What is 15 U.S. Code § 1681s–2?

15 U.S. Code 1681s–2 is a pivotal section within the Fair Credit Reporting Act (FCRA) that defines the responsibilities of entities that provide consumer information to credit reporting agencies. This code aims to ensure the accuracy and integrity of data used in credit reports, safeguarding consumers from the adverse effects of erroneous information.

Understanding the Core Provision

At its heart, 15 U.S. Code 1681s–2 mandates that a person shall not furnish any information relating to a consumer to any consumer reporting agency if the person knows or has reasonable cause to believe that the information is inaccurate. This fundamental principle places a significant burden on data furnishers to maintain accurate records and to exercise due diligence before reporting consumer data.

This section is divided into two main parts:

• 1681s–2(a): General responsibilities of furnishers regarding the accuracy and integrity of furnished information.
• 1681s–2(b): Responsibilities of furnishers upon receiving a notice of dispute from a consumer reporting agency.

Who are "Furnishers of Information"?

"Furnishers of information" are any entities that supply data about consumers to credit reporting agencies. These typically include, but are not limited to:

• Banks and Credit Unions: Reporting loan accounts, checking, and savings account activity.
• Credit Card Companies: Reporting payment history, balances, and credit limits.
• Auto Lenders and Mortgage Companies: Reporting loan repayment status.
• Retailers Offering Store Credit: Reporting account activity.
• Collection Agencies: Reporting delinquent debts.
• Landlords: (In some cases) reporting rental payment history.
• Utility Companies and Cell Phone Providers: Reporting payment history, especially for delinquent accounts.

Key Responsibilities Under 15 U.S. Code 1681s–2

Furnishers have several critical responsibilities to ensure data accuracy and respond to disputes:

1. Accuracy Before Furnishing:

   • They must establish and implement reasonable policies and procedures regarding the accuracy and integrity of information furnished.
   • They are prohibited from providing information they know or have reasonable cause to believe is inaccurate. This includes investigating and correcting errors proactively.

2. Responding to Consumer Disputes (via CRAs):

   • When a consumer disputes an item on their credit report directly with a consumer reporting agency (CRA), the CRA then forwards this dispute to the furnisher.
   • Upon receiving a dispute, the furnisher must:
     • Conduct an investigation into the disputed information.
     • Review all relevant information provided by the CRA.
     • Report the results of the investigation to the CRA.
     • If the information is found to be inaccurate, incomplete, or unverifiable, promptly modify, delete, or block the reporting of that information.

3. Notice of Closed Accounts and Delinquencies:

   • Furnishers must notify consumer reporting agencies when a consumer's account is voluntarily closed by the consumer.
   • They must also report the month and year of the commencement of delinquency for any charged-off or placed-for-collection accounts.

Importance and Consumer Impact

15 U.S. Code 1681s–2 is vital for several reasons:

• Credit Report Accuracy: It is a cornerstone for ensuring that the information on consumer credit reports is fair and accurate. Inaccurate information can significantly lower credit scores, making it difficult for consumers to secure loans, mortgages, apartments, or even employment.
• Consumer Protection: It provides consumers with a powerful mechanism to challenge incorrect information and hold furnishers accountable for the data they report.
• Fairness in Lending: By promoting accurate reporting, it helps ensure that lenders make informed decisions based on reliable data, fostering a more equitable financial system.

Practical Implications and Examples

Understanding this code can empower consumers and guide furnishers:

• Example 1: Incorrect Late Payment Reporting

  • A consumer pays their credit card bill on time, but due to a processing error, the credit card company (furnisher) reports a 30-day late payment to the credit bureaus.
  • Under 15 U.S. Code 1681s–2(a), the credit card company should have systems in place to prevent such inaccuracies.
  • If the consumer disputes this through a credit bureau, 1681s–2(b) obligates the credit card company to investigate, correct the error, and notify the bureaus.

• Example 2: Paid Account Not Updated

  • A consumer pays off a loan in full, but the lender (furnisher) continues to report an outstanding balance.
  • The furnisher is in violation of the accuracy requirements. When the consumer disputes this, the furnisher must update the balance to zero and reflect the account as paid.

For more detailed information on this regulation, you can refer to the official text: 15 U.S. Code 1681s–2 - Responsibilities of furnishers of information to consumer reporting agencies.