Consumers, Regulators and You — Are You Meeting Your FCRA Responsibilities?

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Experian Public.
Consumers, Regulators and You:
Are you meeting your FCRA
responsibilities?
February 10, 2015

2©2015 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Consumers, Regulators and You
Moderator
Michael Sisk is a New York-based journalist who
has covered business and the financial markets
for 15 years, including stints as the investor
editor at Red Herring, editor-at-large at American
Banker, and contributing editor at Bank
Technology News. His articles have appeared in
numerous publications, including American
Banker, Barron's, Crain's New York Business,
Inc., Institutional investor, Strategy + Business
and Worth. Michael has co-written and edited
three books; the most recent was Merge Ahead:
Mastering the Five Enduring Trends of Artful
M&A (McGraw-Hill 2009).

Experian Public.
Speakers
Tony Hadley, Senior Vice President of Public Policy, Experian
Tony Hadley is Senior Vice President of Public Policy for Experian, where he has led the regulatory agenda relating
to consumer reporting, financial markets, direct marketing and advertising, e-commerce, and privacy for 15
years. He advises the Experian Global Risk Management Council on such activities in the Americas, EMEA
and Asia Pacific.
Tony represents Experian before a number of trade groups and alliances. These include the Direct Marketing
Association's (DMA), the Consumer Data Industry Association, the Internet Advertising Bureau, the Internet Alliance,
the U.S. Chamber of Commerce, the American Financial Services Association, the Consumer Bankers Association,
and the U.S. Chamber of Commerce. Tony is Chairman of the National Business Coalition on E-commerce
and Privacy.
Carmen Hearn, Senior Director Consumer Information Services, Experian
Carmen Hearn leads the product marketing team within Consumer Information Services that has responsibility for
acquisitions, Experian Data Integrity ServicesSM and the Experian Credit EducatorSM product. Carmen joined Experian
in January 2014. She has held several leadership roles within the financial services industry, including Capital One,
HSBC / Household and Providian.
Carmen has more than 25 years senior level experience overseeing the use and reporting of consumer / credit data,
as well as consumer / business data needs pertaining to risk management. She also has provided thought leadership
and played key roles related to compliance and audit across multiple verticals, which included auto, cards, consumer
finance, mortgage, private-label cards, retail banking, small business and commercial lending.
Carmen has sat on several advisory and industry council boards and has been a guest speaker in both the United
States and abroad on the merits of credit scoring, consumer credit data and automated underwriting. She holds
a bachelor’s degree in English from the University of California at Los Angeles and currently resides in Irvine, CA.

Experian Public.
Agenda
The regulatory landscape
Understanding data furnisher rules
How Experian can help
Credit reporting and the consumer
1
2
3
4

Experian Public.
The regulatory
landscape
Tony Hadley
Experian

Experian Public.
Regulatory priorities in the credit reporting
ecosystem
Data
accuracy
Dispute
resolution
Credit score
transparency
Debt
collections

Experian Public.
What’s driving the focus on data accuracy?
2.2%
of credit files contained a material error
that would move a consumer to a different
score band reflecting a higher risk
5.2%
of consumers are affected by a material
error, reflecting that consumers have
three reports and not all reports contain
an error
21% of credit reports contained an error that
did not materially affect their score
26% of credit reports were alleged to contain
an inaccuracy

Experian Public.
CFPB’s consumer complaint system
Credit reporting complaints:
 Incorrect information
on a report (76%)
 Consumer reporting agency
investigation (8%)
 Inability to obtain report
and score (8%)
 Problems with credit monitoring
or identity protection services
(4%)
 Improper use of credit
report (3%)
Semi-Annual Report of the Consumer Financial Protection Bureau, December 2014
October 1, 2013 – September 30, 2014
Mortgages
21%
Credit
cards
8%
Debt collectors
36%
Bank
account
9%
Credit
reporting
17%
Other
9%

Experian Public.
 Procedures to assure
maximum possible accuracy
 Cooperation with data
furnishers
 Disclosures of consumer
reports
 Communications to
consumers
Improving the accuracy of consumer reports

Experian Public.
CFPB’s consumer complaint system, debt collection
Continued attempts
to collect debt not
owed
Communication
tactics
Taking or threatening
an illegal action
Disclosure
verification
of debt
False statements or
representation
Improper contact
or sharing of info
Semi-Annual Report of the Consumer Financial Protection Bureau, December 2014

Experian Public.
Debt collector’s actions
as “data furnishers”
 Unverified debt
 Consumer disputes
Paid debt
 Medical debt
 Other paid debt
Debt collection practices in the credit reporting
ecosystem
More regulations
to come?

Experian Public.
Transparency of credit reports and scores
has been a top priority of policy makers
FACTA (2003)
 Free annual disclosure
 Score disclosures by mortgage lenders
 Educational score disclosures by credit
reporting agencies
Risk-based pricing notices
(January 2011)
Score disclosures by creditors
(July 2011)
 With risk-based pricing notice
 With adverse action notice
 CFPB study on score disclosures
 Scores on statements initiative

Experian Public.
Understanding data
furnisher rules
Carmen Hearn
Experian

Experian Public.
 The regulatory environment continues to be a hot topic in the media today driven largely
by efforts to protect the consumer
► Violation of rules put in place to protect the consumer have resulted in heavy fines
to various size banks and lenders alike
 Understanding rules for data furnishers can help organizations avoid heavy fines
and remain compliant
Understanding data furnisher rules
Duty of
furnishers
Obligations under the Fair Credit Reporting Act (FCRA)
Section 623: Responsibilities of furnishers of information to credit reporting agencies
 Provide accurate information
 Prohibited from reporting information with known errors
 Provide notice of a dispute
 Duty to investigate and respond to a dispute
Regulation V (part 1022): Responsibilities policies and procedures concerning
the accuracy and integrity of furnished information
 Furnishers must implement written policies and procedures to ensure the accuracy
and integrity of information furnished to the credit bureau
 Policies and procedures must be appropriate relative to furnisher’s size, complexity
and nature of business
 Policies and procedures must be reviewed periodically to ensure continued effectiveness
Accuracy
guidelines
1
2

Experian Public.
 As seen in proprietary exam letters, and based on feedback from clients, four key themes
have emerged as a focus from examiners
► Proactively implementing sound data reporting and governance across an
organization can help to be prepared for an exam
Preparing for an exam
General process
to furnisher data
Data
reporting
Policies and
procedures
Dispute
management
 Types of data submitted
 Types of data repositories used
 If / how third parties are used
 How negative information
is submitted
 Software used to track
disputes and data captured
 Number of disputes
 Reason for disputes (by LOB)
 Number of times a disputes results in
correction, modification, deletion or block
 Samples of submitted data
 Occurrences where information
was rejected by a credit bureau
 How data reporting is
monitored / audited
 Reporting practices
 Accuracy and integrity
 Disputes
 Third parties
 Internal training on FCRA rules
FOCUS FOCUS

Experian Public.
 Recent regulatory changes have created an urgency to further expedite our ability
to ‘clean up’ the credit eco system and to focus on the consumer
 On December 11, 2014 the Consumer Financial Protection Bureau (CFPB) announced
that they will now require credit reporting agencies (CRA’s) to provide accuracy reports
on data furnishers that identify key risk areas for consumers
Recent CFPB announcement
New reporting requirements
Furnishers
with the
most disputes
Industries
with the
most overall
disputes
Furnishers
with high overall
disputes relative
to industry

Experian Public.
 In addition to the overall expense associated with the heavy fines and consent orders,
millions of customers have been impacted
 Together with our data providers, we have an obligation to the consumer to minimize
their exposure to negative and harmful situations
Customers impacted by regulatory findings
Financial
services
provider
250K
customers
impacted
CFPB FINDINGS:
Deceptive
practices
Retail
bank
2M
customers
impacted
CFPB FINDINGS:
Deceptive
practices
Credit
card
provider
3.5M
customers
impacted
CFPB FINDINGS:
Deceptive
practices
Financial
services
provider
185K
customers
impacted
CFPB FINDINGS:
Servicing
mis-conduct
Mortgage
loan
servicer
1M
customers
impacted
CFPB FINDINGS:
Violation of
FCRA and
inaccurate
data
Just under…
7M
customers
impacted

Experian Public.
Each industry has its own set of challenges such as:
 Scope of products
 Cost of doing business
 Data management
 Technology advancement
 Operational efficiencies
 Customer experience
There are a common set of best practices that can
help to turn recent commentary and regulatory findings
into actionable information to ensure a positive
customer experience
Best practices

Experian Public.
Maintaining a full 360 degree view of data reporting, from raw data submissions
to the consumer credit profile, is critical to ensuring regulatory compliance
and minimizing reputational and financial risk
Best practices
Better
data
Reduce
disputes
Customer retention
and loyalty
Positive customer
experience
Minimize
regulatory risk
Internal
training
Proactive
and prepared
for exam
Data quality
reporting
Enterprise
approach to
data quality
Data
governance
Full
360°
view

Experian Public.
While an organization may have specific and unique challenges based on the industry
and markets they serve, there are commonalities that all data providers exhibit from a product,
reporting and regulatory perspective
Challenges within the industry
Report data on monthly basis | Report in Metro 2 format | Regulated by the FTC, OCC, FCRA, CFPB |
Dispute management obligations
Unique
Common
Auto Credit card Collections Mortgage
 Third party processors
 Repossessions
 Medical debt
 Missing originating
information (third party
collections)
 Identification and
contact information
problematic
 New rules ability to pay
 Server requirements
 Loan modification
 Higher disputes
 External partnerships
 Authorization systems
 Higher transaction
volumes

Experian Public.
Evaluating your organizations engagement in these three core areas can help to address
pressure from consumers and regulatory agencies
How do you know?

Experian Public.
How Experian
can help

Experian Public.
 While data reporting is voluntary, data furnishers must adhere to complete and accurate
reporting of consumer credit data as mandated in the current Fair Credit Reporting Act
(FCRA)
 Experian offers reporting tools and metric packages and provides insight and analysis
into consumer tradeline and dispute data
Experian’s data quality tools and packages
Data Integrity
ServicesSM
Data reporting tools
Custom data review
packages
Metric
Report™*
Annualized
metric report**
DataArc™ DataArc Plus™
DataArc
Custom™
* Offered to select clients currently
** Not yet offered, currently being built

Experian Public.
 DataArc Plus™ / DataArc Custom™ provides data furnishers insight into their Metro 2
data submissions, fatal errors, disputes and peer benchmarking
 The data is delivered in an interactive dashboard that allows for filtering and isolating
certain data points and metrics
 Drill into data disputes by
portfolio, account type, dispute
reason
 Ability to analyze which portfolio
is generating the most data
disputes and what the reason of
those dispute are
 Pull targeted dispute samples
on the data that you are
interested in
 Pull dispute information by
dispute reference number
or by account number
 Obtain information on how many
disputes are not responded to
 12 months of dispute
information available for
trending
Sample dispute
dashboard

Experian Public.
 Peer dashboards provide a means to benchmark your statistics against a similar peer group
 Compare peer dispute metrics including: DNR rate, dispute rate, and dispute reason

Experian Public.
Experian Data Integrity ServicesSM
What our clients are saying…
“
… if we hadn’t engaged Experian, we might
have implemented routines that would have
caused downstream negative impact and
potential additional consumer harm.
Top-10 financial institution
The data, delivery, consultation and
thought leadership were very detailed. We
confirmed positive aspects of our reporting
and identified recommendations for best-in-
class changes.
Top-10 financial institution
(Card division)
This was an excellent exercise and an
investment no other bureau has undertaken
with us, ever. The insight we gained was
very valuable.
Collection agency

Experian Public.
Credit reporting
and the consumer

Experian Public.
Headlines
To attract new relationships
and retain current ones, researchers say banks and credit unions should
focus on one thing: improving
the customer experience
they offer.
— The Financial Brand,
Satisfaction Barometer Reveals Consumers Banking Desires and Drivers, January 2014
“
”

Experian Public.
 Lenders should consider that in light of the heavily regulated environment, reporting
accurate and complete credit data has significant benefits to the consumer
 Our joint obligation is to create a healthy credit eco system and support the choices
consumers make as part of their financial journey
Consumer benefit of reporting

Experian Public.
Consumer benefit of reporting
Most decisions to grant credit – including
mortgage loans, auto loans, credit cards,
and private student loans – include
information contained in credit reports as
part of the lending decision. These
reports are also used in other spheres of
decision-making, including eligibility for
rental housing, setting premiums for auto
and homeowners insurance in some
states, or determining whether to hire an
applicant for a job.
”
“
— Consumer Financial Protection Bureau, Key Dimensions and Processes in the U.S. Credit Reporting System, December 2012
“Credit reports play an increasingly important
role in the lives of American consumers…”

Experian Public.
Consumer benefit
c. 35m
businesses
globally
Educated Consumers
Through financial literacy and access
to their credit file, consumers may
Better understand their credit report
and dispute less
Customer disputes
Complete and accurate
data will reduce disputes
Accurate credit score
Incomplete or missing
data may have an
impact to score, or
result in no score at all
Transparency
Allows consumer to evaluate
mistakes of the past to correct
going forward and become more
desirable to a lender
Expanded credit
offerings
Absence of credit may
deem customer as ‘high-
risk’ and limit offers
Customer experience
More relevant, meaningful
conversation and
experience with lender
Reduced costs
‘Low risk’ consumers
will have lower interest
rate products and fees
Non-credit needs
Consumer can provide
Credit report for job or
rental application
60%of the Society for Resource Management's
member employers used credit reports
to screen applicants for at least some
of their positions¹
Consumer benefits of a complete and accurate credit report
“
”
¹ The Society for Human Resources Management, SHRM Research Spotlight: Credit Background checks, 2010.

Experian Public.
 There is currently a gap in awareness within the industry and for the consumer regarding
the impact of an accurate and complete credit report
 Financial institutions have the opportunity to communicate directly with consumers
to create awareness leveraging social media
► Consumers can also share and inform each other creating further engagement
Educating the consumer
Gap
Consumer
Benefit
Consumer
awareness
¹ CivicScience, “Insight Report: Social Media Now Equals TV Advertising in Influence Power on Consumption Decisions”, Oct 2014
”
”
43%of U.S. Internet users said that
social media “chatter” had the
most influence on what they
bought... Up 22 percentage
points year over year... Those
who were most likely to be
influenced by comments or
recommendations on social
media were ages 18 to 29.¹
Accurate and complete credit report
Financial
Institution and
Social Media
“  Positive
customer
experience
 Trust
 Loyalty
 Brand
recognition
Benefits

Experian Public.
Next steps

Experian Public.
Download:
 New Experian perspective paper
“The Impact of Consumer Data Reporting” at
http://www.experian.com/consumerimpact
Visit:
 Data Integrity Services Website at
http://www.experian.com/dataintegrityservices
 CFPB Website at http://www.consumerfinance.gov/
Sign up for:
 Experian News Blog posts
http://www.experian.com/blogs/news
Request more info:
 http://now.experian.com/data-accuracy
Next steps

Experian Public.

Consumers, Regulators and You — Are You Meeting Your FCRA Responsibilities?

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