Furnishers' Compliance Obligations for Consumer Credit Information Under the FCRA and ECOA
By: Carly Souther
Banks and credit unions that provide information to Credit Reporting Agencies (CRAs) must implement effective policies and procedures to ensure compliance with the Fair Credit Reporting Act (FCRA) and the Equal Credit Opportunity Act (ECOA). One important policy your financial institution must establish is the periodic testing of your reporting systems to verify complying with the requirements of the FCRA and ECOA.
Creditors find consumer reports and credit scores invaluable when: (1) evaluating credit applications, (2) establishing terms and conditions for accounts, and (3) reviewing existing accounts.
Congress created consumer protection laws for the information that furnishers provide to national consumer reporting agencies (NCRAs) because that information can have major consequences for consumers.
The Fair Credit Reporting Act (FCRA) and the Equal Credit Opportunity Act (ECOA) are the two primary consumer protection laws that your financial institution must follow when furnishing information to NCRAs.
Creditors must follow three obligations under the ECOA, as implemented by Regulation B (Section 1002.10, 12 C.F.R. Part 1002).
- 1. Both Spouses. An account must reflect both spouses' participation in these circumstances: (i) New Accounts. If the spouse is an authorized user or is liable on the account (except as a guarantor, surety, endorses, etc.); and, (2) Existing Accounts. If one spouse makes a written request to reflect both spouses' participation, this designation must be made within 90 days of receipt.
- 2. Enable NCRAs to Provide Access to Each Spouse. If an account reflects both spouses' participation, creditors must furnish this information to the NCRAs in a manner that enables the NCRAs to provide access to this information in the name of each spouse.
- 3. Creditor Must Furnish Info to Requesting Spouse. If an account reflects both spouses' participation, then the creditor must furnish information in the name of the spouse who requests such information. For example, if an inquiry concerns an account on which husbands Jack and John Smith both participate, and the inquiry specifically is about Jack, the creditor must provide the information in Jack's name.
These requirements only apply to consumer credit and only to creditors if they choose to furnish information to the NCRAs (because furnishing such information is not required). Likewise, creditors are not required to distinguish whether a spouse is an authorized user or a contractually liable party. See Official Staff Commentary to §1002.10.
Creditors must comply with the compliance obligations created under §623 of the FCRA. This section requires that creditors (1) do not furnish inaccurate information to NCRAs, and (2) investigate a consumer's dispute of the accuracy or completeness of information after the creditor receives notice from a NCRA.
More information on the affirmative duties under the FCRA will be outlined in a follow-up post.
COO & General Counsel