Federal
Deposit Insurance Corporation (FDIC); Office of Thrift Supervision,
Treasury (OTS); National Credit Union Administration (NCUA); and
Federal Trade Commission (FTC).

ACTION: Notice of proposed rulemaking.

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SUMMARY: The OCC, Board, FDIC, OTS, NCUA, and FTC (Agencies) are
publishing for comment proposed regulations and guidelines to implement
the accuracy and integrity provisions in section 312 of the Fair and
Accurate Credit Transactions Act of 2003 (FACT Act).\1\ The proposed
regulations and guidelines would implement the requirement that the
Agencies issue guidelines for use by furnishers regarding the accuracy
and integrity of the information about consumers that they furnish to
consumer reporting agencies and prescribe regulations requiring
furnishers to establish reasonable policies and procedures for
implementing the guidelines. The Agencies also are publishing for
comment proposed regulations to implement the direct dispute provisions
in section 312. The proposed regulations would implement the
requirement that the Agencies issue regulations identifying the
circumstances under which a furnisher must reinvestigate disputes about
the accuracy of information contained in a consumer report based on a
direct request from a consumer.
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\1\ Pub. L. 108-159, 117 Stat. 1952 (Dec. 4, 2003).

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DATES: Comments must be submitted by February 11, 2008.

ADDRESSES: Because paper mail in the Washington, DC area and at the
Agencies is subject to delay, commenters are encouraged to submit
comments by e-mail, if possible. Commenters are also encouraged to use
the title ``Procedures to Enhance the Accuracy and Integrity of
Information Furnished to Consumer Reporting Agencies'' to facilitate
the organization and distribution of the comments. Comments submitted
to one or more of the Agencies will be made available to all of the
Agencies. Interested parties are invited to submit comments to:
OCC: You may submit comments by any of the following methods:
Federal eRulemaking Portal--``Regulations.gov'': Go to
http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.regulations.gov, select ``Comptroller of the Currency'' from

the agency drop-down menu, then click ``Submit.'' In the ``Docket ID''
column, select ``OCC-2007-0019'' to submit or view public comments and
to view supporting and related materials for this notice of proposed
rulemaking. The ``User Tips'' link at the top of the Regulations.gov
home page provides information on using Regulations.gov, including
instructions for submitting or viewing public comments, viewing other
supporting and related materials, and viewing the docket after the
close of the comment period.
Mail: Office of the Comptroller of the Currency, 250 E
Street, SW., Mail Stop 1-5, Washington, DC 20219.
E-mail: [email-masked].
Fax: (202) 874-4448.
Hand Delivery/Courier: 250 E Street, SW., Attn: Public
Information Room, Mail Stop 1-5, Washington, DC 20219.
Instructions: You must include ``OCC'' as the agency name and
``Docket Number OCC-2007-0019'' in your comment. In general, OCC will
enter all comments received into the docket and publish them on
Regulations.gov without change, including any business or personal
information that you provide such as name and address information, e-
mail addresses, or phone numbers. Comments received, including
attachments and other supporting materials, are part of the public
record and subject to public disclosure. Do not enclose any information
in your comment or supporting materials that you consider confidential
or inappropriate for public disclosure.
You may review comments and other related materials by any of the
following methods:
Viewing Comments Electronically: Go to http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.regulations.gov
, select the ``Search for All Documents (Open and

Closed for Comment)'' option, select ``Comptroller of the Currency''
from the agency drop-down menu, then click ``Submit.'' In the ``Docket
ID'' column, select ``OCC-2007-0019'' to view public comments for this
notice of proposed rulemaking.
Viewing Comments Personally: You may personally inspect
and photocopy comments at the OCC's Public Information Room, 250 E
Street, SW., Washington, DC. You can make an appointment to inspect
comments by calling (202) 874-5043.
Docket: You may also view or request available background
documents and project summaries using the methods described above.
Board: You may submit comments, identified by Docket No. R-1300, by
any of the following methods:
Agency Web site: http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.federalreserve.gov Follow the instructions for submitting comments at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.federalreserve.gov/.

.

Federal eRulemaking Portal: http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.regulations.gov.

Follow the instructions for submitting comments.
E-mail: [email-masked]. Include docket
number in the subject line of the message.
FAX: (202) 452-3819 or (202) 452-3102.
Mail: Jennifer J. Johnson, Secretary, Board of Governors
of the Federal Reserve System, 20th Street and Constitution Avenue,
NW., Washington, DC 20551.

All public comments are available from the Board's Web site at
http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as submitted,

[[Page 70945]]

unless modified for technical reasons. Accordingly, your comments will
not be edited to remove any identifying or contact information. Public
comments may also be viewed electronically or in paper in Room MP-500
of the Board's Martin Building (20th and C Streets, NW.) between 9 a.m.
and 5 p.m. on weekdays.
FDIC: You may submit comments, identified by the RIN for this
rulemaking, by any of the following methods:
Agency Web site: http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.fdic.gov/regulations/laws/federal/propose.html.
Follow instructions for submitting comments on

the Agency Web site.
Federal eRulemaking Portal: http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.regulations.gov.

Follow the instructions for submitting comments.
E-Mail: [email-masked]. Include the RIN number in the
subject line of the message.
Mail: Robert E. Feldman, Executive Secretary, Attention:
Comments, Federal Deposit Insurance Corporation, 550 17th Street, NW.,
Washington, DC 20429.
Hand Delivery/Courier: Guard station at the rear of the
550 17th Street Building (located on F Street) on business days between
7 a.m. and 5 p.m.
Public Inspection: All comments received will be posted without
change to http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.fdic.gov/regulations/laws/federal/propose.html,

including any personal information provided. Comments may be inspected
and photocopied at the FDIC Public Information Center, Room E-1002,
3501 North Fairfax Drive, Arlington, VA 22226, between 9 a.m. and 5
p.m. (EST) on business days. Paper copies of public comments may be
ordered from the Public Information Center by telephone at (877) 275-
3342 or (703) 562-2200.
OTS: You may submit comments, identified by OTS-2007-0022, by any
of the following methods:
Federal eRulemaking Portal: Go to http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.regulations.gov
, select ``Office of Thrift Supervision'' from the

agency drop-down menu, then click submit. Select Docket ID ``OTS-2007-
0022'' to submit or view public comments and to view supporting and
related materials for this notice of proposed rulemaking. The ``User
Tips'' link at the top of the page provides information on using
Regulations.gov, including instructions for submitting or viewing
public comments, viewing other supporting and related materials, and
viewing the docket after the close of the comment period.
Mail: Regulation Comments, Chief Counsel's Office, Office
of Thrift Supervision, 1700 G Street, NW., Washington, DC 20552,
Attention: OTS-2007-0022.
Fax: (202) 906-6518.
Hand Delivery/Courier: Guard's Desk, East Lobby Entrance,
1700 G Street, NW., from 9 a.m. to 4 p.m. on business days, Attention:
Regulation Comments, Chief Counsel's Office, Attention: OTS-2007-0022.
Instructions: All submissions received must include the
agency name and docket number for this rulemaking. All comments
received will be entered into the docket and posted on Regulations.gov
without change, including any personal information provided. Comments,
including attachments and other supporting materials received are part
of the public record and subject to public disclosure. Do not enclose
any information in your comment or supporting materials that you
consider confidential or inappropriate for public disclosure.
Viewing Comments Electronically: Go to http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.regulations.gov
, select ``Office of Thrift Supervision'' from the

agency drop-down menu, then click ``Submit.'' Select Docket ID ``OTS-
2007-0022'' to view public comments for this notice of proposed
rulemaking.
Viewing Comments On-Site: You may inspect comments at the
Public Reading Room, 1700 G Street, NW., by appointment. To make an
appointment for access, call (202) 906-5922, send an e-mail to
[email-masked], or send a facsimile transmission to (202)

906-6518. (Prior notice identifying the materials you will be
requesting will assist us in serving you.) We schedule appointments on
business days between 10 a.m. and 4 p.m. In most cases, appointments
will be available the next business day following the date we receive a
request.
NCUA: You may submit comments by any of the following methods
(please send comments by one method only):
Federal eRulemaking Portal: http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.regulations.gov.

Follow the instructions for submitting comments.
NCUA Web Site: http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.ncua.gov/RegulationsOpinionsLaws/proposed_regs/proposed_regs.html.
Follow the

instructions for submitting comments.
E-mail: Address to [email-masked]. Include ``[Your
name] Comments on Notice of Proposed Rulemaking Part 717, Procedures to
Enhance the Accuracy and Integrity of Information Furnished to Consumer
Reporting Agencies under Section 312 of the Fair and Accurate Credit
Transactions Act'' in the e-mail subject line.
Fax: (703) 518-6319. Use the subject line described above
for e-mail.
Mail: Address to Mary Rupp, Secretary of the Board,
National Credit Union Administration, 1775 Duke Street, Alexandria, VA
22314-3428.
Hand Delivery/Courier: Address to Mary Rupp, Secretary of
the Board, National Credit Union Administration. Deliver to guard
station in the lobby of 1775 Duke Street, Alexandria, VA 22314-3428, on
business days between 8 a.m. and 5 p.m.

All public comments are available on the agency's Web site at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.ncua.gov/RegulationsOpinionsLaws/comments
as submitted, except as

may not be possible for technical reasons. Public comments will not be
edited to remove any identifying or contact information. Paper copies
of comments may be inspected in NCUA's law library, at 1775 Duke
Street, Alexandria, VA 22314, by appointment weekdays between 9 a.m.
and 3 p.m. To make an appointment, call (703) 518-6546 or send an e-
mail to [email-masked].
FTC: Comments should refer to ``Procedures to Enhance the Accuracy
and Integrity of Information Furnished to Consumer Reporting Agencies
under Section 312 of the Fair and Accurate Credit Transactions Act,
Project No. R611017,'' and may be submitted by any of the following
methods. Comments containing confidential material must be filed in
paper form, must be clearly labeled ``Confidential,'' and must comply
with Commission Rule 4.9(c).\2\
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\2\ The comment must be accompanied by an explicit request for
confidential treatment, including the factual and legal basis for
the request, and must identify the specific portions of the comment
to be withheld from the public record. The request will be granted
or denied by the Commission's General Counsel, consistent with
applicable law and the public interest. See Commission Rule 4.9(c),
16 CFR 4.9(c).
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E-mail: http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=https://secure.commentworks.com/ftc-FACTAfurnishers.
To ensure that the Commission considers an electronic

comment, you must file it on the Web-based form found at this Web link
and follow the instructions on that form.
Federal eRulemaking Portal: http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.regulations.gov.

You may visit this Web site to read this request for public comment and
to file an electronic comment. The Commission will consider all
comments that regulations.gov forwards to it.
Mail or Hand Delivery: A comment filed in paper form
should refer, both in the text and on the envelope, to the name and
project number identified above, and should be mailed or delivered to
the following address:

[[Page 70946]]

Federal Trade Commission/Office of the Secretary, Room 159-H (Annex C),
600 Pennsylvania Avenue, NW., Washington, DC 20580.
The FTC Act and other laws the Commission administers permit the
collection of public comments to consider and use in this proceeding as
appropriate. All timely and responsive public comments, whether filed
in paper or electronic form, will be considered by the Commission, and
will be available to the public on the FTC Web site, to the extent
practicable, at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.ftc.gov/os/publiccomments.htm. As a matter

of discretion, the FTC makes every effort to remove home contact
information for individuals from the public comments it receives before
placing those comments on the FTC Web site. More information, including
routine uses permitted by the Privacy Act, may be found in the FTC's
privacy policy, at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.ftc.gov/ftc/privacy.htm.

FOR FURTHER INFORMATION CONTACT:
OCC: Stephen Van Meter, Assistant Director, Community and Consumer
Law Division, (202) 874-5750; Patrick T. Tierney, Senior Attorney,
Legislative and Regulatory Activities Division, (202) 874-5090; or Paul
Utterback, National Bank Examiner, Compliance Policy, (202) 874-4428,
Office of the Comptroller of the Currency, 250 E Street, SW.,
Washington, DC 20219.
Board: David A. Stein, Counsel, Amy E. Burke, Attorney, or Jelena
McWilliams, Attorney, Division of Consumer and Community Affairs, (202)
452-3667 or (202) 452-2412; or Anne B. Zorc, Senior Attorney, (202)
452-3876, or Kara L. Handzlik, Attorney, (202) 452-3852, Legal
Division, Board of Governors of the Federal Reserve System, 20th and C
Streets, NW., Washington, DC 20551.
FDIC: David P. Lafleur, Policy Analyst, (202) 898-6569, or John
Jackwood, Senior Policy Analyst, (202) 898-3991, Division of
Supervision and Consumer Protection; Richard M. Schwartz, Counsel,
(202) 898-7424, or Richard B. Foley, Counsel, (202) 898-3784, Legal
Division; 550 17th St., NW., Washington, DC 20429.
OTS: Suzanne McQueen, Consumer Regulations Analyst, Compliance and
Consumer Protection Division, (202) 906-6459; or Richard Bennett,
Senior Compliance Counsel, Regulations and Legislation Division, (202)
906-7409, at 1700 G Street, NW., Washington, DC 20552.
NCUA: Linda Dent or Regina Metz, Attorneys, Office of General
Counsel, phone (703) 518-6540 or fax (703) 518-6569, National Credit
Union Administration, 1775 Duke Street, Alexandria, VA 22314.
FTC: Clarke W. Brinckerhoff and Pavneet Singh, Attorneys, (202)
326-2252, Bureau of Consumer Protection, Federal Trade Commission, 600
Pennsylvania Avenue, NW., Washington, DC 20580.

SUPPLEMENTARY INFORMATION:

I. Introduction

The Fair Credit Reporting Act (FCRA), which was enacted in 1970,
sets standards for the collection, communication, and use of
information bearing on a consumer's creditworthiness, credit standing,
credit capacity, character, general reputation, personal
characteristics, or mode of living.\3\ In 1996, the Consumer Credit
Reporting Reform Act extensively amended the FCRA.\4\ The FACT Act
further amended the FCRA for various purposes, including to increase
the accuracy of consumer reports.
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\3\ 15 U.S.C. 1681-1681x.
\4\ Pub. L. 104-208, 110 Stat. 3009 (Sept. 20, 1996).
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Section 623 of the FCRA describes the responsibilities of persons
that furnish information about consumers (furnishers) to consumer
reporting agencies (CRAs).\5\ Section 312 of the FACT Act amended
section 623 by requiring the Agencies to issue guidelines for use by
furnishers regarding the accuracy and integrity of the information
about consumers that they furnish to consumer reporting agencies and to
prescribe regulations requiring furnishers to establish reasonable
policies and procedures for implementing the guidelines (referred to in
this proposal as the accuracy and integrity regulations and
guidelines). Section 312 also requires the Agencies to issue
regulations identifying the circumstances under which a furnisher must
reinvestigate disputes concerning the accuracy of information provided
by a furnisher to a CRA and contained in a consumer report based on a
direct request from a consumer (referred to in this proposal as the
direct dispute regulations). The Agencies are proposing to adopt
accuracy and integrity regulations and guidelines and direct dispute
regulations to satisfy the requirements of section 312.\6\
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\5\ Section 623 is codified at 15 U.S.C. 1681s-2.
\6\ The FACT Act also directs the FTC to ``conduct an ongoing
study of the accuracy and completeness of information contained in
consumer reports prepared or maintained by consumer reporting
agencies and methods for improving the accuracy and completeness of
such information.'' See section 319 of the FACT Act. The FTC
submitted its first interim report to Congress on this study on
December 9, 2004, http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.ftc.gov/reports/facta/041209factarpt.pdf
(last visited Oct. 4, 2007). The FTC submitted

its second interim report to Congress in December 2006, http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.ftc.gov/reports/FACTACT/FACT_Act_Report_2006.pdf
(last

visited Oct. 4, 2007).
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II. Statutory Requirements

Accuracy and Integrity Regulations and Guidelines

As added by section 312 of the FACT Act, section 623(e)(1)(A) of
the FCRA requires the Agencies to establish and maintain guidelines for
use by each furnisher ``regarding the accuracy and integrity of the
information relating to consumers'' that the furnisher provides to
CRAs. In developing the guidelines, section 623(e)(3) directs the
Agencies to:
Identify patterns, practices, and specific forms of
activity that can compromise the accuracy and integrity of information
furnished to CRAs;
Review the methods (including technological means) used to
furnish information relating to consumers to CRAs;
Determine whether furnishers maintain and enforce policies
to assure the accuracy and integrity of information furnished to CRAs;
and
Examine the policies and processes employed by furnishers
to conduct reinvestigations and correct inaccurate information relating
to consumers that has been furnished to CRAs.

The Agencies also are required to update the guidelines as often as
necessary.
Section 623(e)(1)(B) of the FCRA requires the Agencies to prescribe
regulations requiring furnishers to ``establish reasonable policies and
procedures for implementing the guidelines'' established pursuant to
section 623(e)(1)(A). Section 623(e)(2) of the FCRA provides that the
Agencies must consult and coordinate with one another so that, to the
extent possible, the regulations prescribed by each Agency are
consistent and comparable with the regulations prescribed by each of
the other Agencies.

Direct Disputes

As amended by section 312 of the FACT Act, section 623(a)(8) of the
FCRA directs the Agencies jointly to prescribe regulations that
identify the circumstances under which a furnisher is required to
reinvestigate a dispute concerning the accuracy of information
contained in a consumer report on the consumer, based on a direct
request by the consumer. In prescribing the direct dispute regulations,
section 623(a)(8) directs the Agencies to weigh the following specific
factors:
The benefits to consumers and the costs to furnishers and
the credit reporting system;

[[Page 70947]]

The impact on the overall accuracy and integrity of
consumer reports of any direct dispute requirements;
Whether direct contact by the consumer with the furnisher
would likely result in the most expeditious resolution of any dispute;
and
The potential impact on the credit reporting process if
credit repair organizations are able to circumvent the provisions in
subparagraph G of section 623(a)(8), which generally states that the
direct dispute rules shall not apply when credit repair organizations
provide notices of dispute on behalf of consumers.

III. The Agencies' Consideration of the Statutory Accuracy and
Integrity Criteria and Direct Dispute Factors

The Agencies' Advance Notice of Proposed Rulemaking

In order to obtain information pertaining to the criteria that
Congress directed the Agencies to consider in developing the accuracy
and integrity guidelines and the factors that Congress directed the
Agencies to weigh in prescribing the direct dispute regulations, the
Agencies issued an advance notice of proposed rulemaking (ANPR) in
March 2006.\7\ The ANPR contained detailed requests for comment on ten
issues related to the statutory criteria governing the development of
the accuracy and integrity guidelines, and on eight issues related to
the statutory factors that the Agencies must weigh when promulgating
the direct dispute regulations. The Agencies also specifically
requested comment on how the issues presented by the ANPR might differ
depending on the type of furnisher, the types of information furnished,
the frequency with which a furnisher reports information about
consumers to CRAs, or the type of CRA that receives the furnished
information.
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\7\ 71 FR 14,419 (March 22, 2006).
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The Agencies received a total of 197 comments. Commenters included
depository institutions, other financial services companies, trade
associations, a CRA, a credit score service provider, a mortgage
company, consumer groups, and individual consumers. Key issues
identified and comments received on the accuracy and integrity criteria
and on the direct dispute factors are summarized separately in the next
two sections.

Comments Pertaining to Accuracy and Integrity Regulations and
Guidelines

Burden of accuracy and integrity regulations and guidelines. A
consistent theme among industry commenters on the ANPR was that the
proposed guidelines and regulations should be sensitive to the
voluntary nature of the reporting of information about consumers by
furnishers to CRAs and not create undue burdens on furnishers that
would discourage reporting. These commenters asserted that imposing
burden on furnishers may result in furnishers reporting less
information than they do presently or ceasing to report at all, thereby
decreasing the effectiveness of the current credit reporting system for
both consumers and industry.
Types of errors, omissions, or other problems that may impair the
accuracy and integrity of furnished information. Many commenters
detailed the types of errors that may impair the accuracy of
information furnished to CRAs. Industry commenters, consumer groups,
and individuals stated that some furnishers do not report consumers'
positive payment histories, a practice that can lead to lower credit
scores than consumers may merit. Similarly, commenters also noted that
some furnishers do not report credit limits, which may likewise lead to
lower credit scores. Consumer groups reported that sales of consumer
accounts to collection agencies also result in accounts being ``re-
aged,'' meaning that a debt receives a new origination date when the
collection account is opened, resulting in the debt being included on a
consumer's credit file longer than legally permissible. In addition, a
number of industry commenters mentioned that data entry errors by
furnishers and different data processing procedures by the CRAs can
result in ``mixed files''--files that include information from two or
more consumers. Commenters noted that furnishing inaccurate information
can adversely affect consumer credit scores and result in higher costs
of credit for some consumers and increased credit risk for lenders.
Patterns, practices, and specific forms of activity that can
compromise the accuracy and integrity of furnished information.
Industry commenters and consumer groups stated that a number of
furnishers do not use the industry standard format for reporting
information about consumers to CRAs, which results in the reporting of
inaccurate information. In addition, industry and consumer groups
mentioned that sales of debt to collection agencies or to other
creditors results in inaccurate information reported to the CRAs (e.g.,
duplicative reporting of accounts and re-aged accounts). Consumer
groups and a trade association noted problems with inaccurate
bankruptcy information being reported--some furnishers continue to
report a debt as not included in bankruptcy, fail to record a debt as
discharged, or continue to show a balance owed after bankruptcy
discharge. Several industry commenters stated that some furnishers do
not provide data to CRAs in a timely manner, which may result in
delinquent debtors appearing as current on their loans.
Business, economic, or other reasons for the patterns, practices,
and specific forms of activity that can compromise the accuracy and
integrity of furnished information. A few consumer groups and trade
associations indicated that some creditors omit good payment history or
credit limit information in order to protect their proprietary
underwriting systems and prevent competitors from soliciting business
from their customers. Some commenters also asserted that collection
agencies have little economic incentive to report updated or accurate
information because they typically do not use consumer report
information to determine credit risk.
Recommendations and descriptions of policies and procedures that a
furnisher should implement and maintain to identify, prevent, or
mitigate patterns, practices, and specific forms of activity that can
compromise the accuracy and integrity of information furnished to a
CRA. Some individual and industry commenters recommended that
furnishers report all consumer account information to CRAs and not omit
information. Consumer groups and some industry commenters recommended
that furnishers should report using the Metro 2 format--a standard
reporting format created by the credit reporting industry--or a similar
standardized format. Some depository institutions and trade
associations suggested that the accuracy and integrity guidelines
should be flexible and take into consideration the diversity of
furnishers with regard to size and business complexity.
Methods (including technological means) used to furnish information
about consumers to CRAs. Industry commenters stated that most
furnishers are reporting to the three nationwide CRAs electronically
using the Metro 2 format, although some furnishers transmit information
via magnetic tape, disks, or paper. Some trade associations commented
that errors can be introduced into a consumer's credit file when a CRA
translates the furnisher's raw data into the CRA's database.

[[Page 70948]]

Maintenance and enforcement of policies and procedures to ensure
the accuracy and integrity of information furnished to CRAs. Industry
commenters stated that, in general, furnishers have policies and
procedures in place to ensure the accuracy of information and perform
internal audits to verify accuracy. Industry commenters also stated
that furnishers have a business incentive to maintain and report
accurate information in order to maintain good customer relations.
Methods (including any technological means) that a furnisher should
use to ensure the accuracy and integrity of information about consumers
furnished to CRAs. Industry commenters suggested that furnishers should
use internal reports to verify the accuracy of information transmitted
to the CRAs. Consumer groups recommended that furnishers take
appropriate steps to ensure that they report bankruptcy discharge
information accurately.
Descriptions of policies, procedures, and processes used by
furnishers to conduct reinvestigations and to correct inaccurately
furnished information and recommendations that furnishers should adopt.
Industry commenters indicated that most furnishers use an electronic
automated system (e-OSCAR) for receiving and transmitting consumer
dispute information from and to the three nationwide CRAs. Although
each furnisher has its own procedures for investigating disputes,
furnishers generally review the information provided by the CRA and
compare it to the information in the consumer's file at the furnisher.
A few industry commenters stated that using the e-OSCAR system to
conduct reinvestigations is adequate. One trade association stated that
furnishers should establish better reinvestigation procedures and
provide staff training for processing credit disputes.
Consumer groups commented that furnishers' reinvestigation
procedures are inadequate in that they only verify that the reported
information is consistent with the furnishers' records, not the
underlying accuracy of such information. Consumer groups recommended
that furnishers should perform in-depth investigations beyond verifying
that information reported to CRAs matches furnishers' records,
including contacting consumers to obtain additional information, if
necessary. Consumer groups also noted that CRAs do not provide
furnishers with documentation provided by consumers to support their
claims.
Description of the policies and procedures of CRAs for ensuring the
accuracy and integrity of furnished information and whether and to what
extent those policies, procedures, or other requirements address
particular problems that may affect information accuracy and integrity.
A few industry commenters noted that CRAs have implemented policies to
ensure the accuracy of information that they receive from furnishers.
One industry commenter asserted that once CRAs incorporate data into
their databases, furnishers do not know how CRAs actually apply the
data to consumer credit files or whether the data is applied to the
correct consumers.

Comments Pertaining to Direct Dispute Regulations

Circumstances under which a furnisher should be required to
investigate a dispute. Industry commenters indicated that furnishers
generally are voluntarily investigating disputes that are directly
submitted to them using a process that is similar to the one furnishers
use to investigate disputes that CRAs forward to the furnishers.
Industry commenters, however, also stated that investigations of direct
disputes should be required only in instances of fraud or identity
theft that can be documented by the consumer, or where the consumer has
provided a written detailed dispute to the furnisher. Other industry
commenters believe that investigations of direct disputes should only
be required if the consumer has already disputed the item with the CRA
and received a response. Consumer groups favored a broad application of
the direct dispute rule, noting that many furnishers already have an
obligation to investigate other types of disputes for major product
categories under other laws, such as the Truth in Lending Act, Real
Estate Settlement Procedures Act, and Electronic Fund Transfer Act.
Some individuals commented that furnishers should always be required to
reinvestigate a consumer's account upon the consumer's request.
Benefits or costs to consumers that may result from a direct
dispute right. Consumer groups commented that consumers would benefit
from direct disputes because the dispute requirement would eliminate
the problem of CRAs not forwarding disputes and supporting
documentation to furnishers and would provide furnishers with necessary
documentation to investigate errors or fraud. One individual noted that
consumers would benefit by being able to deal with one entity, the
furnisher, rather than the three nationwide CRAs. Some industry
commenters noted that consumers would benefit from direct disputes in
complex cases or where the consumer needs to provide the furnisher with
supporting documentation.
Benefits to furnishers, consumer reporting agencies, or the credit
reporting system that may result if furnishers are required to
investigate direct disputes. Consumer groups stated that direct
disputes will result in a more accurate credit reporting system and
would afford industry the opportunity to standardize the dispute
resolution process. A few industry commenters stated that direct
disputes would yield faster dispute resolution for consumers. Some
industry commenters mentioned that direct disputes may be beneficial
for providing to furnishers additional documentation for complex
disputes, noting that such information may not be forwarded by CRAs.
Costs to furnishers, consumer reporting agencies, or the credit
reporting system of implementing a direct dispute requirement. Industry
commenters believed that a direct dispute requirement would impose
significant costs on furnishers resulting from an expected increase in
the number of direct disputes. One depository institution reported that
the costs of resolving a direct dispute are related to whether the
disputed information contains derogatory information and the nature of
the consumer's dispute. Some industry commenters noted that reviewing
consumers' lengthy payment histories can be costly. One industry
commenter noted that a direct dispute requirement would shift costs
from CRAs to furnishers.
One consumer group commented that start-up costs should not be
burdensome as many furnishers already have direct dispute
responsibilities for their major products (such as credit cards). This
commenter asserted that the cost for processing a direct dispute ranges
from $25 to $200, and that this cost is exceeded by the harms to
consumers who are adversely affected due to reporting errors.
Impact on the overall accuracy and integrity of consumer reports if
furnishers are required to investigate direct disputes. Some industry
commenters stated that they expect an adverse impact on overall
accuracy and integrity of consumer reports as a result of an increase
in duplicate disputes and costs, decreased efficiency in processing
disputes, and the likelihood that some furnishers would stop reporting
or report less information than they currently do.
Whether direct contact by the consumer with the furnisher would
likely result in the most expeditious

[[Page 70949]]

resolution of a dispute. Industry commenters generally believed that
direct contact by the consumer is most appropriate in instances of
fraud, identity theft, or where detailed information is needed in order
to resolve the consumer dispute. Some industry commenters also stated
that direct contact by the consumer would not be appropriate where the
error lies with the CRA or an aggregator rather than with the
furnisher.
Potential impact on the credit reporting process if credit repair
organizations are able to circumvent the FCRA's prohibition of their
submission of direct disputes. Consumer groups and an individual
commented that attorneys should be permitted to assist consumers with
disputes and not be considered credit repair organizations. Industry
commenters predicted an increase in costs resulting from a significant
increase in the number of direct disputes that would be filed by credit
repair organizations, which, these commenters contended, are often
deliberately vague or overbroad.
Additional, specific comments are mentioned, as appropriate, in the
section-by-section analysis.
The Agencies have carefully considered the comments received in
response to the ANPR in developing the proposed accuracy and integrity
regulations and guidelines and the proposed direct dispute regulations.
The Agencies also reviewed a number of studies that have identified
potential issues that may affect the accuracy of consumer report
information. These studies indicate that consumer report accuracy may
be affected by the presence of stale account information, the practice
of furnishing only negative information about an account, inaccurate or
incomplete public record data, inaccurate or incomplete collection
account data, and unreported credit limits.\8\
---------------------------------------------------------------------------

\8\ See Robert B. Avery, Raphael W. Bostic, Paul S. Calem &
Glenn B. Canner, An Overview of Consumer Data and Credit Reporting,
Federal Reserve Bulletin, vol. 89, at 47-73 (Feb. 2003); Robert B.
Avery, Paul S. Calem, Glenn B. Canner & Shannon C. Mok, Credit
Report Accuracy and Access to Credit, Federal Reserve Bulletin, vol.
90, at 297-322 (Summer 2004); Consumer Federation of America &
National Credit Reporting Association, Credit Score Accuracy and
Implications for Consumers (Dec. 17, 2002), http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.consumerfed.org/pdfs/121702CFA_NCRA_Credit_Score_Report_Final.pdf
(last visited Oct. 4, 2007); Federal Trade Commission and

Board of Governors of the Federal Reserve System, Report to Congress
on the Fair Credit Reporting Act Dispute Process (Aug. 2006).
---------------------------------------------------------------------------

IV. Section-by-Section Analysis \9\
---------------------------------------------------------------------------

\9\ The OCC, Board, FDIC, OTS and NCUA would place the proposed
regulations and guidelines implementing section 312 in the part of
their regulations that implement the FCRA--12 CFR parts 41, 222,
334, 571, and 717, respectively. For ease of reference, the
discussion in the Supplementary Information section uses the shared
numerical suffix of each of these agency's regulations. The FTC also
would place the proposed regulations and guidelines in the part of
its regulations implementing the FCRA, specifically 16 CFR part 660.
However, the FTC uses different numerical suffixes that equate to
the numerical suffixes discussed in the Supplementary Information
section as follows: Suffix .40 = FTC suffix .1, suffix .41 = FTC
suffix .2, suffix .42 = FTC suffix .3, and suffix .43 = FTC suffix
.4. In addition, Appendix E referenced in the Supplementary
Information section is the FTC's Appendix A.
---------------------------------------------------------------------------

The following describes the three components of this rulemaking:
the proposed accuracy and integrity regulations, the proposed accuracy
and integrity guidelines, and the proposed direct dispute regulations.

Proposed Accuracy and Integrity Regulations

Section --.40 Scope
Section --.40 sets forth the scope of each Agency's proposed
regulations requiring furnishers to establish reasonable policies and
procedures for implementing the accuracy and integrity guidelines. Each
of the Agencies has tailored this section to describe those entities to
which this subpart applies. The FDIC requests comment on whether it
would be useful to include a cross-reference in its proposed regulation
to the definition of ``subsidiary'' in the Federal Deposit Insurance
Act.\10\
---------------------------------------------------------------------------

\10\ See 12 U.S.C. 1813(w)(4).
---------------------------------------------------------------------------

Section --.41 Definitions.
Two approaches to defining the terms ``accuracy'' and
``integrity.''
Section 623(e) of the FCRA requires the Agencies to establish and
maintain guidelines for use by furnishers regarding the accuracy and
integrity of the information about consumers that they furnish to CRAs.
The statute does not define the terms ``accuracy'' or ``integrity.''
Consumer group and industry commenters on the ANPR provided
suggestions for defining the terms ``accuracy'' and ``integrity.''
Consumer groups proposed that the Agencies define the term ``accuracy''
to mean ``conformity to fact,'' rather than conformity to data records.
They said that an accuracy standard should rely not only upon a
furnisher's data records, but also upon original documents such as
credit agreements. Some consumer groups also said that information
should not be considered ``accurate'' if it is overly general,
incomplete, out-of-date, or misleading. Consumer groups also proposed
that the Agencies make clear that information lacks ``integrity'' if it
is technically accurate, but misleads users of consumer reports because
it does not include critical information.
Industry commenters, citing the legislative history of the FACT
Act, suggested that the term ``integrity'' does not mean completeness,
but rather, that the information a furnisher provides to a CRA is
factually correct.
In the Agencies' view, neither the text nor the legislative history
of the FACT Act resolves how the terms ``accuracy'' and ``integrity''
should be defined. Although the terms used in section 623(e) differ
from terms used in other provisions of the FCRA,\11\ the text of
section 623(e) provides no direction to the Agencies about the meaning
or significance of that difference.\12\ The Agencies have reviewed the
legislative history, and note that the Congressional Record includes
post-enrollment statements regarding section 623(e) made by the
Chairman of the House Financial Services Committee and by the Ranking
Member of the Senate Committee on Banking, Housing and Urban
Affairs.\13\ Those statements,

[[Page 70950]]

however, provide different views on the meaning of the terms.
---------------------------------------------------------------------------

\11\ See FCRA section 623(b)(1), 15 U.S.C. 1681s-2(b)(1)
(requiring entities that furnish information to CRAs to conduct
investigations in response to complaints regarding the
``completeness or accuracy'' of furnished information); sections
FCRA 623(a)(2)(A)-(B), 15 U.S.C. 1681s-2(a)(2)(A)-(B) (requiring
furnishers to correct and update information that the furnisher
determines is ``not complete or accurate'' and to refrain from
refurnishing information that remains ``not complete or accurate'').
\12\ Earlier versions of the legislation that became the FACT
Act required the agencies to prescribe regulations and guidelines
regarding the ``accuracy and completeness'' of information relating
to consumers. This language also was contained in the bill passed by
the Senate and referred to the Conference Committee. However, the
bill reported by the Conference Committee used the phrase ``accuracy
and integrity.'' Compare 149 Cong. Rec. S13990 (Nov. 5, 2003) (bill
as passed by the Senate) with 149 Cong. Rec. H12198 (Nov. 21, 2003)
(bill as reported by the Conference Committee).
\13\ See 149 Cong. Rec. E2512, E2516 (Nov. 4, 2003) (extension
of remarks of Chairman Michael Oxley, entered into the Congressional
Record on Dec. 9, 2003) (`` `[a]ccuracy and integrity' was selected
[by the Congress] as the relevant standard rather than `accuracy and
completeness' as used in Sections 313 and 319 [of the FACT Act], to
focus on the quality of the information furnished rather than the
completeness of the information furnished.''); 149 Cong. Rec.
S15806-02 (Nov. 24, 2003) (statement of Ranking Member Paul
Sarbanes) (`` `[A]ccuracy' relates to whether the information that
is provided by data furnishers to credit reporting agencies is
factually correct. The term `integrity' relates to whether all
relevant information that is used to assess credit risk and to grant
credit is accurately provided. Integrity of information is not
achieved when furnishers do not fully provide data that, by its
absence, could have a positive or negative effect on a consumer's
credit score, or on his or her ability to obtain credit under the
most favorable terms for which he or she qualifies.'').
---------------------------------------------------------------------------

In light of these considerations, the Agencies are proposing for
comment two alternative approaches to defining the terms ``accuracy''
and ``integrity'' in the text of the regulations and guidelines.
Although the definition of ``accuracy'' is the same under both
alternatives, the two approaches differ in terms of both the substance
of the definition of ``integrity'' and the placement of the
definitions. Accordingly, the Agencies request comment on which
definition of ``integrity'' should be adopted in the final rule, and on
whether the definitions of ``accuracy'' and ``integrity'' should be
placed in the regulations or in the guidelines.

A. Regulatory Definition Approach

Under the first approach, the Agencies would provide specific
definitions for the terms ``accuracy'' and ``integrity'' in the
regulations. This approach, labeled ``Regulatory Definition Approach,''
appears at Sec. Sec. --.41(a) and --.41(b) in the text of the proposed
regulations. Under proposed Sec. --.41(a), the term ``accuracy'' means
that any information that a furnisher provides to a CRA about an
account or other relationship with the consumer reflects without error
the terms of and liability for the account or other relationship and
the consumer's performance or other conduct with respect to the account
or other relationship. This proposed definition of ``accuracy'' is
intended to require that furnishers have reasonable procedures in place
to ensure that the information they provide to CRAs is factually
correct. The Agencies solicit comment on whether the definition of
accuracy should specifically provide that accuracy includes updating
information as necessary to ensure that information furnished is
current.
Under proposed Sec. --.41(b), the term ``integrity'' means that
any information that a furnisher provides to a CRA about an account or
other relationship with the consumer does not omit any term, such as a
credit limit or opening date, of that account or other relationship,
the absence of which can reasonably be expected to contribute to an
incorrect evaluation by a user of a consumer report of a consumer's
creditworthiness, credit standing, credit capacity, character, general
reputation, personal characteristics, or mode of living. Thus, the
Regulatory Definition Approach provides that information furnished to a
CRA may be technically ``accurate'' yet lack ``integrity'' because it
presents a misleading picture of the consumer's creditworthiness by
omitting critical information, such as a credit limit on a revolving
credit account.\14\
---------------------------------------------------------------------------

\14\ ``A key factor that credit evaluators consider when they
assess the creditworthiness of an individual is credit utilization.
If a creditor fails to report a credit limit for an account, credit
evaluators must either ignore utilization or use a substitute
measure such as the highest-balance level--that is, the largest
amount ever owed on the account. Substituting the highest balance
level for the credit limit generally results in a higher estimate of
credit utilization because the highest-balance amount is typically
lower than the credit limit: the higher estimate leads, in turn, to
a higher perceived level of credit risk for affected consumers.''
Robert B. Avery, Paul S. Calem, Glenn B. Canner, Credit Report
Accuracy and Access to Credit; Federal Reserve Bulletin, Summer
2004, p. 306.
---------------------------------------------------------------------------

Under the Regulatory Definition Approach--and as described in
further detail in the section-by-section analysis of the guidelines--
the Agencies would include in the guidelines six objectives that a
furnisher's policies and procedures should be designed to achieve. The
six objectives seek to ensure that: Information is furnished
accurately; information is furnished with integrity; the furnisher
conducts reasonable investigations of consumer disputes about the
accuracy or integrity of information in consumer reports and takes
appropriate actions based on the outcome of such investigations;
information is reported in a form and manner designed to minimize the
likelihood that it will be erroneously reflected in the consumer's
report; information furnished is substantiated by the furnisher's
records; and the furnisher updates information it furnishes as
necessary to reflect the current status of the consumer's account or
other relationship. The first two of these objectives would reflect the
regulatory definitions of ``accuracy'' and ``integrity.''
Thus, under the Regulatory Definition Approach, the guidelines
would provide that a furnisher should have written policies and
procedures reasonably designed to ensure that the information it
furnishes about accounts or other relationships with a consumer:
Accurately identifies the appropriate consumer;
Accurately reports the terms of those accounts or other
relationships; and
Accurately reports the consumer's performance and other
conduct with respect to the account or other relationship.

Further, the guidelines would provide that a furnisher should have
policies and procedures reasonably designed to ensure that the
information it furnishes about accounts or other relationships with a
consumer avoids misleading users of consumer reports about the
consumer's creditworthiness, credit standing, credit capacity,
character, general reputation, personal characteristics, or mode of
living.
Consistent with the FCRA, under which the furnishing of information
about consumers is voluntary, the proposed definitions would apply only
to information that the furnisher elects to report to CRAs. The
Agencies are aware that some furnishers may be subject to separate
obligations to report all available information about an account or
other relationship.\15\ These proposed definitions, however, are not
intended to require furnishers to do so.
---------------------------------------------------------------------------

\15\ Furnishers that report information about consumers to CRAs
related to mortgage loans may be required by Freddie Mac, Fannie
Mae, and the Federal Housing Administration to report full-file
information. See Fannie Mae Servicing Guide, Part I, Section 304.09
and Part VII, Section 107; Freddie Mac Service Guide, Section 55.4:
Reports to credit repositories; and the Federal Housing
Administration Servicing Handbook, Section 4330.1(c) (Rev-5)
(incorporating by reference the Fannie Mae Servicing Guide).
Further, the Department of Housing and Urban Development has defined
``Mortgages contrary to good lending practices'' to include a
mortgage or a group or category of mortgages entered into by a
lender and purchased by Fannie Mae or Freddie Mac where it can be
shown that a lender engaged in a practice of failing to report
monthly on borrowers' repayment history to credit repositories on
the status of each loan purchased by Fannie Mae or Freddie Mac that
a lender is servicing. 24 CFR 81.2(b).
---------------------------------------------------------------------------

B. Guidelines Definition Approach

The second approach contained in the proposal, labeled the
``Guidelines Definition Approach,'' would define the terms ``accuracy''
and ``integrity'' in the guidelines--rather than in the regulations--
with reference to the objectives that a furnisher's policies and
procedures should be designed to accomplish.
Under the Guidelines Definition Approach, the Agencies have
identified four objectives that pertain to the accuracy and integrity
of information furnished and related matters. Definitions for the terms
``accuracy'' and ``integrity'' would be incorporated into the first two
of these objectives. Thus, the guidelines would provide that a
furnisher should have written policies and procedures reasonably
designed to ensure that the information it furnishes about accounts or
other relationships with a consumer is accurate. The guidelines would
define ``accuracy'' to mean that any information that a furnisher
provides to a CRA about an account or other relationship with the
consumer reflects without error the terms of and liability for the
account or other relationship and the consumer's performance or other
conduct with

[[Page 70951]]

respect to the account or other relationship. This is the same
definition of ``accuracy'' used in the Regulatory Definition Approach.
Additionally, the guidelines would provide that a furnisher's
policies and procedures should ensure that the information it furnishes
about accounts or other relationships with a consumer is furnished with
integrity. The guidelines would define ``integrity'' to mean that any
information that a furnisher provides to a CRA about an account or
other relationship with the consumer: (1) Is reported in a form and
manner that is designed to minimize the likelihood that the
information, although accurate, may be erroneously reflected in a
consumer report; and (2) should be substantiated by the furnisher's own
records. In addition to being placed in a different location, this
definition is substantively different from that used in the Regulatory
Definition Approach.
Under the Guidelines Definition Approach, the definition of
``integrity'' does not address the omission of any term the absence of
which could contribute to an incorrect evaluation by a user of a
consumer's creditworthiness. Instead, the proposed definition of
``integrity'' addresses two potential issues with furnished
information. First, accurate information may be attributed to the wrong
consumer or the wrong account, or may be associated with an erroneous
date. Second, if the accuracy of the furnished information is disputed,
the furnisher should be able to substantiate, or verify, the
information through its own records. The Regulatory Definition Approach
also includes these two concepts in the guidelines as objectives that a
furnisher's policies and procedures should be designed to achieve. The
Guidelines Definition Approach, like the Regulatory Definition
Approach, also includes as objectives: Ensuring that the furnisher
conducts reasonable investigations of consumer disputes about the
accuracy or integrity of information in consumer reports and takes
appropriate actions based on the outcome of such investigations; and
ensuring that the furnisher updates information it furnishes as
necessary to reflect the current status of the consumer's account or
other relationship.
As noted above, the Agencies invite comment on these alternative
definitions of ``integrity,'' and on whether the definitions of
``accuracy'' and ``integrity'' should be placed in the regulatory text
or in the guidelines.
Furnisher
Proposed Sec. --.41(c) would define the term ``furnisher'' to mean
an entity other than an individual consumer that furnishes information
relating to consumers to one or more CRAs. An entity is not a furnisher
under the proposed definition when it provides information to a CRA
solely to obtain a consumer report under sections 604(a) and (f) of the
FCRA, which enumerate the circumstances under which a CRA may provide a
consumer report and prohibit persons from obtaining or using consumer
reports for impermissible purposes. Users of consumer reports may
provide information about consumers to CRAs in order to obtain such
reports, but they do not do so for the purpose of having such
information included in consumer reports. Although the user's request
for the report may be reflected in the consumer report as an inquiry,
the Agencies do not believe it would be appropriate to subject such
furnishing of information to the regulations and guidelines proposed
here. In addition, by defining the term ``furnisher'' in terms of an
entity other than an individual consumer, the proposal makes clear that
consumers are not furnishers, even if they self-report information
about themselves to a CRA.
Identity Theft
Proposed Sec. --.41(d) provides that the term ``identity theft''
has the same meaning as in the FTC's regulations at 16 CFR 603.2(a).
Section 603.2(a), which was adopted pursuant to section 111 of the FACT
Act,\16\ defines the term ``identity theft'' to mean ``a fraud
committed or attempted using the identifying information of another
person without authority.'' This definition also is used in the
interagency regulations implementing section 114 of the FACT Act (Red
Flags).
---------------------------------------------------------------------------

\16\ Section 111 provides for a definition of the term
``identity theft,'' and authorizes the FTC to refine that
definition. See section 603(q)(3) of the FCRA, 15 U.S.C.
1681a(q)(3).
---------------------------------------------------------------------------

Direct Dispute
Proposed Sec. --.41(e) defines ``direct dispute'' to mean a
dispute submitted directly to a furnisher by a consumer concerning the
accuracy of any information contained in a consumer report relating to
the consumer. Although the definition of ``direct dispute'' uses the
term accuracy, the proposed Regulatory Definition Approach provides a
definition of accuracy for purposes of the definition of ``direct
dispute,'' but the Guidelines Definition Approach does not.
The Agencies solicit comment on whether the definition of
``accuracy'' should be made applicable to direct disputes, if the
Guidelines Definition Approach is adopted. The Agencies also solicit
comment on whether the proposed definition of ``accuracy'' is
appropriate for the direct dispute provision.\17\
---------------------------------------------------------------------------

\17\ The Agencies note that section 623(a)(8) only requires a
furnisher to handle direct disputes about ``accuracy.'' In contrast,
section 611(a) requires a CRA to handle disputes about
``completeness or accuracy'' and section 623(b) requires furnishers
to reinvestigate disputes about ``completeness or accuracy'' if the
disputes come through a CRA. The Agencies particularly request
comment on whether the definition of ``accuracy'' needs to be
clarified in order to more clearly delineate those disputes that,
while subject to the CRA dispute process, would not be subject to
the direct disputes rule.
---------------------------------------------------------------------------

Section --.42 Reasonable Policies and Procedures Concerning the
Accuracy and Integrity of Furnished Information
Paragraph (a) of proposed Sec. --.42 would require each furnisher
to establish and implement reasonable written policies and procedures
regarding the accuracy and integrity of the information about consumers
that it furnishes to a CRA. The policies and procedures must be
appropriate to the nature, size, complexity, and scope of the
furnisher's activities.
The requirement that furnishers' policies and procedures be written
facilitates effective implementation and enables the Agencies to assess
furnishers' compliance with the rules. The Agencies do not believe that
the requirement for written policies and procedures will be unduly
burdensome, particularly since, under the guidelines, a furnisher may
include any of its existing policies and procedures that are relevant
and appropriate. As noted previously, industry commenters responding to
the ANPR noted that, in general, furnishers have policies and
procedures in place to ensure the accuracy of information furnished to
CRAs. The Agencies invite comment on any burden and effects on
furnishers, particularly small furnishers, regarding the requirement
that the policies and procedures be written.
The Agencies recognize that there is substantial diversity among
furnishers with respect to their structure, operations, and the types
of business they conduct, such that a ``one-size-fit-all'' approach to
the implementation of the guidelines is inappropriate. The requirement
that the furnisher's policies and procedures must be appropriate to the
nature, size, complexity, and scope of the furnisher's activities
permits furnishers to tailor their policies and procedures to their
business activities.

[[Page 70952]]

The Agencies expect, for example, that the policies and procedures for
a small retail entity would differ from those of a multi-billion dollar
financial services company.
Proposed Sec. --.42(b) requires each furnisher to consider the
accuracy and integrity guidelines in developing its policies and
procedures and to incorporate those guidelines that are appropriate.
Furnishers should consider the guidelines in the context of the nature,
size, complexity, and scope of their activities and incorporate the
guidelines that are appropriate to ensure the accuracy and integrity of
the information about consumers that they provide to CRAs.
Some of the commenters on the ANPR specifically suggested that the
Agencies require furnishers to review or audit their furnishing
policies and procedures in order to ensure that the information about
consumers continues to be furnished accurately and with integrity.
Proposed Sec. --.42(c) incorporates these commenters' suggestions and
would require each furnisher to review its policies and procedures
periodically and update them as necessary to ensure their continued
effectiveness.

Proposed Accuracy and Integrity Guidelines

The accuracy and integrity guidelines appear as Appendix E to the
appropriate part of each Agency's regulations. In the introductory
language to the guidelines, the Agencies encourage voluntary furnishing
of information about consumers to CRAs. This reflects the recognition
that the voluntary system of consumer reporting produces substantial
benefits for consumers, users of consumer reports, and the economy as a
whole. The introduction also reminds furnishers that Sec. --.42 of the
proposed regulations would require each furnisher to establish and
implement reasonable written policies and procedures concerning the
accuracy and integrity of the information about consumers it furnishes
to CRAs and to consider the guidelines in developing those policies and
procedures.
Section I--Nature, Scope, and Objectives of Policies and Procedures
The Nature and Scope section of the guidelines references the
requirement, at proposed Sec. --.42(a), that a furnisher's policies
and procedures must be appropriate to the nature, size, complexity, and
scope of the furnisher's activities and provides the following examples
of aspects of a furnisher's business activities that its policies and
procedures should reflect: The types of business activities in which
the furnisher engages; the nature and frequency of the information
about consumers the furnisher provides to CRAs; and the technology used
by the furnisher to provide information to CRAs.
The Objectives section of the guidelines provides that a furnisher
should have written policies and procedures reasonably designed to
accomplish the specified objectives. As described earlier in the
discussion of the terms ``accuracy'' and ``integrity,'' the wording of
some of the objectives set out in the guidelines is related to the
alternative approaches to construing the term ``integrity'' that the
Agencies are proposing in the text.
In connection with the Regulatory Definition Approach, the first
two objectives of the guidelines would provide that a furnisher should
have written policies and procedures reasonably designed to ensure that
the information it furnishes about accounts or other relationships with
a consumer accurately identifies the appropriate consumer; accurately
reports the terms of those accounts or other relationships; accurately
reports the consumer's performance and other conduct with respect to
the account or other relationship; and designed to ensure that the
information it furnishes about accounts or other relationships with a
consumer avoids misleading a consumer report user as to the consumer's
creditworthiness, credit standing, credit capacity, character, general
reputation, personal characteristics, or mode of living.
Under the Guidelines Definition Approach, definitions of
``accuracy'' and ``integrity'' would be incorporated into the first two
objectives. Thus, the guidelines would provide that a furnisher should
have written policies and procedures reasonably designed to ensure that
the information it furnishes about accounts or other relationships with
a consumer is accurate. The guidelines would define ``accuracy'' to
mean that with respect to any information that a furnisher provides
about an account or other relationship with the consumer to a CRA
reflects without error the terms of and liability for the account or
other relationship and the consumer's performance and other conduct
with respect to the account or other relationship.
Additionally, under the Guidelines Definition Approach, the
guidelines would provide that a furnisher's written policies and
procedures should be reasonably designed to ensure that the information
it furnishes about accounts or other relationships with a consumer is
furnished with integrity. The guidelines would define ``integrity'' to
mean, that any information that a furnisher provides to a CRA about an
account or other relationship with the consumer is:
Reported in a form and manner that is designed to minimize
the likelihood that the information, although accurate, may be
erroneously reflected in a consumer report, for example, by ensuring
that the information is: (A) Reported with appropriate identifying
information about the consumer to which it pertains; (B) reported in a
standardized and clearly understandable form and manner; and (C)
reported with a date specifying the time period to which the
information pertains; and
Substantiated by the furnisher's own records.
As indicated in the discussion of the proposed accuracy and
integrity regulations, the Agencies invite comment on the alternative
approaches to defining the term ``integrity'' and the appropriate
placement of the definitions. When responding to these issues raised by
the Agencies, commenters may wish to address, among other relevant
factors, how the approaches would impact the quality of information in
consumer reports, the burdens on furnishers, and the relative benefits
to consumers, the credit reporting system, and users of consumer
reports.
The third proposed objective under both approaches states that a
furnisher's policies and procedures should ensure that the furnisher
conducts reasonable investigations of consumer disputes about the
accuracy or integrity of information in consumer reports and takes
appropriate actions based on the outcome of such investigations. This
objective addresses concerns raised by commenters that some furnishers
perform perfunctory investigations of consumer disputes in cases where
a proper investigation would require reviewing information beyond the
account status listed in the furnisher's electronic records, and that
some furnishers do not update their own records when errors are
discovered, resulting in incorrect information being reported again to
the CRAs.
The fourth proposed objective under both approaches states that a
furnisher should have written policies and procedures reasonably
designed to ensure that the furnisher updates information it furnishes
as necessary to reflect the current status of the consumer's account or
other relationship, including: (a) Any transfer of an account (e.g., by
sale or assignment for collection) to a third

[[Page 70953]]

party; and (b) any cure of the consumer's failure to abide by the terms
of the account or other relationship.
The fifth proposed objective under the Regulatory Definition
Approach states that the information a furnisher furnishes about
accounts or other relationships with a consumer is reported in a form
and manner that is designed to minimize the likelihood that the
information, although accurate, may be erroneously reflected in a
consumer report, for example, by ensuring that the information is
reported with appropriate identifying information about the consumer to
which it pertains, in a standardized and clearly understandable form
and manner, with a date specifying the time period to which the
information pertains.
The sixth proposed objective under the Regulatory Definition
Approach states that the information a furnisher furnishes about
accounts or other relationships with a furnisher should be
substantiated by the furnisher's own records.
Section II--Accuracy and Integrity Duties of Furnishers Under the FCRA
This section reminds furnishers of their statutory duties that
relate to the accuracy and integrity of the information about consumers
they provide to CRAs. This section states that a furnisher's policies
and procedures should address compliance with all applicable
requirements imposed on the furnisher under the FCRA and lists certain
of those requirements, including the duty to investigate direct
disputes as required by proposed Sec. --.43 and section 623(a)(8) of
the FCRA. This section also lists requirements such as the duty to
provide to CRAs corrections or additional information necessary to make
furnished information complete and accurate under the circumstances
specified under section 623(a)(2) of the FCRA.
Section III--Establishing and Implementing Policies and Procedures
This section identifies three steps that furnishers should take
when establishing accuracy and integrity policies and procedures.
First, a furnisher should identify its practices or activities that can
compromise the accuracy and integrity of information about consumers
furnished to CRAs. Methods appropriate for this purpose include:
Reviewing the furnisher's existing practices and
activities;
Reviewing historical records relating to accuracy or
integrity or to disputes, or other information relating to the accuracy
and integrity of information provided by the furnisher to CRAs and the
types of errors, omissions, or other problems that may have affected
the accuracy and integrity of such information about consumers; and
Obtaining feedback from CRAs, consumers, the furnisher's
staff, or other appropriate parties.
Second, a furnisher should evaluate the effectiveness of its
existing policies and procedures regarding the accuracy and integrity
of information about consumers furnished to CRAs and consider whether
additions or modifications to the policies and procedures are
necessary. As is specifically mentioned in the introduction to the
guidelines, a furnisher may incorporate in its accuracy and integrity
policies and procedures any of its existing policies and procedures
that are relevant and appropriate.
Third, a furnisher should evaluate the effectiveness of specific
methods (including technological means) the furnisher uses to provide
information about consumers to CRAs and determine whether changes to
those methods are appropriate to enhance the accuracy and integrity of
that information.
Section IV--Specific Components of Policies and Procedures
This section serves to address specific problems raised by
commenters on the ANPR, studies regarding the consumer reporting
system, and other information gathered by the Agencies in the course of
developing this proposal. The proposed guidelines detail specific
components that should be addressed in a furnisher's policies and
procedures. These include:
Establishing and implementing a system for furnishing
information about consumers to CRAs that is appropriate to the nature,
size, complexity, and scope of the furnisher's business operations.
Using standard data reporting formats and standard
procedures for compiling and furnishing data, where feasible, such as
the electronic transmission of information about consumers to CRAs.
Ensuring that the furnisher maintains its own records for
a reasonable period of time, not less than any applicable recordkeeping
requirement, in order to substantiate the accuracy of any information
about consumers it furnishes that may be subject to a direct dispute.
Thus, a furnisher's policies and procedures should incorporate any
applicable recordkeeping requirements such as those contained in
regulations implementing the Truth in Lending Act and the Equal Credit
Opportunity Act,\18\ or agency-specific requirements.\19\ The Agencies
note that section 611(a)(5) of the FCRA contains no time limit on the
requirement that if a CRA reinvestigates a consumer dispute, it must
modify or delete items that cannot be verified. The Agencies seek
comment on whether a specific time period for recordkeeping should be
incorporated in the final regulations.
---------------------------------------------------------------------------

\18\ See 12 CFR 226.25(a) and 12 CFR 202.11(b).
\19\ See, e.g., 12 CFR 561.2 (savings associations must retain
accurate and complete records of all business transactions) and OTS
Examination Handbook Sec. 310 (savings associations should retain
original business transaction records until the savings association
has two regular examinations and has resolved any supervisory
matters raised in the examinations).
---------------------------------------------------------------------------

Establishing and implementing appropriate internal
controls regarding the accuracy and integrity of information about
consumers furnished to CRAs, such as by implementing standard
procedures, verifying random samples, and conducting regular reviews of
information provided to CRAs.
Training staff that participates in activities related to
the furnishing of information about consumers to CRAs to implement the
policies and procedures.
Providing for appropriate and effective oversight of
relevant service providers whose activities may affect the accuracy and
integrity of information about consumers furnished to CRAs to ensure
compliance with the policies and procedures.
Furnishing information about consumers to CRAs following
mergers, portfolio acquisitions or sales, or other acquisitions or
transfers of accounts or other debts, in a manner that prevents re-
aging of information, duplicative reporting, or other problems
affecting the accuracy or integrity of the information furnished.
Attempting to obtain the information listed in Sec.
--.43(d) from a consumer before determining that the consumer's dispute
is frivolous or irrelevant.
Ensuring that deletions, updates, and corrections
furnished to CRAs are reflected in business systems to avoid furnishing
erroneous information.
Conducting investigations of direct disputes in a manner
that promotes the efficient resolution of such disputes.
Ensuring that technological and other means of
communication with CRAs are designed to prevent duplicative reporting
of accounts, erroneous association of information with the wrong
consumer(s), and other

[[Page 70954]]

occurrences that may compromise the accuracy and integrity of
information contained in consumer reports.
Providing CRAs with sufficient identifying information in
the furnisher's possession about each consumer about whom information
is furnished to enable the CRA properly to identify the consumer.
Conducting a periodic evaluation of its own practices, CRA
practices of which the furnisher is aware, investigations of disputed
information, corrections of inaccurate information, means of
communication, and other factors that may affect the accuracy and
integrity of information furnished to CRAs.

Proposed Regulations Concerning Direct Disputes

The third component of this notice of proposed rulemaking comprises
the Agencies' proposed regulations implementing section 623(a)(8) of
the FCRA, which directs the Agencies jointly to prescribe regulations
that identify the circumstances under which a furnisher is required to
reinvestigate a dispute concerning the accuracy of information about
the consumer contained in a consumer report,\20\ based on a direct
request by the consumer. The statute sets forth procedural and other
requirements applicable to any such reinvestigations.
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\20\ For purposes of the proposed Sec. --.43(c) and (d) of the
direct disputes provision, a ``consumer report'' means a disclosure
a CRA provides to a consumer as referenced in section 609(a) of the
FCRA. CRAs may provide such disclosures in a different format than a
consumer report they provide to a third party and refer to them as
``file disclosures.''
---------------------------------------------------------------------------

We note that a number of industry commenters on the ANPR indicated
that they are already voluntarily investigating direct disputes as a
matter of good customer relations and sound business practices. The
Agencies encourage furnishers to continue voluntary investigations of
consumer disputes as one way to enhance the accuracy and integrity of
the information about consumers they provide to CRAs.\21\
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\21\ The Agencies note that many entities, including depository
institutions and their affiliates, also investigate disputes about
information they furnish to CRAs that consumers raise through the
consumer complaint processes established by their respective
supervisory agencies. See generally FRB, ``How to File a Consumer
Complaint Against a Bank,'' http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.federalreserveconsumerhelp.gov
(last visited October 26, 2007);

FDIC, ``Consumer Affairs Brochure: Fostering Consumer Confidence in
Banking, How to file a Written Complaint'' (October 2005), http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.fdic.gov/consumers/questions/consumer/complaint.html
(last

visited November 1, 2007); OTS, ``How to Resolve a Consumer
Complaint'' (February 2007), http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.ots.treas.gov/docs/4/480924.pdf
(last visited October 24, 2007); and OCC, ``Assistance

for Customers of National Banks'' (April 2005), http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.occ.gov/customer.pdf
(last visited October 24, 2007).

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Section --.43(a) General Rule
The proposed general rule would require a furnisher to investigate
a direct dispute if it relates to:
The consumer's liability for a credit account or other
debt with the furnisher, such as direct disputes relating to whether
there is or has been identity theft or fraud against the consumer,
whether there is individual or joint liability on an account, or
whether the consumer is an authorized user of a credit account;
The terms of a credit account or other debt with the
furnisher, such as direct disputes relating to the type of account,
principal balance, scheduled payment amount on an account, or the
amount of the reported credit limit on an open-end account;
The consumer's performance or other conduct concerning a
credit account or other debt with the furnisher, such as direct
disputes relating to the current payment status, high balance, date a
payment was made, the amount of a payment made, or the date an account
was opened or closed; or
Any other information contained in a consumer report
regarding an account or other relationship with the furnisher that
bears on the consumer's creditworthiness, credit standing, credit
capacity, character, general reputation, personal characteristics, or
mode of living attributed to the furnisher on the consumer report.
The proposed rule is designed to permit direct disputes in
virtually all circumstances involving disputes with respect to the
types of information typically provided by the furnisher to a CRA,
while excepting out certain types of information from the direct
dispute process. The Agencies are proposing this approach in light of
the considerations set forth in the statute to be weighed by the
Agencies, including the benefits to consumers, the impact on the
overall accuracy and integrity of consumer reports, and whether direct
disputes would lead to the most expeditious resolutions of consumer
disputes. The exceptions in the proposed rule relate to information
where the disputes are more appropriately directed to the CRA, such as
information derived from public records, which may be obtained directly
from public sources,\22\ and information about requests for consumer
reports (``inquiries''). The Agencies specifically request comment on
whether this approach appropriately weighs all of the relevant
considerations.
---------------------------------------------------------------------------

\22\ The public records exception applies only to information
``derived'' by the CRA from public records. It would not exempt a
consumer's dispute of the accuracy of a furnisher's reference to a
particular account being included in bankruptcy, for example.
---------------------------------------------------------------------------

In developing the proposed rule, the Agencies considered more
targeted approaches based, for example, on commenters' suggestions that
fraud and identity theft should be the only circumstances when a
furnisher must investigate a direct dispute. The Agencies also
considered other commenters' suggestions about when investigations of a
direct dispute would be appropriate, such as for disputing account
ownership and complex issues requiring analysis of supporting
documentation. The Agencies are not proposing these approaches,
however, as these approaches would likely present at least one
disadvantage, namely, that it would be difficult for consumers and
furnishers to know whether there is a direct dispute right in any
particular circumstance.
In addition, the Agencies considered another commenter's suggestion
to require investigation of direct disputes only where the consumer
first raises the dispute with a CRA, but that process does not resolve
the matter to the consumer's satisfaction. The Agencies are not
proposing such an approach, however, because it could impose
unnecessary barriers and delays for consumers wishing to avoid the CRA
dispute process and bring disputes immediately to the furnisher.\23\
---------------------------------------------------------------------------

\23\ The Agencies note further that section 623(a)(8)(F) states
that the obligation to reinvestigate direct disputes shall not apply
if the dispute is ``frivolous or irrelevant'' because the consumer
submitted a dispute that is substantially the same as a dispute
previously submitted to a furnisher or through a CRA. The Agencies
note that under the proposed rule, a direct dispute is not
substantially the same if a consumer's dispute includes information
listed in Sec. --.43(d) that had not previously been provided to
the furnisher.
---------------------------------------------------------------------------

The Agencies believe that the approach adopted by the proposed rule
more closely comports with consumer expectations that they be able to
submit a dispute directly to the furnisher (with certain exceptions)
when the issue in dispute relates to information for which the
furnisher is responsible. The Agencies request comment on whether a
more targeted approach would represent a more appropriate balancing of
relevant policy considerations.
The Agencies also specifically invite comment on how direct dispute
requirements would affect furnishers to smaller and specialty CRAs,
such as CRAs that report medical information,

[[Page 70955]]

check writing history, apartment rental history, or insurance claim
filings.
Section --.43(b) Exceptions
A consumer report may include identifying information about a
consumer (e.g., names, addresses), trade line information (e.g., name
of creditor, payment history, loan amount), past and present employer
information, and public record information (e.g., information received
from courts or other governmental authorities that are related to
bankruptcies, judgments, or liens). Any given furnisher is the source
of some, but not all, of the information included on a consumer report.
A furnisher should only be responsible for investigating disputes about
information regarding an account or other relationship between the
furnisher and the consumer. Accordingly, the proposal requires a
furnisher to investigate direct disputes only with respect to the types
of information that it typically provides to CRAs. In most cases, the
information subject to direct dispute will be part of a furnisher's
trade line entry or entries on a consumer report.
Proposed Sec. --.43(b) excepts from the investigation requirement
any direct dispute that relates to:
The consumer's identifying information (other than a
direct dispute relating to a consumer's liability for a credit account
or other debt with the furnisher, as provided in Sec.
--.43(a)(1)),\24\ such as name(s), date of birth, Social Security
number, telephone number(s), or address(es);
---------------------------------------------------------------------------

\24\ A direct dispute that relates both to identifying
information and a consumer's liability for a credit account or other
debt with the furnisher, such as in cases of identity theft, must be
investigated by a furnisher pursuant to Sec. --.43(a)(1).
---------------------------------------------------------------------------

The identity of past or present employers; \25\
---------------------------------------------------------------------------

\25\ For this category of information concerning the identity of
past or present employers, the Agencies believe that direct contact
by the consumer would be unlikely to result in the most expeditious
resolution of an employer identity-related dispute. For example,
consumer reports sometimes contain certain ``employment history''
information, which is typically obtained from sources other than
employers (such as credit applications). In those cases, an
identified employer would be unable to correct disputed information
because it was provided by another source.
---------------------------------------------------------------------------

Inquiries or requests for a consumer report;
Information derived from public records, such as
judgments, bankruptcies, liens, and other legal matters (unless
provided by a furnisher having a relationship with the consumer); or
Information related to fraud alerts or active duty alerts.
Proposed Sec. --.43(b) also excepts from the investigation
requirement any direct dispute if the notice of dispute is submitted
by, is prepared on behalf of the consumer by, or is submitted on a form
supplied to the consumer by, a credit repair organization as defined in
15 U.S.C. 1679a(3),\26\ or an entity that would be a credit repair
organization but for 15 U.S.C. 1679a(3)(B)(i), which excludes tax-
exempt section 501(c)(3) organizations.
---------------------------------------------------------------------------

\26\ Under this provision of the Credit Repair Organizations
Act, the term ``credit repair organization''--
(A) means any person who uses any instrumentality of interstate
commerce or the mails to sell, provide, or perform (or represent
that such person can or will sell, provide, or perform) any service,
in return for the payment of money or other valuable consideration,
for the express or implied purpose of--
(i) improving any consumer's credit record, credit history, or
credit rating; or
(ii) providing advice or assistance to any consumer with regard
to any activity or service described in clause (i).
---------------------------------------------------------------------------

Section --.43(c) Direct Dispute Address
As added by section 312 of the FACT Act, section 623(a)(8)(D) of
the FCRA requires a consumer to provide a direct dispute notice ``at
the address specified'' by the furnisher. The statute and legislative
history provide no guidance about how this address is to be specified
by furnishers and effectively communicated to consumers. The Agencies
believe that, in order for the direct dispute right to be implemented
and to operate as Congress intended, it is necessary to clarify how a
furnisher's direct dispute address is to be specified and communicated
to consumers.
Proposed Sec. --.43(c) would require a furnisher to investigate a
direct dispute only if a consumer submits a dispute notice to the
furnisher at:
The address of the furnisher provided by a furnisher and
set forth on a consumer report relating to the consumer (i.e., the
disclosure under section 609(a) of the FCRA);
An address clearly and conspicuously specified by the
furnisher for submitting direct disputes that is provided in writing or
electronically (if the consumer has agreed to the electronic delivery
of information from the furnisher); or
Any business address of the furnisher, if the furnisher
has not so specified and provided an address for submitting direct
disputes.

Thus, a consumer would always be able to submit a direct dispute to the
appropriate address appearing on the consumer report. The consumer
would also be able to submit a direct dispute to any other business
address of the furnisher unless the furnisher has separately specified
an address to the consumer in accordance with the regulation. A
furnisher choosing to specify an address must do so in a manner that is
both reasonably understandable and designed to call the consumer's
attention to the fact that the address is the one to use for submitting
direct disputes about the accuracy of information in a consumer report.
The Agencies note that a furnisher that specifies such an address for
this purpose will not be deemed to have specified an address for
purposes of section 623(a)(1)(B) of the FCRA, relating to the general
duty to provide accurate information to the CRAs.
The Agencies believe that it will benefit consumers and be
operationally feasible to allow consumers to submit a dispute notice to
the address of the furnisher specified on the consumer report. The
Agencies understand that in a large majority of cases, the consumer
report includes an address supplied by the furnisher and the furnisher
can control such address.\27\ In addition, the Agencies believe that
allowing consumers to submit dispute notices to the address of the
furnisher set forth on the consumer report will increase the likelihood
that the consumers will know where to send that dispute (because that
address will be seen by consumers contemporaneous in time and location
with the disputed information) and will encourage consumers to obtain
and review their consumer reports prior to submitting a dispute to a
furnisher. A furnisher will not be in violation of this provision for
failure to investigate a dispute submitted to the address set forth on
the consumer report if that address is incorrect due to an error by the
CRA and does not reflect any business address of the furnisher.
---------------------------------------------------------------------------

\27\ Allowing consumers to submit dispute notices to the address
of the furnisher set forth on the consumer report is consistent with
existing Federal and some state laws because these laws already
impose related obligations. Section 611(a)(6)(B)(iii) of the FCRA
requires the CRA to provide, upon the consumer's request, the
business name and address, and phone number if reasonably available,
of any furnisher the CRA contacts in connection with information
reinvestigated in response to a consumer complaint filed with the
CRA. California law requires that upon request of the consumer, the
CRA must provide the consumer with the ``names, addresses and, if
provided by the sources of information, the telephone numbers
identified for customer service for the sources of information.''
Cal. Civil Code Sec. 1785.10(c). It is the Agencies' understanding
that CRAs commonly include the furnisher's business name, address,
and telephone number on the consumer report (where the furnisher
provides it) so that consumers will automatically learn how to
contact the furnisher about a dispute upon receipt of the consumer
report without the need to request that information from the CRA.

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[[Page 70956]]

The Agencies request comment on whether there are circumstances
under which it would not be appropriate for a consumer to submit a
dispute notice to the address of the furnisher set forth on the
consumer report. The Agencies also invite comment on whether Sec.
--.43(c)(3) should exclude certain types of business addresses, such as
a business address that is used for reasons other than for receiving
correspondence from consumers or business locations where business is
not conducted with consumers.
In addition, the Agencies request comment on whether Sec.
--.43(c)(2) should be amended to permit furnishers to notify consumers
orally of the address for direct disputes. The agencies also request
comment on whether and, if so, how an oral notice can be provided
clearly and conspicuously.
Section --.43(d) Direct Dispute Notice Contents
Section 623(a)(8)(D) of the FCRA provides that a furnisher is not
required to investigate a dispute unless a consumer provides the
furnisher with a notice of dispute that:
Identifies the specific information that is being
disputed;
Explains the basis for the dispute; and
Includes all supporting documentation required by the
furnisher to substantiate the basis of the dispute.
Proposed Sec. --.43(d) would implement 623(a)(8)(D) by requiring
that a notice of dispute include:
The name, address, and telephone number of the consumer;
Sufficient information to identify the account or other
relationship that is in dispute, such as an account number;
The specific information that the consumer is disputing
and an explanation of the basis for the dispute; and
All supporting documentation or other information
reasonably required by the furnisher to substantiate the basis of the
dispute, such as a copy of the consumer report that contains the
allegedly inaccurate information, a police report, a fraud or identity
theft affidavit, a court order, or account statements.
Section 609(c)(2) of the FCRA requires the FTC to promulgate, and
CRAs to disseminate with their provision of consumer reports to
consumers, a ``General Summary of Consumer Rights.'' The FTC intends to
update the existing General Summary of Consumer Rights to reflect
additional rights provided to consumers by the FACT Act and the
implementing rules, including consumers' direct dispute rights. The
Agencies invite comment on what additional mechanisms should be
required, if any, for informing consumers of their direct dispute
rights.
Section --.43(e) Frivolous or Irrelevant Disputes
Section 623(a)(8)(F) of the FCRA provides that a furnisher is not
required to investigate a dispute that a furnisher reasonably
determines to be frivolous or irrelevant. That statutory provision
states that a frivolous or irrelevant dispute includes situations
involving:
The failure of a consumer to provide sufficient
information to investigate the disputed information; or
The submission by a consumer of a dispute that is
substantially the same as a dispute previously submitted by or on
behalf of the consumer, either directly to the furnisher or through a
CRA under section 623(b) of the FCRA, with respect to which the
furnisher already completed its investigation duties.
Proposed Sec. --.43(e) implements these statutory provisions,
including these two types of frivolous or irrelevant disputes. Under
the statute, when a furnisher determines that a dispute is frivolous or
irrelevant, it must send a notice of that determination (including the
reasons for the determination) to the consumer. In cases involving
insufficient information, furnishers should make a good faith attempt
to obtain sufficient information from a consumer before sending such a
notice to the consumer as noted in section IV(I) of the guidelines.
The Agencies note that the language of section 623(a)(8)(F)
specifies two situations, but does not limit frivolous or irrelevant
disputes solely to those two situations. The Agencies are proposing to
specify a third situation involving a frivolous or irrelevant dispute.
Under proposed Sec. --.43(e)(1)(iii), a dispute would be frivolous or
irrelevant if the furnisher is not otherwise required to investigate
the direct dispute under the proposed regulation.\28\ This provision is
intended to provide clarity for furnishers regarding their duty to
investigate direct disputes and their responsibilities when no such
investigation is required. This provision also would ensure that
consumers in this situation receive notice from the furnisher that
their dispute was deemed frivolous or irrelevant, as required by the
FCRA in sections 623(a)(8)(F)(ii) and (iii).\29\
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\28\ For example, under proposed Sec. --.43(b)(2), a furnisher
would not be required to investigate a direct dispute that is
submitted by, is prepared on behalf of the consumer by, or is
submitted on a form supplied to the consumer by, a credit repair
organization. Thus, such a dispute would be frivolous or irrelevant
under proposed Sec. --.43(e)(1)(iii).
\29\ 15 U.S.C. 1681s-2(a)(8)(F)(ii) and (iii). Those provisions
of the FCRA generally set out a furnisher's responsibilities
regarding the notice it must provide to a consumer once it
determines that a dispute is frivolous or irrelevant.
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Section --.43(e)(2) would incorporate the FCRA's section
623(a)(8)(F)(ii) requirement that a furnisher must notify a consumer of
its determination that a dispute is frivolous or irrelevant not later
than five business days after making the determination. Section
--.43(e)(3) likewise would incorporate from section 623(a)(8)(F)(iii)
of the FCRA the content requirements for a notice of determination that
a dispute is frivolous or irrelevant. Such notices are to include the
reasons for the determination and identify any information required to
investigate the disputed information.

V. Request for Comment

The Agencies invite comment on all aspects of the proposed accuracy
and integrity regulations and guidelines and of the proposed direct
dispute regulations, on the factors to be considered by the Agencies
under sections 623(a)(8) and 623(e) of the FCRA, and on the specific
issues on which comment is solicited elsewhere in the Supplementary
Information, including the following:
The alternative definitions of ``integrity'' and the
alternative placement of the definitions of ``accuracy'' and
``integrity'' in regulatory text or in the guidelines;
Whether the definition of accuracy should specifically
provide that ``accuracy'' includes updating information as necessary to
ensure that information furnished is current;
Whether the definition of ``accuracy'' should be made
applicable to direct disputes if the Guidelines Definition Approach is
adopted;
Whether the proposed definition of ``accuracy'' is
appropriate for the direct dispute rule, and, in particular, whether
the definition of ``accuracy'' needs to be clarified in order to more
clearly delineate those disputes that, while subject to the CRA dispute
process, would not be subject to the direct dispute rule;
Whether the Agencies' approach to direct disputes
appropriately reflects the relevant considerations, or whether a more
targeted approach would represent a more appropriate balancing of
relevant policy considerations;
Whether proposed Sec. --.43(c)(2) should be amended to
permit furnishers to notify consumers orally of the

[[Page 70957]]

address for direct disputes and, if so, how an oral notice can be
provided clearly and conspicuously;
What additional mechanisms should be required, if any, for
informing consumers of their direct dispute rights;
How direct dispute requirements would affect furnishers to
smaller and specialty CRAs, such as CRAs that report medical
information, check writing history, apartment rental history, or
insurance claim filings;
Whether the guidelines should incorporate a specific time
period for retaining records in order to provide for meaningful
investigations of direct disputes, and, if so, what record retention
time period would be appropriate; and
Whether Sec. --.42(c)(2) should exclude certain types of
business addresses, such as a business address that is used for reasons
other than for receiving correspondence from consumers or business
locations where business is not conducted with consumers.
In addition, the Agencies specifically invite comment as follows:
The Agencies invite comment from individuals and public interest
and consumer advocacy organizations on the effect this proposal may
have on consumers and the credit reporting industry.
The Agencies recognize that small institutions operate with more
limited resources than larger institutions. Thus, the Agencies
specifically request comment on the impact of this proposal on small
institutions' current resources, including personnel resources, and
whether the goals of the proposal could be achieved for small
institutions through an alternative approach.
The Agencies invite comment from businesses other than depository
institutions that furnish information about consumers to CRAs,
including non-depository institution mortgage lenders, debt collectors,
consumer finance companies, and retailers. The Agencies also invite
comment from persons who furnish information about consumers to
specialized types of CRAs, such as CRAs that collect information for
the purpose of making decisions regarding insurance, employment or
tenant screening, or check verification. Similarly, the Agencies
request comments from CRAs, including nontraditional CRAs that may only
provide information to a limited class of businesses (e.g., medical
information providers and tenant screening services).
The Agencies also invite comment on ways to minimize the burden of
the final rule.

VI. Regulatory Analysis

A. Paperwork Reduction Act

Request for Comment on Proposed Information Collection
In accordance with section 3512 of the Paperwork Reduction Act of
1995, 44 U.S.C. 3501-3521 (``PRA''), the Agencies may not conduct or
sponsor, and the respondent is not required to respond to, an
information collection unless it displays a currently valid Office of
Management and Budget (``OMB'') control number. The information
collection requirements contained in this joint notice of proposed
rulemaking have been submitted by the OCC, FDIC, OTS, NCUA, and FTC to
OMB for review and approval under section 3506 of the PRA and Sec.
1320.11 of OMB's implementing regulations (5 CFR Part 1320). The review
and authorization information for the Board is provided later in this
section along with the Board's burden estimates. The proposed rule
contains requirements subject to the PRA. The requirements are found in
12 CFR Sec. Sec. --.42(a), --.43(e)(2), and --.43(e)(3) and 16 CFR
Sec. Sec. 660.3(a), 660.4(e)(2), and 660.4(e)(3).
Comments are invited on:
(a) Whether the collection of information is necessary for the
proper performance of the Agencies' functions, including whether the
information has practical utility;
(b) The accuracy of the estimates of the burden of the information
collection, including the validity of the methodology and assumptions
used;
(c) Ways to enhance the quality, utility, and clarity of the
information to be collected;
(d) Ways to minimize the burden of the information collection on
respondents, including through the use of automated collection
techniques or other forms of information technology; and
(e) Estimates of capital or start up costs and costs of operation,
maintenance, and purchase of services to provide information.
All comments will become a matter of public record.
Comments should be addressed to:
OCC: Communications Division, Office of the Comptroller of the
Currency, Public Information Room, Mailstop 1-5, Attention: 1557-NEW,
250 E Street, SW., Washington, DC 20219. In addition, comments may be
sent by fax to (202) 874-4448, or by electronic mail to
[email-masked]. You can inspect and photocopy comments at

the OCC's Public Information Room, 250 E Street, SW., Washington, DC
20219. For security reasons, the OCC requires that visitors make an
appointment to inspect comments. You may do so by calling (202) 874-
5043. Upon arrival, visitors will be required to present valid
government-issued photo identification and submit to security screening
in order to inspect and photocopy comments.
Board: You may submit comments, identified by R-1300, by any of the
following methods:
Agency Web Site: http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.federalreserve.gov Follow the instructions for submitting comments on the http://.

http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.

Federal eRulemaking Portal: http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.regulations.gov.

Follow the instructions for submitting comments.
E-mail: [email-masked]. Include docket
number in the subject line of the message.
Fax: 202-452-3819 or 202-452-3102.
Mail: Jennifer J. Johnson, Secretary, Board of Governors
of the Federal Reserve System, 20th Street and Constitution Avenue,
NW., Washington, DC 20551.
All public comments are available from the Board's Web site at
http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as

submitted, unless modified for technical reasons. Accordingly, your
comments will not be edited to remove any identifying or contact
information. Public comments may also be viewed electronically or in
paper in Room MP-500 of the Board's Martin Building (20th and C
Streets, NW.) between 9 a.m. and 5 p.m. on weekdays.
FDIC: You may submit written comments, which should refer to 3064-
AC99, by any of the following methods:
Agency Web Site: http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.fdic.gov/regulations/laws/federal/propose.html.
Follow the instructions for submitting comments

on the FDIC Web site.
Federal eRulemaking Portal: http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.regulations.gov.

Follow the instructions for submitting comments.
E-mail: [email-masked].
Mail: Robert E. Feldman, Executive Secretary, Attention:
Comments, FDIC, 550 17th Street, NW., Washington, DC 20429.
Hand Delivery/Courier: Guard station at the rear of the
550 17th Street Building (located on F Street) on business days between
7 a.m. and 5 p.m.
Public Inspection: All comments received will be posted without
change to http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.fdic.gov/regulations/laws/federal/propose/html

including any

[[Page 70958]]

personal information provided. Comments may be inspected at the FDIC
Public Information Center, Room E-1007, 3501 North Fairfax Drive,
Arlington, Virginia, between 9 a.m. and 4:30 p.m. on business days.
OTS: Information Collection Comments, Chief Counsel's Office,
Office of Thrift Supervision, 1700 G Street, NW., Washington, DC 20552;
send a facsimile transmission to (202) 906-6518; or send an e-mail to
[email-masked]. OTS will post comments and the

related index on the OTS Internet site at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.ots.treas.gov. In

addition, interested persons may inspect the comments at the Public
Reading Room, 1700 G Street, NW., by appointment. To make an
appointment, call (202) 906-5922, send an e-mail to
[email-masked], or send a facsimile transmission to (202)

906-7755.
NCUA: You may submit comments by any of the following methods
(Please send comments by one method only):
Federal eRulemaking Portal: http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.regulations.gov.

Follow the instructions for submitting comments.
NCUA Web Site: http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.ncua.gov/RegulationsOpinionsLaws/proposedregs/proposedregs.html.
Follow the

instructions for submitting comments.
E-mail: Address to [email-masked]. Include ``[Your
name] Comments on Notice of Proposed Rulemaking Part 717, Procedures to
Enhance the Accuracy and Integrity of Information Furnished to Consumer
Reporting Agencies under Section 312 of the Fair and Accurate Credit
Transactions Act'' in the e-mail subject line.
Fax: (703) 518-6319. Use the subject line described above
for e-mail.
Mail: Address to Neil McNamara, Deputy Chief Information
Officer, National Credit Union Administration, 1775 Duke Street,
Alexandria, VA 22314-3428.
Hand Delivery/Courier: Same as mail address.

Additionally, you should send a copy of your comments to the OMB Desk
Officer for the Agencies, by mail to U.S. Office of Management and
Budget, 725 17th Street, NW., 10235, Washington, DC 20503, or by fax to
(202) 395-6974.
FTC: Comments should refer to ``Furnisher Rules, Project No.
R611017,'' and may be submitted by any of the following methods.
However, if the comment contains any material for which confidential
treatment is requested, it must be filed in paper form, and the first
page of the document must be clearly labeled ``Confidential.'' \30\
---------------------------------------------------------------------------

\30\ Commission Rule 4.2(d), 16 CFR 4.2(d). The comment must be
accompanied by an explicit request for confidential treatment,
including the factual and legal basis for the request, and must
identify the specific portions of the comment to be withheld from
the public record. The request will be granted or denied by the
Commission's General Counsel, consistent with applicable law and the
public interest. See Commission Rule 4.9(c), 16 CFR 4.9(c).
---------------------------------------------------------------------------

E-mail: Comments filed in electronic form should be
submitted by clicking on the following Web link: http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=https://secure.commentworks.com/ftc-FACTAfurnishers
and following the

instructions on the Web-based form. To ensure that the Commission
considers an electronic comment, you must file it on the Web-based form
at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=https://secure.commentworks.com/ftc-FACTAfurnishers.

Federal eRulemaking Portal: If this notice appears at
http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.regulations.gov, you may also file an electronic comment

through that Web site. The Commission will consider all comments that
regulations.gov forwards to it.
Mail or Hand Delivery: A comment filed in paper form
should include ``Furnisher Rules: Project No. R611017,'' both in the
text and on the envelope and should be mailed or delivered, with two
complete copies, to the following address: Federal Trade Commission/
Office of the Secretary, Room H-135 (Annex M), 600 Pennsylvania Avenue,
NW., Washington, DC 20580. Because paper mail in the Washington area
and at the Commission is subject to delay, please consider submitting
your comments in electronic form, as prescribed above. The FTC is
requesting that any comment filed in paper form be sent by courier or
overnight service, if possible.
Comments on any proposed filing, recordkeeping, or disclosure
requirements that are subject to paperwork burden review under the
Paperwork Reduction Act should additionally be submitted to: Office of
Management and Budget, Attention: Desk Officer for the Federal Trade
Commission. Comments should be submitted via facsimile to (202) 395-
6974 because U.S. Postal Mail is subject to lengthy delays due to
heightened security precautions.
The FTC Act and other laws the Commission administers permit the
collection of public comments to consider and use in this proceeding as
appropriate. All timely and responsive public comments, whether filed
in paper or electronic form, will be considered by the Commission, and
will be available to the public on the FTC Web site, to the extent
practicable, at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.ftc.gov/os/publiccomments.htm. As a matter

of discretion, the FTC makes every effort to remove home contact
information for individuals from the public comments it receives before
placing those comments on the FTC Web site. More information, including
routine uses permitted by the Privacy Act, may be found in the FTC's
privacy policy, at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.ftc.gov/ftc/privacy.htm.

Proposed Information Collection

Title of Information Collection: Accuracy and Integrity of
Information Furnished to Consumer Reporting Agencies.
Frequency of Response: On occasion.
Affected Public:
OCC: National banks, Federal branches and agencies of foreign
banks, and their respective operating subsidiaries that are not
functionally regulated within the meaning of section 5(c)(5) of the
Bank Holding Company Act of 1956, as amended (12 U.S.C. 1844(c)(5)).
Board: State member banks, uninsured state agencies and branches of
foreign banks, commercial lending companies owned or controlled by
foreign banks, and Edge and agreement corporations.
FDIC: Insured nonmember banks, insured state branches of foreign
banks, and certain subsidiaries of these entities.
OTS: Savings associations and certain of their subsidiaries.
NCUA: Federally-chartered credit unions.
FTC: Businesses that furnish information to a consumer reporting
agency, and are subject to administrative enforcement by the FTC
pursuant to section 621(a)(1) of the FCRA (15 U.S.C. 1681s(a)(1).
Abstract: Proposed section .42(a) \31\ would require a furnisher to
implement reasonable written policies and procedures regarding the
accuracy and integrity of information relating to consumers that it
provides to a CRA. Furnishers already have an ongoing responsibility
under section 623 of the FCRA for accurate reporting, which has been in
place for several years, long before the FACT Act. This proposed rule
would require furnishers to put into writing policies and procedures
that address their section 312 responsibilities regarding the accuracy
and integrity of information. Furnishers' accuracy and integrity
policies and

[[Page 70959]]

procedures may include their existing policies and procedures that are
reasonable and appropriate. The Agencies estimate it would take
furnishers a total of 21 hours per institution to comply with this
requirement.
---------------------------------------------------------------------------

\31\ For purposes of the FTC regulations, this proposed section
is 16 CFR 660.3(a).
---------------------------------------------------------------------------

Proposed section .43(a) \32\ would allow consumers to initiate
disputes directly with the furnishers, instead of using the existing
FCRA process through the CRAs. This gives consumers a new way to
dispute consumer report information; instead of having to go through a
CRA, consumers would have the right to go directly to the furnisher in
certain circumstances. Furnishers already have affirmative
responsibilities to research and respond and, if necessary, make any
corrections when a dispute is initiated by consumers through a CRA.
Under this proposed rule, furnishers would have to follow a
substantially similar process for disputes consumers submit directly to
furnishers. Furnishers would need to amend their procedures to ensure
that disputes received directly from consumers are handled the same way
as complaints from CRAs. The Agencies estimate that furnishers would
have to devote four hours per institution to amend their procedures in
this manner. Proposed section --.43(e)(2) \33\ incorporates the section
312 requirement that a furnisher must notify a consumer by mail or
other means (if authorized by the consumer) within five business days
after making a determination that a dispute is frivolous or irrelevant.
Proposed section --.43(e)(3) \34\ incorporates the content requirements
of such notices as specified by section 312. The Agencies estimate that
furnishers would have to devote four hours per institution to implement
this notice requirement, including the time necessary to develop
policies and procedures regarding the provision of the notices to
consumers and to initially prepare the notices.
---------------------------------------------------------------------------

\32\ 16 CFR 660.4(a) in the FTC regulations.
\33\ 16 CFR 660.4(e)(2) in the FTC regulations.
\34\ CFR 660.4(e)(3) in the FTC regulations.
---------------------------------------------------------------------------

With respect to estimating the potential burden associated with
providing the notices to consumers, the Agencies received one comment
on the ANPR from a financial institution stating that it is estimated
that 50% of disputes received are frivolous or irrelevant. In contrast,
one trade association commented that in only 25% of disputes is the
information in the consumer report being challenged verified as
correct; thus, even assuming that every time the information in the
consumer report is verified as correct the underlying dispute was
frivolous or irrelevant, a maximum of 25% of disputes could be
frivolous or irrelevant. The Agencies are also aware that a significant
number of furnishers are already providing consumers with a written
notice in response to direct disputes. Further, commenters from both
industry and consumer groups observed that disputes filed with CRAs
from credit repair organizations have been particularly likely to be
rejected, though they disagreed on the reasons. Considering all of
these comments and information, and taking into account that direct
disputes from credit repair organizations are prohibited by section
623(a)(8)(G) of the FCRA, the Agencies believe it is reasonable to
estimate that the number of written notices that furnishers provide to
consumers in response to direct disputes that are frivolous or
irrelevant would increase by 10%. The Agencies estimate that furnishers
would devote five minutes per notice to provide a notice to a consumer.
Estimated Burden: \35\
---------------------------------------------------------------------------

\35\ The Estimated Burden section reflects the views of all of
the Agencies except the FTC, which has prepared a separate analysis.
---------------------------------------------------------------------------

Thus, the burden associated with this collection of information may
be summarized as follows.
OCC
Number of respondents: 1,800.
Number of frivolous or irrelevant dispute notices: 312,335.
Estimated burden per notice: 5 minutes.
Estimated burden per respondent: 21 hours to implement written
policies and procedures and training associated with the written
policies and procedures, 4 hours to amend procedures for handling
complaints received directly from consumers, 4 hours to implement the
new dispute notice requirement.
Total estimated annual burden: 78,228 hours.
Board
In accordance with the PRA (44 U.S.C. 3506; 5 CFR part 1320,
Appendix A.1), the Board has reviewed the proposed rule under its
authority delegated by OMB. The proposed information collections
associated with this rulemaking, if approved, will be incorporated into
the Recordkeeping and Disclosure Requirements Associated with
Regulation V (Fair Credit Reporting) and will be assigned OMB No. 7100-
0308. The burden estimates provided below pertain only to the
information collections associated with this proposed rulemaking.
Number of respondents: 1,172.
Number of frivolous or irrelevant dispute notices: 116,582.
Estimated burden per respondent: 21 hours to implement written
policies and procedures and training associated with the written
policies and procedures, 4 hours to amend procedures for handling
complaints received directly from consumers, 4 hours to implement the
new dispute notice requirement, and 5 minutes per notice for
distribution.
Total estimated annual burden: 43,703 hours.
FDIC
Number of respondents: 5,260.
Number of frivolous or irrelevant dispute notices: 24,198.
Estimated burden per respondent to implement written policies and
procedures regarding accuracy and integrity and the frivolous or
irrelevant dispute notice: 29 hours.
Estimated burden per frivolous or irrelevant dispute notice: 5
minutes.
Total estimated annual burden: 154,557 hours.
OTS
Number of respondents: 829.
Number of frivolous or irrelevant dispute notices: 15,001.
Estimated burden per respondent: 21 hours to implement written
policies and procedures and training associated with the written
policies and procedures, 4 hours to amend procedures for handling
complaints received directly from consumers, 4 hours to implement the
new dispute notice requirement, and 5 minutes per notice for
distribution.
Total estimated annual burden: 25,286 hours.
NCUA
Number of respondents: 5,103.
Estimated burden per respondent: 29 hours.
Number of frivolous or irrelevant dispute notices: 3,044.
Estimated burden per notice: 5 minutes.
Total estimated annual burden: 148,241 hours.
FTC \36\
---------------------------------------------------------------------------

\36\ Due to the varied nature of the entities subject to the
jurisdiction of the FTC, this Estimated Burden section reflects only
the view of the FTC. The banking regulatory agencies have jointly
prepared a separate analysis.
---------------------------------------------------------------------------

Section 660.3:
Estimated Hours Burden:
As discussed above, the proposed regulations would require
furnishers to establish and implement reasonable written policies and
procedures regarding the accuracy and integrity of

[[Page 70960]]

the information relating to consumers that it furnishes to a CRA. The
proposed regulations would define ``furnisher'' to mean an entity other
than an individual consumer that furnishes information relating to
consumers to one or more CRAs, except when it provides information to a
CRA solely to obtain a consumer report for a permissible purpose under
the FCRA.\37\ Given the broad scope of furnishers, it is difficult to
determine precisely the number of furnishers that are subject to the
FTC's jurisdiction. Nonetheless, FTC staff estimates that the proposed
regulations in section 660.3 will affect approximately 6,133 furnishers
subject to the FTC's jurisdiction.\38\ The Commission invites comment
and information about the categories and number of furnishers subject
to its jurisdiction. As detailed below, FTC staff estimates that the
average annual information collection burden during the three-year
period for which OMB clearance is sought will be 51,000 hours (rounded
to the nearest thousand). The estimated annual labor cost associated
with this burden is $1,985,000 (rounded to the nearest thousand).
---------------------------------------------------------------------------

\37\ 15 U.S.C. 1681b(a).
\38\ This estimate is derived from the number of furnishers
reporting to the three nationwide CRAs (approximately 18,000), minus
the number of entities subject to jurisdiction by the federal
financial agencies and the NCUA (14,167 combined), and adding the
number of furnishers to medical information bureaus (approximately
500) and the number of insurance companies furnishing information to
other types of CRAs (approximately 1,800).
---------------------------------------------------------------------------

The proposed regulations are drafted in a flexible manner that
allows entities to establish and implement different types of written
policies and procedures based upon the nature, size, complexity, and
scope of their activities. A furnisher may include any of its existing
policies and procedures in place to ensure the accuracy of information.
The Commission believes that many entities have already implemented a
significant portion of the policies and procedures required by the
proposed rule. Entities have had an ongoing requirement under Section
623 of the FCRA to provide accurate information when they choose to
furnish data to consumer reporting agencies. The written policies and
procedures proposed in the rule would formalize the processes and
controls necessary for accurate reporting. Accordingly, FTC staff
estimates that entities will require 21 hours to establish and
implement written policies and procedures, including the incremental
time to train staff to implement these policies and procedures, with an
annual recurring burden of 2 hours.
FTC staff estimates that the proposed regulations implementing
section 623(e) affect 6,133 furnishers subject to the FTC's
jurisdiction at an average annual burden of 8.33 hours per entity
[average annual burden over 3-year clearance period for establishment
and implementation of written policies and procedures (25 hours/3)],
for a cumulative total of 51,000 hours (rounded to the nearest
thousand).
Estimated Cost Burden:
The FTC staff derived labor costs by applying appropriate estimated
hourly cost figures to the burden hours described above. It is
difficult to calculate with precision the labor costs associated with
the proposed regulations, as they entail varying compensation levels of
management and/or technical staff among companies of different sizes.
In calculating the cost figures, staff assumes that managerial and/or
professional technical personnel will draft the written policies and
procedures and train staff, at an hourly rate of $38.93.\39\
---------------------------------------------------------------------------

\39\ This cost is derived from the median hourly wage from the
2006 National Occupational Employment and Wage Estimates by the
Bureau of Labor Statistics for management occupations.
---------------------------------------------------------------------------

Based on the above estimates and assumptions, the total annual
labor costs for all categories of covered entities under the proposed
regulations in section 660.3 are $1,985,000 (rounded to the nearest
thousand) [(51,000 hours x $38.93)].
Section 660.4:
Estimated Hours Burden:
The proposed regulations would also require entities that furnish
information about consumers to respond to direct disputes from
consumers. FTC staff estimates that the proposed regulations in section
660.4 will also affect approximately 6,133 furnishers subject to the
FTC's jurisdiction. As detailed below, FTC staff estimates that the
average annual information collection burden during the three-year
period for which OMB clearance is sought will be 17,000 hours (rounded
to the nearest thousand). The estimated annual labor cost associated
with this burden is $641,000 (rounded to the nearest thousand).
FTC staff estimates that it will take furnishers four hours to
amend their procedures to ensure that disputes received directly from
consumers are handled the same way as complaints from CRAs. FTC staff
believes that furnishers of information to CRAs will have automated the
process of responding to direct disputes in the first year of the
clearance, therefore, there will be no annual recurring burden. FTC
staff estimates that it will take furnishers four hours in the first
year to implement the requirement to notify a consumer by mail or other
means (if authorized by the consumer) within five business days after
making a determination that a dispute is frivolous or irrelevant. FTC
staff believes that furnishers will also automate this process in the
first year of clearance, so there will be no annual recurring burden.
FTC staff further estimates that to prepare and distribute a notice
to a consumer after a furnisher determines that a dispute is frivolous
or irrelevant will require approximately five minutes per notice. FTC
staff projects that furnishers under its jurisdiction would receive
5,430 frivolous or irrelevant disputes requiring a notice each
year.\40\ Accordingly, FTC staff estimates it will take furnishers 452
hours for each of the three years for which OMB clearance is sought.
The estimated annual labor cost associated with this burden is $6,102.
---------------------------------------------------------------------------

\40\ This number is derived from an estimate of disputes per
year that relate to information provided by an entity under the
FTC's jurisdiction and the Agencies' estimated 10% increase of the
number of written notices that furnishers will provide to consumers
in response to direct disputes that are frivolous or irrelevant.
---------------------------------------------------------------------------

Estimated Cost Burden:
The FTC staff derived labor costs by applying appropriate estimated
hourly cost figures to the burden hours described above. It is
difficult to calculate with precision the labor costs associated with
the proposed regulations, as they entail varying compensation levels of
different types of support staff among companies of different sizes.
Nonetheless, in calculating the cost figures, staff assumes managerial
and/or professional technical personnel will amend procedures to ensure
that disputes received directly from consumers are handled the same way
as complaints from CRAs and will implement the requirement to notify a
consumer by mail or other means, after making a determination that a
dispute is frivolous or irrelevant, at an hourly rate of $38.93.\41\
Staff assumes that administrative support personnel will provide the
required notices to consumers, at an hourly rate of $13.50.\42\
---------------------------------------------------------------------------

\41\ This cost is derived from the median hourly wage from the
2006 National Occupational Employment and Wage Estimates by the
Bureau of Labor Statistics for management occupations.
\42\ This cost is derived from the median hourly wage from the
2006 National Occupational Employment and Wage Estimates by the
Bureau of Labor Statistics for office and administrative support
occupations.
---------------------------------------------------------------------------

Based on the above estimates and assumptions, the total average
annual labor costs for all categories of covered

[[Page 70961]]

entities under the proposed regulations in section 660.4 are $641,000
(rounded to the nearest thousand) [((1.33 + 1.33 hours) x 6,133 x
$38.93) + $6102].

B. Regulatory Flexibility Act

OCC: The Regulatory Flexibility Act (5 U.S.C. 601--612) (RFA)
requires an agency to either provide an Initial Regulatory Flexibility
Analysis with a proposed rule or certify that the proposed rule will
not have a significant economic impact on a substantial number of small
entities. For purposes of the RFA and OCC-regulated entities, a ``small
entity'' is a national bank with assets of $165 million or less (small
national bank). Based on its analysis and for the reason stated below,
OCC certifies that this proposed rule will not have a significant
economic impact on a substantial number of small entities. Based on two
tests used to evaluate the impact of the proposed rule (compliance
costs as a percent of labor costs and compliance costs as a percent of
non-interest expenses) the OCC estimates that the proposed rule would
have a significant economic impact on 7 of 948 small national banks
(.074 percent); the OCC does not consider this to be a substantial
number of small entities.
1. Reasons for Proposed Rule
The FACT Act amends the FCRA and was enacted, in part, for the
purpose of enhancing the accuracy and integrity of information
furnished to CRAs. Section 312 of the FACT Act generally requires the
Agencies to issue guidelines for use by furnishers regarding the
accuracy and integrity of the information about consumers that they
furnish to consumer reporting agencies and prescribe regulations
requiring furnishers to establish reasonable policies and procedures
for implementing the guidelines. Section 312 also requires the Agencies
to prescribe regulations identifying the circumstances under which a
furnisher must reinvestigate disputes about the accuracy of information
contained in a consumer report based on a direct request from a
consumer. OCC is issuing this proposed rule to implement section 312 of
the FACT Act.
2. Statement of Objectives and Legal Basis
The objectives of the proposed rule are described in the
SUPPLEMENTARY INFORMATION section. In sum, the objectives are: (1) To
implement the general statutory provision that requires the Agencies to
issue guidelines for use by furnishers regarding the accuracy and
integrity of the information about consumers that they furnish to
consumer reporting agencies and prescribe regulations requiring
furnishers to establish reasonable policies and procedures for
implementing the guidelines and (2) to fulfill the statutory mandate
requiring the Agencies to prescribe regulations identifying the
circumstances under which a furnisher must reinvestigate disputes about
the accuracy of information contained in a consumer report based on a
direct request from a consumer. The legal bases for the proposed rule
are the National Bank Act found at 12 U.S.C. 1 et seq., 24 (Seventh),
481, and 484; the Depository Institutions Deregulation and Monetary
Control Act of 1980 found at 12 U.S.C. 93a; the Federal Deposit
Insurance Act found at 12 U.S.C. 1818; and the Fair Credit Reporting
Act found at 15 U.S.C. 1681 et seq.
3. Description and Estimate of Small Entities Affected by the Final
Rule
The proposed rule would apply to national banks, Federal branches
and agencies of foreign banks, and any of their operating subsidiaries
that are not functionally regulated within the meaning of section
5(c)(5) of the Bank Holding Company Act of 1956, as amended (12 U.S.C.
1844(c)(5)) (national banks).
OCC estimates that its proposed rule would apply to 948 small
national banks with assets of $165 million or less.
4. Projected Recordkeeping, Reporting, and Other Compliance
Requirements
The compliance requirements of the proposed rules are described in
the SUPPLEMENTARY INFORMATION above.
In general, the proposal would require each furnisher subject to
the rule to establish and implement reasonable policies and procedures
regarding the accuracy and integrity of the information relating to
consumers that it furnishes to a consumer reporting agency. Furnishers
would be required to consider the guidelines in Appendix E to the
proposed rule in developing these policies and procedures and to
incorporate those guidelines that are appropriate. The Agencies have
sought to reduce the burden associated with these proposed accuracy and
integrity regulations and guidelines in several ways. First, the
proposed guidelines provide that a furnisher may include in its
policies and procedures concerning the accuracy and integrity of
information it furnishes to consumer reporting agencies any of its
existing policies and procedures that are relevant and appropriate.
Furnishers have a preexisting obligation under Section 623 of the FCRA
to provide accurate information when they furnish data to consumer
reporting agencies. The OCC believes that many furnishers are likely to
have existing policies and procedures regarding accurate reporting in
order to satisfy their obligations under section 623, and that these
policies and procedures could be incorporated in the policies and
procedures required by the proposed rule.
Furnishers subject to the proposed rule also would be required,
under certain circumstances, to investigate disputes concerning the
accuracy of information about the consumer contained in a consumer
report based on a direct request of a consumer. While the rule would
require new procedural requirements, the OCC believes that
investigating direct disputes will not create significant additional
burdens on small institutions, for a number of reasons.
First, most furnishers already investigate similar disputes that
are provided to them by a consumer reporting agency pursuant to the
existing dispute provisions contained in section 611 of the FCRA.
Second, commenters on the ANPR noted that many furnishers already
investigate direct disputes as a matter of good customer relations,
sound business practices, or because they are required to do so under
other consumer protection laws. National banks also investigate
disputes referred to them by the OCC's Customer Assistance Group as
well as other state and Federal regulators.
Finally, the proposed rule does not require investigation of direct
disputes when such disputes are frivolous or irrelevant.
The OCC seeks information and comment on any costs, compliance
requirements, or changes in operating procedures arising from the
application of the proposed rule to small national banks.
5. Identification of Duplicative, Overlapping, or Conflicting Federal
Rules
The OCC is unable to identify any statutes or rules, which would
overlap or conflict with the proposed regulation. The OCC seeks comment
and information about any such statutes or rules, as well as any other
state, local, or industry rules or policies that require a covered
institution to implement business practices that would comply with the
requirements of the proposed rule.

[[Page 70962]]

6. Discussion of Significant Alternatives
As required by the FACT Act, the proposed rules and guidelines
apply to all covered institutions, regardless of the size of the
institution. One approach to minimizing the burden on small entities
would be to provide a specific exemption for small institutions. The
OCC has no authority under section 312 of the FACT Act to grant an
exception that would remove small institutions from the scope of the
rule.
The proposed rule does, however, provide substantial flexibility so
that any national bank, regardless of size, may tailor its practices to
its individual needs. For example, to minimize burden the proposal
would permit institutions to include in their accuracy and integrity
policies and procedures their existing policies and procedures that are
relevant and appropriate. Furthermore, OCC and the other Agencies have
attempted to minimize burden by: Adopting consistent rules; proposing
and soliciting comment on two approaches for defining the terms
``accuracy'' and ``integrity''; incorporating into the proposed rule at
Sec. 41.42(a) a statement that policies and procedures should be
appropriate to the nature, size, complexity, and scope of a furnisher's
activities; and providing furnishers with three options for providing
their direct disputes address to consumers under proposed Sec.
41.43(c).
The OCC welcomes comments on any significant alternatives that are
consistent with section 312 of the FACT Act.
Board: The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.)
requires an agency either to provide an initial regulatory flexibility
analysis with a proposed rule or certify that the proposed rule will
not have a significant economic impact on a substantial number of small
entities (defined for purposes of the RFA to include commercial banks
and other depository institutions with $165 million or less in assets).
The Board requests public comment in the following areas.
1. Reasons for the Proposed Rule
Section 312 of the FACT Act (which amends section 623 of the FCRA)
requires the Agencies to issue regulations and guidelines relating to
the responsibilities of furnishers of information about consumers to
consumer reporting agencies for the purpose of enhancing the accuracy
and integrity of the information furnished. Specifically, the Agencies
must: (i) Establish and maintain guidelines for use by furnishers
regarding the accuracy and integrity of the information relating to
consumers that they furnish to consumer reporting agencies, and update
those guidelines as often as necessary; and (ii) prescribe regulations
requiring furnishers to establish reasonable policies and procedures
for implementing the guidelines. In addition, the Agencies must
prescribe joint regulations that identify the circumstances, if any,
under which furnishers must investigate disputes about the accuracy of
the information contained in a consumer report on the consumer based on
a direct request by a consumer, rather than requiring consumers to
initiate a dispute through a consumer reporting agency.
2. Statement of Objectives and Legal Basis
The SUPPLEMENTARY INFORMATION above contains this information. The
legal basis for the proposed rule is section 312 of the FACT Act.
3. Description of Small Entities to Which the Rule Applies
The proposed regulations would apply to all banks that are members
of the Federal Reserve System (other than national banks) and their
respective operating subsidiaries, branches and Agencies of foreign
banks (other than Federal branches, Federal Agencies, and insured State
branches of foreign banks), commercial lending companies owned or
controlled by foreign banks, and organizations operating under section
25 or 25A of the Federal Reserve Act (12 U.S.C. 601 et seq., and 611 et
seq.). The Board's proposed regulations would apply to the following
institutions (numbers approximate): State member banks (881), operating
subsidiaries that are not functionally regulated with in the meaning of
section 5(c)(5) of the Bank Holding Company Act of 1956, as amended
(877), U.S. branches and agencies of foreign banks (219), commercial
lending companies owned or controlled by foreign banks (3), and Edge
and agreement corporations (64), for a total of approximately 2,044
institutions. The Board estimates that more than 1,448 of these
institutions could be considered small entities with assets of $165
million or less.
All small entities covered by the Board's rule potentially could be
subject to the proposed rule. However, the proposed rule would not
impose any requirements on small entities that do not furnish
information about consumers to consumer reporting agencies.
4. Projected Reporting, Recordkeeping and Other Compliance Requirements
The compliance requirements of the proposed rules are described in
the SUPPLEMENTARY INFORMATION above.
In general, the proposal would require each furnisher subject to
the rule to establish and implement reasonable policies and procedures
regarding the accuracy and integrity of the information relating to
consumers that it furnishes to a consumer reporting agency. Such
furnishers would be required to consider the guidelines in Appendix E
to the proposed rule in developing these policies and procedures, and
to incorporate those guidelines that are appropriate. The Agencies have
sought to reduce the burden associated with these proposed accuracy and
integrity regulations and guidelines in several ways. First, the
proposed guidelines provide that a furnisher may include in its
policies and procedures concerning the accuracy and integrity of
information it furnishes to consumer reporting agencies any of its
existing policies and procedures that are relevant and appropriate.
Furnishers have a preexisting obligation under Section 623 of the FCRA
to provide accurate information when they furnish data to consumer
reporting agencies. The Board believes that many furnishers are likely
to have existing policies and procedures regarding accurate reporting
in order to satisfy their obligations under section 623, and that these
policies and procedures could be incorporated in the policies and
procedures required by the proposed rule.
Furnishers subject to the proposed rule also would be required,
under the circumstances described in the proposed rule, to investigate
disputes concerning the accuracy of information about the consumer
contained in a consumer report based on a direct request of a consumer.
While the rule would require new procedural requirements, the Board
believes that investigating direct disputes will not create significant
additional burdens on small institutions, for a number of reasons.
First, most furnishers already investigate similar disputes upon
receipt from the relevant consumer reporting agency pursuant to the
existing dispute provisions contained in section 611 of the FCRA.
Second, commenters on the ANPR noted that many furnishers already
investigate direct disputes as a matter of good customer relations and
sound business practices or because they are required to under other
consumer protection laws. Finally, the proposed rule does not

[[Page 70963]]

require investigation of direct disputes when such disputes are
frivolous or irrelevant.
The Board seeks information and comment on any costs, compliance
requirements, or changes in operating procedures arising from the
application of the proposed rule to small institutions.
5. Identification of Duplicative, Overlapping, or Conflicting Federal
Rules
The Board has not identified any federal statutes or regulations
that would duplicate, overlap, or conflict with the proposed rule. The
Board seeks comment regarding any statutes or regulations, including
state or local statutes or regulations, that would duplicate, overlap,
or conflict with the proposed rule.
6. Discussion of Significant Alternatives
The proposed rule provides substantial flexibility so that each
institution, regardless of its size, may tailor its practices to its
individual needs. For example, as discussed above, in order to minimize
burden the proposal would permit institutions to include in their
accuracy and integrity policies and procedures any of their existing
policies and procedures that are relevant and appropriate.
The Board welcomes comments on any significant alternatives,
consistent with the requirements of section 312 of the FACT Act, that
would minimize the impact of the proposed rule on small entities.
FDIC: In accordance with the Regulatory Flexibility Act (5 U.S.C.
601-612) (RFA), an agency must publish an initial regulatory
flexibility analysis with its proposed rule, unless the agency
certifies that the rule will not have a significant economic impact on
a substantial number of small entities (defined for purposes of the RFA
to include banks with less than $165 million in assets). The FDIC
hereby certifies that the proposed rule would not have a significant
economic impact on a substantial number of small entities.
The proposed rule would apply to most FDIC-insured state nonmember
banks, approximately 3,400 of which are small entities. Under the
proposed rule, financial institutions that furnish information about
consumers to one or more consumer reporting agencies must have written
policies and procedures regarding the accuracy and integrity of that
information. The program must be appropriate to the nature, size,
complexity and scope of the furnishing activities. A furnisher may
include any of its existing policies and procedures in place to ensure
the accuracy of information. Institutions have had an ongoing
requirement under Section 623 of the FCRA to provide accurate
information when they choose to furnish data to consumer reporting
agencies. The written policies and procedures proposed in the rule
would formalize the processes and controls necessary for accurate
reporting. Similarly, the proposed guidelines in Section II of Appendix
E of the Regulation contain requirements that were already in the FCRA.
Federal Financial Institutions Examination Council examination
procedures exist and have been used for years to evaluate compliance
with the aspects of Section 623 of the FCRA. Based on our examination
of the financial institutions we supervise, the FDIC believes that many
of these institutions have already implemented a significant portion of
the policies and procedures required by the proposed rule, whether
under the definition of ``integrity'' proposed in the Regulatory
Definition Approach or the definition in the Guidelines Definition
Approach, as discussed in the Supplementary Information above. The
process of furnishing information to consumer reporting agencies is
largely automated. With regard to the two alternatives concerning the
``integrity'' of information, the automated furnishing systems already
support for the type of information that a furnisher would provide
under either approach.
Nonetheless, the FDIC specifically requests comment and specific
data on the size of the incremental burden on small banks in
formalizing the policies and procedures not currently included, given
the banks' current practices and compliance with existing requirements.
The proposed rule would also require financial institutions that
furnish information about consumers to respond to direct dispute
requests from consumers with regard to certain perceived inaccuracies.
While the rule would require new procedural requirements, including
direct dispute notices, the FDIC believes that investigating direct
disputes will not create significant additional burdens on small banks,
for a number of reasons.
First, most furnishers are already investigating similar disputes,
which under the current law are brought directly to the relevant
consumer reporting agency, which then contacts the furnisher for an
investigation. Under this procedure, furnishers are already required to
review all relevant information provided by the consumer reporting
agency along with the notice; report the results of the investigation
to the consumer reporting agency; if the disputed information is found
to be incomplete or inaccurate, report those results to all nationwide
consumer reporting agencies to which the financial institution
previously provided the information; and if the disputed information is
incomplete, inaccurate, or not verifiable by the financial institution,
promptly, for purposes of reporting to the consumer reporting agency
modify the item of information, delete the item of information, or
permanently block the reporting of that item of information.
Second, many of these furnishers are already investigating direct
disputes as a matter of good customer relations and sound business
practices or under other consumer protection laws.
Third, the proposed rule does not require investigation in cases
that are frivolous or irrelevant. Nonetheless, the FDIC again
specifically requests comment and specific data on the size of the
incremental burden creating a program would have on small banks, given
their current practices and compliance with existing requirements.
OTS: The Regulatory Flexibility Act (5 U.S.C. 601-612) (RFA)
requires an agency to either provide an Initial Regulatory Flexibility
Analysis with a proposed rule or certify that the proposed rule will
not have a significant economic impact on a substantial number of small
entities. For purposes of the RFA and OTS-regulated entities, a ``small
entity'' is a savings association with assets of $165 million or less
(small savings association). Based on its analysis and for the reason
stated below, OTS certifies that this proposed rule will not have a
significant economic impact on a substantial number of small entities.
1. Reasons for Proposed Rule
The FACT Act amends the FCRA and was enacted, in part, for the
purpose of enhancing the accuracy and integrity of information
furnished to CRAs. Section 312 of the FACT Act generally requires the
Agencies to issue guidelines for use by furnishers regarding the
accuracy and integrity of the information about consumers that they
furnish to consumer reporting agencies and prescribe regulations
requiring furnishers to establish reasonable policies and procedures
for implementing the guidelines. Section 312 also requires the Agencies
to prescribe regulations identifying the circumstances under which a
furnisher must reinvestigate disputes about the accuracy of information
contained in a consumer report based on a direct request from a
consumer. OTS is issuing

[[Page 70964]]

this proposed rule to implement section 312 of the FACT Act.
2. Statement of Objectives and Legal Basis
The objectives of the proposed rule are described in the
SUPPLEMENTARY INFORMATION section. In sum, the objectives are: (1) To
implement the general statutory provision that requires the Agencies to
issue guidelines for use by furnishers regarding the accuracy and
integrity of the information about consumers that they furnish to
consumer reporting agencies and prescribe regulations requiring
furnishers to establish reasonable policies and procedures for
implementing the guidelines and (2) to fulfill the statutory mandate
requiring the Agencies to prescribe regulations identifying the
circumstances under which a furnisher must reinvestigate disputes about
the accuracy of information contained in a consumer report based on a
direct request from a consumer. The primary legal basis for the
proposed rule is the Fair Credit Reporting Act found at 15 U.S.C. 1681
et seq.
3. Description and Estimate of Small Entities Affected by the Final
Rule
The proposed rule would apply to savings associations and operating
subsidiaries of federal savings associations that are not functionally
regulated within the meaning of section 5(c)(5) of the Bank Holding
Company Act of 1956, as amended (12 U.S.C. 1844(c)(5)).
OTS estimates that its proposed rule would apply to 412 small
savings associations with assets of $165 million or less.
4. Projected Recordkeeping, Reporting, and Other Compliance
Requirements
Under the proposed rule, financial institutions that furnish
information about consumers to one or more consumer reporting agencies
must have written policies and procedures regarding the accuracy and
integrity of that information. The program must be appropriate to the
nature, size, complexity and scope of the furnishing activities. A
furnisher may include any of its existing policies and procedures in
place to ensure the accuracy of information. Institutions have had an
ongoing requirement under Section 623 of the FCRA to provide accurate
information when they choose to furnish data to consumer reporting
agencies. The written policies and procedures proposed in the rule
would formalize the processes and controls necessary for accurate
reporting. Similarly, the proposed guidelines in Section II of Appendix
E of the Regulation contain requirements that were already in the FCRA.
Federal Financial Institutions Examination Council examination
procedures exist and have been used for years to evaluate compliance
with the aspects of Section 623 of the FCRA. Based on our examination
of the financial institutions we supervise, OTS believes that many of
these institutions have already implemented a significant portion of
the policies and procedures required by the proposed rule, whether
under the definition of ``integrity'' proposed in the Regulatory
Definition Approach or the definition in the Guidelines Definition
Approach, as discussed in the Supplementary Information above. The
process of furnishing information to consumer reporting agencies is
largely automated. With regard to the two alternatives concerning the
``integrity'' of information, the automated furnishing systems already
support the type of information that a furnisher would provide under
either approach.
Nonetheless, OTS specifically requests comment and specific data on
the size of the incremental burden on small savings associations in
formalizing the policies and procedures not currently included, given
the associations' current practices and compliance with existing
requirements.
The proposed rule would also require financial institutions that
furnish information about consumers to respond to direct dispute
requests from consumers with regard to certain perceived inaccuracies.
While the rule would require new procedural requirements, including
direct dispute notices, OTS believes that investigating direct disputes
will not create significant additional burdens on small savings
associations, for a number of reasons.
First, most furnishers are already investigating similar disputes,
which under the current law are brought directly to the relevant
consumer reporting agency, which then contacts the furnisher for an
investigation. Under this procedure, furnishers are already required to
review all relevant information provided by the consumer reporting
agency along with the notice; report the results of the investigation
to the consumer reporting agency; if the disputed information is found
to be incomplete or inaccurate, report those results to all nationwide
consumer reporting agencies to which the financial institution
previously provided the information; and if the disputed information is
incomplete, inaccurate, or not verifiable by the financial institution,
promptly, for purposes of reporting to the consumer reporting agency
modify the item of information, delete the item of information, or
permanently block the reporting of that item of information.
Second, many of these furnishers are already investigating direct
disputes as a matter of good customer relations and sound business
practices. Many are also investigating disputes brought to the
institution through OTS's customer complaint system.
Third, the proposed rule does not require investigation for
disputes that are frivolous or irrelevant.
Fourth, savings associations already have mechanisms and processes
in place to handle consumer complaints brought under other laws such as
the Truth in Lending Act, Real Estate Settlement Procedures Act, and
Electronic Funds Transfer Act. OTS believes many of these mechanisms
and processes can be readily adapted to handle consumer disputes about
their consumer reports.
Nonetheless, OTS specifically requests comment and specific data on
the size of the incremental burden creating a program would have on
small savings associations, given their current practices and
compliance with existing requirements.
5. Identification of Duplicative, Overlapping, or Conflicting Federal
Rules
OTS is unable to identify any statutes or rules, which would
overlap or conflict with the proposed regulation. OTS seeks comment and
information about any such statutes or rules, as well as any other
state, local, or industry rules or policies that require a covered
institution to implement business practices that would comply with the
requirements of the proposed rule.
6. Discussion of Significant Alternatives
As required by the FACT Act, the proposed rules and guidelines
apply to all covered institutions, regardless of the size of the
institution. One approach to minimizing the burden on small entities
would be to provide a specific exemption for small institutions. OTS
has no authority under section 312 of the FACT Act to grant an
exception that would remove small institutions from the scope of the
rule.
The proposed rule does, however, provide substantial flexibility so
that any savings association, regardless of size, may tailor its
practices to its individual needs. For example, to minimize burden the
proposal would permit institutions to include in their accuracy and
integrity policies and

[[Page 70965]]

procedures their existing policies and procedures that are relevant and
appropriate. Furthermore, OTS and the other Agencies have attempted to
minimize burden by: Adopting consistent rules; proposing and soliciting
comment on two approaches for defining the terms ``accuracy'' and
``integrity''; incorporating into the proposed rule at Sec. --.42(a) a
statement that policies and procedures must be appropriate to the
nature, size, complexity, and scope of a furnisher's activities; and
providing furnishers with a three options for providing their direct
disputes address to consumers under proposed Sec. --.43(c).
OTS welcomes comments on any significant alternatives that are
consistent with section 312.
NCUA: Under the RFA, NCUA must publish an initial regulatory
flexibility analysis with its proposed rule, unless NCUA certifies the
rule will not have a significant economic impact on a substantial
number of small entities. For NCUA, these are federal credit unions
with less than $10 million in assets. NCUA certifies this proposed rule
would not have a significant economic impact on a substantial number of
small entities.
Under the proposed rule, federal credit unions furnishing
information about consumers to consumer reporting agencies (CRAs) must
have a written program on the information's accuracy and integrity. The
program must be appropriate to the nature, size, complexity and scope
of the furnishing activities. The federal credit union can include its
existing policies and procedures in its program under the proposed
rule. Federal credit unions already are required under FCRA section 623
to provide accurate information when they furnish data to CRAs. The
proposed rule would formalize the processes and controls for accurate
reporting. Likewise, the proposed guidelines contain requirements
already in the FCRA section 623.
Accordingly, NCUA requests comment and specific data on any
additional burden on small federal credit unions in making their
current accuracy and integrity programs consistent with existing
requirements.
The proposed rule would also require federal credit unions that
furnish consumer information to CRAs to respond to consumers' direct
dispute requests to correct credit report inaccuracies. The rule would
require new procedural requirements, including direct dispute notices,
but the NCUA believes that investigating direct disputes will not
create significant additional burdens on small federal credit unions,
for the following reasons.
First, most furnishers already investigate consumer dispute
requests, even if under the current law, the consumers complain
directly to the relevant CRA, which then contacts the federal credit
union to investigate. Currently, furnishers must review all relevant
information the CRA provides with the notice; report the investigation
results to the CRA; if the disputed information is determined to be
incomplete or inaccurate, report this to all nationwide CRAs to which
the federal credit union previously provided the information; and if
the disputed information is incomplete, inaccurate, or not verifiable
by the federal credit union, promptly, for purposes of reporting to the
CRA, modify the item of information, delete the item of information, or
permanently block the reporting of that item of information.
Second, many federal credit unions already investigate direct
disputes as part of good member relations and sound business practices
or under other consumer protection laws.
Third, the proposed rule does not require investigation in cases
that are frivolous or irrelevant. Nonetheless, NCUA specifically
requests comment and specific data on the size of the incremental
burden creating a program would have on small federal credit unions,
given their current practices and compliance with existing
requirements.
FTC: The Regulatory Flexibility Act (``RFA''), 5 U.S.C. 601-612,
requires that the Commission provide an Initial Regulatory Flexibility
Analysis (``IRFA'') with a proposed rule and a Final Regulatory
Flexibility Analysis (``FRFA'') with the final rule, unless the
Commission certifies that the rule will not have a significant economic
impact on a substantial number of small entities. See 5 U.S.C. 603-605.
Based on its analysis and for the reasons stated below, the
Commission does not anticipate that the proposed regulations will have
a significant economic impact on a substantial number of small
entities. This document serves as notice to the Small Business
Administration of the FTC's certification of no effect. To ensure the
accuracy of this certification, however, the Commission requests
comments on whether the proposed regulations will have a significant
impact on a substantial number of small entities, including specific
information on the number of entities that would be covered by the
proposed regulations, the number of these companies that are ``small
entities,'' and the average annual burden for each entity. Although the
Commission certifies under the RFA that the regulations proposed in
this notice would not, if promulgated, have a significant economic
impact on a substantial number of small entities, the Commission has
determined, nonetheless, that it is appropriate to publish an IRFA in
order to inquire into the impact of the proposed regulations on small
entities. Therefore, the Commission has prepared the following
analysis:
1. Description of the Reasons That Action by the Agency Is Being Taken
The Federal Trade Commission is charged with enforcing the
requirements of section 312 of the Fair and Accurate Credit
Transactions Act of 2003 (FACT Act) (15 U.S.C. 1681a-2(a)(8) and 1681a-
2(e)), which require the agency to issue these proposed regulations.
2. Statement of the Objectives of, and Legal Basis for, the Proposed
Regulations
The objectives of the proposed rule are described in the
SUPPLEMENTARY INFORMATION section. In sum, the objectives are: (1) To
implement the general statutory provision that requires the Agencies to
issue guidelines for use by furnishers regarding the accuracy and
integrity of the information about consumers that they furnish to
consumer reporting agencies and prescribe regulations requiring
furnishers to establish reasonable policies and procedures for
implementing the guidelines and (2) to fulfill the statutory mandate
requiring the Agencies to prescribe regulations identifying the
circumstances under which a furnisher must reinvestigate disputes about
the accuracy of information contained in a consumer report based on a
direct request from a consumer. The legal basis for the proposed
regulations is 15 U.S.C. 1681a-2(a)(8) and 1681a-2(e).
3. Small Entities To Which the Proposed Rule Will Apply
The proposed rule would apply to ``an entity other than an
individual consumer that furnishes information relating to consumers to
one or more consumer reporting agencies,'' except when it ``provides
information to a consumer reporting agency solely to obtain a consumer
report in accordance with sections 604(a) and (f) of the FCRA.'' In
short, the rule would apply to any entity that (1) is under the FTC's
jurisdiction pursuant to the FCRA and (2) furnishes information
relating to consumers to one or more consumer reporting agencies.

[[Page 70966]]

Generally, the proposed regulations would apply to financial
institutions, creditors, and other entities that furnish information
relating to consumers to consumer reporting agencies. In particular,
entities under FTC's jurisdiction covered by section 312 include state-
chartered credit unions, non-bank lenders, insurers, debt collectors,
and any other entity other than an individual consumer that furnishes
information relating to consumers to one or more consumer reporting
agencies. The available data is not sufficient for the Commission to
realistically estimate the number of entities the Commission regulates
that would be subject to the proposed rule and that are small as
defined by the Small Business Administration.\43\ The Commission
invites comment and information on the number and type of small
entities affected by the proposed rule.
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\43\ The size standard to be considered a small business for the
majority of the non-bank creditors, insurers, and debt collectors
that are subject to the Commission's jurisdiction is to have average
annual receipts that are $6.5 million or less. A list of the SBA's
size standards for all industries can be found at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf
.

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4. Projected Reporting, Recordkeeping and Other Compliance Requirements
Under the proposed rule, entities that furnish information about
consumers to one or more consumer reporting agencies must have written
policies and procedures regarding the accuracy and integrity of that
information. The program must be appropriate to the nature, size,
complexity, and scope of the furnishing activities. A furnisher may
include any of its existing policies and procedures in place to ensure
the accuracy of information. Entities have had an ongoing requirement
under Section 623 of the FCRA to provide accurate information when they
choose to furnish data to consumer reporting agencies. The written
policies and procedures proposed in the rule would formalize the
processes and controls necessary for accurate reporting. Similarly, the
proposed guidelines in Section II of Appendix A of the Regulation
contain requirements that are already included in the FCRA.
Entities under the FTC's jurisdiction covered by this rule include
state-chartered credit unions, non-bank lenders, insurers, debt
collectors, and any other entity other than an individual consumer that
furnishes information relating to consumers to one or more consumer
reporting agencies. In calculating costs, FTC staff assumes that for
all entities, managerial and/or professional technical personnel will
draft the written policies and procedures regarding the accuracy and
integrity of furnished information.
The Commission believes that many entities have already implemented
a significant portion of the policies and procedures required by the
proposed rule, whether under the definition of ``integrity'' proposed
in the Regulatory Definition Approach or the definition in the
Guidelines Definition Approach, as discussed in the SUPPLEMENTARY
INFORMATION above. The process of furnishing information to consumer
reporting agencies is often automated. With regard to the two
alternatives concerning the ``integrity'' of information, the automated
furnishing systems already support the type of information that a
furnisher would provide under either approach.
Nonetheless, the Commission specifically requests comment and
specific data on the size of the incremental burden on small entities
in formalizing the policies and procedures not currently included,
given the entities' current practices and compliance with existing
requirements.
The proposed rule would also require entities that furnish
information about consumers to respond to direct disputes from
consumers. The rule would require new procedural requirements,
including direct dispute notices.
Entities under the FTC's jurisdiction covered by this rule include
state-chartered credit unions, non-bank lenders, insurers, debt
collectors, and any other entity other than an individual consumer that
furnishes information relating to consumers to one or more consumer
reporting agencies. In calculating costs, FTC staff assumes that
managerial and/or professional technical personnel will adapt
mechanisms and processes to handle consumer disputes about their
consumer reports and administrative support personnel will provide any
required notices to consumers.
The Commission believes that investigating direct disputes will not
create significant additional burdens on covered entities for a number
of reasons.
First, most furnishers are already investigating similar disputes,
which under the current law are brought directly to the relevant
consumer reporting agency, which then contacts the furnisher for an
investigation. Under this procedure, furnishers are already required to
review all relevant information provided by the consumer reporting
agency along with the notice of dispute; report the results of the
investigation to the consumer reporting agency; if the disputed
information is found to be incomplete or inaccurate, report those
results to all nationwide consumer reporting agencies to which the
furnisher previously provided the information; and if the disputed
information is incomplete, inaccurate, or not verifiable by the
financial institution, promptly, for the purposes of reporting to the
consumer reporting agency to modify the item of information, delete the
item of information, or permanently block the reporting of that item of
information.
Second, many of these furnishers are already investigating direct
disputes as a matter of good customer relations and sound business
practices.
Third, the proposed rule does not require investigation for
disputes that are frivolous or irrelevant.
Fourth, many furnishers already have mechanisms and processes in
place to handle consumer disputes brought under other laws such as the
Fair Debt Collection Practices Act (15 U.S.C. 1692-1692p), Truth in
Lending Act (15 U.S.C. 1601-1665b), Fair Credit Billing Act (15 U.S.C.
1666-1666j), Real Estate Settlement Procedures Act (12 U.S.C. 2601-
2627), and Electronic Funds Transfer Act (15 U.S.C. 1693-1693r). The
Commission believes that many of these mechanisms and processes can be
readily adapted to handle consumer disputes about their consumer
reports.
Nonetheless, the Commission specifically requests comment and
specific data on the size of the incremental burden that creating a
program would have on small entities, given their current practices and
compliance with existing requirements.
5. Duplicative, Overlapping, or Conflicting Federal Rules
The Commission has not identified any federal statutes, rules, or
policies that would duplicate, overlap, or conflict with the proposed
Rule. As noted in Section 4, however, compliance with some provisions
of other federal statutes will facilitate compliance with the proposed
rule by furnishers of information to consumer reporting agencies. The
Commission invites comment and information about any statutes or rules
that may duplicate, overlap, or conflict with the proposed Rule.
6. Significant Alternatives to the Proposed Rule
The standards in the proposed Rule are flexible so that a covered
entity, regardless of size, may tailor its practices to its individual
needs. For example, to minimize the burden the proposal would permit
entities to include in their accuracy and integrity

[[Page 70967]]

policies and procedures their existing policies and procedures that are
relevant and appropriate. Furthermore, the FTC and other Agencies have
attempted to minimize the burden by: adopting consistent rules;
incorporating into the proposed rule at Sec. 660.3 a statement that
policies and procedures should be appropriate to the nature, size,
complexity, and scope of a furnisher's activities; and providing
furnishers with three options for providing their direct disputes
address to consumers under proposed Sec. 660.4. Nevertheless, the
Commission seeks comment and information on the need, if any, for
alternative compliance methods that, consistent with the statutory
requirement, would reduce the economic impact of the rule on small
entities.
If the comments filed in response to this notice identify small
entities that are affected by the rule, as well as alternative methods
of compliance that would reduce the economic impact of the rule on such
entities, the Commission will consider the feasibility of such
alternatives and determine whether they should be incorporated into the
final rule.

C. OCC and OTS Executive Order 12866 Determinations

The OCC and OTS each determined that its portion of the proposed
rulemaking is not a significant regulatory action under Executive Order
12866.

D. OCC and OTS Executive Order 13132 Determinations

The OCC and the OTS each determined that its portion of the
proposed rulemaking does not have any federalism implications for
purposes of Executive Order 13132.

E. NCUA Executive Order 13132 Determination

Executive Order 13132 encourages independent regulatory agencies to
consider the impact of their actions on State and local interests. In
adherence to fundamental federalism principles, the NCUA, an
independent regulatory agency as defined in 44 U.S.C. 3502(5)
voluntarily complies with the Executive Order. The proposed rules and
guidelines apply only to federally chartered credit unions and would
not have substantial direct effects on the States, on the connection
between the national government and the States, or on the distribution
of power and responsibilities among the various levels of government.
The NCUA has determined that these proposed rules and guidelines do not
constitute a policy that has federalism implications for purposes of
the Executive Order.

F. OCC and OTS Unfunded Mandates Reform Act of 1995 Determinations

Section 202 of the Unfunded Mandates Reform Act of 1995, Public Law
104-4 (Unfunded Mandates Act) requires that an agency prepare a
budgetary impact statement before promulgating a rule that includes a
Federal mandate that may result in expenditure by State, local, and
tribal governments, in the aggregate, or by the private sector, of $100
million or more in any one year. If a budgetary impact statement is
required, section 205 of the Unfunded Mandates Act also requires an
agency to identify and consider a reasonable number of regulatory
alternatives before promulgating a rule. The OCC and OTS each
determined that this proposed rule will not result in expenditures by
State, local, and tribal governments, or by the private sector, of $100
million or more. Accordingly, neither the OCC nor the OTS has prepared
a budgetary impact statement or specifically addressed the regulatory
alternatives considered.

G. NCUA: The Treasury and General Government Appropriations Act, 1999--
Assessment of Federal Regulations and Policies on Families

The NCUA has determined that this proposed rule would not affect
family well-being within the meaning of section 654 of the Treasury and
General Government Appropriations Act, 1999, Pub. L. 105-277, 112 Stat.
2681 (1998).

VII. Solicitation of Comments on Use of Plain Language

Section 722 of the Gramm-Leach-Bliley Act, Pub. L. 106-102, sec.
722, 113 Stat. 1338, 1471 (Nov. 12, 1999), requires the OCC, Board,
FDIC, and OTS to use plain language in all proposed and final rules
published after January 1, 2000. Therefore, these agencies specifically
invite your comments on how to make this proposal easier to understand.
For example:
Have we organized the material to suit your needs? If not,
how could this material be better organized?
Are the requirements in the proposed regulations and
guidelines clearly stated? If not, how could the regulations and
guidelines be more clearly stated?
Do the proposed regulations and guidelines contain
language or jargon that is not clear? If so, which language requires
clarification?
Would a different format (grouping and order of sections,
use of headings, paragraphing) make the regulations and guidelines
easier to understand? If so, what changes to the format would make them
easier to understand?
What else could we do to make the regulations and
guidelines easier to understand?

VIII. Communications by Outside Parties to FTC Commissioners or Their
Advisors

Written communications and summaries or transcripts of oral
communications respecting the merits of this proceeding from any
outside party to any FTC Commissioner or FTC Commissioner's advisor
will be placed on the public record. See 16 CFR 1.26(b)(5).

List of Subjects

12 CFR Part 41

Banks, banking, Consumer protection, National Banks, Reporting and
recordkeeping requirements.

12 CFR Part 222

Banks, banking, Holding companies, state member banks.

12 CFR Part 334

Administrative practice and procedure, Bank deposit insurance,
Banks, banking, Reporting and recordkeeping requirements, Safety and
soundness.

12 CFR Part 571

Consumer protection, Credit, Fair credit reporting, Privacy,
Reporting and recordkeeping requirements, Savings associations.

12 CFR Part 717

Consumer protection, Credit unions, Fair credit reporting, Privacy,
Reporting and recordkeeping requirements.

16 CFR Part 660

Consumer reports, Consumer reporting agencies, Fair credit
reporting, Information furnishers, Identity theft, Trade practices.

Department of the Treasury

Office of the Comptroller of the Currency

12 CFR Chapter I

Authority and Issuance

For the reasons discussed in the joint preamble, the Office of the
Comptroller of the Currency proposes to amend chapter I of title 12 of
the Code of Federal Regulations by amending 12 CFR part 41 as follows:

PART 41--FAIR CREDIT REPORTING

1. Revise the authority citation for part 41 to read as follows:

[[Page 70968]]

Authority: 12 U.S.C. 1 et seq., 24 (Seventh), 93a, 481, 484, and
1818; 15 U.S.C. 1681a, 1681b, 1681c, 1681m, 1681s, 1681s-2, 1681s-3,
1681t, and 1681w; Sec. 214, Pub. L. 108-159, 117 Stat. 1952.

2. Add a new subpart E to part 41 to read as follows:
Subpart E--Duties of Furnishers of Information
Sec.
41.40 Scope.
41.41 Definitions.
41.42 Reasonable policies and procedures concerning the accuracy and
integrity of furnished information.
41.43 Direct disputes.

Subpart E--Duties of Furnishers of Information

Sec. 41.40 Scope.

This subpart applies to a national bank, Federal branch and agency
of a foreign bank, and their respective operating subsidiaries that are
not functionally regulated within the meaning of section 5(c)(5) of the
Bank Holding Company Act of 1956, as amended (12 U.S.C. 1844(c)(5)).

Sec. 41.41 Definitions.

For purposes of this subpart and Appendix E of this part, the
following definitions apply:
Regulatory Definition Approach for Defining ``Accuracy'' and
``Integrity'' Follows
(a) Accuracy means that any information that a furnisher provides
to a consumer reporting agency about an account or other relationship
with the consumer reflects without error the terms of and liability for
the account or other relationship and the consumer's performance and
other conduct with respect to the account or other relationship.
(b) Integrity means that any information that a furnisher provides
to a consumer reporting agency about an account or other relationship
with the consumer does not omit any term, such as a credit limit or
opening date, of that account or other relationship, the absence of
which can reasonably be expected to contribute to an incorrect
evaluation by a user of a consumer report of a consumer's
creditworthiness, credit standing, credit capacity, character, general
reputation, personal characteristics, or mode of living.
(c) Furnisher means an entity other than an individual consumer
that furnishes information relating to consumers to one or more
consumer reporting agencies. An entity is not a furnisher when it
provides information to a consumer reporting agency solely to obtain a
consumer report in accordance with sections 604(a) and (f) of the FCRA.
(d) Identity theft has the same meaning as in 16 CFR 603.2(a).
(e) Direct dispute means a dispute submitted directly to a
furnisher by a consumer concerning the accuracy of any information
contained in a consumer report relating to the consumer.

Sec. 41.42 Reasonable policies and procedures concerning the accuracy
and integrity of furnished information.

(a) Policies and procedures. Each furnisher must establish and
implement reasonable written policies and procedures regarding the
accuracy and integrity of the information relating to consumers that it
furnishes to a consumer reporting agency. The policies and procedures
must be appropriate to the nature, size, complexity, and scope of each
furnisher's activities.
(b) Guidelines. Each furnisher must consider the guidelines in
Appendix E of this part in developing its policies and procedures
required by this section, and incorporate those guidelines that are
appropriate.
(c) Reviewing and updating policies and procedures. Each furnisher
must review its policies and procedures required by this section
periodically and update them as necessary to ensure their continued
effectiveness.

Sec. 41.43 Direct disputes.

(a) General rule. Except as otherwise provided in this section, a
furnisher must investigate a direct dispute if it relates to:
(1) The consumer's liability for a credit account or other debt
with the furnisher, such as direct disputes relating to whether there
is or has been identity theft or fraud against the consumer, whether
there is individual or joint liability on an account, or whether the
consumer is an authorized user of a credit account;
(2) The terms of a credit account or other debt with the furnisher,
such as direct disputes relating to the type of account, principal
balance, scheduled payment amount on an account, or the amount of the
reported credit limit on an open-end account;
(3) The consumer's performance or other conduct concerning an
account or other relationship with the furnisher, such as direct
disputes relating to the current payment status, high balance, date a
payment was made, the amount of a payment made, or the date an account
was opened or closed; or
(4) Any other information contained in a consumer report regarding
an account or other relationship with the furnisher that bears on the
consumer's creditworthiness, credit standing, credit capacity,
character, general reputation, personal characteristics, or mode of
living.
(b) Exceptions. The requirements of paragraph (a) of this section
do not apply to a furnisher if:
(1) The direct dispute relates to:
(i) The consumer's identifying information (other than a direct
dispute relating to a consumer's liability for a credit account or
other debt with the furnisher, as provided in paragraph (a)(1) of this
section) such as name(s), date of birth, Social Security number,
telephone number(s), or address(es);
(ii) The identity of past or present employers;
(iii) Inquiries or requests for a consumer report;
(iv) Information derived from public records, such as judgments,
bankruptcies, liens, and other legal matters (unless provided by a
furnisher with an account or other relationship with the consumer); or
(v) Information related to fraud alerts or active duty alerts; or
(2) The direct dispute is submitted by, is prepared on behalf of
the consumer by, or is submitted on a form supplied to the consumer by,
a credit repair organization, as defined in 15 U.S.C. 1679a(3), or an
entity that would be a credit repair organization, but for 15 U.S.C.
1679a(3)(B)(i).
(c) Direct dispute address. A furnisher is required to investigate
a direct dispute only if a consumer submits a dispute notice to the
furnisher at:
(1) The address of a furnisher provided by a furnisher and set
forth on a consumer report relating to the consumer;
(2) An address clearly and conspicuously specified by the furnisher
for submitting direct disputes that is provided to the consumer in
writing or electronically (if the consumer has agreed to the electronic
delivery of information from the furnisher); or
(3) Any business address of the furnisher if the furnisher has not
so specified and provided an address for submitting direct disputes
under paragraph (c)(2) of this section.
(d) Direct dispute notice contents. A dispute notice must include:
(1) The name, address, and telephone number of the consumer;
(2) Sufficient information to identify the account or other
relationship that is in dispute, such as an account number;
(3) The specific information that the consumer is disputing and an
explanation of the basis for the dispute; and
(4) All supporting documentation or other information reasonably
required

[[Page 70969]]

by the furnisher to substantiate the basis of the dispute. This
documentation may include, for example: A copy of the consumer report
that contains the allegedly inaccurate information; a police report; a
fraud or identity theft affidavit; a court order; or account
statements.
(e) Frivolous or irrelevant disputes. (1) A furnisher is not
required to investigate a direct dispute if the furnisher has
reasonably determined that the dispute is frivolous or irrelevant. A
dispute may be frivolous or irrelevant if:
(i) The consumer did not provide sufficient information to
investigate the disputed information as required by paragraph (d) of
this section;
(ii) The direct dispute is substantially the same as a dispute
previously submitted by or on behalf of the consumer, either directly
to the furnisher or through a consumer reporting agency, with respect
to which the furnisher has already satisfied the applicable
requirements of the Act or this section; provided, however, that a
direct dispute is not substantially the same as a dispute previously
submitted if the dispute includes information listed in paragraph (d)
of this section that had not previously been provided to the furnisher;
or
(iii) The furnisher is not required to investigate the direct
dispute under this section.
(2) Notice of determination. Upon making a determination that a
dispute is frivolous or irrelevant, the furnisher must notify the
consumer of the determination not later than five business days after
making the determination, by mail or, if authorized by the consumer for
that purpose, by any other means available to the furnisher.
(3) Contents of notice of determination that a dispute is frivolous
or irrelevant. A notice of determination that a dispute is frivolous or
irrelevant must include the reasons for such determination and identify
any information required to investigate the disputed information, which
notice may consist of a standardized form describing the general nature
of such information.
3. Add a new appendix E to read as follows:

Appendix E to Part 41--Interagency Guidelines Concerning the Accuracy
and Integrity of Information Furnished to Consumer Reporting Agencies

The OCC encourages voluntary furnishing of information to
consumer reporting agencies. Section 41.42 of this part requires
each furnisher to establish and implement reasonable written
policies and procedures concerning the accuracy and integrity of the
information it furnishes to consumer reporting agencies. Under Sec.
41.42(b), the furnisher must consider the guidelines set forth below
in developing these policies and procedures. In establishing these
policies and procedures, a furnisher may include any of its existing
policies and procedures that are relevant and appropriate.

I. Nature, Scope, and Objectives of Policies and Procedures

A. Nature and Scope. Section 41.42(a) of this part requires that
a furnisher's policies and procedures be appropriate to the nature,
size, complexity, and scope of the furnisher's activities. The
furnisher's policies and procedures should reflect, for example:
1. The types of business activities in which the furnisher
engages;
2. The nature and frequency of the information the furnisher
provides to consumer reporting agencies; and
3. The technology used by the furnisher to furnish information
to consumer reporting agencies.
Regulatory Definition Approach for Paragraph B Follows
B. Objectives. A furnisher should have written policies and
procedures reasonably designed to accomplish the following
objectives:
1. Ensure that the information it furnishes about accounts or
other relationships with a consumer:
(a) Accurately identifies the appropriate consumer;
(b) Accurately reports the terms of those accounts or other
relationships; and
(c) Accurately reports the consumer's performance and other
conduct with respect to the account or other relationship with the
consumer;
2. Ensure that the information it furnishes about accounts or
other relationships with a consumer avoids misleading a consumer
report user as to the consumer's creditworthiness, credit standing,
credit capacity, character, general reputation, personal
characteristics, or mode of living;
3. Ensure that it conducts reasonable investigations of consumer
disputes about the accuracy or integrity of information in consumer
reports and takes appropriate actions based on the outcome of such
investigations;
4. Ensure that it updates information it furnishes as necessary
to reflect the current status of the consumer's account or other
relationship, including:
(a) Any transfer of an account (e.g., by sale or assignment for
collection) to a third party; and
(b) Any cure of the consumer's failure to abide by the terms of
the account or other relationship;
5. Ensure that the information it furnishes about accounts or
other relationships with a consumer is reported in a form and manner
that is designed to minimize the likelihood that the information,
although accurate, may be erroneously reflected in a consumer
report, for example, by ensuring that the information is reported
with appropriate identifying information about the consumer to whom
it pertains, in a standardized and clearly understandable form and
manner, and with a date specifying the time period to which the
information pertains; and
6. Ensure that the information it furnishes about accounts or
other relationships with a consumer is substantiated by the
furnisher's own records.
Guidelines Definition Approach for Paragraph B Follows
B. Objectives. A furnisher should have written policies and
procedures reasonably designed to accomplish the following
objectives:
1. Ensure that the information it furnishes about accounts or
other relationships with a consumer is accurate. Accuracy means that
any information that a furnisher provides to a consumer reporting
agency about an account or other relationship with the consumer
reflects without error the terms of and liability for the account or
other relationship and the consumer's performance and other conduct
with respect to the account or other relationship;
2. Ensure that the information it furnishes about accounts or
other relationships with a consumer is furnished with integrity.
Integrity means that any information that a furnisher provides to a
consumer reporting agency about an account or other relationship
with the consumer is:
(i) Reported in a form and manner that is designed to minimize
the likelihood that the information, although accurate, may be
erroneously reflected in a consumer report, for example, by ensuring
that the information is:
(A) Reported with appropriate identifying information about the
consumer to whom it pertains;
(B) Reported in a standardized and clearly understandable form
and manner; and
(C) Reported with a date specifying the time period to which the
information pertains; and
(ii) Substantiated by the furnisher's own records;
3. Ensure that it conducts reasonable investigations of consumer
disputes about the accuracy or integrity of information in consumer
reports and takes appropriate actions based on the outcome of such
investigations; and
4. Ensure that it updates information it furnishes as necessary
to reflect the current status of the consumer's account or other
relationship, including:
(a) Any transfer of an account (e.g., by sale or assignment for
collection) to a third party; and
(b) Any cure of the consumer's failure to abide by the terms of
the account or other relationship.

II. Accuracy and Integrity Duties of Furnishers Under the FCRA

A furnisher's policies and procedures should address compliance
with all applicable requirements imposed on the furnisher under the
FCRA, including the duties to:\1\
---------------------------------------------------------------------------

\1\ This is not a complete listing of furnisher duties relating
to accuracy and integrity. Furnishers should consult the FCRA to
determine what additional duties may apply.

---------------------------------------------------------------------------

[[Page 70970]]

A. Promptly notify the consumer reporting agency of the
furnisher's determination that furnished information is not complete
or accurate, for a furnisher that regularly and in the ordinary
course of business furnishes information; provide any corrections,
or any additional information, that is necessary to make the
furnished information complete and accurate; and not thereafter
furnish information that remains incomplete or inaccurate. 15 U.S.C.
1681s-2(a)(2).
B. Provide notice of a dispute by a consumer about the accuracy
or completeness of information furnished to a consumer reporting
agency. 15 U.S.C. 1681s-2(a)(3).
C. Report voluntary closure of a credit account by the consumer
in information regularly furnished for the period in which the
credit account is closed, for a furnisher that regularly and in the
ordinary course of business furnishes information about consumer
credit accounts. 15 U.S.C. 1681s-2(a)(4).
D. Notify the consumer reporting agency of the date of
delinquency on an account not later than 90 days after the furnisher
furnishes information to the consumer reporting agency regarding
action taken on the delinquent account (including placement for
collection, charge to profit or loss, or any similar action). Date
of delinquency means the month and year of the commencement of the
delinquency on the account that immediately preceded the action. 15
U.S.C. 1681s-2(a)(5).
E. Have in place reasonable procedures to respond to any
notification that the furnisher receives from a consumer reporting
agency under section 605B of the FCRA, relating to the blocking of
information resulting from identity theft and to prevent the
refurnishing of such blocked information. 15 U.S.C. 1681s-
2(a)(6)(A).
F. Not furnish to a consumer reporting agency information that
purports to relate to the consumer if the consumer submits an
identity theft report to the furnisher (at the address specified by
that furnisher for receiving such reports) stating that such
information maintained by that furnisher resulted from identity
theft. (This restriction does not apply if the furnisher
subsequently knows or is informed by the consumer that the
information is correct.) 15 U.S.C. 1681s-2(a)(6)(B).
G. After receiving a notice of dispute from a consumer reporting
agency, in a timely manner: Conduct an investigation; review all
relevant information the consumer reporting agency provides; report
the results of the investigation to the consumer reporting agency;
report incomplete or inaccurate information to all nationwide
consumer reporting agencies to which it reported the information;
and modify, delete, or permanently block incomplete or inaccurate
information or information that cannot be verified. 15 U.S.C. 1681s-
2(b).
H. Investigate direct disputes as required by 12 CFR 41.43 and
15 U.S.C. 1681s-2(a)(8).

III. Establishing and Implementing Policies and Procedures

In establishing and implementing its policies and procedures, a
furnisher should:
A. Identify practices or activities of the furnisher that can
compromise the accuracy and integrity of information furnished to
consumer reporting agencies, such as by:
1. Reviewing its existing practices and activities, including
the technological means and other methods it uses to furnish
information to consumer reporting agencies and the frequency and
timing of its furnishing of information, such as through an audit;
2. Reviewing historical records relating to accuracy or
integrity or to disputes, or other information relating to the
accuracy and integrity of information provided by the furnisher to
consumer reporting agencies and the types of errors, omissions, or
other problems that may have affected the accuracy and integrity of
information it has furnished about consumers to consumer reporting
agencies; and
3. Obtaining feedback from consumer reporting agencies,
consumers, the furnisher's staff, or other appropriate parties.
B. Evaluate the effectiveness of existing policies and
procedures of the furnisher regarding the accuracy and integrity of
information furnished to consumer reporting agencies; consider
whether new, additional, or different policies and procedures are
necessary; and consider whether implementation of existing policies
and procedures should be modified to enhance the accuracy and
integrity of information about consumers furnished to consumer
reporting agencies.
C. Evaluate the effectiveness of specific methods (including
technological means) the furnisher uses to provide information to
consumer reporting agencies; how those methods may affect the
accuracy and integrity of the information it provides to consumer
reporting agencies; and whether new, additional, or different
methods (including technological means) should be used to provide
information to consumer reporting agencies to enhance the accuracy
and integrity of that information.

IV. Specific Components of Policies and Procedures

A furnisher's policies and procedures should address the
following:
A. Establishing and implementing a system for furnishing
information about consumers to consumer reporting agencies that is
appropriate to the nature, size, complexity, and scope of the
furnisher's business operations.
B. Using standard data reporting formats and standard procedures
for compiling and furnishing data, where feasible, such as the
electronic transmission of information about consumers to consumer
reporting agencies.
C. Ensuring that the furnisher maintains its own records for a
reasonable period of time, not less than any applicable
recordkeeping requirement, in order to substantiate the accuracy of
any information about consumers it furnishes that is subject to a
direct dispute.
D. Establishing and implementing appropriate internal controls
regarding the accuracy and integrity of information about consumers
furnished to consumer reporting agencies, such as by implementing
standard procedures, verifying random samples, and conducting
regular reviews of information provided to consumer reporting
agencies.
E. Training staff that participates in activities related to the
furnishing of information about consumers to consumer reporting
agencies to implement the policies and procedures.
F. Providing for appropriate and effective oversight of relevant
service providers whose activities may affect the accuracy and
integrity of information about consumers furnished to consumer
reporting agencies to ensure compliance with the policies and
procedures.
G. Furnishing information about consumers to consumer reporting
agencies following mergers, portfolio acquisitions or sales, or
other acquisitions or transfers of accounts or other debts in a
manner that prevents re-aging of information, duplicative reporting,
or other problems affecting the accuracy or integrity of the
information furnished.
H. Attempting to obtain the information listed in Sec. 41.43(d)
from a consumer before determining that the consumer's dispute is
frivolous or irrelevant.
I. Ensuring that deletions, updates, and corrections furnished
to consumer reporting agencies are reflected in business systems to
avoid furnishing erroneous information.
J. Conducting investigations of direct disputes in a manner that
promotes the efficient resolution of such disputes.
K. Ensuring that technological and other means of communication
with consumer reporting agencies are designed to prevent duplicative
reporting of accounts, erroneous association of information with the
wrong consumer(s), and other occurrences that may compromise the
accuracy and integrity of information contained in consumer reports.
L. Providing consumer reporting agencies with sufficient
identifying information in the furnisher's possession about each
consumer about whom information is furnished to enable the consumer
reporting agency properly to identify the consumer.
M. Conducting a periodic evaluation of its own practices,
consumer reporting agency practices of which the furnisher is aware,
investigations of disputed information, corrections of inaccurate
information, means of communication, and other factors that may
affect the accuracy and integrity of information furnished to
consumer reporting agencies.

Board of Governors of the Federal Reserve System

12 CFR Chapter II

Authority and Issuance

For the reasons set forth in the joint preamble, part 222 of title
12, chapter II, of the Code of Federal Regulations is proposed to be
amended as follows:

PART 222--FAIR CREDIT REPORTING (REGULATION V)

1. The authority citation for part 222 continues to read as
follows:

Authority: 15 U.S.C. 1681a, 1681b, 1681c, 1681m, 1681s, 1681s-2,
1681s-3, 1681t, and

[[Page 70971]]

1681w; Secs. 3 and 214, Pub. L. 108-159, 117 Stat. 1952.

2. A new Subpart E is added to part 222 to read as follows:
Subpart E--Duties of Furnishers of Information
Sec.
222.40 Scope.
222.41 Definitions.
222.42 Reasonable policies and procedures concerning the accuracy
and integrity of furnished information.
222.43 Direct disputes.

Subpart E--Duties of Furnishers of Information

Sec. 222.40 Scope.

Subpart E of this part applies to member banks of the Federal
Reserve System (other than national banks) and their respective
operating subsidiaries that are not functionally regulated within the
meaning of section 5(c)(5) of the Bank Holding Company Act, as amended
(12 U.S.C. 1844(c)(5)), branches and Agencies of foreign banks (other
than Federal branches, Federal Agencies, and insured State branches of
foreign banks), commercial lending companies owned or controlled by
foreign banks, and organizations operating under section 25 or 25A of
the Federal Reserve Act (12 U.S.C. 601 et seq., and 611 et seq.).

Sec. 222.41 Definitions.

For purposes of this subpart and Appendix E of this part, the
following definitions apply:
Regulatory Definition Approach for Defining ``Accuracy'' and
``Integrity'' Follows:
(a) Accuracy means that any information that a furnisher provides
to a consumer reporting agency about an account or other relationship
with the consumer reflects without error the terms of and liability for
the account or other relationship and the consumer's performance and
other conduct with respect to the account or other relationship.
(b) Integrity means that any information that a furnisher provides
to a consumer reporting agency about an account or other relationship
with the consumer does not omit any term, such as a credit limit or
opening date, of that account or other relationship, the absence of
which can reasonably be expected to contribute to an incorrect
evaluation by a user of a consumer report of a consumer's
creditworthiness, credit standing, credit capacity, character, general
reputation, personal characteristics, or mode of living.
(c) Furnisher means an entity other than an individual consumer
that furnishes information relating to consumers to one or more
consumer reporting agencies. An entity is not a furnisher when it
provides information to a consumer reporting agency solely to obtain a
consumer report in accordance with sections 604(a) and (f) of the FCRA.
(d) Identity theft has the same meaning as in 16 CFR 603.2(a).
(e) Direct dispute means a dispute submitted directly to a
furnisher by a consumer concerning the accuracy of any information
contained in a consumer report relating to the consumer.

Sec. 222.42 Reasonable policies and procedures concerning the
accuracy and integrity of furnished information.

(a) Policies and procedures. Each furnisher must establish and
implement reasonable written policies and procedures regarding the
accuracy and integrity of the information relating to consumers that it
furnishes to a consumer reporting agency. The policies and procedures
must be appropriate to the nature, size, complexity, and scope of each
furnisher's activities.
(b) Guidelines. Each furnisher must consider the guidelines in
Appendix E of this part in developing its policies and procedures
required by this section, and incorporate those guidelines that are
appropriate.
(c) Reviewing and updating policies and procedures. Each furnisher
must review its policies and procedures required by this section
periodically and update them as necessary to ensure their continued
effectiveness.

Sec. 222.43 Direct disputes.

(a) General rule. Except as otherwise provided in this section, a
furnisher must investigate a direct dispute if it relates to:
(1) The consumer's liability for a credit account or other debt
with the furnisher, such as direct disputes relating to whether there
is or has been identity theft or fraud against the consumer, whether
there is individual or joint liability on an account, or whether the
consumer is an authorized user of a credit account;
(2) The terms of a credit account or other debt with the furnisher,
such as direct disputes relating to the type of account, principal
balance, scheduled payment amount on an account, or the amount of the
reported credit limit on an open-end account;
(3) The consumer's performance or other conduct concerning an
account or other relationship with the furnisher, such as direct
disputes relating to the current payment status, high balance, date a
payment was made, the amount of a payment made, or the date an account
was opened or closed; or
(4) Any other information contained in a consumer report regarding
an account or other relationship with the furnisher that bears on the
consumer's creditworthiness, credit standing, credit capacity,
character, general reputation, personal characteristics, or mode of
living.
(b) Exceptions. The requirements of paragraph (a) of this section
do not apply to a furnisher if:
(1) The direct dispute relates to:
(i) The consumer's identifying information (other than a direct
dispute relating to a consumer's liability for a credit account or
other debt with the furnisher, as provided in paragraph (a)(1) of this
section) such as name(s), date of birth, Social Security number,
telephone number(s), or address(es);
(ii) The identity of past or present employers;
(iii) Inquiries or requests for a consumer report;
(iv) Information derived from public records, such as judgments,
bankruptcies, liens, and other legal matters (unless provided by a
furnisher with an account or other relationship with the consumer); or
(v) Information related to fraud alerts or active duty alerts; or
(2) The direct dispute is submitted by, is prepared on behalf of
the consumer by, or is submitted on a form supplied to the consumer by,
a credit repair organization, as defined in 15 U.S.C. 1679a(3), or an
entity that would be a credit repair organization, but for 15 U.S.C.
1679a(3)(B)(i).
(c) Direct dispute address. A furnisher is required to investigate
a direct dispute only if a consumer submits a dispute notice to the
furnisher at:
(1) The address of a furnisher provided by a furnisher and set
forth on a consumer report relating to the consumer;
(2) An address clearly and conspicuously specified by the furnisher
for submitting direct disputes that is provided to the consumer in
writing or electronically (if the consumer has agreed to the electronic
delivery of information from the furnisher); or
(3) Any business address of the furnisher if the furnisher has not
so specified and provided an address for submitting direct disputes
under paragraph (c)(2) of this section.
(d) Direct dispute notice contents. A dispute notice must include:
(1) The name, address, and telephone number of the consumer;
(2) Sufficient information to identify the account or other
relationship that is in dispute, such as an account number;

[[Page 70972]]

(3) The specific information that the consumer is disputing and an
explanation of the basis for the dispute; and
(4) All supporting documentation or other information reasonably
required by the furnisher to substantiate the basis of the dispute.
This documentation may include, for example: a copy of the consumer
report that contains the allegedly inaccurate information; a police
report; a fraud or identity theft affidavit; a court order; or account
statements.
(e) Frivolous or irrelevant disputes. (1) A furnisher is not
required to investigate a direct dispute if the furnisher has
reasonably determined that the dispute is frivolous or irrelevant. A
dispute may be frivolous or irrelevant if:
(i) The consumer did not provide sufficient information to
investigate the disputed information as required by paragraph (d) of
this section;
(ii) The direct dispute is substantially the same as a dispute
previously submitted by or on behalf of the consumer, either directly
to the furnisher or through a consumer reporting agency, with respect
to which the furnisher has already satisfied the applicable
requirements of the Act or this section; provided, however, that a
direct dispute is not substantially the same as a dispute previously
submitted if the dispute includes information listed in paragraph (d)
of this section that had not previously been provided to the furnisher;
or
(iii) The furnisher is not required to investigate the direct
dispute under this section.
(2) Notice of determination. Upon making a determination that a
dispute is frivolous or irrelevant, the furnisher must notify the
consumer of the determination not later than five business days after
making the determination, by mail or, if authorized by the consumer for
that purpose, by any other means available to the furnisher.
(3) Contents of notice of determination that a dispute is frivolous
or irrelevant. A notice of determination that a dispute is frivolous or
irrelevant must include the reasons for such determination and identify
any information required to investigate the disputed information, which
may notice consist of a standardized form describing the general nature
of such information.
3. A new Appendix E is added to part 222 to read as follows:

Appendix E to Part 222--Interagency Guidelines Concerning the Accuracy
and Integrity of Information Furnished to Consumer Reporting Agencies

The Board encourages voluntary furnishing of information to
consumer reporting agencies. Section 222.42 of this part requires
each furnisher to establish and implement reasonable written
policies and procedures concerning the accuracy and integrity of the
information it furnishes to consumer reporting agencies. Under Sec.
222.42(b), the furnisher must consider the guidelines set forth
below in developing these policies and procedures. In establishing
these policies and procedures, a furnisher may include any of its
existing policies and procedures that are relevant and appropriate.

I. Nature, Scope, and Objectives of Policies and Procedures

A. Nature and Scope. Section 222.42(a) of this part requires
that a furnisher's policies and procedures be appropriate to the
nature, size, complexity, and scope of the furnisher's activities.
The furnisher's policies and procedures should reflect, for example:
1. The types of business activities in which the furnisher
engages;
2. The nature and frequency of the information the furnisher
provides to consumer reporting agencies; and
3. The technology used by the furnisher to furnish information
to consumer reporting agencies.
Regulatory Definition Approach for Paragraph B Follows:
B. Objectives. A furnisher should have written policies and
procedures reasonably designed to accomplish the following
objectives:
1. Ensure that the information it furnishes about accounts or
other relationships with a consumer:
(a) Accurately identifies the appropriate consumer;
(b) Accurately reports the terms of those accounts or other
relationships; and
(c) Accurately reports the consumer's performance and other
conduct with respect to the account or other relationship with the
consumer;
2. Ensure that the information it furnishes about accounts or
other relationships with a consumer avoids misleading a consumer
report user as to the consumer's creditworthiness, credit standing,
credit capacity, character, general reputation, personal
characteristics, or mode of living;
3. Ensure that it conducts reasonable investigations of consumer
disputes about the accuracy or integrity of information in consumer
reports and takes appropriate actions based on the outcome of such
investigations;
4. Ensure that it updates information it furnishes as necessary
to reflect the current status of the consumer's account or other
relationship, including:
(a) Any transfer of an account (e.g., by sale or assignment for
collection) to a third party; and
(b) Any cure of the consumer's failure to abide by the terms of
the account or other relationship;
5. Ensure that the information it furnishes about accounts or
other relationships with a consumer is reported in a form and manner
that is designed to minimize the likelihood that the information,
although accurate, may be erroneously reflected in a consumer
report, for example, by ensuring that the information is reported
with appropriate identifying information about the consumer to whom
it pertains, in a standardized and clearly understandable form and
manner, and with a date specifying the time period to which the
information pertains; and
6. Ensure that the information it furnishes about accounts or
other relationships with a consumer is substantiated by the
furnisher's own records.
Guidelines Definition Approach for Paragraph B Follows:
B. Objectives. A furnisher should have written policies and
procedures reasonably designed to accomplish the following
objectives:
1. Ensure that the information it furnishes about accounts or
other relationships with a consumer is accurate. Accuracy means that
any information that a furnisher provides to a consumer reporting
agency about an account or other relationship with the consumer
reflects without error the terms of and liability for the account or
other relationship and the consumer's performance and other conduct
with respect to the account or other relationship;
2. Ensure that the information it furnishes about accounts or
other relationships with a consumer is furnished with integrity.
Integrity means that any information that a furnisher provides to a
consumer reporting agency about an account or other relationship
with the consumer is:
(i) Reported in a form and manner that is designed to minimize
the likelihood that the information, although accurate, may be
erroneously reflected in a consumer report, for example, by ensuring
that the information is:
(A) Reported with appropriate identifying information about the
consumer to whom it pertains;
(B) Reported in a standardized and clearly understandable form
and manner; and
(C) Reported with a date specifying the time period to which the
information pertains; and
(ii) Substantiated by the furnisher's own records;
3. Ensure that it conducts reasonable investigations of consumer
disputes about the accuracy or integrity of information in consumer
reports and takes appropriate actions based on the outcome of such
investigations; and
4. Ensure that it updates information it furnishes as necessary
to reflect the current status of the consumer's account or other
relationship, including:
(a) Any transfer of an account (e.g., by sale or assignment for
collection) to a third party; and
(b) Any cure of the consumer's failure to abide by the terms of
the account or other relationship.

[[Page 70973]]

II. Accuracy and Integrity Duties of Furnishers Under the FCRA

A furnisher's policies and procedures should address compliance
with all applicable requirements imposed on the furnisher under the
FCRA, including the duties to: \1\
---------------------------------------------------------------------------

\1\ This is not a complete listing of furnisher duties relating
to accuracy and integrity. Furnishers should consult the FCRA to
determine what additional duties may apply.
---------------------------------------------------------------------------

A. Promptly notify the consumer reporting agency of the
furnisher's determination that furnished information is not complete
or accurate, for a furnisher that regularly and in the ordinary
course of business furnishes information; provide any corrections,
or any additional information, that is necessary to make the
furnished information complete and accurate; and not thereafter
furnish information that remains incomplete or inaccurate. 15 U.S.C.
1681s-2(a)(2).
B. Provide notice of a dispute by a consumer about the accuracy
or completeness of information furnished to a consumer reporting
agency. 15 U.S.C. 1681s-2(a)(3).
C. Report voluntary closure of a credit account by the consumer
in information regularly furnished for the period in which the
credit account is closed, for a furnisher that regularly and in the
ordinary course of business furnishes information about consumer
credit accounts. 15 U.S.C. 1681s-2(a)(4).
D. Notify the consumer reporting agency of the date of
delinquency on an account not later than 90 days after the furnisher
furnishes information to the consumer reporting agency regarding
action taken on the delinquent account (including placement for
collection, charge to profit or loss, or any similar action). Date
of delinquency means the month and year of the commencement of the
delinquency on the account that immediately preceded the action. 15
U.S.C. 1681s-2(a)(5).
E. Have in place reasonable procedures to respond to any
notification that the furnisher receives from a consumer reporting
agency under section 605B of the FCRA, relating to the blocking of
information resulting from identity theft and to prevent the
refurnishing of such blocked information. 15 U.S.C. 1681s-
2(a)(6)(A).
F. Not furnish to a consumer reporting agency information that
purports to relate to the consumer if the consumer submits an
identity theft report to the furnisher (at the address specified by
that furnisher for receiving such reports) stating that such
information maintained by that furnisher resulted from identity
theft. (This restriction does not apply if the furnisher
subsequently knows or is informed by the consumer that the
information is correct.) 15 U.S.C. 1681s-2(a)(6)(B).
G. After receiving a notice of dispute from a consumer reporting
agency, in a timely manner: Conduct an investigation; review all
relevant information the consumer reporting agency provides; report
the results of the investigation to the consumer reporting agency;
report incomplete or inaccurate information to all nationwide
consumer reporting agencies to which it reported the information;
and modify, delete, or permanently block incomplete or inaccurate
information or information that cannot be verified. 15 U.S.C. 1681s-
2(b).
H. Investigate direct disputes as required by 12 CFR 222.43 and
15 U.S.C. 1681s-2(a)(8).

III. Establishing and Implementing Policies and Procedures

In establishing and implementing its policies and procedures, a
furnisher should:
A. Identify practices or activities of the furnisher that can
compromise the accuracy and integrity of information furnished to
consumer reporting agencies, such as by:
1. Reviewing its existing practices and activities, including
the technological means and other methods it uses to furnish
information to consumer reporting agencies and the frequency and
timing of its furnishing of information, such as through an audit;
2. Reviewing historical records relating to accuracy or
integrity or to disputes, or other information relating to the
accuracy and integrity of information provided by the furnisher to
consumer reporting agencies and the types of errors, omissions, or
other problems that may have affected the accuracy and integrity of
information it has furnished about consumers to consumer reporting
agencies; and
3. Obtaining feedback from consumer reporting agencies,
consumers, the furnisher's staff, or other appropriate parties.
B. Evaluate the effectiveness of existing policies and
procedures of the furnisher regarding the accuracy and integrity of
information furnished to consumer reporting agencies; consider
whether new, additional, or different policies and procedures are
necessary; and consider whether implementation of existing policies
and procedures should be modified to enhance the accuracy and
integrity of information about consumers furnished to consumer
reporting agencies.
C. Evaluate the effectiveness of specific methods (including
technological means) the furnisher uses to provide information to
consumer reporting agencies; how those methods may affect the
accuracy and integrity of the information it provides to consumer
reporting agencies; and whether new, additional, or different
methods (including technological means) should be used to provide
information to consumer reporting agencies to enhance the accuracy
and integrity of that information.

IV. Specific Components of Policies and Procedures

A furnisher's policies and procedures should address the
following:
A. Establishing and implementing a system for furnishing
information about consumers to consumer reporting agencies that is
appropriate to the nature, size, complexity, and scope of the
furnisher's business operations.
B. Using standard data reporting formats and standard procedures
for compiling and furnishing data, where feasible, such as the
electronic transmission of information about consumers to consumer
reporting agencies.
C. Ensuring that the furnisher maintains its own records for a
reasonable period of time, not less than any applicable
recordkeeping requirement, in order to substantiate the accuracy of
any information about consumers it furnishes that is subject to a
direct dispute.
D. Establishing and implementing appropriate internal controls
regarding the accuracy and integrity of information about consumers
furnished to consumer reporting agencies, such as by implementing
standard procedures, verifying random samples, and conducting
regular reviews of information provided to consumer reporting
agencies.
E. Training staff that participates in activities related to the
furnishing of information about consumers to consumer reporting
agencies to implement the policies and procedures.
F. Providing for appropriate and effective oversight of relevant
service providers whose activities may affect the accuracy and
integrity of information about consumers furnished to consumer
reporting agencies to ensure compliance with the policies and
procedures.
G. Furnishing information about consumers to consumer reporting
agencies following mergers, portfolio acquisitions or sales, or
other acquisitions or transfers of accounts or other debts in a
manner that prevents re-aging of information, duplicative reporting,
or other problems affecting the accuracy or integrity of the
information furnished.
H. Attempting to obtain the information listed in Sec.
222.43(d) of this part from a consumer before determining that the
consumer's dispute is frivolous or irrelevant.
I. Ensuring that deletions, updates, and corrections furnished
to consumer reporting agencies are reflected in business systems to
avoid furnishing erroneous information.
J. Conducting investigations of direct disputes in a manner that
promotes the efficient resolution of such disputes.
K. Ensuring that technological and other means of communication
with consumer reporting agencies are designed to prevent duplicative
reporting of accounts, erroneous association of information with the
wrong consumer(s), and other occurrences that may compromise the
accuracy and integrity of information contained in consumer reports.
L. Providing consumer reporting agencies with sufficient
identifying information in the furnisher's possession about each
consumer about whom information is furnished to enable the consumer
reporting agency properly to identify the consumer.
M. Conducting a periodic evaluation of its own practices,
consumer reporting agency practices of which the furnisher is aware,
investigations of disputed information, corrections of inaccurate
information, means of communication, and other factors that may
affect the accuracy and integrity of information furnished to
consumer reporting agencies.

Federal Deposit Insurance Corporation

12 CFR Chapter III

Authority and Issuance

For the reasons discussed in the joint preamble, the Federal
Deposit Insurance

[[Page 70974]]

Corporation proposes to amend chapter III of title 12 of the Code of
Federal Regulations by amending 12 CFR part 334 as follows:

PART 334--FAIR CREDIT REPORTING

1. The authority citation for part 334 is revised to read as
follows:

Authority: 12 U.S.C. 1818, 1819 (Tenth), and 1831p-1; 15 U.S.C.
1681a, 1681b, 1681c, 1681m, 1681s, 1681s-2, 1681s-3, 1681t, 1681w,
and 6801 et seq.; Pub. L. 108-159, 117 Stat. 1952.
2. Add subpart E to part 334 to read as follows:
Subpart E--Duties of Furnishers of Information
Sec.
334.40 Scope.
334.41 Definitions.
334.42 Reasonable policies and procedures concerning the accuracy
and integrity of furnished information.
334.43 Direct disputes.

Subpart E--Duties of Furnishers of Information

Sec. 334.40 Scope.

This subpart applies to a financial institution or creditor that is
an insured state nonmember bank, insured state licensed branch of a
foreign bank, or a subsidiary of such entities (except dealers, persons
providing insurance, investment companies, and investment advisers).

Sec. 334.41 Definitions.

For purposes of this subpart and Appendix E of this part, the
following definitions apply:
Regulatory Definition Approach for Defining ``Accuracy'' and
``Integrity'' Follows:
(a) Accuracy means that any information that a furnisher provides
to a consumer reporting agency about an account or other relationship
with the consumer that reflects without error the terms of and
liability for the account or other relationship and the consumer's
performance and other conduct with respect to the account or other
relationship.
(b) Integrity means that any information that a furnisher provides
to a consumer reporting agency about an account or other relationship
with the consumer does not omit any term, such as a credit limit or
opening date, of that account or other relationship, the absence of
which can reasonably be expected to contribute to an incorrect
evaluation by a user of a consumer report of a consumer's
creditworthiness, credit standing, credit capacity, character, general
reputation, personal characteristics, or mode of living.
(c) Furnisher means an entity that furnishes information relating
to consumers to one or more consumer reporting agencies. An entity is
not a furnisher when it provides information to a consumer reporting
agency solely to obtain a consumer report in accordance with sections
604(a) and (f) of the FCRA.
(d) Identity theft has the same meaning as in 16 CFR 603.2(a).
(e) Direct dispute means a dispute submitted directly to a
furnisher by a consumer concerning the accuracy of any information
contained in a consumer report relating to the consumer.

Sec. 334.42 Reasonable policies and procedures concerning the
accuracy and integrity of furnished information.

(a) Policies and procedures. Each furnisher must establish and
implement reasonable written policies and procedures regarding the
accuracy and integrity of the information relating to consumers that it
furnishes to a consumer reporting agency. The policies and procedures
must be appropriate to the nature, size, complexity, and scope of each
furnisher's activities.
(b) Guidelines. Each furnisher must consider the guidelines in
Appendix E of this part in developing its policies and procedures
required by this section, and incorporate those guidelines that are
appropriate.
(c) Reviewing and updating policies and procedures. Each furnisher
must review its policies and procedures required by this section
periodically and update them as necessary to ensure their continued
effectiveness.

Sec. 334.43 Direct disputes.

(a) General rule. Except as otherwise provided in this section, a
furnisher must investigate a direct dispute if it relates to:
(1) The consumer's liability for a credit account or other debt
with the furnisher, such as direct disputes relating to whether there
is or has been identity theft or fraud against the consumer, whether
there is individual or joint liability on an account, or whether the
consumer is an authorized user of a credit account;
(2) The terms of a credit account or other debt with the furnisher,
such as direct disputes relating to the type of account, principal
balance, scheduled payment amount on an account, or the amount of the
reported credit limit on an open-end account;
(3) The consumer's performance or other conduct concerning an
account or other relationship with the furnisher, such as direct
disputes relating to the current payment status, high balance, date a
payment was made, the amount of a payment made, or the date an account
was opened or closed; or
(4) Any other information contained in a consumer report regarding
an account or other relationship with the furnisher that bears on the
consumer's credit worthiness, credit standing, credit capacity,
character, general reputation, personal characteristics, or mode of
living.
(b) Exceptions. The requirements of paragraph (a) of this section
do not apply to a furnisher if:
(1) The direct dispute relates to:
(i) The consumer's identifying information (other than a direct
dispute relating to a consumer's liability for a credit account or
other debt with the furnisher, as provided in paragraph (a)(1) of this
section) such as name(s), date of birth, Social Security number,
telephone number(s), or address(es);
(ii) The identity of past or present employers;
(iii) Inquiries or requests for a consumer report;
(iv) Information derived from public records, such as judgments,
bankruptcies, liens, and other legal matters; or
(v) Information related to fraud alerts or active duty alerts; or
(2) The direct dispute is submitted by, is prepared on behalf of
the consumer by, or is submitted on a form supplied to the consumer by,
a credit repair organization, as defined in 15 U.S.C. 1679a(3), or an
entity that would be a credit repair organization, but for 15 U.S.C.
1679a(3)(B)(i).
(c) Direct dispute address. A furnisher is required to investigate
a direct dispute only if a consumer submits a dispute notice to the
furnisher at:
(1) The address of a furnisher provided by a furnisher and set
forth on a consumer report relating to the consumer;
(2) An address clearly and conspicuously specified by the furnisher
for submitting direct disputes that is provided to the consumer in
writing or electronically (if the consumer has agreed to the electronic
delivery of information from the furnisher); or
(3) Any business address of the furnisher if the furnisher has not
so specified and provided an address for submitting direct disputes
under paragraph (c)(2) of this section.
(d) Direct dispute notice contents. A dispute notice must include:
(1) The name, address, and telephone number of the consumer;
(2) Sufficient information to identify the account or other
relationship that is in dispute, such as an account number;

[[Page 70975]]

(3) The specific information that the consumer is disputing and an
explanation of the basis for the dispute; and
(4) All supporting documentation or other information reasonably
required by the furnisher to substantiate the basis of the dispute.
This documentation may include, for example: a copy of the consumer
report that contains the allegedly inaccurate information; a police
report; a fraud or identity theft affidavit; a court order; or account
statements.
(e) Frivolous or irrelevant disputes. (1) A furnisher is not
required to investigate a direct dispute if the furnisher has
reasonably determined that the dispute is frivolous or irrelevant. A
dispute may be frivolous or irrelevant if:
(i) The consumer did not provide sufficient information to
investigate the disputed information as required by paragraph (d) of
this section;
(ii) The direct dispute is substantially the same as a dispute
previously submitted by or on behalf of the consumer, either directly
to the furnisher or through a consumer reporting agency, with respect
to which the furnisher has already satisfied the applicable
requirements of the Act or this section; provided, however, that a
direct dispute is not substantially the same as a dispute previously
submitted if the dispute includes information listed in paragraph (d)
of this section that had not previously been provided to the furnisher;
or
(iii) The furnisher is not required to investigate the direct
dispute under this section.
(2) Notice of determination. Upon making a determination that a
dispute is frivolous or irrelevant, the furnisher must notify the
consumer of the determination not later than five business days after
making the determination, by mail or, if authorized by the consumer for
that purpose, by any other means available to the furnisher.
(3) Contents of notice of determination that a dispute is frivolous
or irrelevant. A notice of determination that a dispute is frivolous or
irrelevant must include the reasons for such determination and identify
any information required to investigate the disputed information, which
may consist of a standardized form describing the general nature of
such information.
3. Add Appendix E to part 334 to read as follows:

Appendix E to Part 334--Interagency Guidelines Concerning the Accuracy
and Integrity of Information Furnished to Consumer Reporting Agencies

The FDIC encourages voluntary furnishing of information to
consumer reporting agencies. Section 334.42 of this part requires
each furnisher to establish and implement reasonable written
policies and procedures concerning the accuracy and integrity of the
information it furnishes to consumer reporting agencies. Under Sec.
334.42(b), the furnisher must consider the guidelines set forth
below in developing these policies and procedures. In establishing
these policies and procedures, a furnisher may include any of its
existing policies and procedures that are relevant and appropriate.

I. Nature, Scope, and Objectives of Policies and Procedures

A. Nature and Scope. Section 334.42(a) of this part requires
that a furnisher's policies and procedures be appropriate to the
nature, size, complexity, and scope of the furnisher's activities.
The furnisher's policies and procedures should reflect, for example:
1. The types of business activities in which the furnisher
engages;
2. The nature and frequency of the information the furnisher
provides to consumer reporting agencies; and
3. The technology used by the furnisher to furnish information
to consumer reporting agencies.
Regulatory Definition Approach for Paragraph B Follows:
B. Objectives. A furnisher should have written policies and
procedures reasonably designed to accomplish the following
objectives:
1. Ensure that the information it furnishes about accounts or
other relationships with a consumer:
(a) Accurately identifies the appropriate consumer;
(b) Accurately reports the terms of those accounts or other
relationships;
(c) Accurately reports the consumer's performance and other
conduct with respect to the account or other relationship with the
consumer;
2. Ensure that the information it furnishes about accounts or
other relationships with a consumer avoids misleading a consumer
report user as to the consumer's creditworthiness, credit standing,
credit capacity, character, general reputation, personal
characteristics, or mode of living;
3. Ensure that it conducts reasonable investigations of consumer
disputes about the accuracy or integrity of information in consumer
reports and takes appropriate actions based on the outcome of such
investigations;
4. Ensure that it updates information it furnishes as necessary
to reflect the current status of the consumer's account or other
relationship, including:
(a) Any transfer of an account (e.g., by sale or assignment for
collection) to a third party; and
(b) Any cure of the consumer's failure to abide by the terms of
the account or other relationship;
5. Ensure that the information it furnishes about accounts or
other relationships with a consumer is reported in a form and manner
that is designed to minimize the likelihood that the information,
although accurate, may be erroneously reflected in a consumer
report, for example, by ensuring that the information is reported
with appropriate identifying information about the consumer to which
it pertains, in a standardized and clearly understandable form and
manner, with a date specifying the time period to which the
information pertains; and
6. Ensure that the information it furnishes about accounts or
other relationships with a furnisher is substantiated by the
furnisher's own records.
Guidelines Definition Approach for Paragraph B Follows:
B. Objectives. A furnisher should have written policies and
procedures reasonably designed to accomplish the following
objectives:
1. Ensure that the information it furnishes about accounts or
other relationships with a consumer is accurate. Accuracy means that
any information that a furnisher provides to a consumer reporting
agency about an account or other relationship with the consumer
reflects without error the terms of and liability for the account or
other relationship and the consumer's performance and other conduct
with respect to the account or other relationship;
2. Ensure that the information it furnishes about accounts or
other relationships with a consumer is furnished with integrity.
Integrity means that any information that a furnisher provides to a
consumer reporting agency about an account or other relationship
with the consumer is:
(i) Reported in a form and manner that is designed to minimize
the likelihood that the information, although accurate, may be
erroneously reflected in a consumer report, for example, by ensuring
that the information is:
(A) Reported with appropriate identifying information about the
consumer to whom it pertains;
(B) Reported in a standardized and clearly understandable form
and manner; and
(C) Reported with a date specifying the time period to which the
information pertains; and
(ii) Substantiated by the furnisher's own records;
3. Ensure that it conducts reasonable investigations of consumer
disputes about the accuracy or integrity of information in consumer
reports and takes appropriate actions based on the outcome of such
investigations; and
4. Ensure that it updates information it furnishes as necessary
to reflect the current status of the consumer's account or other
relationship, including:
(a) Any transfer of an account (e.g., by sale or assignment for
collection) to a third party; and
(b) Any cure of the consumer's failure to abide by the terms of
the account or other relationship.

[[Page 70976]]

II. Accuracy and Integrity Duties of Furnishers Under the FCRA

A furnisher's policies and procedures should address compliance
with all applicable requirements imposed on the furnisher under the
FCRA, including the duties to: \1\
---------------------------------------------------------------------------

\1\ This is not a complete listing of furnisher duties relating
to accuracy and integrity. Furnishers should consult the FCRA to
determine what additional duties may apply.
---------------------------------------------------------------------------

A. Promptly notify the consumer reporting agency of the
furnisher's determination that furnished information is not complete
or accurate, for a furnisher that regularly and in the ordinary
course of business furnishes information; provide any corrections,
or any additional information, that is necessary to make the
furnished information complete and accurate; and not thereafter
furnish information that remains incomplete or inaccurate. 15 U.S.C.
1681s-2(a)(2).
B. Provide notice of a dispute by a consumer about the accuracy
or completeness of information furnished to a consumer reporting
agency. 15 U.S.C. 1681s-2(a)(3).
C. Report voluntary closure of a credit account by the consumer
in information regularly furnished for the period in which the
credit account is closed, for a furnisher that regularly and in the
ordinary course of business furnishes information about consumer
credit accounts. 15 U.S.C. 1681s-2(a)(4).
D. Notify the consumer reporting agency of the date of
delinquency on an account not later than 90 days after the furnisher
furnishes information to the consumer reporting agency regarding
action taken on the delinquent account (including placement for
collection, charge to profit or loss, or any similar action). Date
of delinquency means the month and year of the commencement of the
delinquency on the account that immediately preceded the action. 15
U.S.C. 1681s-2(a)(5).
E. Have in place reasonable procedures to respond to any
notification that the furnisher receives from a consumer reporting
agency under section 605B of the FCRA, relating to the blocking of
information resulting from identity theft and to prevent the
refurnishing of such blocked information. 15 U.S.C. 1681s-
2(a)(6)(A).
F. Not furnish to a consumer reporting agency information that
purports to relate to the consumer if the consumer submits an
identity theft report to the furnisher (at the address specified by
that furnisher for receiving such reports) stating that such
information maintained by that furnisher resulted from identity
theft. (This restriction does not apply if the furnisher
subsequently knows or is informed by the consumer that the
information is correct.) 15 U.S.C. 1681s-2(a)(6)(B).
G. After receiving a notice of dispute from a consumer reporting
agency, in a timely manner: Conduct an investigation; review all
relevant information the consumer reporting agency provides; report
the results of the investigation to the consumer reporting agency;
report incomplete or inaccurate information to all nationwide
consumer reporting agencies to which it reported the information;
and modify, delete, or permanently block incomplete or inaccurate
information or information that cannot be verified. 15 U.S.C. 1681s-
2(b).
H. Investigate direct disputes as required by 12 CFR 334.43 and
15 U.S.C. 1681s-2(a)(8).

III. Establishing and Implementing Policies and Procedures

In establishing and implementing its policies and procedures, a
furnisher should:
A. Identify practices or activities of the furnisher that can
compromise the accuracy and integrity of information furnished to
consumer reporting agencies, such as by:
1. Reviewing its existing practices and activities, including
the technological means and other methods it uses to furnish
information to consumer reporting agencies and the frequency and
timing of its furnishing of information, such as through an audit;
2. Reviewing historical records relating to accuracy or
integrity or to disputes, or other information relating to the
accuracy and integrity of information provided by the furnisher to
consumer reporting agencies and the types of errors, omissions, or
other problems that may have affected the accuracy and integrity of
information it has furnished about consumers to consumer reporting
agencies; and
3. Obtaining feedback from consumer reporting agencies,
consumers, the furnisher's staff, or other appropriate parties.
B. Evaluate the effectiveness of existing policies and
procedures of the furnisher regarding the accuracy and integrity of
information furnished to consumer reporting agencies; consider
whether new, additional, or different policies and procedures are
necessary; and consider whether implementation of existing policies
and procedures should be modified to enhance the accuracy and
integrity of information about consumers furnished to consumer
reporting agencies.
C. Evaluate the effectiveness of specific methods (including
technological means) the furnisher uses to provide information to
consumer reporting agencies; how those methods may affect the
accuracy and integrity of the information it provides to consumer
reporting agencies; and whether new, additional, or different
methods (including technological means) should be used to provide
information to consumer reporting agencies to enhance the accuracy
and integrity of that information.

IV. Specific Components of Policies and Procedures

A furnisher's policies and procedures should address the
following:
A. Establishing and implementing a system for furnishing
information about consumers to consumer reporting agencies that is
appropriate to the nature, size, complexity, and scope of the
furnisher's business operations.
B. Using standard data reporting formats and standard procedures
for compiling and furnishing data, where feasible, such as the
electronic transmission of information about consumers to consumer
reporting agencies.
C. Ensuring that the furnisher maintains its own records for a
reasonable period of time, not less than any applicable
recordkeeping requirement, in order to substantiate the accuracy of
any information about consumers it furnishes that is subject to a
direct dispute.
D. Establishing and implementing appropriate internal controls
regarding the accuracy and integrity of information about consumers
furnished to consumer reporting agencies, such as by implementing
standard procedures, verifying random samples, and conducting
regular reviews of information provided to consumer reporting
agencies.
E. Training staff that participates in activities related to the
furnishing of information about consumers to consumer reporting
agencies to implement the policies and procedures.
F. Providing for appropriate and effective oversight of relevant
service providers whose activities may affect the accuracy and
integrity of information about consumers furnished to consumer
reporting agencies to ensure compliance with the policies and
procedures.
G. Furnishing information about consumers to consumer reporting
agencies following mergers, portfolio acquisitions or sales, or
other acquisitions or transfers of accounts or other debts in a
manner that prevents re-aging of information, duplicative reporting,
or other problems affecting the accuracy or integrity of the
information furnished.
H. Attempting to obtain the information listed in Sec. --.43(d)
from a consumer before determining that the consumer's dispute is
frivolous or irrelevant.
I. Ensuring that deletions, updates, and corrections furnished
to consumer reporting agencies are reflected in business systems to
avoid furnishing erroneous information.
J. Conducting investigations of direct disputes in a manner that
promotes the efficient resolution of such disputes.
K. Ensuring that technological and other means of communication
with consumer reporting agencies are designed to prevent duplicative
reporting of accounts, erroneous association of information with the
wrong consumer(s), and other occurrences that may compromise the
accuracy and integrity of information contained in consumer reports.
L. Providing consumer reporting agencies with sufficient
identifying information in the furnisher's possession about each
consumer about whom information is furnished to enable the consumer
reporting agency properly to identify the consumer.
M. Conducting a periodic evaluation of its own practices,
consumer reporting agency practices, investigations of disputed
information, corrections of inaccurate information, means of
communication, and other factors that may affect the accuracy and
integrity of information furnished to consumer reporting agencies.

Department of the Treasury

Office of Thrift Supervision

12 CFR Chapter V

Authority and Issuance

For the reasons discussed in the joint preamble, the Office of
Thrift

[[Page 70977]]

Supervision proposes to amend chapter V of title 12 of the Code of
Federal Regulations by amending 12 CFR part 571 as follows:

PART 571--FAIR CREDIT REPORTING

1. The authority citation for part 571 is revised to read as
follows:

Authority: 12 U.S.C. 1462a, 1463, 1464, 1467a, 1828, 1831p-1,
and 1881-1884; 15 U.S.C. 1681b, 1681c, 1681m, 1681s, 1681s-2, 1681s-
3, 1681t, and 1681w; 15 U.S.C. 6801 and 6805; Sec. 214 Pub. L. 108-
159, 117 Stat. 1952.

Subpart A--General Provisions

2. Amend Sec. 571.1 by adding a new paragraph (b)(5) to read as
follows:

Sec. 571.1 Purpose and scope.

* * * * *
(b) * * *
(5) The scope of subpart E of this part is stated in Sec. 571.40
of this part.
* * * * *
3. Add a new Subpart E to part 571 to read as follows:
Subpart E--Duties of Furnishers of Information
Sec.
571.40 Scope.
571.41 Definitions.
571.42 Reasonable policies and procedures concerning the accuracy
and integrity of furnished information.
571.43 Direct disputes.

Subpart E--Duties of Furnishers of Information

Sec. 571.40 Scope.

Subpart C of this part applies to savings associations whose
deposits are insured by the Federal Deposit Insurance Corporation or,
in accordance with Sec. 559.3(h)(1) of this chapter, federal savings
association operating subsidiaries that are not functionally regulated
within the meaning of section 5(c)(5) of the Bank Holding Company Act
of 1956, as amended (12 U.S.C. 1844(c)(5).

Sec. 571.41 Definitions.

For purposes of this subpart and Appendix E of this part, the
following definitions apply:
Regulatory Definition Approach for Defining ``Accuracy'' and
``Integrity'' Follows:
(a) Accuracy means that any information that a furnisher provides
to a consumer reporting agency about an account or other relationship
with the consumer reflects without error the terms of and liability for
the account or other relationship and the consumer's performance and
other conduct with respect to the account or other relationship.
(b) Integrity means that any information that a furnisher provides
to a consumer reporting agency about an account or other relationship
with the consumer does not omit any term, such as a credit limit or
opening date, of that account or other relationship, the absence of
which can reasonably be expected to contribute to an incorrect
evaluation by a user of a consumer report of a consumer's
creditworthiness, credit standing, credit capacity, character, general
reputation, personal characteristics, or mode of living.
(c) Furnisher means an entity other than an individual consumer
that furnishes information relating to consumers to one or more
consumer reporting agencies. An entity is not a furnisher when it
provides information to a consumer reporting agency solely to obtain a
consumer report in accordance with sections 604(a) and (f) of the FCRA.
(d) Identity theft has the same meaning as in 16 CFR 603.2(a).
(e) Direct dispute means a dispute submitted directly to a
furnisher by a consumer concerning the accuracy of any information
contained in a consumer report relating to the consumer.

Sec. 571.42 Reasonable policies and procedures concerning the
accuracy and integrity of furnished information.

(a) Policies and procedures. Each furnisher must establish and
implement reasonable written policies and procedures regarding the
accuracy and integrity of the information relating to consumers that it
furnishes to a consumer reporting agency. The policies and procedures
must be appropriate to the nature, size, complexity, and scope of each
furnisher's activities.
(b) Guidelines. Each furnisher must consider the guidelines in
Appendix E of this part in developing its policies and procedures
required by this section, and incorporate those guidelines that are
appropriate.
(c) Reviewing and updating policies and procedures. Each furnisher
must review its policies and procedures required by this section
periodically and update them as necessary to ensure their continued
effectiveness.

Sec. 571.43 Direct disputes.

(a) General rule. Except as otherwise provided in this section, a
furnisher must investigate a direct dispute if it relates to:
(1) The consumer's liability for a credit account or other debt
with the furnisher, such as direct disputes relating to whether there
is or has been identity theft or fraud against the consumer, whether
there is individual or joint liability on an account, or whether the
consumer is an authorized user of a credit account;
(2) The terms of a credit account or other debt with the furnisher,
such as direct disputes relating to the credit limit on an open-end
account, type of account, principal balance, scheduled payment amount
on an account, or the amount of the reported credit limit on an open-
end account;
(3) The consumer's performance or other conduct concerning an
account or other relationship with the furnisher, such as direct
disputes relating to the current payment status, high balance, date a
payment was made, the amount of a payment made, or the date an account
was opened or closed; or
(4) Any other information contained in a consumer report regarding
an account or other relationship with the furnisher that bears on the
consumer's creditworthiness, credit standing, credit capacity,
character, general reputation, personal characteristics, or mode of
living.
(b) Exceptions. The requirements of paragraph (a) of this section
do not apply to a furnisher if:
(1) The direct dispute relates to:
(i) The consumer's identifying information (other than a direct
dispute relating to a consumer's liability for a credit account or
other debt with the furnisher, as provided in paragraph (a)(1) of this
section) such as name(s), date of birth, Social Security number,
telephone number(s), or address(es);
(ii) The identity of past or present employers;
(iii) Inquiries or requests for a consumer report;
(iv) Information derived from public records, such as judgments,
bankruptcies, liens, and other legal matters (unless provided by a
furnisher with an account or other relationship with the consumer); or
(v) Information related to fraud alerts or active duty alerts; or
(2) The direct dispute is submitted by, is prepared on behalf of
the consumer by, or is submitted on a form supplied to the consumer by,
a credit repair organization, as defined in 15 U.S.C. 1679a(3), or an
entity that would be a credit repair organization, but for 15 U.S.C.
1679a(3)(B)(i).
(c) Direct dispute address. A furnisher is required to investigate
a direct dispute only if a consumer submits a dispute notice to the
furnisher at:
(1) The address of a furnisher provided by a furnisher and set
forth on a consumer report relating to the consumer;

[[Page 70978]]

(2) An address clearly and conspicuously specified by the furnisher
for submitting direct disputes that is provided to the consumer in
writing or electronically (if the consumer has agreed to the electronic
delivery of information from the furnisher); or
(3) Any business address of the furnisher if the furnisher has not
so specified and provided an address for submitting direct disputes
under paragraph (c)(2) of this section.
(d) Direct dispute notice contents. A dispute notice must include:
(1) The name, address, and telephone number of the consumer;
(2) Sufficient information to identify the account or other
relationship that is in dispute, such as an account number;
(3) The specific information that the consumer is disputing and an
explanation of the basis for the dispute; and
(4) All supporting documentation or other information reasonably
required by the furnisher to substantiate the basis of the dispute.
This documentation may include, for example: A copy of the consumer
report that contains the allegedly inaccurate information; a police
report; a fraud or identity theft affidavit; a court order; or account
statements.
(e) Frivolous or irrelevant disputes. (1) A furnisher is not
required to investigate a direct dispute if the furnisher has
reasonably determined that the dispute is frivolous or irrelevant. A
dispute may be frivolous or irrelevant if:
(i) The consumer did not provide sufficient information to
investigate the disputed information as required by paragraph (d) of
this section;
(ii) The direct dispute is substantially the same as a dispute
previously submitted by or on behalf of the consumer, either directly
to the furnisher or through a consumer reporting agency, with respect
to which the furnisher has already satisfied the applicable
requirements of the Act or this section; provided, however, that a
direct dispute is not substantially the same as a dispute previously
submitted if the dispute includes information listed in paragraph (d)
of this section that had not previously been provided to the furnisher;
or
(iii) The furnisher is not required to investigate the direct
dispute under this section.
(2) Notice of determination. Upon making a determination that a
dispute is frivolous or irrelevant, the furnisher must notify the
consumer of the determination not later than five business days after
making the determination by mail or, if authorized by the consumer for
that purpose, by any other means available to the furnisher.
(3) Contents of notice of determination that a dispute is frivolous
or irrelevant. A notice of determination that a dispute is frivolous or
irrelevant must include the reasons for such determination and identify
any information required to investigate the disputed information, which
may consist of a standardized form describing the general nature of
such information.
4. Add a new Appendix E to part 571 to read as follows:

Appendix E to Part 571--Interagency Guidelines Concerning the Accuracy
and Integrity of Information Furnished to Consumer Reporting Agencies

OTS encourages voluntary furnishing of information to consumer
reporting agencies. Section 571.42 of this part requires each
furnisher to establish and implement reasonable written policies and
procedures concerning the accuracy and integrity of the information
it furnishes to consumer reporting agencies. Under Sec. 571.42(b)
of this part, the furnisher must consider the guidelines set forth
below in developing these policies and procedures. In establishing
these policies and procedures, a furnisher may include any of its
existing policies and procedures that are relevant and appropriate.

I. Nature, Scope, and Objectives of Policies and Procedures

A. Nature and Scope. Section 571.42(a) of this part requires
that a furnisher's policies and procedures be appropriate to the
nature, size, complexity, and scope of the furnisher's activities.
The furnisher's policies and procedures should reflect, for example:
1. The types of business activities in which the furnisher
engages;
2. The nature and frequency of the information the furnisher
provides to consumer reporting agencies; and
3. The technology used by the furnisher to furnish information
to consumer reporting agencies.
Regulatory Definition Approach for Paragraph B Follows:
B. Objectives. A furnisher should have written policies and
procedures reasonably designed to accomplish the following
objectives:
1. Ensure that the information it furnishes about accounts or
other relationships with a consumer:
(a) Accurately identifies the appropriate consumer;
(b) Accurately reports the terms of those accounts or other
relationships; and
(c) Accurately reports the consumer's performance and other
conduct with respect to the account or other relationship with the
consumer;
2. Ensure that the information it furnishes about accounts or
other relationships with a consumer avoids misleading a consumer
report user as to the consumer's creditworthiness, credit standing,
credit capacity, character, general reputation, personal
characteristics, or mode of living;
3. Ensure that it conducts reasonable investigations of consumer
disputes about the accuracy or integrity of information in consumer
reports and takes appropriate actions based on the outcome of such
investigations;
4. Ensure that it updates information it furnishes as necessary
to reflect the current status of the consumer's account or other
relationship, including:
(a) Any transfer of an account (e.g., by sale or assignment for
collection) to a third party; and
(b) Any cure of the consumer's failure to abide by the terms of
the account or other relationship;
5. Ensure that the information it furnishes about accounts or
other relationships with a consumer is reported in a form and manner
that is designed to minimize the likelihood that the information,
although accurate, may be erroneously reflected in a consumer
report, for example, by ensuring that the information is reported
with appropriate identifying information about the consumer to whom
it pertains, in a standardized and clearly understandable form and
manner, and with a date specifying the time period to which the
information pertains; and
6. Ensure that the information it furnishes about accounts or
other relationships with a consumer is substantiated by the
furnisher's own records.
Guidelines Definition Approach for Paragraph B Follows:
B. Objectives. A furnisher should have written policies and
procedures reasonably designed to accomplish the following
objectives:
1. Ensure that the information it furnishes about accounts or
other relationships with a consumer is accurate. Accuracy means that
any information that a furnisher provides to a consumer reporting
agency about an account or other relationship with the consumer
reflects without error the terms of and liability for the account or
other relationship and the consumer's performance and other conduct
with respect to the account or other relationship;
2. Ensure that the information it furnishes about accounts or
other relationships with a consumer is furnished with integrity.
Integrity means that any information that a furnisher provides to a
consumer reporting agency about an account or other relationship
with the consumer is:
(i) Reported in a form and manner that is designed to minimize
the likelihood that the information, although accurate, may be
erroneously reflected in a consumer report, for example, by ensuring
that the information is:
(A) Reported with appropriate identifying information about the
consumer to whom it pertains;
(B) Reported in a standardized and clearly understandable form
and manner; and
(C) Reported with a date specifying the time period to which the
information pertains; and
(ii) Substantiated by the furnisher's own records;
3. Ensure that it conducts reasonable investigations of consumer
disputes about

[[Page 70979]]

the accuracy or integrity of information in consumer reports and
takes appropriate actions based on the outcome of such
investigations; and
4. Ensure that it updates information it furnishes as necessary
to reflect the current status of the consumer's account or other
relationship, including:
(a) Any transfer of an account (e.g., by sale or assignment for
collection) to a third party; and
(b) Any cure of the consumer's failure to abide by the terms of
the account or other relationship.

II. Accuracy and Integrity Duties of Furnishers Under the FCRA

A furnisher's policies and procedures should address compliance
with all applicable requirements imposed on the furnisher under the
FCRA, including the duties to: \1\
---------------------------------------------------------------------------

\1\ This is not a complete listing of furnisher duties relating
to accuracy and integrity. Furnishers should consult the FCRA to
determine what additional duties may apply.
---------------------------------------------------------------------------

A. Promptly notify the consumer reporting agency of the
furnisher's determination that furnished information is not complete
or accurate, for a furnisher that regularly and in the ordinary
course of business furnishes information; provide any corrections,
or any additional information, that is necessary to make the
furnished information complete and accurate; and not thereafter
furnish information that remains incomplete or inaccurate. 15 U.S.C.
1681s-2(a)(2).
B. Provide notice of a dispute by a consumer about the accuracy
or completeness of information furnished to a consumer reporting
agency. 15 U.S.C. 1681s-2(a)(3).
C. Report voluntary closure of a credit account by the consumer
in information regularly furnished for the period in which the
credit account is closed, for a furnisher that regularly and in the
ordinary course of business furnishes information about consumer
credit accounts. 15 U.S.C. 1681s-2(a)(4).
D. Notify the consumer reporting agency of the date of
delinquency on an account not later than 90 days after the furnisher
furnishes information to the consumer reporting agency regarding
action taken on the delinquent account (including placement for
collection, charge to profit or loss, or any similar action). Date
of delinquency means the month and year of the commencement of the
delinquency on the account that immediately preceded the action. 15
U.S.C. 1681s-2(a)(5).
E. Have in place reasonable procedures to respond to any
notification that the furnisher receives from a consumer reporting
agency under section 605B of the FCRA, relating to the blocking of
information resulting from identity theft and to prevent the
refurnishing of such blocked information. 15 U.S.C. 1681s-
2(a)(6)(A).
F. Not furnish to a consumer reporting agency information that
purports to relate to the consumer if the consumer submits an
identity theft report to the furnisher (at the address specified by
that furnisher for receiving such reports) stating that such
information maintained by that furnisher resulted from identity
theft. (This restriction does not apply if the furnisher
subsequently knows or is informed by the consumer that the
information is correct.) 15 U.S.C. 1681s-2(a)(6)(B).
G. After receiving a notice of dispute from a consumer reporting
agency, in a timely manner: Conduct an investigation; review all
relevant information the consumer reporting agency provides; report
the results of the investigation to the consumer reporting agency;
report incomplete or inaccurate information to all nationwide
consumer reporting agencies to which it reported the information;
and modify, delete, or permanently block incomplete or inaccurate
information or information that cannot be verified. 15 U.S.C. 1681s-
2(b).
H. Investigate direct disputes as required by Sec. 571.43 of
this part and 15 U.S.C. 1681s-2(a)(8).

III. Establishing and Implementing Policies and Procedures

In establishing and implementing its policies and procedures, a
furnisher should:
A. Identify practices or activities of the furnisher that can
compromise the accuracy and integrity of information furnished to
consumer reporting agencies, such as by:
1. Reviewing its existing practices and activities, including
the technological means and other methods it uses to furnish
information to consumer reporting agencies and the frequency and
timing of its furnishing of information, such as through an audit;
2. Reviewing historical records relating to accuracy or
integrity or to disputes, or other information relating to the
accuracy and integrity of information provided by the furnisher to
consumer reporting agencies and the types of errors, omissions, or
other problems that may have affected the accuracy and integrity of
information it has furnished about consumers to consumer reporting
agencies; and
3. Obtaining feedback from consumer reporting agencies,
consumers, the furnisher's staff, or other appropriate parties.
B. Evaluate the effectiveness of existing policies and
procedures of the furnisher regarding the accuracy and integrity of
information furnished to consumer reporting agencies; consider
whether new, additional, or different policies and procedures are
necessary; and consider whether implementation of existing policies
and procedures should be modified to enhance the accuracy and
integrity of information about consumers furnished to consumer
reporting agencies.
C. Evaluate the effectiveness of specific methods (including
technological means) the furnisher uses to provide information to
consumer reporting agencies; how those methods may affect the
accuracy and integrity of the information it provides to consumer
reporting agencies; and whether new, additional, or different
methods (including technological means) should be used to provide
information to consumer reporting agencies to enhance the accuracy
and integrity of that information.

IV. Specific Components of Policies and Procedures

A furnisher's policies and procedures should address the
following:
A. Establishing and implementing a system for furnishing
information about consumers to consumer reporting agencies that is
appropriate to the nature, size, complexity, and scope of the
furnisher's business operations.
B. Using standard data reporting formats and standard procedures
for compiling and furnishing data, where feasible, such as the
electronic transmission of information about consumers to consumer
reporting agencies.
C. Ensuring that the furnisher maintains its own records for a
reasonable period of time, not less than any applicable
recordkeeping requirement, in order to substantiate the accuracy of
any information about consumers it furnishes that is subject to a
direct dispute.
D. Establishing and implementing appropriate internal controls
regarding the accuracy and integrity of information about consumers
furnished to consumer reporting agencies, such as by implementing
standard procedures, verifying random samples, and conducting
regular reviews of information provided to consumer reporting
agencies.
E. Training staff that participates in activities related to the
furnishing of information about consumers to consumer reporting
agencies to implement the policies and procedures.
F. Providing for appropriate and effective oversight of relevant
service providers whose activities may affect the accuracy and
integrity of information about consumers furnished to consumer
reporting agencies to ensure compliance with the policies and
procedures.
G. Furnishing information about consumers to consumer reporting
agencies following mergers, portfolio acquisitions or sales, or
other acquisitions or transfers of accounts or other debts in a
manner that prevents re-aging of information, duplicative reporting,
or other problems affecting the accuracy or integrity of the
information furnished.
H. Attempting to obtain the information listed in Sec.
571.43(d) of this part from a consumer before determining that the
consumer's dispute is frivolous or irrelevant.
I. Ensuring that deletions, updates, and corrections furnished
to consumer reporting agencies are reflected in business systems to
avoid furnishing erroneous information.
J. Conducting investigations of direct disputes in a manner that
promotes the efficient resolution of such disputes.
K. Ensuring that technological and other means of communication
with consumer reporting agencies are designed to prevent duplicative
reporting of accounts, erroneous association of information with the
wrong consumer(s), and other occurrences that may compromise the
accuracy and integrity of information contained in consumer reports.
L. Providing consumer reporting agencies with sufficient
identifying information in the furnisher's possession about each
consumer about whom information is furnished to enable the consumer
reporting agency properly to identify the consumer.
M. Conducting a periodic evaluation of its own practices,
consumer reporting agency

[[Page 70980]]

practices of which the furnisher is aware, investigations of
disputed information, corrections of inaccurate information, means
of communication, and other factors that may affect the accuracy and
integrity of information furnished to consumer reporting agencies.

National Credit Union Administration

12 CFR Chapter VII

Authority and Issuance

For the reasons discussed in the joint preamble, the National
Credit Union Administration proposes to amend chapter VII of title 12
of the Code of Federal Regulations by amending 12 CFR part 717 as
follows:

PART 717--FAIR CREDIT REPORTING

1. Revise the authority citation for part 717 to read as follows:

Authority: 12 U.S.C. 1751 et seq.; 15 U.S.C. 1681a, 1681b,
1681c, 1681m, 1681s, 1681s-1, 1681t, 1681w, 6801 and 6805; Public
Law 108-159, 117 Stat. 1952.

2. Add a new subpart E to part 717 to read as follows:
Subpart E--Duties of Furnishers of Information
Sec.
717.40 Scope.
717.41 Definitions.
717.42 Reasonable policies and procedures concerning the accuracy
and integrity of furnished information.
717.43 Direct disputes.

Subpart E--Duties of Furnishers of Information

Sec. 717.40 Scope.

This subpart applies to a federal credit union that furnishes
information to a consumer reporting agency.

Sec. 717.41 Definitions.

For purposes of this subpart and Appendix E of this part, the
following definitions apply:
Regulatory Definition Approach for Defining ``Accuracy'' and
``Integrity'' Follows:
(a) Accuracy means that any information that a furnisher provides
to a consumer reporting agency about an account or other relationship
with the consumer reflects without error the terms of and liability for
the account or other relationship and the consumer's performance and
other conduct with respect to the account or other relationship.
(b) Integrity means that any information that a furnisher provides
to a consumer reporting agency about an account or other relationship
with the consumer does not omit any term, such as a credit limit or
opening date, of that account or other relationship, the absence of
which can reasonably be expected to contribute to an incorrect
evaluation by a user of a consumer report of a consumer's
creditworthiness, credit standing, credit capacity, character, general
reputation, personal characteristics, or mode of living.
(c) Furnisher means an entity other than an individual consumer
that furnishes information relating to consumers to one or more
consumer reporting agencies. An entity is not a furnisher when it
provides information to a consumer reporting agency solely to obtain a
consumer report in accordance with sections 604(a) and (f) of the FCRA.
(d) Identity theft has the same meaning as in 16 CFR 603.2(a).
(e) Direct dispute means a dispute submitted directly to a
furnisher by a consumer concerning the accuracy of any information
contained in a consumer report relating to the consumer.

Sec. 717.42 Reasonable policies and procedures concerning the
accuracy and integrity of furnished information.

(a) Policies and procedures. Each furnisher must establish and
implement reasonable written policies and procedures regarding the
accuracy and integrity of the information relating to consumers that it
furnishes to a consumer reporting agency. The policies and procedures
must be appropriate to the nature, size, complexity, and scope of each
furnisher's activities.
(b) Guidelines. Each furnisher must consider the guidelines in
Appendix E of this part in developing its policies and procedures
required by this section, and incorporate those guidelines that are
appropriate.
(c) Reviewing and updating policies and procedures. Each furnisher
must review its policies and procedures required by this section
periodically and update them as necessary to ensure their continued
effectiveness.

Sec. 717.43 Direct disputes.

(a) General rule. Except as otherwise provided in this section, a
furnisher must investigate a direct dispute if it relates to:
(1) The consumer's liability for a credit account or other debt
with the furnisher, such as direct disputes relating to whether there
is or has been identity theft or fraud against the consumer, whether
there is individual or joint liability on an account, or whether the
consumer is an authorized user of a credit account;
(2) The terms of a credit account or other debt with the furnisher,
such as direct disputes relating to the type of account, principal
balance, scheduled payment amount on an account, or the amount of the
reported credit limit on an open-end account;
(3) The consumer's performance or other conduct concerning an
account or other relationship with the furnisher, such as direct
disputes relating to the current payment status, high balance, date a
payment was made, the amount of a payment made, or the date an account
was opened or closed; or
(4) Any other information contained in a consumer report regarding
an account or other relationship with the furnisher that bears on the
consumer's creditworthiness, credit standing, credit capacity,
character, general reputation, personal characteristics, or mode of
living.
(b) Exceptions. The requirements of paragraph (a) of this section
do not apply to a furnisher if:
(1) The direct dispute relates to:
(i) The consumer's identifying information (other than a direct
dispute relating to a consumer's liability for a credit account or
other debt with the furnisher, as provided in paragraph (a)(1) of this
section) such as name(s), date of birth, Social Security number,
telephone number(s), or address(es);
(ii) The identity of past or present employers;
(iii) Inquiries or requests for a consumer report;
(iv) Information derived from public records, such as judgments,
bankruptcies, liens, and other legal matters (unless provided by a
furnisher with an account or other relationship with the consumer); or
(v) Information related to fraud alerts or active duty alerts; or
(2) The direct dispute is submitted by, is prepared on behalf of
the consumer by, or is submitted on a form supplied to the consumer by,
a credit repair organization, as defined in 15 U.S.C. 1679a(3), or an
entity that would be a credit repair organization, but for 15 U.S.C.
1679a(3)(B)(i).
(c) Direct dispute address. A furnisher is required to investigate
a direct dispute only if a consumer submits a dispute notice to the
furnisher at:
(1) The address of a furnisher provided by a furnisher and set
forth on a consumer report relating to the consumer;
(2) An address clearly and conspicuously specified by the furnisher
for submitting direct disputes that is provided to the consumer in
writing or electronically (if the consumer has agreed to the electronic
delivery of information from the furnisher); or

[[Page 70981]]

(3) Any business address of the furnisher if the furnisher has not
so specified and provided an address for submitting direct disputes
under paragraph (c)(2) of this section.
(d) Direct dispute notice contents. A dispute notice must include:
(1) The name, address, and telephone number of the consumer;
(2) Sufficient information to identify the account or other
relationship that is in dispute, such as an account number;
(3) The specific information that the consumer is disputing and an
explanation of the basis for the dispute; and
(4) All supporting documentation or other information reasonably
required by the furnisher to substantiate the basis of the dispute.
This documentation may include, for example: a copy of the consumer
report that contains the allegedly inaccurate information; a police
report; a fraud or identity theft affidavit; a court order; or account
statements.
(e) Frivolous or irrelevant disputes. (1) A furnisher is not
required to investigate a direct dispute if the furnisher has
reasonably determined that the dispute is frivolous or irrelevant. A
dispute may be frivolous or irrelevant if:
(i) The consumer did not provide sufficient information to
investigate the disputed information as required by paragraph (d) of
this section;
(ii) The direct dispute is substantially the same as a dispute
previously submitted by or on behalf of the consumer, either directly
to the furnisher or through a consumer reporting agency, with respect
to which the furnisher has already satisfied the applicable
requirements of the Act or this section; provided, however, that a
direct dispute is not substantially the same as a dispute previously
submitted if the dispute includes information listed in paragraph (d)
of this section that had not previously been provided to the furnisher;
or
(iii) The furnisher is not required to investigate the direct
dispute under this section.
(2) Notice of determination. Upon making a determination that a
dispute is frivolous or irrelevant, the furnisher must notify the
consumer of the determination not later than five business days after
making the determination by mail or, if authorized by the consumer for
that purpose, by any other means available to the furnisher.
(3) Contents of notice of determination that a dispute is frivolous
or irrelevant. A notice of determination that a dispute is frivolous or
irrelevant must include the reasons for such determination and identify
any information required to investigate the disputed information, which
notice may consist of a standardized form describing the general nature
of such information.
3. Add a new appendix E to read as follows:

Appendix E to Part 717--Interagency Guidelines Concerning the Accuracy
and Integrity of Information Furnished to Consumer Reporting Agencies

The NCUA encourages voluntary furnishing of information to
consumer reporting agencies. Section 717.42 of this part requires
each furnisher to establish and implement reasonable written
policies and procedures concerning the accuracy and integrity of the
information it furnishes to consumer reporting agencies. Under Sec.
717.42(b), the furnisher must consider the guidelines set forth
below in developing these policies and procedures. In establishing
these policies and procedures, a furnisher may include any of its
existing policies and procedures that are relevant and appropriate.

I. Nature, Scope, and Objectives of Policies and Procedures

A. Nature and Scope. Section 717.42(a) of this part requires
that a furnisher's policies and procedures be appropriate to the
nature, size, complexity, and scope of the furnisher's activities.
The furnisher's policies and procedures should reflect, for example:
1. The types of business activities in which the furnisher
engages;
2. The nature and frequency of the information the furnisher
provides to consumer reporting agencies; and
3. The technology used by the furnisher to furnish information
to consumer reporting agencies.
Regulatory Definition Approach for Paragraph B Follows:
B. Objectives. A furnisher should have written policies and
procedures reasonably designed to accomplish the following
objectives:
1. Ensure that the information it furnishes about accounts or
other relationships with a consumer:
(a) Accurately identifies the appropriate consumer;
(b) Accurately reports the terms of those accounts or other
relationships; and
(c) Accurately reports the consumer's performance and other
conduct with respect to the account or other relationship with the
consumer;
2. Ensure that the information it furnishes about accounts or
other relationships with a consumer avoids misleading a consumer
report user as to the consumer's creditworthiness, credit standing,
credit capacity, character, general reputation, personal
characteristics, or mode of living;
3. Ensure that it conducts reasonable investigations of consumer
disputes about the accuracy or integrity of information in consumer
reports and takes appropriate actions based on the outcome of such
investigations;
4. Ensure that it updates information it furnishes as necessary
to reflect the current status of the consumer's account or other
relationship, including:
(a) Any transfer of an account (e.g., by sale or assignment for
collection) to a third party; and
(b) Any cure of the consumer's failure to abide by the terms of
the account or other relationship;
5. Ensure that the information it furnishes about accounts or
other relationships with a consumer is reported in a form and manner
that is designed to minimize the likelihood that the information,
although accurate, may be erroneously reflected in a consumer
report, for example, by ensuring that the information is reported
with appropriate identifying information about the consumer to whom
it pertains, in a standardized and clearly understandable form and
manner, and with a date specifying the time period to which the
information pertains; and
6. Ensure that the information it furnishes about accounts or
other relationships with a consumer is substantiated by the
furnisher's own records.
Guidelines Definition Approach for Paragraph B Follows:
B. Objectives. A furnisher should have written policies and
procedures reasonably designed to accomplish the following
objectives:
1. Ensure that the information it furnishes about accounts or
other relationships with a consumer is accurate. Accuracy means that
any information that a furnisher provides to a consumer reporting
agency about an account or other relationship with the consumer
reflects without error the terms of and liability for the account or
other relationship and the consumer's performance and other conduct
with respect to the account or other relationship;
2. Ensure that the information it furnishes about accounts or
other relationships with a consumer is furnished with integrity.
Integrity means that any information that a furnisher provides to a
consumer reporting agency about an account or other relationship
with the consumer is:
(i) Reported in a form and manner that is designed to minimize
the likelihood that the information, although accurate, may be
erroneously reflected in a consumer report, for example, by ensuring
that the information is:
(A) Reported with appropriate identifying information about the
consumer to whom it pertains;
(B) Reported in a standardized and clearly understandable form
and manner; and
(C) Reported with a date specifying the time period to which the
information pertains; and
(ii) Substantiated by the furnisher's own records;
3. Ensure that it conducts reasonable investigations of consumer
disputes about the accuracy or integrity of information in consumer
reports and takes appropriate actions based on the outcome of such
investigations; and
4. Ensure that it updates information it furnishes as necessary
to reflect the current status of the consumer's account or other
relationship, including:

[[Page 70982]]

(a) Any transfer of an account (e.g., by sale or assignment for
collection) to a third party; and
(b) Any cure of the consumer's failure to abide by the terms of
the account or other relationship.

II. Accuracy and Integrity Duties of Furnishers Under the FCRA

A furnisher's policies and procedures should address compliance
with all applicable requirements imposed on the furnisher under the
FCRA, including the duties to: \1\
---------------------------------------------------------------------------

\1\ This is not a complete listing of furnisher duties relating
to accuracy and integrity. Furnishers should consult the FCRA to
determine what additional duties may apply.
---------------------------------------------------------------------------

A. Promptly notify the consumer reporting agency of the
furnisher's determination that furnished information is not complete
or accurate, for a furnisher that regularly and in the ordinary
course of business furnishes information; provide any corrections,
or any additional information, that is necessary to make the
furnished information complete and accurate; and not thereafter
furnish information that remains incomplete or inaccurate. 15 U.S.C.
1681s-2(a)(2).
B. Provide notice of a dispute by a consumer about the accuracy
or completeness of information furnished to a consumer reporting
agency. 15 U.S.C. 1681s-2(a)(3).
C. Report voluntary closure of a credit account by the consumer
in information regularly furnished for the period in which the
credit account is closed, for a furnisher that regularly and in the
ordinary course of business furnishes information about consumer
credit accounts. 15 U.S.C. 1681s-2(a)(4).
D. Notify the consumer reporting agency of the date of
delinquency on an account not later than 90 days after the furnisher
furnishes information to the consumer reporting agency regarding
action taken on the delinquent account (including placement for
collection, charge to profit or loss, or any similar action). Date
of delinquency means the month and year of the commencement of the
delinquency on the account that immediately preceded the action. 15
U.S.C. 1681s-2(a)(5).
E. Have in place reasonable procedures to respond to any
notification that the furnisher receives from a consumer reporting
agency under section 605B of the FCRA, relating to the blocking of
information resulting from identity theft and to prevent the
refurnishing of such blocked information. 15 U.S.C. 1681s-
2(a)(6)(A).
F. Not furnish to a consumer reporting agency information that
purports to relate to the consumer if the consumer submits an
identity theft report to the furnisher (at the address specified by
that furnisher for receiving such reports) stating that such
information maintained by that furnisher resulted from identity
theft. (This restriction does not apply if the furnisher
subsequently knows or is informed by the consumer that the
information is correct.) 15 U.S.C. 1681s-2(a)(6)(B).
G. After receiving a notice of dispute from a consumer reporting
agency, in a timely manner: Conduct an investigation; review all
relevant information the consumer reporting agency provides; report
the results of the investigation to the consumer reporting agency;
report incomplete or inaccurate information to all nationwide
consumer reporting agencies to which it reported the information;
and modify, delete, or permanently block incomplete or inaccurate
information or information that cannot be verified. 15 U.S.C. 1681s-
2(b).
H. Investigate direct disputes as required by 12 CFR 717.43 and
15 U.S.C. 1681s-2(a)(8).

III. Establishing and Implementing Policies and Procedures

In establishing and implementing its policies and procedures, a
furnisher should:
A. Identify practices or activities of the furnisher that can
compromise the accuracy and integrity of information furnished to
consumer reporting agencies, such as by:
1. Reviewing its existing practices and activities, including
the technological means and other methods it uses to furnish
information to consumer reporting agencies and the frequency and
timing of its furnishing of information, such as through an audit;
2. Reviewing historical records relating to accuracy or
integrity or to disputes, or other information relating to the
accuracy and integrity of information provided by the furnisher to
consumer reporting agencies and the types of errors, omissions, or
other problems that may have affected the accuracy and integrity of
information it has furnished about consumers to consumer reporting
agencies; and
3. Obtaining feedback from consumer reporting agencies,
consumers, the furnisher's staff, or other appropriate parties.
B. Evaluate the effectiveness of existing policies and
procedures of the furnisher regarding the accuracy and integrity of
information furnished to consumer reporting agencies; consider
whether new, additional, or different policies and procedures are
necessary; and consider whether implementation of existing policies
and procedures should be modified to enhance the accuracy and
integrity of information about consumers furnished to consumer
reporting agencies.
C. Evaluate the effectiveness of specific methods (including
technological means) the furnisher uses to provide information to
consumer reporting agencies; how those methods may affect the
accuracy and integrity of the information it provides to consumer
reporting agencies; and whether new, additional, or different
methods (including technological means) should be used to provide
information to consumer reporting agencies to enhance the accuracy
and integrity of that information.

IV. Specific Components of Policies and Procedures

A furnisher's policies and procedures should address the
following:
A. Establishing and implementing a system for furnishing
information about consumers to consumer reporting agencies that is
appropriate to the nature, size, complexity, and scope of the
furnisher's business operations.
B. Using standard data reporting formats and standard procedures
for compiling and furnishing data, where feasible, such as the
electronic transmission of information about consumers to consumer
reporting agencies.
C. Ensuring that the furnisher maintains its own records for a
reasonable period of time, not less than any applicable
recordkeeping requirement, in order to substantiate the accuracy of
any information about consumers it furnishes that is subject to a
direct dispute.
D. Establishing and implementing appropriate internal controls
regarding the accuracy and integrity of information about consumers
furnished to consumer reporting agencies, such as by implementing
standard procedures, verifying random samples, and conducting
regular reviews of information provided to consumer reporting
agencies.
E. Training staff that participates in activities related to the
furnishing of information about consumers to consumer reporting
agencies to implement the policies and procedures.
F. Providing for appropriate and effective oversight of relevant
service providers whose activities may affect the accuracy and
integrity of information about consumers furnished to consumer
reporting agencies to ensure compliance with the policies and
procedures.
G. Furnishing information about consumers to consumer reporting
agencies following mergers, portfolio acquisitions or sales, or
other acquisitions or transfers of accounts or other debts in a
manner that prevents re-aging of information, duplicative reporting,
or other problems affecting the accuracy or integrity of the
information furnished.
H. Attempting to obtain the information listed in Sec.
717.43(d) from a consumer before determining that the consumer's
dispute is frivolous or irrelevant.
I. Ensuring that deletions, updates, and corrections furnished
to consumer reporting agencies are reflected in business systems to
avoid furnishing erroneous information.
J. Conducting investigations of direct disputes in a manner that
promotes the efficient resolution of such disputes.
K. Ensuring that technological and other means of communication
with consumer reporting agencies are designed to prevent duplicative
reporting of accounts, erroneous association of information with the
wrong consumer(s), and other occurrences that may compromise the
accuracy and integrity of information contained in consumer reports.
L. Providing consumer reporting agencies with sufficient
identifying information in the furnisher's possession about each
consumer about whom information is furnished to enable the consumer
reporting agency properly to identify the consumer.
M. Conducting a periodic evaluation of its own practices,
consumer reporting agency practices of which the furnisher is aware,
investigations of disputed information, corrections of inaccurate
information, means of communication, and other factors that may
affect the accuracy and integrity of information furnished to
consumer reporting agencies.

[[Page 70983]]

Federal Trade Commission

16 CFR Chapter I

Authority and Issuance

For the reasons discussed in the joint preamble, the Federal Trade
Commission proposes to add part 660 to title 16 of the Code of Federal
Regulations as follows:

PART 660--DUTIES OF FURNISHERS OF INFORMATION TO CONSUMER REPORTING
AGENCIES

Sec.
660.1 Scope.
660.2 Definitions.
660.3 Reasonable policies and procedures concerning the accuracy and
integrity of furnisher information.
660.4 Direct disputes.
Appendix A to Part 660--Interagency Guidelines Concerning the
Accuracy and Integrity of Information Furnished to Consumer
Reporting Agencies

Authority: 15 U.S.C. 1681s-2(a)(8) and 1681s-2(e); Sec. 312,
Pub. L. 108-159, 117 Stat. 1989.

Sec. 660.1 Scope.

This part applies to furnishers of information to consumer
reporting agencies that are subject to administrative enforcement of
the FCRA by the Federal Trade Commission pursuant to 15 U.S.C.
1681s(a)(1)(referred to as ``furnishers'').

Sec. 660.2 Definitions.

For purposes of this part and Appendix A of this part, the
following definitions apply: Regulatory Definition Approach for
Defining ``Accuracy'' and ``Integrity'' Follows:
(a) Accuracy means that any information that a furnisher provides
to a consumer reporting agency about an account or other relationship
with the consumer reflects without error the terms of and liability for
the account or other relationship and the consumer's performance and
other conduct with respect to the account or other relationship.
(b) Integrity means that any information that a furnisher provides
to a consumer reporting agency about an account or other relationship
with the consumer does not omit any term, such as a credit limit or
opening date, of that account or other relationship, the absence of
which can reasonably be expected to contribute to an incorrect
evaluation by a user of a consumer report of a consumer's
creditworthiness, credit standing, credit capacity, character, general
reputation, personal characteristics, or mode of living.
(c) Furnisher means an entity other than an individual consumer
that furnishes information relating to consumers to one or more
consumer reporting agencies. An entity is not a furnisher when it
provides information to a consumer reporting agency solely to obtain a
consumer report in accordance with sections 604(a) and (f) of the FCRA.
(d) Identity theft has the same meaning as in 16 CFR 603.2(a).
(e) Direct dispute means a dispute submitted directly to a
furnisher by a consumer concerning the accuracy of any information
contained in a consumer report relating to the consumer.

Sec. 660.3 Reasonable policies and procedures concerning the accuracy
and integrity of furnished information.

(a) Policies and procedures. Each furnisher must establish and
implement reasonable written policies and procedures regarding the
accuracy and integrity of the information relating to consumers that it
furnishes to a consumer reporting agency. The policies and procedures
must be appropriate to the nature, size, complexity, and scope of each
furnisher's activities.
(b) Guidelines. Each furnisher must consider the guidelines in
Appendix A of this part in developing its policies and procedures
required by this section, and incorporate those guidelines that are
appropriate.
(c) Reviewing and updating policies and procedures. Each furnisher
must review its policies and procedures required by this section
periodically and update them as necessary to ensure their continued
effectiveness.

Sec. 660.4 Direct disputes.

(a) General rule. Except as otherwise provided in this section, a
furnisher must investigate a direct dispute if it relates to:
(1) The consumer's liability for a credit account or other debt
with the furnisher, such as direct disputes relating to whether there
is or has been identity theft or fraud against the consumer, whether
there is individual or joint liability on an account, or whether the
consumer is an authorized user of a credit account;
(2) The terms of a credit account or other debt with the furnisher,
such as direct disputes relating to the credit limit on an open-end
account, type of account, principal balance, scheduled payment amount
on an account, or the amount of the reported credit limit on an open-
end account;
(3) The consumer's performance or other conduct concerning an
account or other relationship with the furnisher, such as direct
disputes relating to the current payment status, high balance, date a
payment was made, the amount of a payment made, or the date an account
was opened or closed; or
(4) Any other information contained in a consumer report regarding
an account or other relationship with the furnisher that bears on the
consumer's creditworthiness, credit standing, credit capacity,
character, general reputation, personal characteristics, or mode of
living.
(b) Exceptions. The requirements of paragraph (a) of this section
do not apply to a furnisher if:
(1) The direct dispute relates to:
(i) The consumer's identifying information (other than a direct
dispute relating to a consumer's liability for a credit account or
other debt with the furnisher, as provided in paragraph (a)(1) of this
section) such as name(s), date of birth, Social Security number,
telephone number(s), or address(es);
(ii) The identity of past or present employers;
(iii) Inquiries or requests for a consumer report;
(iv) Information derived from public records, such as judgments,
bankruptcies, liens, and other legal matters (unless provided by a
furnisher with an account or other relationship with the consumer); or
(v) Information related to fraud alerts or active duty alerts; or
(2) The direct dispute is submitted by, is prepared on behalf of
the consumer by, or is submitted on a form supplied to the consumer by,
a credit repair organization, as defined in 15 U.S.C. 1679a(3), or an
entity that would be a credit repair organization, but for 15 U.S.C.
1679a(3)(B)(i).
(c) Direct dispute address. A furnisher is required to investigate
a direct dispute only if a consumer submits a dispute notice to the
furnisher at:
(1) The address of a furnisher provided by a furnisher and set
forth on a consumer report relating to the consumer;
(2) An address clearly and conspicuously specified by the furnisher
for submitting direct disputes that is provided to the consumer in
writing or electronically (if the consumer has agreed to the electronic
delivery of information from the furnisher); or
(3) Any business address of the furnisher if the furnisher has not
so specified and provided an address for submitting direct disputes
under paragraph (c)(2) of this section.
(d) Direct dispute notice contents. A dispute notice must include:
(1) The name, address, and telephone number of the consumer;

[[Page 70984]]

(2) Sufficient information to identify the account or other
relationship that is in dispute, such as an account number;
(3) The specific information that the consumer is disputing and an
explanation of the basis for the dispute; and
(4) All supporting documentation or other information reasonably
required by the furnisher to substantiate the basis of the dispute.
This documentation may include, for example: a copy of the consumer
report that contains the allegedly inaccurate information; a police
report; a fraud or identity theft affidavit; a court order; or account
statements.
(e) Frivolous or irrelevant disputes. (1) A furnisher is not
required to investigate a direct dispute if the furnisher has
reasonably determined that the dispute is frivolous or irrelevant. A
dispute may be frivolous or irrelevant if:
(i) The consumer did not provide sufficient information to
investigate the disputed information as required by paragraph (d) of
this section;
(ii) The direct dispute is substantially the same as a dispute
previously submitted by or on behalf of the consumer, either directly
to the furnisher or through a consumer reporting agency, with respect
to which the furnisher has already satisfied the applicable
requirements of the Act or this section; provided, however, that a
direct dispute is not substantially the same as a dispute previously
submitted if the dispute includes information listed in paragraph (d)
of this section that had not previously been provided to the furnisher;
or
(iii) The furnisher is not required to investigate the direct
dispute under this section.
(2) Notice of determination. Upon making a determination that a
dispute is frivolous or irrelevant, the furnisher must notify the
consumer of the determination not later than five business days after
making the determination, by mail or, if authorized by the consumer for
that purpose, by any other means available to the furnisher.
(3) Contents of notice of determination that a dispute is frivolous
or irrelevant. A notice of determination that a dispute is frivolous or
irrelevant must include the reasons for such determination and identify
any information required to investigate the disputed information, which
may consist of a standardized form describing the general nature of
such information.

Appendix A to Part 660--Interagency Guidelines Concerning the Accuracy
and Integrity of Information Furnished to Consumer Reporting Agencies

The Commission encourages voluntary furnishing of information to
consumer reporting agencies. Section 660.3 of this part requires
each furnisher to establish and implement reasonable written
policies and procedures concerning the accuracy and integrity of the
information it furnishes to consumer reporting agencies. Under Sec.
660.3(b) of this part, the furnisher must consider the guidelines
set forth below in developing these policies and procedures. In
establishing these policies and procedures, a furnisher may include
any of its existing policies and procedures that are relevant and
appropriate.

I. Nature, Scope, and Objectives of Policies and Procedures

A. Nature and Scope. Section 660.3(a) of this part requires that
a furnisher's policies and procedures be appropriate to the nature,
size, complexity, and scope of the furnisher's activities. The
furnisher's policies and procedures should reflect, for example:
1. The types of business activities in which the furnisher
engages;
2. The nature and frequency of the information the furnisher
provides to consumer reporting agencies; and
3. The technology used by the furnisher to furnish information
to consumer reporting agencies.
Regulatory Definition Approach for Paragraph B Follows:
B. Objectives. A furnisher should have written policies and
procedures reasonably designed to accomplish the following
objectives:
1. Ensure that the information it furnishes about accounts or
other relationships with a consumer:
(a) Accurately identifies the appropriate consumer;
(b) Accurately reports the terms of those accounts or other
relationships; and
(c) Accurately reports the consumer's performance and other
conduct with respect to the account or other relationship with the
consumer;
2. Ensure that the information it furnishes about accounts or
other relationships with a consumer avoids misleading a consumer
report user as to the consumer's creditworthiness, credit standing,
credit capacity, character, general reputation, personal
characteristics, or mode of living;
3. Ensure that it conducts reasonable investigations of consumer
disputes about the accuracy or integrity of information in consumer
reports and takes appropriate actions based on the outcome of such
investigations;
4. Ensure that it updates information it furnishes as necessary
to reflect the current status of the consumer's account or other
relationship, including:
(a) Any transfer of an account (e.g., by sale or assignment for
collection) to a third party; and
(b) Any cure of the consumer's failure to abide by the terms of
the account or other relationship;
5. Ensure that the information it furnishes about accounts or
other relationships with a consumer is reported in a form and manner
that is designed to minimize the likelihood that the information,
although accurate, may be erroneously reflected in a consumer
report, for example, by ensuring that the information is reported
with appropriate identifying information about the consumer to whom
it pertains, in a standardized and clearly understandable form and
manner, and with a date specifying the time period to which the
information pertains; and
6. Ensure that the information it furnishes about accounts or
other relationships with a consumer is substantiated by the
furnisher's own records.
Guidelines Definition Approach for Paragraph B Follows:
B. Objectives. A furnisher should have written policies and
procedures reasonably designed to accomplish the following
objectives:
1. Ensure that the information it furnishes about accounts or
other relationships with a consumer is accurate. Accuracy means that
any information that a furnisher provides to a consumer reporting
agency about an account or other relationship with the consumer
reflects without error the terms of and liability for the account or
other relationship and the consumer's performance and other conduct
with respect to the account or other relationship;
2. Ensure that the information it furnishes about accounts or
other relationships with a consumer is furnished with integrity.
Integrity means that any information that a furnisher provides to a
consumer reporting agency about an account or other relationship
with the consumer is:
(i) Reported in a form and manner that is designed to minimize
the likelihood that the information, although accurate, may be
erroneously reflected in a consumer report, for example, by ensuring
that the information is:
(A) Reported with appropriate identifying information about the
consumer to whom it pertains;
(B) Reported in a standardized and clearly understandable form
and manner; and
(C) Reported with a date specifying the time period to which the
information pertains; and
(ii) Substantiated by the furnisher's own records;
3. Ensure that it conducts reasonable investigations of consumer
disputes about the accuracy or integrity of information in consumer
reports and takes appropriate actions based on the outcome of such
investigations; and
4. Ensure that it updates information it furnishes as necessary
to reflect the current status of the consumer's account or other
relationship, including:
(a) Any transfer of an account (e.g., by sale or assignment for
collection) to a third party; and
(b) Any cure of the consumer's failure to abide by the terms of
the account or other relationship.

[[Page 70985]]

II. Accuracy and Integrity Duties of Furnishers Under the FCRA

A furnisher's policies and procedures should address compliance
with all applicable requirements imposed on the furnisher under the
FCRA, including the duties to: \1\
---------------------------------------------------------------------------

\1\ This is not a complete listing of furnisher duties relating
to accuracy and integrity. Furnishers should consult the FCRA to
determine what additional duties may apply.
---------------------------------------------------------------------------

A. Promptly notify the consumer reporting agency of the
furnisher's determination that furnished information is not complete
or accurate, for a furnisher that regularly and in the ordinary
course of business furnishes information; provide any corrections,
or any additional information, that is necessary to make the
furnished information complete and accurate; and not thereafter
furnish information that remains incomplete or inaccurate. 15 U.S.C.
1681s-2(a)(2).
B. Provide notice of a dispute by a consumer about the accuracy
or completeness of information furnished to a consumer reporting
agency. 15 U.S.C. 1681s-2(a)(3).
C. Report voluntary closure of a credit account by the consumer
in information regularly furnished for the period in which the
credit account is closed, for a furnisher that regularly and in the
ordinary course of business furnishes information about consumer
credit accounts. 15 U.S.C. 1681s-2(a)(4).
D. Notify the consumer reporting agency of the date of
delinquency on an account not later than 90 days after the furnisher
furnishes information to the consumer reporting agency regarding
action taken on the delinquent account (including placement for
collection, charge to profit or loss, or any similar action). Date
of delinquency means the month and year of the commencement of the
delinquency on the account that immediately preceded the action. 15
U.S.C. 1681s-2(a)(5).
E. Have in place reasonable procedures to respond to any
notification that the furnisher receives from a consumer reporting
agency under section 605B of the FCRA, relating to the blocking of
information resulting from identity theft and to prevent the
refurnishing of such blocked information. 15 U.S.C. 1681s-
2(a)(6)(A).
F. Not furnish to a consumer reporting agency information that
purports to relate to the consumer if the consumer submits an
identity theft report to the furnisher (at the address specified by
that furnisher for receiving such reports) stating that such
information maintained by that furnisher resulted from identity
theft. (This restriction does not apply if the furnisher
subsequently knows or is informed by the consumer that the
information is correct.) 15 U.S.C. 1681s-2(a)(6)(B).
G. After receiving a notice of dispute from a consumer reporting
agency, in a timely manner: Conduct an investigation; review all
relevant information the consumer reporting agency provides; report
the results of the investigation to the consumer reporting agency;
report incomplete or inaccurate information to all nationwide
consumer reporting agencies to which it reported the information;
and modify, delete, or permanently block incomplete or inaccurate
information or information that cannot be verified. 15 U.S.C. 1681s-
2(b).
H. Investigate direct disputes as required by section 660.4 of
this part and 15 U.S.C. 1681s-2(a)(8).

III. Establishing and Implementing Policies and Procedures

In establishing and implementing its policies and procedures, a
furnisher should:
A. Identify practices or activities of the furnisher that can
compromise the accuracy and integrity of information furnished to
consumer reporting agencies, such as by:
1. Reviewing its existing practices and activities, including
the technological means and other methods it uses to furnish
information to consumer reporting agencies and the frequency and
timing of its furnishing of information, such as through an audit;
2. Reviewing historical records relating to accuracy or
integrity or to disputes, or other information relating to the
accuracy and integrity of information provided by the furnisher to
consumer reporting agencies and the types of errors, omissions, or
other problems that may have affected the accuracy and integrity of
information it has furnished about consumers to consumer reporting
agencies; and
3. Obtaining feedback from consumer reporting agencies,
consumers, the furnisher's staff, or other appropriate parties.
B. Evaluate the effectiveness of existing policies and
procedures of the furnisher regarding the accuracy and integrity of
information furnished to consumer reporting agencies; consider
whether new, additional, or different policies and procedures are
necessary; and consider whether implementation of existing policies
and procedures should be modified to enhance the accuracy and
integrity of information about consumers furnished to consumer
reporting agencies.
C. Evaluate the effectiveness of specific methods (including
technological means) the furnisher uses to provide information to
consumer reporting agencies; how those methods may affect the
accuracy and integrity of the information it provides to consumer
reporting agencies; and whether new, additional, or different
methods (including technological means) should be used to provide
information to consumer reporting agencies to enhance the accuracy
and integrity of that information.

IV. Specific Components of Policies and Procedures

A furnisher's policies and procedures should address the
following:
A. Establishing and implementing a system for furnishing
information about consumers to consumer reporting agencies that is
appropriate to the nature, size, complexity, and scope of the
furnisher's business operations.
B. Using standard data reporting formats and standard procedures
for compiling and furnishing data, where feasible, such as the
electronic transmission of information about consumers to consumer
reporting agencies.
C. Ensuring that the furnisher maintains its own records for a
reasonable period of time, not less than any applicable
recordkeeping requirement, in order to substantiate the accuracy of
any information about consumers it furnishes that is subject to a
direct dispute.
D. Establishing and implementing appropriate internal controls
regarding the accuracy and integrity of information about consumers
furnished to consumer reporting agencies, such as by implementing
standard procedures, verifying random samples, and conducting
regular reviews of information provided to consumer reporting
agencies.
E. Training staff that participates in activities related to the
furnishing of information about consumers to consumer reporting
agencies to implement the policies and procedures.
F. Providing for appropriate and effective oversight of relevant
service providers whose activities may affect the accuracy and
integrity of information about consumers furnished to consumer
reporting agencies to ensure compliance with the policies and
procedures.
G. Furnishing information about consumers to consumer reporting
agencies following mergers, portfolio acquisitions or sales, or
other acquisitions or transfers of accounts or other debts in a
manner that prevents re-aging of information, duplicative reporting,
or other problems affecting the accuracy or integrity of the
information furnished.
H. Attempting to obtain the information listed in Sec. 660.4(d)
of this part from a consumer before determining that the consumer's
dispute is frivolous or irrelevant.
I. Ensuring that deletions, updates, and corrections furnished
to consumer reporting agencies are reflected in business systems to
avoid furnishing erroneous information.
J. Conducting investigations of direct disputes in a manner that
promotes the efficient resolution of such disputes.
K. Ensuring that technological and other means of communication
with consumer reporting agencies are designed to prevent duplicative
reporting of accounts, erroneous association of information with the
wrong consumer(s), and other occurrences that may compromise the
accuracy and integrity of information contained in consumer reports.
L. Providing consumer reporting agencies with sufficient
identifying information in the furnisher's possession about each
consumer about whom information is furnished to enable the consumer
reporting agency properly to identify the consumer.
M. Conducting a periodic evaluation of its own practices,
consumer reporting agency practices of which the furnisher is aware,
investigations of disputed information, corrections of inaccurate
information, means of communication, and other factors that may
affect the accuracy and integrity of information furnished to
consumer reporting agencies.

[[Page 70986]]

Dated: November 2, 2007.
John C. Dugan,
Comptroller of the Currency.

By order of the Board of Governors of the Federal Reserve
System, November 28th, 2007.
Jennifer J. Johnson,
Secretary of the Board.

By order of the Board of Directors.

Dated at Washington, DC, the 5th day of November, 2007.

Federal Deposit Insurance Corporation.
Valerie J. Best,
Assistant Executive Secretary.
Dated: November 2, 2007.

By the Office of Thrift Supervision.
John M. Reich,
Director.

By the National Credit Union Administration Board on November 5,
2007.
Mary Rupp,
Secretary of the Board.

By Direction of the Commission.
Donald S. Clark,
Secretary.

[FR Doc. E7-23549 Filed 12-12-07; 8:45 am]

BILLING CODE 4810-33-P