March 25, 2019

March 22, 2019

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CFPB announces consent order with State Farm Bank to settle alleged violations related to furnishing consumer report information and obtaining and using consumer reports

At the end of last week, the CFPB announced that it had entered into a consent order with State Farm Bank, FSB to settle allegations that the Bank violated the Fair Credit Reporting Act, Regulation V, and the Consumer Financial Protection Act in connection with furnishing information to consumer reporting agencies (CRAs ) and obtaining and using consumer reports.  The consent order does not require the Bank to pay any consumer redress or a civil penalty.  The Bank must implement and maintain reasonable written policies, procedures, and processes to address the practices at issue and prevent future violations and must submit a compliance plan to the Bureau designed to ensure that its consumer credit reporting practices comply with applicable federal laws and the terms of the consent order.

The Bureau’s findings set forth in the consent order include the following:

  • The Bank violated the FCRA requirement that consumer reports only be used or obtained for a permissible purpose.  It obtained credit reports of consumers who were not seeking an extension of credit or otherwise involved in a credit transaction or without some other permissible purpose.  In some instances such violations resulted from the Bank’s agents and employees initiating credit applications for the wrong consumer or initiating credit applications for consumers for the purpose of soliciting those consumers.

  • The Bank violated the FCRA prohibition on furnishing inaccurate information to a CRA if the furnisher knows or has reasonable cause to believe the information is inaccurate by furnishing account information on the wrong consumer, reporting current accounts as delinquent, and reporting inaccurate past due amounts and payment histories.  The Bank knew or had reasonable cause to believe the furnished information was inaccurate because it was in direct conflict with information in the Bank’s credit applications, loan files, or payment system of record.

  • The Bank violated the FCRA requirement for a furnisher to promptly notify the CRA and provide corrections to make furnished information complete and accurate that the furnisher has determined to be incomplete or inaccurate.  The Bank took several months to correct or complete furnished information after the Bank had determined such information was incomplete or inaccurate or when consumers had made repeated requests for corrections.

  • The Bank violated the FCRA requirement not to furnish information to a CRA that has been disputed by the consumer without notice of the dispute by failing to provide such notice to CRAs.

  • The Bank violated the Regulation V requirement for a furnisher to establish and implement reasonable written policies and procedures regarding the accuracy and integrity of furnished information because the Bank’s policies and procedures were inadequate given the high volume and complexity of its furnishing activities and were not reasonable or appropriate given the nature, size, complexity, and scope of its activities.

  • The Bank’s FCRA and Regulation V violations also constituted CFPA violations.

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About this Author

Barbara S. Mishkin, Ballard Spahr, Philadelphia, Deceptive Practices Lawyer, Fair Debt Collection Practices Act, Gramm Leach Bliley
Of Counsel

Barbara Mishkin focuses on consumer compliance and banking law. The federal laws with which Ms. Mishkin has dealt extensively include the Truth in Lending Act, Equal Credit Opportunity Act, Real Estate Settlement Procedures Act, Fair Credit Reporting Act, Fair Debt Collection Practices Act, and Gramm-Leach-Bliley Act. She also has significant experience with state usury and lender licensing laws, as well as state laws prohibiting unfair and deceptive acts and practices.

American Bar Association, member, Consumer Financial Services Committee;...

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