CFPB Addresses “Junk Data” in Credit Reports

The CFPB recently issued an advisory opinion to consumer reporting companies about their obligation to prevent obviously false “junk data” from appearing on consumers’ credit reports.  The opinion states that companies must take steps to reliably detect and remove logically inconsistent data from consumers’ credit reports such as information that is obviously impossible.

“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” said Director Chopra in remarks about the opinion.  He also stated that “[c]onsumer reporting companies have a clear obligation to use better procedures to screen for and eliminate conflicting information, or information that cannot be true.”

Under section 607(b) of the Fair Credit Reporting Act, consumer reporting companies must “follow reasonable procedures to assure maximum possible accuracy” of the information they collect and report.  The advisory opinion is intended to serve as a reminder to consumer reporting agencies “that the failure to maintain reasonable procedures to screen for and eliminate logical inconsistencies, to prevent the inclusion of facially false data in consumer reports, is a violation of [section 607(b)].”

The opinion states that a consumer reporting agency’s policies and procedures should be sufficient to detect tradelines with account statuses or codes that are plainly inconsistent…