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Dreher Tomkies LLP
Attorneys at Law
2750 Huntington Center
41 South High Street
Columbus, Ohio 43215
Telephone: 614-628-8000
Fax: 614-628-1600

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Several federal agencies, including the Office of the Comptroller of the Currency, the Federal Reserve Board, the Federal Deposit Insurance Corporation, the Office of Thrift Supervision and the Federal Trade Commission (FTC), have issued proposed rules and guidelines implementing Section 312 of the Fair and Accurate Credit Transactions Act of 2003 (FACTA), which generally requires new procedures to enhance the accuracy and integrity of information furnished to consumer reporting agencies (CRAs) and creates a new right for consumers to dispute inaccurate credit report information directly with the furnisher of the information. An advance notice of proposed rulemaking was issued in March 2006. See 71 Fed. Reg. 14419 (Mar. 22, 2006).

Accuracy and Integrity Regulations and Guidelines

FACTA Section 312(a) amends the Fair Credit Reporting Act (FCRA) to require the federal banking agencies and FTC in coordination to (i) establish, maintain and update guidelines for use by furnishers regarding the accuracy and integrity of the information furnished to CRAs and (ii) prescribe regulations requiring furnishers to establish reasonable policies and procedures for implementing the guidelines. The proposed regulations, which contain some specific objectives and steps a furnisher must take to implement policies and procedures, generally reflect a flexible, risk-based approach similar to the approach taken in the recently issued FACTA Red Flag regulations and guidelines.

Some provisions of the regulations are undetermined as yet. For example, the agencies are proposing for comment two alternative approaches (the “Regulatory Definition Approach” and the “Guidelines Definition Approach”) to defining the key terms “accuracy” and “integrity.” As the names suggest, the definitions would be in the regulations under one approach and in the guidelines in the other. The two approaches affect the substantive provisions of the regulations and guidelines as well.

Direct Dispute Regulations

FACTA § 312(c) amends the FCRA to require the agencies to prescribe regulations identifying circumstances under which a furnisher will be required to reinvestigate a dispute concerning the accuracy of information contained in a consumer report based on a direct request of a consumer. 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 a furnisher to a CRA, including disputes relating to:

  • A consumer’s liability for a credit account or other debt with the furnisher (e.g., disputes relating to identity theft or fraud, individual or joint liability or authorized users);
  • The terms of a credit account or other debt with the furnisher (e.g., disputes relating to the type of account, principal balance, scheduled payment amount or credit limit);
  • The consumer’s performance or other conduct concerning a credit account or other debt with the furnisher (e.g., disputes relating to payment status, high balance, payment dates or amounts or account opening or closing dates); or
  • Any other information in a consumer report 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.

Proposed exceptions from the investigation requirement include (i) disputes submitted or prepared by credit repair organizations, (ii) frivolous or irrelevant disputes and (iii) disputes relating to a consumer’s identifying information, the identity of past or present employers, inquiries or requests for a consumer report information from public records (unless provided by a furnisher having a relationship with the consumer) and information related to fraud alerts or active duty alerts.

The proposed regulations also (i) clarify how a furnisher’s direct dispute address is to be specified and communicated to consumers and (ii) prescribe the contents of dispute notices. The agencies invite comment on the proposed rules and guidelines. Comments must be submitted by 60 days after the date of publication in the Federal Register, which is expected shortly.

The only FACTA rules that have not been proposed yet are the risk-based pricing notice rules under Section 311.

  • Judy Scheiderer