Automation, artificial intelligence and machine learning are at the forefront of the continued digital transformation within the world of collections. And organizations from across industries — including healthcare, financial services and the public sector — are learning how automation can improve their workflows and collection efforts.

When implemented well, automation can ease pressure from call center agents, which can be especially important when there’s a tight labor market and retention is at the forefront of every employer’s mind. Automated systems can also help improve recovery rates while minimizing the risk of human error and the corresponding liability.

These same systems can increase long-term customer satisfaction and lifetime value. Deeper insights into consumers’ financial situations and preferences allow you to avoid wasting resources and making contact when consumers are truly unable to pay. Instead, monitoring and following up with their preferred contact method can be a more successful approach — and a better experience for consumers.

The end of pandemic assistance programs and policies, along with new compliance requirements, are making automation more important than ever before.

Three tips when automating debt collections

Automation and artificial intelligence (AI) aren’t new to collections. You may have heard about or tried automated dialing systems, chatbots, text message services and virtual negotiators. But the following three points can be important to consider as the technology and compliance landscapes change.¹

1. Good automation depends on good data

Whether you’re using static automated systems to improve efficiencies or using a machine learning model that will adapt over time, the data you feed into the system needs to be accurate. The data can be internal, from call center agents and your customers, and external sources can help verify and expand on what you know.

With your internal systems, consider how you can automate processes to limit human errors. For example, you may be able to auto-fill contact information for customers and agents — saving them time and avoiding typos that can cause issues later.

External data sources can be helpful in several ways. You can also use third-party data as a complementary resource to help determine the best address, phone number or email address to increase right-party contact (RPC) rates. External sources can also validate your internal data and automatically highlight errors or potentially outdated information, which can be important for maintaining compliance.²

Robust and frequently updated datasets can make your collection efforts more efficient and effective. An automated system could be notified when a debtor resurfaces or gets a new job, triggering new reminders or requests for payment. And if you’re using the right tools, you can automatically route the account to internal or external servicing and prioritize accounts based on the consumer’s propensity to pay or the expected recovery amount.

2. Expand consumers’ communication options and choices

Your automated systems can suggest when and who to contact, but you’ll also want them to recommend the best way to contact consumers. An omnichannel strategy and digital-first approach is increasingly the preferred method by consumers, who have become more accustomed to online communications and services throughout the pandemic.

The Experian 2022 Global Insights Report highlights that 81 percent of consumers say they think more highly of brands when they have a positive experience with the brand online, including when there are multiple digital touchpoints. Additionally, 59 percent of consumers trust organizations that use AI.³

Organizations can benefit by using alternative communication methods, such as push notifications, as part of an AI-driven automated process. These can be unobtrusive reminders that gently nudge customers without bothering them, and send them to self-cure portals.

Many consumers may need to review the payment options before committing — perhaps they need to check their account balances or ask friends or family for help. Self-service options through an app or web portal can give them choices, such as a single payment or payment plan, without having to involve a live agent.

3. Maintaining compliance must be a priority

As the pandemic responses made clear, you need to be ready to adjust to a rapidly changing compliance environment. Over the last few years, organizations have also had to react to changes that can impact Telephone Consumer Protection Act (TCPA) compliance. And the first part of the debt collection final rule from the Consumer Financial Protection Bureau (CFPB), which impacts collectors’ use of electronic communications and increases consumers’ control over communication.⁴

The automated systems you use should be nimble enough to comply with required changes, and they should be able to support your overall operation’s compliance. In particular, you may want to focus on how automated systems collect, verify, safeguard and send consumers’ personal information.

Why partner with Experian?

Whether you’re looking to explore or expand your use of automated systems in your collection efforts, you want to make sure you’re taking the right approach. Experian helps clients balance effective collections and a great customer experience within their given constraints, including limited budgets and regulatory compliance.

The Experian Ascend Intelligence Platform and award-winning PowerCurve® Collections solutions are also making AI-driven automated systems accessible to more lenders and collectors than ever before. Taking a closer look at Experian’s offerings, we can focus on three particular areas:

Industry-leading data sources

Experian’s data sources go well beyond the consumer credit database, which has information on over 245 million consumers. Clients can also benefit from alternative financial services data, rental payment data, modeled income estimates, information on collateral and skip tracing data. And real-time access to information from over 5,000 local exchange carriers, which can help you validate phone ownership and phone type.⁵

Tools for maximizing recovery rates

Experian helps clients turn data into insights and decisions to determine the best next step. Some of Experian’s offerings include:

• PriorityScore for Collections℠: Over 60 industry-specific debt recovery scores that can help you prioritize accounts based on the likelihood to pay or expected recovery amount.⁶
• RecoveryScore 2.0: Helps you prioritize charged-off accounts based on collectability.
• TrueTrace™ and TrueTrace Live™: Find consumers based on real-time contact information. We’ve seen a 10 percent lift in RPC with clients who use Experian’s locating tools, TrueTrace or TrueTrace Live.
• Collection Triggers℠: Sometimes, waiting is the best option. And with an account monitoring tool like Collection Triggers℠, you’ll automatically get notified when it makes sense to reach out.
• RPC contact scores: Tools like Phone Number ID™ and Contact Monitor™ can track phone numbers, ownership and line type to determine how to contact consumers. Real-time data can also increase your RPC rates while limiting your risk.

You can use these, and other, tools to prioritize collection efforts. Experian clients also use different types of scores that aren’t always associated with collections to segment and prioritize their collection efforts, including bankruptcy and traditional credit-based scores.

Custom models based on internal and external scores can also be beneficial, which Experian can help you build, improve and house.

Prioritize collections activities with confidence

Collections optimization comes down to making the right contact at the right time via the right channel. Equally important is making sure you’re not running afoul of regulations by making the wrong contact.

Experian’s data standards and hygiene measures can help you:

• Identify consumers who require special handling
• Validate email addresses and identify work email addresses
• Get notified when a line type or phone ownership changes
• Append new contact information to a consumer’s file
• Know when to reach out to consumers to update contact information and permissions
• Recommend the best way to reach consumers

Automated tools can make these efforts easier and more accurate, leading to a better consumer experience that increases the customer’s lifetime value and maximizes your recovery efforts.

Learn more about Experian’s end-to-end automated debt collections solutions

¹Consumer Financial Protection Bureau Issues Final Rule to Implement the Fair Debt Collection Practices Act, October 2020.

²Collections After Compliance, Experian August 2019

³“Experian 2022 Global Insights Report” Experian April 2022

⁴Consumer Financial Protection Bureau Issues Final Rule to Implement the Fair Debt Collection Practices Act, October 2020

⁵Phone Number ID with Contact Monitor, Experian, August 2020

⁶PriorityScore for Collections Product Sheet, Experian 2020

In response to the Fifth Circuit’s ruling in Community Financial Services Association of America, Ltd. v. Consumer Financial Protection Bureau (CFSA) that the Consumer Financial Protection Bureau’s (CFPB) funding mechanism is unconstitutional, West Virginia Attorney General Patrick Morrisey sent a letter on October 24th to the CFPB, calling its continued operations into question and foreshadowing potential state challenges to its actions. While some state AGs and financial regulators are likely to help offset any reduction in CFPB activity through their own investigations and coordination with the CFPB, the dark cloud of the CFSA opinion hangs over the agency.

In his letter to CFPB Director Rohit Chopra, Attorney General Morrisey highlighted the Fifth Circuit’s holding that the CFPB’s “independent funding mechanism … is unconstitutional” and questioned Director Rohit’s “business as usual” response to the court’s decision. He also reminded Director Chopra that the CFPB must discharge its responsibilities in a “constitutionally permissible way,” which, according to Attorney General Morrisey, the “CFPB plainly cannot do” without congressional appropriations. Attorney General Morrisey ends by asking the CFPB to detail its own perception of the effect of its regulations and to state how the Fifth Circuit’s decision affects the CFPB’s past enforcement actions.

Until the challenge posed to the CFPB by CFSA is resolved, it is likely that state attorneys general will look to fill at least some of the perceived regulatory vacuum like they did when the U.S. Supreme Court curtailed the Federal Trade Commission’s ability to seek monetary relief in AMG Capital Management LLC v. Federal Trade Commission. The CFPB’s own interpretative rulings that emphasize state attorneys general’s concurrent and independent authority to pursue actions under the federal Consumer Financial Protection Act in 2010 should strengthen the hands of attorneys general in this effort. This independent authority remains viable and unobstructed by CFSA.

We note that West Virginia successfully challenged the Environmental Protection Agency’s power to regulate carbon emissions from existing power plants in the U.S. Supreme Court, resulting in the landmark West Virginia v. EPA decision. It remains to be seen whether West Virginia or other states will challenge any CFPB actions, especially rules and regulatory guidance that may broadly impact the consumer finance space.

Troutman Pepper will continue to monitor this case—and all related activity—to provide our latest insights. In case you missed Troutman Pepper attorneys Misha Tesytlin and Chris Willis reacting to the Fifth Circuit’s decision, you can listen to their commentary here.

SARASOTA, Fla. — The National Creditors Bar Association (NCBA) held its annual Fall Conference in Tampa, FL October 26-28th with more than 800 attendees.  Steve Markoff of Markoff Law LLC, Chicago, IL, continues his term as President of NCBA and swore in new officers to its Board of Directors including President-Elect Barbara Nilsen of Blitt & Gaines, P.C., Vernon Hills, IL, who will become President next October, 2023.  The full list of NCBA Board members can be found on the NCBA website.   

“Another terrific conference is in the books for NCBA.  The educational sessions were excellent, and the conversations engaging and productive.  Turnout was strong and Tampa was a great host City.  I’m grateful to have the honor to serve a top-notch organization along with such a great team of people.  We look forward to the upcoming Executive Experience in January,” said Steve Markoff. 

About National Creditors Bar Association

National Creditors Bar Association (NCBA) is a bar association dedicated to serving law firms engaged in the practice of creditors rights law. Originally founded in 1993 as the National Association of Retail Collection Attorneys (NARCA), it became known as NCBA in 2015. NCBA members practice in over 20 different practice areas in the 50 states, Puerto Rico, and Canada. NCBA attorney members are committed to being professional, responsible, and ethical in their practice and profession.

The CFPB has told two courts, an Illinois federal district court and the Ninth Circuit, that the Fifth Circuit panel decision holding that the Bureau’s funding mechanism is unconstitutional is “neither controlling nor correct” and “mistaken.” 

The CFPB addressed the panel’s decision in Community Financial Services Association v. CFPB in its response to the Notice of Supplemental Authority filed by TransUnion in the CFPB’s enforcement action against TransUnion in the Illinois court and in a letter to the Ninth Circuit responding to the Notice of Supplemental Authority filed by the defendants in CFPB v Nationwide Biweekly Administration.  (TransUnion and the defendants in Nationwide Biweekly are among the defendants in CFPB enforcement actions that are already attempting to use the Fifth Circuit decision as grounds for dismissal.)  We expect the CFPB to seek to overturn the Fifth Circuit decision by either petitioning the Fifth Circuit for a rehearing en banc or proceeding directly to the Supreme Court with a certiorari petition.  Whichever route the CFPB takes, its responses serve as a preview of the arguments it will likely make in challenging the decision.

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Pursuant to the Dodd-Frank Act, the CFPB receives its funding through requests made by the CFPB Director to the Federal Reserve, subject to a cap equal to 12% of the Federal Reserve’s budget, rather than through the Congressional appropriations process. In its decision, the Fifth Circuit panel concluded that the CFPB’s funding mechanism did not satisfy the Appropriations Clause because the CFPB was double-insulated from annual or other time limited appropriations. The panel rejected the CFPB’s argument that the funding mechanism satisfied the Appropriations Clause because it was created pursuant to a law enacted by Congress.  According to the panel, a law alone did not satisfy the Appropriations Clause’s command that “No money shall be drawn from the Treasury, but in Consequence of Appropriations made by law.” (emphasis added).  In the panel’s view, to satisfy the Clause, “an appropriation is required.”

In its enforcement action against TransUnion, the CFPB alleges that TransUnion violated a 2017 consent order with the CFPB.  In its Notice of Supplemental Authority, TransUnion argues that the CFSA decision establishes that the CFPB’s enforcement action must be dismissed because the consent order is invalid as the CFPB “used unappropriated funds to negotiate and prepare it.”  TransUnion also argues that the CFPB “may not expend unappropriated funds prosecuting this suit.” 

In its reply to TransUnion’s notice, the CFPB makes the following key arguments for why the panel’s decision is wrong:

• There is no case law support for the Fifth Circuit’s conclusion that a statutory authorization does not constitute an appropriation made by law or that Congress violates the Appropriations Cause or separation of powers when it authorizes spending by statute, as it did for the Bureau.

• The Bureau’s funding is not more insulated from Congressional oversight because it comes from receipts of the Federal Reserve System.  The source of funds makes no difference to Congress’s ability to oversee how the Bureau spends that money to carry out its duties.  And that point does not differentiate the Bureau from the Federal Reserve Board, which like the Bureau is part of the Federal Reserve System and funded from the same source. Congress is capable of overseeing the Bureau’s spending, including because of provisions in Dodd-Frank that ensure its ability to supervise, such as provisions requiring the Bureau to provide regular audits and reports to Congress.

• The Fifth Circuit’s holding finds no support in the Dodd-Frank provision that states funds transferred to the Bureau “shall not be construed to be Government funds or appropriated monies.”  That provision, like similar provisions that apply to the Farm Credit Administration, Federal Reserve Board, and OCC, determines the degree to which various statutory restrictions apply to the Bureau’s use of funds.  It has nothing to do with the constitutional requirement that Congress authorize the executive to spend money.

• The Bureau’s funding is not meaningfully different from numerous other agencies such as the Federal Reserve Board, OCC, and FDIC that are funded in ways other than annual spending bills.  The decision leaves no way to know what statutory spending authorizations count, in the panel’s view, as an “appropriation” that complies with the Appropriations Clause.

• Even if the court were to agree with the Fifth Circuit panel, it should still reject TransUnion’s request to dismiss the complaint because any defect in the Bureau’s funding authorization would not deprive the Bureau of the power to carry out its statutory responsibility to enforce the law.

In the Ninth Circuit case, a California district court imposed a $7.9 million civil penalty against the defendants for allegedly misleading marketing practices but did not award the nearly $74 million in restitution sought by the CFPB.  (The CFPB is seeking in the appeal to have the district court’s denial of restitution reversed.)  In their Notice of Supplemental Authority filed with the Ninth Circuit, the defendants argue that based on the Fifth Circuit’s decision, the Ninth Circuit should reverse the district court’s civil penalty award and dismiss the CFPB’s enforcement action.  In addition to making several of the same arguments it made to the Illinois court, the CFPB also told the Ninth Circuit that the Fifth Circuit decision should not result in a dismissal because:

“As to remedy, the panel failed to heed its own understanding of Collins [v. Yellen].  The court didn’t consider whether “the Bureau would have acted differently “but for” its statutory funding mechanism.  Here, applying Collins yields a straightforward answer: the case should not be dismissed because there is no evidence the Bureau “would have acted differently” with different funding.”

BLOOMINGTON, Minn. — Absolute Resolutions Corp. (“ARC”), headquartered in Bloomington, MN, announced today that Whitney Carpenter has been promoted to the role of Vice President of Operations.   

“Anyone who knows Whitney would immediately recognize the drive and determination with which she approaches each day. Her demonstrated leadership ability and experience have earned her an expanded role that allows her to have an even greater impact on our organization.” said Chad Lemke, ARC’s Chief Operating Officer. 

Prior to joining ARC in 2020, Whitney served in several leadership positions at some of the largest debt purchasing companies in the country including Encore Capital Group, PRA Group, and JH Capital Group.  

“I couldn’t be more thrilled to expand on my role at ARC,” said Whitney, “The team and culture here is truly one of a kind, and the collaboration between departments is what continues to play a role in ARC’s success. I’m proud to be able to contribute to the organization in a greater leadership capacity.”

In her new role, Whitney is responsible for oversight of ARC’s Internal Operations, Servicer Support and Performance Management. She will continue to partner closely with internal teams and external partners to ensure smooth operations. 

About Absolute Resolutions Corp.

Absolute Resolutions Corp. is a certified professional receivables company with offices in Bloomington, MN and San Diego, CA. 

www.absoluteresolutions.com

In a clear rebuke of a credit repair organization’s tactics, a judge in the Middle District of Florida said the Fair Debt Collection Practices Act (“FDCPA”) cannot be weaponized against a debt collector for declining to participate in a scam. The “scam” in this case was a letter sent to the debt collector by the credit repair organization, Credit Repair Lawyers of America (CRLA). 

In Dukes v. LVNV Funding, Case Number 21-cv-1342 (M.D. FL 2022), a consumer engaged a credit repair organization for 80$ per month to try to “straighten out” her credit so she could apply for a mortgage. On March 5, 2019, she disputed her LVNV account. The letter appeared to bear her signature. At some point in 2019, the consumer engaged CRLA (it is unclear whether CRLA was engaged before or after the March 5th letter). 

Over two years later, on May 28, 2021, CRLA drafted and sent a letter to LVNV stating the consumer no longer disputed the account, so LVNV should remove the dispute mark from her credit report. The letter was signed electronically by an out-of-state attorney.

Believing the letter was a scam, LVNV’s servicer did not remove the dispute upon receipt. Instead, the letter was marked as a scam because: 

• It arrived in an envelope indicating Michigan Consumer Lawyers sent it, but the letterhead on the correspondence indicated it was from CRLA.
• No Power of Attorney indicating CRLA could act on the consumer’s behalf was included.
• It had no wet handwritten signature.
• No payment was included with the rescission of the longstanding dispute.
• It did not include the consumer’s account number. 
• The consumer was not copied on the letter.
• The account had been disputed for years; and
• it was one of a slew of nearly identical letters received.

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The consumer, represented by CRLA, filed a suit alleging LVNV violated the FDCPA by failing to remove the dispute upon receipt of the letter. LVNV deposed the consumer, and she testified (1) she disputed the amount of the account, not that the account was hers; and (2) she authorized CRLA to send the letter to remove the dispute so she could move forward on her mortgage application.

LVNV moved for summary judgment on the basis that it did not violate the FDCPA because the consumer still disputed the account. The consumer responded by stating she disputed the amount, not the account. The court found there is no difference between disputing the amount and the account and granted LVNV’s motion for summary judgment. 

In ruling in LVNV’s favor, the court did not mince words, stating, “in spite of [the consumer]’s attempt to misrepresent the status of her debt [LVNV] has accurately reported it.” The court further admonished the consumer and CRLA stating, “[the consumer] does not have the right to manipulate her credit reports with false representations to improve her access to credit.”   

Read the full Order here. 

insideARM Perspective

There are a few things that stand out in this win. First, LVNV’s servicer clearly articulated why they considered the letter to be a scam. The result could have been different without evidence showing that LVNV had a reasonable basis to determine the letter was a scam. Cases like this, which turn on a debt collector’s ability to articulate and show why they took a specific action, are a good reminder that it’s never a bad time to review basic procedures (like note-taking procedures) to ensure standards are met. 

Second, LVNV took the consumer’s deposition, and the consumer’s testimony allowed the court to find in LVNV’s favor because the consumer admitted she still disputed the account. Over the past year or so, due to the high visibility of the Hunstein case, debt collectors have spent considerable time discussing motions to dismiss and standing. This case, as well as this one from a few months ago, are good reminders that sometimes a case needs to be litigated through the discovery phase to win. Yes, litigation costs time and money, but the results can be worth it in the proper case. Though motions for summary judgment typically take a fair amount of attorney time, they can be worth it. 

RAMSEY, Minn. — Phin Solutions, LLC an information services company in the Accounts Receivable Management industry, announced today that Robert “Bob” Schofield has joined the Phin Solutions team as their Senior Vice President of Business Development.

Prior to joining Phin, Bob has held numerous executive roles throughout the industry in companies including Northland Group Inc, Fourscore Resource Capital LLC and Unifund LLC. Most recently Bob worked for LTD Financial as their SVP of Business Development. 

“I am excited to have Bob as a part of the Phin Solutions team. He is a problem solver, hard worker and a wealth of knowledge in our industry. I have known Bob for 15 years and I am eager to be working alongside him.” CEO Todd Hinrichs shared. 

When asked about his new position, Bob said, “I am excited for this opportunity to generate new revenue streams for Phin Solutions. I have followed Phin Solutions for years and they have a great product that I am excited to help grow and share with the industry.”

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About Phin Solutions, LLC 

Phin Solutions LLC, is a national information services company specializing in Bankruptcy and Deceased Notification services, Bankruptcy proof of claim filing services and active duty military verification services. Phin Solutions offers several services and solutions to help organizations identify and manage their bankrupt and deceased accounts within their portfolios. Whether in-house behind your firewall using our Vigilant-CMS℠ software or from our secure data center, we provide clients a secure environment while delivering complete and timely Bankruptcy and Deceased information. Phin Solutions also sets up and provides clients access to the Bankruptcy courts EBN service. This greatly reduces the cost of information while reducing the paper handling within organizations. In addition to Bankruptcy and Deceased notification services Phin Solutions also offers skip tracing services to provide a complete one stop solution for our clients.

For more information visit the company website at www.phinsolutions.com or call 763-633-7007.

DULUTH, GA – Crown Asset Management, LLC hosted a successful Servicer Summit on September 20-21, 2022. The CAM team wants to express appreciation to its agency and law firm partners for making this event a success through their attendance and participation. The two-day event took place in Duluth, GA at the CAM office and the TPC Sugarloaf Country Club. 

Open House

The Summit kicked off with an “Open House” event, including a tour of the CAM office and time set aside for CAM Team members in all departments to meet directly with servicers and provide training and Q&A on some key processes. It was beneficial, productive, and enjoyable to have face-to-face interactions and opportunities for conversation outside of conference calls, video calls, and emails! 

Activities & Dinner

Next, the attendees and hosts headed over to TPC Sugarloaf where they chose from a golf “Tee Party” or an artist-led “Sip ‘n Paint” class. The relaxing activities offered an opportunity to connect in a casual environment, which was wrapped up with cocktails and dinner together as a large group

Keynote Address & Presentations

On Day 2, CAM was excited and honored to have Georgia’s Attorney General, Chris Carr, as the keynote speaker. This was followed by members of the CAM team (Bob Deter, VP of Business Development, and Leah Ri, Financial Planning & Analysis Manager) discussing market trends and observations in consumer debt. The overall discussion included retrospective observations of the impact of COVID-19 on the industry, as well as observations of current/recent market conditions, delinquency/charge-off volumes, and future pricing. Next on the agenda was a presentation from CAM’s Audit & Compliance team, led by VP of Audit & Compliance, Deb Tucker. The team presented attendees with an overview of critical audit & compliance observations, expectations, metrics, and trends.  

Collaborative Breakout Sessions

Finally, everyone broke out into various focus groups to share best practices. The Agency Roundtable was moderated by Relationship Manager, Lisa Rozzelle.   Topics included motivating collectors, dealing with staffing, work-from-home challenges, and more. The law firm breakout covered the nuances of litigating fintech accounts. CAM’s Law Firms of the Year 2021 (Gordon, Aylworth & Tami, P.C. and Blitt & Gaines, P.C.) presented a “fintech mock trial” to illustrate points and prompt collaborative discussion.  VP of Operations, Bekah Luebcke, moderated this session.

Pulling it all together

Day 2 ended with a panel discussion with the VPs and Directors from CAM’s management team. Moderated by Relationship Manager, Lana Taylor, the panel discussion was an opportunity for the management team to address questions from the attendees, discuss their roles within the organization, and illustrate how their business units are contributing to CAM’s continued success.

CAM thanks everyone who attended and took part in making the Servicer Summit a wonderful success and looks forward to continued partnerships and future meetings! 

About Crown Asset Management

Founded in 2004, Crown Asset Management, LLC, is a professional receivables management firm that outsources purchased accounts to a nationwide, proprietary network of collection agencies and law firms. Utilizing a cutting-edge predictive analytical model during pre-purchase portfolio due diligence, our team focuses on achieving appropriate financial returns while ensuring the best possible experience for consumers. We are an RMAI Certified Receivables Business headquartered in Duluth, GA.

Pursuant to its authority under Section 1022(b)(1) of the Dodd-Frank Act, the Consumer Financial Protection Bureau (CFPB) issued an advisory opinion to consumer reporting agencies (CRAs), highlighting their obligation to screen for and eliminate obviously false data from consumers’ credit reports. Specifically, CRAs were instructed to implement policies, procedures, and systems to screen for and remove “logically inconsistent” information.

In its advisory opinion, the CFPB emphasized the negative effects that inaccurate reporting can have on consumers: “[I]naccurate, derogatory information in consumer reports can lead to higher interest rates, ineligibility for promotional offers, or otherwise less favorable credit terms for affected consumers. This in turn may cost consumers hundreds or thousands of dollars in additional interest. Even worse, inaccurate, derogatory information in consumer reports could lead lenders to deny a consumer credit entirely, making it difficult or impossible for that consumer to obtain a mortgage, auto loan, student loan, or other credit.”

The advisory opinion also provided examples of some of the types of logical inconsistencies that the CFPB contends “reasonable procedures to assure maximum possible accuracy” would screen for and eliminate:

– Inconsistent Account Information of Statuses, which may include:

• An account whose status is paid in full, and thus has no balance due but nevertheless reflects a balance due;

• An account that reflects an “Original Loan Amount” that increases over time, an impossibility by definition;

• Derogatory information being reported on an account, although that derogatory information predates an earlier report that did not include the derogatory information;

– Illogical reporting of a Date of First Delinquency in connection with an account, which may include:

• A Date of First Delinquency reported for an account whose records reflect no delinquency, such as through activity reflecting a current account (complete history of timely payments, $0 amount overdue) or through a current account status code;

• A Date of First Delinquency that post-dates a charge-off date; and

• A Date of First Delinquency, or date of last payment, that predates the account open date (for non-collection accounts).

– Illogical reporting of information relating to consumers, which may include:

• Impossible information about consumers — for example, a tradeline that includes a relevant date for an account that is in the future or for an individual account that either predates that consumer’s listed date of birth or that is impossibly far in the past;

• Information that is plainly inconsistent with other reported information, such that one piece of information must be inaccurate — for example, if every other tradeline is reporting ongoing payment activity, while one tradeline contains a “deceased” indicator; and

– Illegitimate credit transactions for a minor.

According to the CFPB, complaints about incorrect information on consumer reports have represented the largest share of credit or consumer reporting complaints submitted to the CFPB each year for at least the last six years. The advisory opinion emphasized 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 under section 607(b) of the Fair Credit Reporting Act.”