What Is Regulation V?

Regulation V Explained in Less Than 5 Minutes

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Regulation V is the federal regulation adopted by the Consumer Financial Protection Bureau (CFPB) to ensure confidential consumer data reported in credit reports is protected and accurate, as stipulated in the Fair Credit Reporting Act (FCRA).

Understanding Regulation V can help consumers maintain their confidential information; keep themselves safe from privacy violations made by reporting agencies; and keep their credit histories clear and efficient. Learn more here about the guidelines and protections of Regulation V.

Definition and Examples of Regulation V

The Fair Credit Reporting Act (FCRA) is a legal document that states you are allowed to see whatever information a credit reporting agency (CRA) has about you. Anytime the CRA submits new information to your file, you are entitled to know about it. Regulation V is the portion of the FRCA that implements those allowances and entitlements for the consumer.

You also have the right to object to information on your report if it is inaccurate. If you do so, Regulation V states you must receive a response within five days of your initial request. This disclosure must be written and mailed to the consumer no later than five days after the date on which the request was received from the consumer or such report was first requested, whichever is later.

The FCRA was passed by Congress in 1970, and for many years, a variety of federal agencies maintained the rule-making responsibilities established in the act. In 2011, the Dodd-Frank Act transferred rule-making authority to the CFPB, which is the current agency that oversees Regulation V.

The purpose of Regulation V is simply to implement the FCRA. Regulation V applies to:

  • Consumer reporting agencies
  • Those who obtain consumer credit histories to determine their participation in purchases and employment
  • Individuals who share consumer information with affiliates
  • Anyone who provides credit reporting agencies with consumer information

A credit report contains detailed financial information about a consumer, which is all relevant to Regulation V. That information includes the consumer’s name; current and previous addresses; employer; revolving accounts; installment loans; open and closed accounts; payment history; recent credit applications; debts in collection; and any public records such as a bankruptcy or foreclosure on a home.

Consumer credit information is generally used to determine the likelihood that an individual will receive credit products such as a loan or credit card. However, credit reports are also used in general vetting processes, such as when an employee is screened by a potential employer. For this reason, Regulation V serves as protection of the consumer’s privacy.

For example, let’s say you take out an installment loan on a car. Regulation V ensures the bank reporting the loan will provide accurate information, and the information remains private and confidential. This helps alleviate the risk of identity theft by placing the responsibility of accuracy on the reporting parties and not on the consumer.

Consumers should check their credit reports regularly for inaccurate information. Incorrect information on a credit report can affect one’s ability to obtain credit, secure a mortgage, or even be eligible for employment at certain companies.

How Regulation V Works

After Congress passes a law, a federal agency will issue a set of requirements to implement that law, officially deeming it a regulation. Regulation V is the federal regulation issued by the CFPB that is responsible for implementing the fair credit reporting of the FCRA.

Prior to the adoption of a regulation, the federal agency will propose the requirements and invite public comments on them. After review and possible revisions, the agency will then formally issue the regulation. In the case of Regulation V, rulemaking authority was once in the hands of a number of federal agencies, and it is now solely in the hands of the CFPB as of July 21, 2011.

The CFPB is the federal agency that protects consumers from abusive and deceptive practices, and also maintains Regulation V. When necessary, the CFPB takes legal action against companies that break the law.

If FCRA rights are violated, consumers are entitled to seek damages from a consumer reporting agency or user of consumer information in credit reports. While there are both federal and state consumer laws, consumers often have more protection under their state laws. Contact your state’s local consumer protection agency, or utilize one of the CFPB’s tools and resources for consumers.

Regulation V outlines consumers’ rights under the FCRA, and provides precise language in explaining those rights so both consumers and reporting parties understand what is legal to report and what is not. Topics covered in the regulation include:

  • Identity theft
  • Duties of companies holding consumers’ information
  • Duties of users and consumer reports
  • Duties of consumer reporting agencies
  • Filing disclosures to consumers
  • Affiliate marketing
  • Use of medical information

Key Takeaways

  • Regulation V is the federal regulation that implements the Fair Credit Reporting Act.
  • Regulation V ensures consumer financial information is protected, private, and accurate in credit reports.
  • Per Regulation V, consumers have the right to dispute inaccurate information and see new information reported to their credit files by credit reporting agencies.
  • The Consumer Financial Protection Bureau (CFPB) maintains Regulation V.