FTC Staff Opinion Letter: Fair Credit Reporting Act Sections 623(a)(3) and 623(a)(5)

The Fair Credit Reporting Act (FCRA) was enacted into law in 1970 by President Richard Nixon. The law is designed to promote the accuracy, fairness, and privacy of consumer information contained in the files of consumer reporting agencies. Most importantly, the intention of the act is to protect consumers from the willful and/or negligent inclusion of inaccurate information in their credit reports.

Two sections in particular relate to the obligation furnishers of credit information to provide important notices to the consumer reporting agency when supplying credit reports. In section 623 of the FCRA, the law bestows upon these furnishers a duty to provide notice of dispute and a duty to provide notice of delinquency of accounts. Any willful or negligent failure to satisfy these duties exposes furnisher of credit information to various civil liabilities (See. FCRA §§616-617)

Duty to Provide Notice of Dispute

Roughly 23% of consumers find inaccurate information on their credit reports. Identifying and disputing any discrepancies in your report is the first step to get your credit back on track. A common question for consumers disputing the validity of the furnisher’s report, is whether the furnisher of credit information can still send the credit report to the requesting consumer reporting agency.

Section 623 (a)(3) of the FCRA states that “if the completeness or accuracy of any information furnished by any person to any consumer reporting agency is disputed to such person by a consumer, the person may not furnish the information to any consumer reporting agency without notice that such information is disputed by the consumer.” Therefore, a furnisher can still provide a consumers credit information that is in dispute, but it must clearly state to the credit reporting agency that the information provided is being disputed.

While a notice of dispute is necessary if the furnisher decides to provide the disputed report, the statute is silent on whether the furnisher may cease to report information altogether while it is investigating the dispute. The Federal Trade Commission staff states that a furnisher that temporarily ceases to report disputed information while it investigates the matter, and then either (1) corrects the information if its investigation results in agreement with the consumer or (2) reports the item as disputed by the consumer where that is the result of the investigation, would comply with Section 623(a).

Duty to Provide Notice of Delinquency of Accounts

In order for there to be a uniform date by which all consumer reporting agencies would compute the seven-year reporting period for adverse items of information, Congress included section 623 (a)(5) with the intent that the seven-year reporting period begin with the commencement of the delinquency rather than any other date. That section of the FCRA states that “a person who furnishes information to a consumer reporting agency regarding a delinquent account being placed for collection, charged to profit or loss, or subjected to any similar action shall . . . notify the agency of the date of delinquency on the account, which shall be the month and year of the commencement of the delinquency on the account that immediately preceded the action.”

A common concern for furnishers about reporting delinquency dates arises when an account has been delinquent for several payment periods prior to being placed for collection. The provision is clear that furnishers must provide to consumer reporting agencies the month and year of the commencement of the delinquency that immediately preceded placement for collection, charge to profit and loss, or similar action. Thus, there is no allowance for the use of an alternate, later date. Use of the “paid-to-date” as that term is used in an accounting system is therefore, not acceptable.

Incorrect information on your credit report can hinder consumers from obtaining everything from a home to a job. To ensure that your credit report remains private and accurate, the FCRA provides caveats that information furnishers must follow. Learn more about the FCRA and how to dispute claims through FindLaw.