Advisory Opinion to Harvey (12-23-97)

December 23, 1997

Jack Harvey, III
Regulatory Analyst
ALLTEL Information Services
Financial Services Division
4001 Rodney Parham Road
Little Rock, AR 72212-2496

Re: Sections 623(a)(3) and 623(a)(5) of the Fair Credit Reporting Act

Dear Mr. Harvey:

This is in response to your letter dated September 4, 1997 concerning the responsibilities of furnishers of information to consumer reporting agencies.

First, you ask whether a furnisher of information may cease reporting information disputed by a consumer until the furnisher and consumer have resolved the dispute. You note that ALLTEL believes it best to cease reporting disputed information until a resolution of the dispute is reached in order to be fair to the consumer and to supply the most accurate information for use by others in making business decisions concerning that consumer.

Section 623(a)(3) of the Fair Credit Reporting Act ("FCRA") concerns the reporting of information to consumer reporting agencies once the consumer has notified the furnisher that information is disputed. That section states that when a consumer disputes the completeness or accuracy of any information furnished to a consumer reporting agency, the information in question may not then be furnished without notice that it is disputed by the consumer. That provision addresses the furnisher's obligation only when the furnisher continues to report disputed information. The statute is silent on the matter of the furnisher ceasing to report information while it is investigating the dispute. It is thus the opinion of the Commission staff 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).

Second, you ask for clarification of the requirements concerning the reporting of delinquent accounts, specifically the requirement that the furnisher report the date of the commencement of the delinquency that immediately precedes a collection action, charge to profit or loss or other similar action. You note that compliance with this provision presents problems for data processing systems, particularly where an account has been delinquent for several payment periods prior to being placed for collection or similar action. Further, you note that it is your understanding that an alternate date, such as the due date or paid-to date at the time of the collection activity, would be sufficient for compliance purposes. I understand from my discussion with you that you define the "paid-to date" as the due date of thelast paid periodic installment.

Section 623(a)(5) of the FCRA concerns the duty of furnishers to provide a notice of the delinquency date of accounts to consumer reporting agencies. This section provides that persons who furnish "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 month and year of the commencement of the delinquency that immediately preceded the action." 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, under the plain language of the statute there is no allowance for the use of an alternate, later date; you must use the statutory date for reporting. Use of the "paid-to-date" as that term is used in your accounting system is not acceptable.(1)

The legislative history indicates that Congress included the requirement of Section 623(a)(5) so that there would be a uniform date certain by which all consumer reporting agencies would compute the seven-year reporting period for adverse items of information. It was the intent that the seven year reporting period begin with the commencement of the delinquency rather than any other date.(2)

The views set forth in this letter are the views of the staff and are not binding on the Commission.

Yours truly,

Cynthia S. Lamb

Endnotes:

1. On the other hand, we would not challenge a decision, driven by administrative convenience, to use a date certain that was always earlier than the commencement of the delinquency, as there would be no consumer injury resulting.

2. H.R. Rep. No. 103-486, 103rd Cong., 2nd Sess. 35, 51 (1994); S. Rep. No. 103-209, 103rd Cong., 1st Sess. 15, 25 (1993); H.R. Rep. No. 102-692, 102nd Cong., 2nd Sess. 28, 71 (1992).