On October 20, 2022, the CFPB issued guidance to consumer reporting companies about their obligation to screen for and eliminate obviously false “junk data” from consumers’ credit reports. According to the CFPB, companies need to take steps to reliably detect and remove inconsistent or impossible information from consumers’ credit profiles.
From CFPB Director Rohit Chopra’s statement:
“When a credit report accuses someone of defaulting on a loan before they were born, this is nonsensical, junk data that should have never shown up in the first place. Consumer reporting companies have a clear obligation to use better procedures to screen for and eliminate conflicting information, or information that cannot be true.”
According to the Bureau, children in foster care are particularly susceptible to having incorrect or junk data in their credit reports because of a high rate of identity theft impacting that population. Bad actors take advantage of children passing through their care and use their personal information to take out loans which can hinder the victims’ progress toward financial independence.
The CFPB’s advisory opinion highlights that a consumer reporting agency that does not implement reasonable internal controls to prevent the inclusion of facially false data, including logically inconsistent information, in consumer reports it prepares is not using reasonable procedures to assure maximum possible accuracy. Consumer reporting companies must have policies and procedures to screen for and eliminate junk data. Specifically, the policies and procedures should be able to detect and remove inconsistent account information and Information that cannot be accurate. In addition, companies should be able to identify and prevent reporting of illegitimate credit transactions for a minor.
The CFPB’s release can be found here.
Read the Advisory Opinion on Fair Credit Reporting; Facially False Data here.
