This content was published prior to the combination of Dentons Sirote. Learn more about Dentons Sirote. 

As we discussed in last week’s post, companies that are “furnishers” of data to consumer reporting agencies (CRAs) have an obligation under the Fair Credit Reporting Act to furnish accurate information to CRAs and correct and update inaccurate information. But, what happens when consumers catch mistakes in their own credit reports?

There are two ways a consumer can dispute inaccurate credit report information. The first is directly with the CRAs—many of you are familiar with the e-OSCAR dispute resolution system. The second is directly to the furnisher through a “direct dispute." Regular readers of our blog know that we frequently write about the direct dispute requirements and a furnisher’s obligation to investigate a proper direct dispute. In today’s post, we remind you about a furnisher’s obligations when the furnisher receives an improper or “frivolous or irrelevant” direct dispute.

The direct dispute rules, provide that a dispute is frivolous or irrelevant, meaning the furnisher does not have an obligation to investigate the dispute, if:

The consumer fails to provide sufficient information to investigate the dispute;
The dispute is substantially similar to a previously investigated dispute (either submitted directly to the furnisher or through a CRA), unless new information is submitted; or
The dispute relates to information that a furnisher is not required to investigate (e.g., identifying information, employment information, credit inquiries, public record information, fraud/active duty alerts, information provided by other furnishers, or disputes submitted from a credit repair organization).
Within five business days of determining a dispute is frivolous or irrelevant, the furnisher must send the consumer notice (either by mail or other authorized means) that states the reasons and identifies information required to investigate a proper direct dispute. This is exactly why we advise our clients to never let a consumer dispute letter go unanswered—whether it is a proper direct dispute or a frivolous or irrelevant dispute.

The truth is most dispute letters our clients receive fall into the frivolous or irrelevant bucket. Some studies even indicate that over 90% of dispute letters are frivolous or irrelevant. Some of the most common examples are letters that make vague statements (e.g., there may be mistakes in my credit), demand documentation that the law doesn’t require (e.g., show me your business license), or invoke the Fair Debt Collection Practices Act (which typically doesn’t apply to non-debt collectors). These letters have become a frustrating nuisance for companies and get in the way of legitimate consumer disputes, but each letter needs to be reviewed and answered. The best way to make sure your company is in compliance is to have good, clear, and written policies and procedures for dealing with direct disputes.