Today's Trends in Credit Regulation

Is Your Credit Reporting House in Order, or Will it Fall Like a House of Cards?
By Eric L. Johnson

I'm a huge fan of the Netflix series House of Cards, and I must admit that I binge-watched Season 2. It was recently announced that Season 3 is coming back in February, and I couldn't be more excited. If you haven't seen the show, it centers on Frank Underwood (played by Kevin Spacey), a Democrat from South Carolina who, after being passed over for appointment as secretary of state, initiates an elaborate plan to propel himself into the presidency without a single vote. The series is primarily about manipulation, power, and how doing something bad is justifiable provided it's for the greater good. Frank has some great one-liners, too, that he dryly rolls out in his Southern accent - such as, "Let's see if he stays with the herd or joins the pack," "You will be cleaved from the herd and left to die in the wilderness," and "That's how you devour a whale. One bite at a time."

Frank Underwood's voice and words of wisdom were still bouncing around in my brain when I recently attended a Consumer Financial Protection Bureau field hearing in Oklahoma City on medical debt collection. The CFPB took the opportunity to discuss the release of its report that "describes characteristics of the medical and non-medical collections tradelines on consumers' credit reports and the processes by which they appear and disappear."

As in House of Cards, where you've got to pay close attention to see strings being pulled that you didn't even know were there, you must pay close attention prior to and at a CFPB field hearing. At the hearing I attended, I learned that there are strings being pulled on other entities that will greatly affect the auto finance industry: newly required accuracy reports by the consumer reporting agencies.

In its medical debt collections press release, the CFPB devoted only a short paragraph to announce that it will require "major credit reporting companies to provide regular accuracy reports to the Bureau as part of ongoing examinations." The accuracy reports are intended to highlight key risk areas for consumers, including disputes filed with the CRAs. In addition, Director Cordray's prepared remarks only briefly mentioned the new reporting requirement. The invited speakers at the field hearing didn't discuss the new requirement at all, and the brief comments from the audience didn't address the reporting requirement either. Everyone was so focused on the medical debt collection issues and the new CFPB report that they missed the tight new strings the CFPB will be pulling on the CRAs to serve up bad actors' heads on a silver platter.

The accuracy report that the CRAs are required to complete has been labeled by the CFPB: "Consumer Reporting Agency Data Request." A sample accuracy report is available on the CFPB's website. The information requested for each relevant reporting period includes:

  • names of the 25 furnishers with the largest number of consumer disputes, the number of disputes received by the CRA for each such furnisher, and the number of tradelines actively reported;
  • names of furnisher industries (e.g., bank cards, student loans, collection/debt buyers, auto finance), and the number of disputes received by the CRA about furnishers in each industry;
  • names of the 10 furnishers in each industry with the largest number of consumer disputes;
  • information about the outcome of disputes (e.g., data modified, information verified, data deleted, tradelines removed); and
  • information about collection account disputes, including the total number of such disputes and the percentage of collection disputes by portfolio type (e.g., medical, credit card, retail, telecom).

The CFPB also expects the CRAs to do more than just complete and submit the new accuracy report form. In its press release, the CFPB states that "[i]f a credit reporting company continuously experiences an outsized number of consumer disputes about information from a particular furnisher, the CFPB expects the credit reporting agency to investigate, identify if there is a problem, and take appropriate action." Among the actions taken may be to decline to accept information from the "troubled" furnisher when that step is justified.

Director Cordray briefly explained in his prepared remarks that access to the required reporting information on a regular basis will "help us prioritize our work, and it will help us protect consumers even more effectively in the field." You know what that means - if the CFPB receives an accuracy report indicating that a furnisher has an outsized rate of consumer disputes compared to its peers in a particular industry, the Bureau will do something about it. How does a shiny new Civil Investigative Demand or enforcement action sound? I can easily hear Director Cordray, in his best Frank Underwood droll, saying, "You will be cleaved from the herd and left to die in the wilderness."

So, do you have your credit reporting and furnishing house in order, or will it fall like a house of cards?

Eric L. Johnson is a partner in the Oklahoma office of Hudson Cook, LLP. Eric can be reached at 405-602-3812 or by email at

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