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Tuesday, September 2, 2014

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Legislative Update

Third Quarter 2012

Federal Regulation

Consumer Financial Protection Bureau

Finalized Exam Procedures for Consumer Reporting Agencies

On September 5, the CFPB released its objectives and procedures PDF External Link for examining credit bureaus and other consumer reporting agencies (CRAs). The CFPB’s examination of the credit reporting market is part of its larger nonbank supervision program, which was authorized by the Dodd-Frank Act. The CFPB will examine only "larger participants" in the consumer reporting market, which the CFPB defines as companies that have more than $7 million in annual receipts.27 In practice, this will cover an estimated 30 companies, which account for approximately 94 percent of the market’s total receipts and issue over 3 billion consumer reports a year.

The objectives of the examinations are to ensure that CRAs comply with federal consumer financial law. These requirements include providing accurate information, responding to consumer disputes, making disclosures and explanations available, and preventing fraud and identify theft. CFPB examiners will also evaluate a company’s management and controls to identify internal procedures that could compromise compliance. The CFPB will conduct its examinations using a combination of data collection, analysis, on-site visits, interviews, and follow-up monitoring. Examiners will report violations to the CFPB’s enforcement staff, which has the authority to enforce the appropriate changes. The CFPB’s authority over CRAs became effective September 30, 2012.