FORT WORTH, Texas — AutoStar Solutions’ Director of Customer Success Richard Hudson has shared the five most common mistakes dealers and lenders make when notified of a credit reporting dispute.
Hudson will be leading several credit reporting classes at Innovate 2015: The Independent Dealer Industry Conference, scheduled for Sept. 20 – 23, in Fort Worth, Texas. Hudson said that disputes are no longer something that can be overlooked by smaller participants in the market.
“Five years ago, it was acceptable for credit reporting to be last on your list of worries, but that’s no longer the case,” Hudson said. “The CFPB has imposed their will directly on credit reporting agencies, finance sources and other providers. They, in turn, are holding dealers and lenders accountable.”
Here are his top five mistakes dealers and lenders make when responding to a dispute:
1. Untrained staff: Credit reporting now carries much greater consequences than in years past, and it should be treated accordingly. Hudson recommends training at least two times a year. Industry requirements change rapidly, so processes must be updated just as fast.
Hudson also recommends that employees take a test after training and that the results are stored in their personnel file, along with a document the employee signs stating they received training. “It’s all about demonstrating your intent to be a good corporate citizen,” he said. “If something goes wrong down the road, you can make the case that it’s an inadvertent error and not because you weren’t trying.”
The Consumer Data Industry Association offers comprehensive training specifically for furnishers. Annual trade shows like Innovate: The Independent Dealer Industry Conference also offer multiple courses on this subject.
2. Not documenting a process that meets “reasonable procedures” guideline: To avoid this mistake, identify existing practices or policies that can compromise the accuracy or integrity of furnished data. For example, if a vehicle is voluntarily repossessed, indicate that so it doesn’t show as a charge-off on the consumer’s credit report.
You should also review your technology and conduct historical self-audits related to accuracy and disputes. Be sure to maintain records long enough to substantiate the accuracy of anything you reported.
3. Taking too long to respond: You must complete your investigation of a dispute within 30 days from the date the consumer filed. If not, you may be liable to the consumer for the amount of actual damages in addition to punitive damages.
4. Adopting procedures that don’t match the scope, size and complexity of your business: As your business evolves, so should your procedures. At least once per quarter, review the changes to your business over the last several months and assess whether your procedures need to be updated as a result.
Credit reporting is a complex issue with many moving parts. It requires more depth than a one- or two-page policy manual can provide. And remember, the manual should do more than collect dust on a shelf. You must be able to demonstrate its full implementation into your day-to-day operations.
5. Being unaware of all your responsibilities as a furnisher: This is often the result of not enough training. Key responsibilities include: not reporting information you know or have cause to believe is inaccurate, correcting and updating information, providing notice of dispute and reporting the date of first delinquency within 90 days of reporting any derogatory information.
Innovate is a show for independent dealers and lenders to gain legal insights. Admission includes two full compliance tracks, each covering 16-20 different topics. AutoStar expects more than 600 attendees at the conference including major exhibitors and financial institutions that showcase the latest dealership technology, best practices and industry solutions.
To view the full schedule or buy tickets, click here.
