21.1 Negative Information Notices and Furnisher Disputes

Negative Information Notice (§ 623(a)(7))

Financial institutions extending credit must provide a clear, written notice to a customer if the institution furnishes negative information (e.g., late payments, missed installments, delinquencies, defaults) to a nationwide CRA:

• Timing: Must be provided prior to, or within 30 calendar days after, furnishing negative information.
• Format: May be delivered on or with a periodic statement, billing notice, or initial loan agreement using Model Form B-1 (pre-furnishing) or Model Form B-2 (post-furnishing).
• Single Notice Rule: The bank is required to provide only one negative information notice per account; subsequent negative reporting on the same account does not trigger recurring notices.

Direct Consumer Disputes (12 CFR § 1022.43)

Under CFPB Regulation V, consumers have the legal right to submit credit disputes directly to the financial institution that furnished the data, bypassing the CRA.

• Covered Direct Dispute Topics:
  1. The consumer's liability for a credit account (e.g., alleging they never opened the account or were merely an authorized user);
  2. Terms of credit agreements (e.g., disputed interest rates, credit limits);
  3. Payment performance or account status (e.g., disputing late payment reporting, charge-off balance, payment posting dates); or
  4. Other information contained in a consumer report bearing on an account.
• Disputes Excluded from Direct Dispute Rules: Inquiries regarding personal identifying info (name, address, SSN), inquiries regarding other accounts, public record judgments, or credit inquiries.
• Furnisher Obligations upon Receipt:
  • Conduct a reasonable investigation of the disputed information;
  • Review all relevant information provided by the consumer with the dispute;
  • Complete the investigation and notify the consumer of results within 30 calendar days of receipt (extendable to 45 calendar days if the consumer provides supplemental information during the initial 30 days);
  • If the investigation reveals the data was inaccurate, promptly notify each CRA to which the data was furnished and provide corrections.
• Frivolous or Irrelevant Disputes (§ 1022.43(f)): A furnisher may determine a direct dispute is frivolous or irrelevant if the consumer fails to provide sufficient information, or submits substantially the same dispute previously resolved. The furnisher must notify the consumer in writing within 5 business days of making the determination, detailing the specific reasons and required supplemental information.

Indirect Disputes via CRAs (FCRA § 611 & § 623(b))

When a consumer files a dispute directly with a CRA, the CRA must forward the dispute to the furnisher within 5 business days using the electronic credit dispute network (e-OSCAR) via an Automated Credit Dispute Verification (ACDV) notice.

Under FCRA § 623(b), the furnisher has mandatory statutory duties upon receiving an ACDV:

1. Conduct an investigation with respect to the disputed information;
2. Review all relevant information provided by the CRA;
3. Report results of the investigation back to the CRA;
4. If the investigation reveals the data is incomplete, inaccurate, or unverifiable, report those findings to all other nationwide CRAs to which the furnisher reported the information; and
5. Promptly modify, delete, or permanently block the reporting of the inaccurate data.
6. Mandatory Deadline: The furnisher must complete all steps within 30 calendar days of the date the consumer filed the dispute with the CRA (or 45 days if the consumer submitted supplemental information to the CRA).

4. Operational Comparison of Key Credit Notices

Dispute and score disclosure qualifications

A furnisher’s indirect-dispute deadline follows the CRA’s statutory reinvestigation period; it is not a new 30-day period starting when the furnisher receives the ACDV. A direct dispute normally uses the same statutory period, with the permitted extension where applicable. Specify no extension in an exam problem if asking for an unconditional 30-day answer. Direct-dispute duties have exclusions and a frivolous-or-irrelevant determination procedure with notice, not permission to ignore a relevant bankruptcy order. An exception credit-score notice must satisfy its timing and content requirements, including special handling for no-score consumers; calling a document H-4 alone does not establish compliance.

Risk-based pricing methods and direct dispute duties.