DEFINITION of Regulation V
Regulation V is one of the regulations set forth by the Federal Reserve designed to implement the Fair Credit Reporting Act (FCRA). Regulation V was enacted to promote fairness and accuracy and to protect the privacy of consumers with regard to information collected by credit reporting agencies.
BREAKING DOWN Regulation V
Regulation V applies to banks that are members of the Federal Reserve. Regulation V pertains to anyone who obtains and uses consumer credit information. Typically such details are used to determine a consumer's eligibility to receive certain products, such as credit to fund the purchase of a vehicle or home; services; or even for employment candidacy. This also applies to the sharing of such information with the any affiliates of the institutions as well as when they provide the information to consumer reporting agencies.
How Regulation V Is Put to Use
Under the provisions of Regulation V, any entity that provides information to a consumer reporting agency regarding a consumer’s account must ensure that the information accurately reflects the terms and liability for the account. The supplied information must also give an accurate record of the consumer’s performance in regards to the account, for example whether they met they payment due dates on time or how their principal balance compared with their available credit. The amount that has been paid toward the balance and the date the account was opened are also taken into account,.
The information must also identify the correct consumer.
Furthermore, an entity that provides information about consumers to reporting agencies regarding an account must be able to substantiate that information with its own records at the time the information is released. They must also present the information in a way to minimize the likelihood the information could be misconstrued in a consumer report.
When consumers initiate direct disputes regarding information presented in their credit reports, the provider of that information can be required to launch an investigation under various circumstances. This includes issues where there is consumer liability on a credit account or debt with the provider of the information, and the dispute includes questions about identity theft or fraud. An investigation could be required if the dispute is related to the terms of the debt or credit account, including direct disputes that stem from the principal balance, or the credit limit for an open-ended account.
Investigations could be required if the direct dispute relates to other information in the credit report stemming from the account as it relates to credit standing, credit capacity, and other personal characteristics.