Collector - September 2016 - (Page 44)

COMPLIANCE To Delete or Not to Delete? Debt collectors sometimes ask whether it's permissible to delete information from a consumer's credit report. The short answer is: it depends on why you're deleting the information. By Andrew Pavlik T here are various reasons why debt collectors may wish to delete certain information that they previously reported to a consumer reporting agency, aside from the reported information being inaccurate, incomplete or unverifiable (in which case the furnisher must delete the information). Sometimes consumers may request deletion of unfavorable information in exchange for payment of the debt. Consumers may also repeatedly dispute debts after they have been paid in hopes that the furnisher will delete the negative item, rather than respond to the continuous disputes. It may be tempting to delete reports under these circumstances; however, there are reasons to approach such practices with caution. The Fair Credit Reporting Act and Regulation V require furnishers and CRAs 44 to delete information that is inaccurate, incomplete or unverifiable. The requirements do not specifically address the deletion of accurate information from a consumer report. However, the FCRA requires information to be reported "accurately." Some argue that information in a consumer report that is accurate and within the applicable reporting period (generally seven years for debts) should remain a part of the consumer's credit history because the deletion of the accurate information amounts to an inaccuracy, which may violate the FCRA. The deletion of accurate information also potentially weakens the accuracy and integrity of the overall credit reporting process, making it more difficult for lenders to make informed decisions when granting credit to consumers. The Consumer Financial Protection Bureau has expressed concern with the practice of furnishers simply deleting disputed information instead of conducting an investigation of the disputed information. In Compliance Bulletin 2014-04, the CFPB reminded furnishers of their obligation under the FCRA and Regulation V to investigate disputed information in a consumer report. The bulletin stated that investigations of disputes are important because they provide a critical check on the accuracy of furnished items by prompting a furnisher to reconsider information that a consumer has identified as incorrect. These investigations may help a furnisher identify problems with the general accuracy of the information that it furnishes to consumer reporting agencies. For example, the CFPB suggested that investigating disputes may help furnishers to learn of a systemic problem, thereby benefiting the consumer who raised the dispute as well as other similarly situated consumers who did not submit disputes. The deletion of accurate credit information may also violate the terms of a furnisher's agreement with a CRA. The METRO II Consumer Reporting Resource Guide, which is published by the Consumer Data Industry Association, conspicuously states: "Do not delete paid in full collection accounts." That said, there are circumstances where deletion is appropriate or even required. The Metro II Guide states the following acceptable reasons for deletion of a report: * Accounts that have been forwarded or sold to another entity. * Accounts that have been canceled or retuned to the creditor. * Accounts reported in error. * Accounts that have been confirmed as fraudulent. Additionally, the CRAs are instituting new reporting requirements that require certain medical debts to be deleted if the accounts have been paid for, or are being paid by insurance. When establishing policies for the deletion of information from consumer reports, collectors should consider applicable law, the guidance of the CFPB, furnisher agreements with CRAs and any specific polices the CRA(s) may have on the deletion of information. For more information on the CFPB's Compliance Bulletin and other information on the CFPB, association members can access ACA International's CFPB Resource Center at acainternational. org/cfpb. Andrew Pavlik is ACA International's senior compliance analyst. ACAINTERNATIONAL.ORG http://www.acainternational.org/cfpb http://www.acainternational.org/cfpb http://www.ACAINTERNATIONAL.ORG

Table of Contents for the Digital Edition of Collector - September 2016

Upfront
Industry News
Best Practices
FYI
Collection Tips
5 Ways to Get Electronic Payments Right
Making the Connection
Curious About Amicus Curiae?
Calendar
Honor Roll
Small Talk
Know the Score
What Creditors Need to Know About the TCPA
ACA Industry Advancement Support Helps Secure Victory for Collection Industry in FDCPA Case
Compliance
ACA SearchPoint
Last Word

Collector - September 2016