topic Re: Direct Dispute Process is now law in General Credit Topics

Direct Dispute Process is now law

RobertEG — Mon, 28 Jun 2010 06:49:43 GMT

I would just like to remind all of those who are considering disputes of accuracy of information in their credit reports of the major change in the dispute process that legally take effect on 7/1/2010.

Up until now, the arcane rules of FCRA 611(a) required we consumers, even though our dispute was with the one who posted information to our credit files, to first file our disputes with the CRAs, who would then use their stupid E-Oscar process, and forward what they chose to consider as “relevant information” (FCRA 611(a)(2)) to the creditor, then for the creditor to report back to the CRA, and then for the CRA, who was never even a party to the disputed issues, to render their decision. Kinda stupid and cumbersome, to say the least.

Congress recognized, more than a decade ago, the stupidity of this procedure.

They set forth what is called a “direct dispute” procedure that enables the consumer to dispute directly with the party that posted to their credit report. That was enacted as FCRA 623(a)(8).

But it had a major hitch, as a legislative concession to the creditor lobby.

It required, before the direct dispute rights was made law, that all interested parties be given the opportunity to first express their concerns, support, or objections.

It would only become law upon publication of final rules published by the major federal banking authorities.

So, proposed rules were published at

70944 Federal Register / Vol. 72, No. 239 / Thursday, December 13, 2007 / Proposed Rules. Comments and opinions received……..

It then took over a year and a half for final rules to be published.

They were finally published in the Federal Register as:

31484 Federal Register / Vol. 74, No. 125 / Wednesday, July 1, 2009 / Rules and Regulations

This fully enacts the provisions of FCRA 623 (a)(8), as of the state effective date of 7/1/2010. It now gives we consumers the right to directly dispute with the provider of disputed information, be they an OC or debt collector, without having to go through the arcane intermediary of a CRA.

Re: Direct Dispute Process is now law

Anonymous — Mon, 28 Jun 2010 13:29:55 GMT

Interesting. Thanks for the update.

Re: Direct Dispute Process is now law

ScarletFever — Tue, 29 Jun 2010 00:56:05 GMT

Robert: What if CRA is reporting wrong out of incompetency? How do we dispute? Will CRA now defer all inquiries to the OC?

Re: Direct Dispute Process is now law

RobertEG — Tue, 29 Jun 2010 01:32:55 GMT

The new rules do not eliminate the dispute process under FCRA 611(a).

You can dspute through the CRA, or directly with the party who reported the information.

Re: Direct Dispute Process is now law

m3v8 — Tue, 29 Jun 2010 02:52:25 GMT

This is good news, thanks for posting... I would never know otherwise. Let the disputes begin!

Re: Direct Dispute Process is now law

Anonymous — Tue, 29 Jun 2010 04:31:46 GMT

So, having said that is there going to be differences on paper trails and procedures?

Re: Direct Dispute Process is now law

Anonymous — Tue, 29 Jun 2010 04:34:31 GMT

This can certainly expedite the time on the overall process. Any pertinent info would be appreciated?!

Re: Direct Dispute Process is now law

Anonymous — Tue, 29 Jun 2010 04:42:22 GMT

Direct Disputes

Section 623(a)(8) of the FCRA directs

the Agencies jointly to prescribe

regulations that identify the

circumstances under which a furnisher

is required to reinvestigate a dispute

concerning the accuracy of information

contained in a consumer report on the

consumer, based on a direct request by

the consumer. In prescribing the direct

dispute regulations, section 623(a)(8)

directs the Agencies to weigh the

following specific factors:

• The benefits to consumers and the

costs to furnishers and the credit

reporting system;

• The impact on the overall accuracy

and integrity of consumer reports of any

direct dispute requirements;

• Whether direct contact by the

consumer with the furnisher would

likely result in the most expeditious

resolution of any dispute; and

• The potential impact on the credit

reporting process if credit repair

organizations are able to circumvent the

provisions in subparagraph G of section

623(a)(8), which generally states that the

direct dispute rules shall not apply

when credit repair organizations

provide notices of dispute on behalf of consumers.

Re: Direct Dispute Process is now law

RobertEG — Tue, 29 Jun 2010 05:49:42 GMT

Hugh, the implementing language of FCRA 623(a)(8) that you cite is only for the prelimimary process of a decade ago that lauuched the long and tortorous process that has now provided consumers with statutory, direct dispute rights. The final enactment of rule making, published in the Federal Register. The new direct dispute process. FCRA 623(A)(8) does NOT include, by intention of Congress, any details of its provisions. Congress left it to the rulemaking authority of the federal banking institutions to enact the implementing provisions of this law.

Those are now published at 31484 Federal Register / Vol. 74, No. 125 / Wednesday, July 1, 2009 / Rules and Regulations

FCRA 623(a)(8) only set forth guidelines to be used in the publicatiion of final rules, not the rules.

What is now published as the new direct dispute process, at 31484 Federal Register / Vol. 74, No. 125 / Wednesday, July 1, 2009 / Rules and Regulations, has the full force and effect of federal statute. It is now an integral part of the FCRA, absent any subsequent federal court ruling that any parts thereof are in conflict with other federal statutes. That is not the case.

Re: Direct Dispute Process is now law

Anonymous — Tue, 29 Jun 2010 05:50:07 GMT

Thanks Robert. I'll check that out.

I did find this:

http://www.bankersonline.com/regs/222/e222.html

Re: Direct Dispute Process is now law

RobertEG — Tue, 29 Jun 2010 06:34:29 GMT

Procedures are basically the same.

The convoluted dispute process through the CRA required multiple steps. But both requrie response back to the consumer within 30-days of dispute.

The biggest complaint I have with the current dispute process under FCRA 611(a), which requries you to dispute first with the CRA, who would then be an intermediary in the dispute process, is how the CRAs implemented this stupid process.

If you just read the law, it looks great. If you dispute through a CRA, they are required under FCRA 611(a)(2)(B) to promptly provide "all relevant information regarding the dispute that is received from the by the agency" to the creditor. But they dont. They decide what is "relevant", or not, and then typically use their automated dispute referall process, called "E-Oscar," to then digest your dispute to a four digit code. Dispute resoluton is thus. more commom than not, a santitized consideration of your dispute.

With the ability to now do a direct dispute, the E-Oscar sanitation screen goes away.

I dont know how it will play out, but you can bet your booties that the creditors have had many board room meetings.

If you really want a legal; consumer perspective on how the reporting system works, I suggest:

First Google on Leonard A. Bennet, then zero in on his testimony before the House on 6/19/2007.

The best understanding of how credit reporting reall works that you can find.

Re: Direct Dispute Process is now law

Anonymous — Tue, 29 Jun 2010 06:35:55 GMT

I hear ya.

I found a website with Bankers and I cant believe I didn't think of this, but they, the bankers treat us with "policies." And after reading how they treat customers I now know why GW letters and such are inconsistent , for example; or the actual dispute process. They do it one time, then they don't or vice a versa...no consistency.

I'm curious as to how this plays out...

Re: Direct Dispute Process is now law

ScarletFever — Tue, 29 Jun 2010 12:08:11 GMT

I'm down with anything that rids us of the damn E-Oscar process, and automated responses that don't do the work or due diligence...Hopefully, CRA's and OC's will actually have to address specific concerns and do something about them.

Re: Direct Dispute Process is now law

Anonymous — Tue, 29 Jun 2010 17:38:18 GMT

How will this affect the HIPAA process? I have two medical bills that I want removed from my credit report. Both are small and I can pay but I want them removed. Do I not have to dispute with the CRAs first now? Thanks for any info and help.

Re: Direct Dispute Process is now law

RobertEG — Thu, 01 Jul 2010 00:54:47 GMT

After really reading the implementing rules for the new Direct Dispute process under FCRA 623(a)(8), that go into effect Thursday, July 1st, I think that it is healthy breeze of fresh air that may bring a lot, if not all, of the CRA abuses of the current process of having to first dispute through the CRA, then turn you dispute from substance to gibberish through their E-Oscar dispute process, and then get incomplete decision on dispute.

Without extensive comment, I post the final rule, 12 CFR 222.43, which has the affect of law, that governs the direct dispute process. If you are at all familiar with the current dispute process under FCRA 611(a), you will see two main changes.

The first is the extended depth that these rules go into, which are not a part of the current FCRA dispute process. It specifies what is and is not disputable.

The only downside is that the direct dispute process puts a very high burden on the consumer, when making a direct dispute, to comply with the requirements of 12 CFR 222.43(d) (2) and (3) to supply…. “the specific information that the consumer is disputing and an explanation of the basis for the dispute; and all supporting documentation or other information reasonably required by the furnisher to substantiate the basis of the dispute”.

I predict, in the next few months, a whole new forum on the Direct Dispute process. What in the world is "all supporting documentation or other information reasonably required?' YOu know the creditors are gearing up to dismiss direct disputes on that basis, but I leave it to your reading to see how much improved this process is over the current dispute process through the CRAs, and E.Oscar.

(If you are not familiar with the FCRA lingo, a "furnisher of information" is the credtior/debt collectior who reported to the CRA the informtion that led to the CRA posting that is in your CR. It is NOT the CRA)

Happy reading!

12 CFR § 222.43 Direct disputes.

(a) General rule. Except as otherwise provided in this section, a furnisher must conduct a reasonable investigation of a direct dispute if it relates to:

(1) The consumer’s liability for a credit account or other debt with the furnisher, such as direct disputes relating to whether there is or has been identity theft or fraud against the consumer, whether there is individual or joint liability on an account, or whether the consumer is an authorized user of a credit account;

(2) The terms of a credit account or other debt with the furnisher, such as direct disputes relating to the type of account, principal balance, scheduled payment amount on an account, or the amount of the credit limit on an openend account;

(3) The consumer’s performance or other conduct concerning an account or other relationship with the furnisher, such as direct disputes relating to the current payment status, high balance, date a payment was made, the amount of a payment made, or the date an account was opened or closed; or

(4) Any other information contained in a consumer report regarding an account or other relationship with the furnisher that bears on the consumer’s creditworthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living.

(b) Exceptions. The requirements of paragraph (a) of this section do not apply to a furnisher if:

(1) The direct dispute relates to:

(i) The consumer’s identifying information (other than a direct dispute relating to a consumer’s liability for a credit account or other debt with the furnisher, as provided in paragraph (a)(1) of this section) such as name(s), date of birth, Social Security number, telephone number(s), or address(es);

(ii) The identity of past or present employers;

(iii) Inquiries or requests for a consumer report;

(iv) Information derived from public records, such as judgments, bankruptcies, liens, and other legal matters (unless provided by a furnisher with an account or other relationship

with the consumer);

(v) Information related to fraud alerts or active duty alerts; or

(vi) Information provided to a consumer reporting agency by another furnisher; or

(2) The furnisher has a reasonable belief that the direct dispute is submitted by, is prepared on behalf of the consumer by, or is submitted on a form supplied to the consumer by, a credit repair organization, as defined in 15 U.S.C. 1679a(3), or an entity that would be a credit repair organization, but for 15 U.S.C. 1679a(3)(B)(i).

(c) Direct dispute address. A furnisher is required to investigate a direct dispute only if a consumer submits a dispute notice to the furnisher at:

(1) The address of a furnisher provided by a furnisher and set forth on a consumer report relating to the consumer;

(2) An address clearly and conspicuously specified by the furnisher for submitting direct disputes that is provided to the consumer in writing or electronically (if the consumer has agreed to the electronic delivery of information from the furnisher); or

(3) Any business address of the furnisher if the furnisher has not so specified and provided an address for submitting direct disputes under paragraphs (c)(1) or (2) of this section.

(d) Direct dispute notice contents.

A direct dispute notice must include:

(1) Sufficient information to identify the account or other relationship that is in dispute, such as an account number and the name, address, and telephone number of the consumer, if applicable;

(2) The specific information that the consumer is disputing and an explanation of the basis for the dispute; and

(3) All supporting documentation or other information reasonably required by the furnisher to substantiate the basis of the dispute. This documentation may include, for example: a copy of the relevant portion of the consumer report that contains the allegedly inaccurate information; a police report; a fraud or identity theft affidavit; a court order; or

account statements.

(e) Duty of furnisher after receiving a

direct dispute notice.

After receiving a dispute notice from a consumer pursuant to paragraphs (c) and (d) of this section, the furnisher must:

(1) Conduct a reasonable investigation with respect to the disputed information;

(2) Review all relevant information provided by the consumer with the dispute notice;

(3) Complete its investigation of the dispute and report the results of the investigation to the consumer before the expiration of the period under section 611(a)(1) of the Fair Credit Reporting Act (15 U.S.C. 1681i(a)(1)) within which a consumer reporting agency would be required to complete its action if the consumer had elected to dispute the information under that section; (note: that is 30-days from date of dispute) and

(4) If the investigation finds that the information reported was inaccurate, promptly notify each consumer reporting agency to which the furnisher provided inaccurate information of that determination and provide to the consumer reporting agency any correction to that information that is necessary to make the information provided by the furnisher accurate.

(f) Frivolous or irrelevant disputes.

(1) A furnisher is not required to investigate a direct dispute if the furnisher has reasonably determined that the dispute is frivolous or irrelevant. A dispute qualifies as frivolous or irrelevant if:

(i) The consumer did not provide sufficient information to investigate the disputed information as required by paragraph (d) of this section;

(ii) The direct dispute is substantially the same as a dispute previously submitted by or on behalf of the consumer, either directly to the furnisher or through a consumer reporting agency, with respect to which the furnisher has already satisfied the applicable requirements of the Act or this section; provided, however, that a direct dispute is not substantially the same as a dispute previously submitted if the dispute includes information listed in paragraph (d) of this section that had not previously been provided to the furnisher; or

(iii) The furnisher is not required to investigate the direct dispute because one or more of the exceptions listed in paragraph (b) of this section applies.

(2) Notice of determination. Upon making a determination that a dispute is frivolous or irrelevant, the furnisher must notify the consumer of the determination not later than five

business days after making the determination, by mail or, if authorized by the consumer for that purpose, by any other means available to the furnisher.

(3) Contents of notice of

determination that a dispute is frivolous

or irrelevant. A notice of determination that a dispute is frivolous or irrelevant must include the reasons for such determination and identify any information required to investigate the disputed information, which notice may consist of a standardized form

describing the general nature of such information.

Re: Direct Dispute Process is now law

ScarletFever — Thu, 01 Jul 2010 02:27:08 GMT

Oh Boy...OC's and CRA's will use this passage to stonewall consumers. This will be the new "can't dispute accurate information"..

The consumer did not provide sufficient information to investigate the disputed information as required by paragraph (d) of this section;

(iii) The furnisher is not required to investigate the direct dispute because one or more of the exceptions listed in paragraph (b) of this section applies

Re: Direct Dispute Process is now law

RobertEG — Thu, 01 Jul 2010 04:39:56 GMT

ScarletteFever hit the nail on the head! Good points!

But if you read it in detail, it is HUGE step forward from the stupid, current. CRA, E-Oscar, under FCRA 611(s)

Re: Direct Dispute Process is now law

ScarletFever — Thu, 01 Jul 2010 11:46:10 GMT

Many of us will see this entry as a result of disputes: "(1) A furnisher is not required to investigate a direct dispute if the furnisher has reasonably determined that the dispute is frivolous or irrelevant. One step forward, two steps back...we will have to be on our game. This answer will be spit out like so many sausages on an assembly line...

Re: Direct Dispute Process is now law

RobertEG — Thu, 01 Jul 2010 14:38:36 GMT

I dont see this as a step back. The current dispute process through the CRAs (FCRA 611(a)) contains the same provision for the termination of disputes that are considered frivolous or irrelevant. See FCRA 611(a)(3). This is not a change.

The only real difference is that under FCRA 611(a)(3), that determination was vested in the CRAs. Under the direct dispute process, that determination is made by the furnisher of the reported information.

No consumer has to use the direct dispute process. If you choose, you can still dispute through the CRA.

If you want to see the extreme faults in the current dispute process through the CRAs, I encourage you to read:

Written Testimony Before The

HOUSE COMMITTEE ON FINANCIAL SERVICES

Regarding

"Fair Credit Reporting Act: How it Functions for Consumers and the Economy"

June 19, 2007

Submitted by: Leonard A. Bennett

Consumer Litigation Associates, P.C.

The faults of the current CRA-based dispute process are discussed in detail beginning at page 18 of that testimony.

Most of it centers around the CRA use of the automated E-Oscar process. Direct dispute eliminates CRA sanitation of your dispute through the E-Oscar process. It is a HUGE step forward..

Re: Direct Dispute Process is now law

ScarletFever — Sat, 03 Jul 2010 12:02:47 GMT

We will see Robert. I am going on record saying that the above passage in the law will now become highlighted more by both CRA's and OC's, and regularly used as a way to avoid performing their due diligence...