The Fair Credit Reporting Act (FCRA) is a federal law that protects the rights and interests of consumers. Under the FCRA, credit reporting agencies have a responsibility to ensure that the information that they publish is accurate. The three major credit bureaus (Experian, TransUnion, and Equifax) must immediately correct any mistakes once they become aware of them. If they fail to do so, they may be legally liable for damages through an FCRA claim.
The FCRA also applies to data furnishers, including banks, credit card companies, and third-party debt collectors. They all have a duty to ensure that the consumer information they report to credit bureaus is accurate and up-to-date. At The Kim Law Firm, LLC, we handle the full range of FCRA claims. Our team wants to make sure that you understand your rights. Here, our credit report error lawyer provides answers to the most frequently asked questions (FAQs) about data furnishers and the FCRA.
Your Frequently Asked Questions About Data Furnishers and the FCRA Answered
What is the Fair Credit Reporting Act (FCRA)?
It is the most important law for credit reports. The FCRA is a comprehensive federal law that protects consumers. The goal is to ensure fairness, accuracy, and privacy in credit reporting. Along with other things, the FCRA regulates how credit information is collected, shared, and corrected. It also gives consumers the right to dispute inaccurate or incomplete information.
What is a Data Furnisher?
Data furnishers are covered by the FCRA. Broadly defined, a data furnisher is any entity that provides consumer information to credit reporting agencies. These businesses report payment history, account status, and other credit data that influence your credit score. Some of the most common examples of data furnishers include:
- Banks: It is not uncommon for commercial banks to report information about checking, savings, and loan account performance, overdrafts, and missed payments.
- Credit Card Companies: Credit card companies are data furnishers. Most credit card companies report consumer information to the three major credit bureaus on a monthly basis. Along with other things, they share monthly account balances, credit limits, and payment history for open and closed accounts.
- Other Lenders: Other lenders are also classified as data furnishers for the purposes of the FCRA. They may provide updated status about things like mortgages, auto loans, and student loans.
- Debt Collectors: Finally, third-party debt collectors are also data furnishers if they opt to report any information to any of the three credit reporting agencies. It does not matter that these entities did not make the original loan. Data collectors may report information about a delinquent account, defaults, payments and settlements, and resolutions.
Are Credit Reporting Agencies Data Furnishers under the FCRA?
No. Credit reporting agencies are not data furnishers. They are still covered by the FCRA, but they are separate entities. Experian, Equifax, and TransUnion are not considered data furnishers because they collect and compile credit data from furnishers. They do not typically provide information themselves. Still, they have legal obligations under the FCRA to ensure accuracy of the information being reported and to handle consumer disputes in the proper manner.
What are the Three Main Obligations of Data Furnishers Under the FCRA?
Data furnishers are required to comply with all applicable FCRA rules. Under federal law (16 CFR Part 660), these entities must meet the following specific duties to promote fair credit reporting:
- Provide Accurate Information: As a starting point, the foundation of FCRA protections is a consumer’s right to have only accurate information on their credit report. With that in mind, data furnishers must ensure that all information they report to credit reporting agencies is complete and correct. Along with other things, it includes account balances, payment history, and account status. They cannot knowingly or negligently report false or outdated data.
- Investigate Complaints: The reality is that nothing is perfect. The FCRA acknowledges that errors can happen on credit reports, including because of good-faith mistakes. The FCRA also grants consumers the right to raise a complaint. When a consumer disputes information appearing on their credit report, the furnisher must conduct a reasonable investigation. They are required to review relevant account records and respond promptly to the credit reporting agency that notified them of the dispute.
- Correct Errors in a Timely Manner: Finally, the FCRA requires data furnishers to correct any credit report errors that they are responsible for in a timely manner. If an error or inaccuracy is found, the furnisher must update or delete the incorrect data quickly. They must also report the correction to all credit reporting agencies that received the inaccurate information. Failure to correct errors within a reasonable period (usually 30 days) can result in legal liability under the FCRA.
Can I Sue a Data Furnisher for an FCRA Violation?
Yes, absolutely. The FCRA includes a private right of action. In other words, you have the right to file a lawsuit against a data furnisher that violates your rights under federal law. Some of the most common FCRA violations by data furnishers include:
- Failing to investigate a valid dispute;
- Reporting false information; and
- Refusing to correct known errors.
What Evidence Do I Need to Hold a Data Furnisher Liable for a Credit Report Error?
It depends. You need documentation that proves the data reported was inaccurate and that the furnisher failed to fix it after being notified. Strong evidence includes things like:
- Account statements;
- Correspondence with the furnisher;
- Dispute letters; and
- Credit reports showing the ongoing error.
Notably, it helps to keep written proof that you submitted a dispute through a credit reporting agency. If the furnisher ignored or mishandled your dispute, this strengthens your case. Remember, a credit report error claim under the FCRA largely depends on showing that the furnisher’s conduct was unreasonable or willful.
What is the Role of “Notice of Dispute” Under the FCRA?
A big one for data furnisher furnishers. Under 15 U.S.C. §1681s-2(a)(3), a data furnisher must include a “notice of dispute” when reporting information that a consumer has formally challenged. While the investigation is ongoing, the furnisher cannot continue to report the data as fully verified or undisputed. The notation alerts credit reporting agencies that the accuracy of the information is under review. Failure to include this notice can mislead potential creditors and violate both the accuracy and fairness provisions of the FCRA. You may have a claim for noncompliance.
What Damages Can I Recover in an FCRA Claim?
Consumers can recover actual damages, statutory damages, and attorney’s fees. In cases of willful noncompliance, punitive damages may also be available. Notably, you can recover statutory damages of $100 to $1,000 for willful violations even without proving financial loss.
To succeed, you must first dispute the inaccuracy with the credit reporting agency and give the furnisher a chance to correct it. If they fail to act, you should pursue your remedies. A top credit report error lawyer can help you determine the remedies that are available in your specific case.
Can a Data Furnisher Report Information Without My Permission?
Yes. Data furnishers do not need your permission to report information to the big three credit bureaus. Indeed, they do not necessarily need to give you express notice that they are reporting anything each time that they do it. With that being said, they can only report information with strict legal limits. When you open a credit account, loan, or line of credit, you typically authorize the lender to share information with credit bureaus as part of your contract. That means they can report payment history, balances, or delinquencies without asking again each time. However, they cannot share personal or financial details unrelated to the account. If a company reports information you never authorized (especially if you never opened an account), you may be dealing with identity theft or another issue. You can dispute the entry and request a fraud alert or credit freeze. A credit report error attorney can help.
What is a “Reasonable Investigation” Under the FCRA?
When a consumer brings a complaint (raises a dispute), the FCRA requires data furnishers to conduct a proper investigation. The term that is used is “reasonable investigation.” Under federal law, it is defined as the furnisher making a genuine, good-faith effort to verify the accuracy of disputed information. Along with other things, this requires reviewing all relevant account records, correspondence, and supporting documentation. To be clear, the investigation must go beyond automated verification or superficial checks.
Note: The data furnisher must respond within 30 days unless the consumer provides additional information that extends the timeframe. If the furnisher cannot confirm the accuracy, it must delete or correct the entry across all reporting agencies. In other words, once a complaint is raised by a consumer, a data furnisher must confirm the accuracy of what it reported. If it cannot do so, it must be removed. The burden of “proof” is on the data furnisher, not the consumer.
Does State Law Matter for the FCRA and Data Furnishers?
Yes. The FCRA sets national standards. With that being said, it does not completely override state law. Some states have additional consumer protection statutes that expand your rights or increase penalties for inaccurate reporting. For example, California and New York impose stricter requirements on furnishers and credit reporting agencies. However, states cannot create conflicting obligations that make compliance with the FCRA impossible. When both laws apply, the consumer generally benefits from whichever rule provides stronger protection.
Should I Review My Credit Reports on a Regular Basis?
Yes. Data furnishers must comply with the FCRA. With that being said, they do not all do so. For that reason, you should review your credit reports at least once a year. It is best to check the report from each of the major credit bureaus. You can request a free copy from each major credit bureau (Experian, Equifax, and TransUnion) every 12 months through AnnualCreditReport.com. Notably, many consumers check one bureau every four months to monitor throughout the year. If you plan to apply for a loan or mortgage, you should review all reports in advance to correct any issues.
When I Close an Account, Does a Data Furnisher Have to Remove All Negative Information?
No. That is not a requirement of the FCRA. Indeed, closing an account does not erase negative history already reported to credit bureaus. Late payments, charge-offs, or defaults remain for up to seven years. However, once the account is closed and paid, it will eventually be marked as “closed in good standing” after the reporting period ends. A data furnisher has not violated the law as long as it reports accurate, up-to-date information.
Why Trust Our FCRA Lawyer for a Claim Against a Data Furnisher
Consumers have important legal rights under the FCRA. If your rights under the law were violated by a data furnisher (credit card company, debt collector, etc), it is imperative that you know how to protect your financial interests. An error on your credit report can cause you serious harm. Richard H. Kim is a consumer rights advocate with extensive experience taking on challenging FCRA cases. Attorney Kim holds data furnishers accountable for violations of federal law. We are proactive, and we invest time and resources into each and every case that we take on. Your initial consultation with our top-rated credit report error lawyer is fully confidential and without any additional obligations.
Speak to Our Credit Report Error Attorney Today
At The Kim Law Firm, LLC, our credit report error lawyer is standing by, ready to protect your rights and your interests. If you have any questions about bringing a claim against a data furnisher, we are here as a legal resource. Call us today or contact us online for your completely confidential, no obligation initial consultation. We handle FCRA claims for consumers nationwide. It is our mission to fight for justice and the best possible outcome for clients.
