Credit reporting errors can devastate your financial future in South Carolina. When creditors and data furnishers violate Fair Credit Reporting Act Section 1681s-2, consumers face wrongful denials for loans, jobs, and housing.

We at Hays Cauley, P.C. see these violations daily. This federal law places specific duties on information furnishers to maintain accuracy and investigate disputes properly.

Understanding Section 1681s-2 Requirements in South Carolina

Section 1681s-2 places strict obligations on information furnishers that most creditors violate daily. Information furnishers include banks, credit card companies, collection agencies, and any entity that reports consumer data to credit bureaus. These furnishers cannot report information they know or have reasonable cause to believe is inaccurate. The Consumer Financial Protection Bureau found that approximately 1 in 5 consumers find errors on their credit reports, yet furnishers continue to report without proper verification procedures.

Duties of Information Furnishers to Credit Reporting Agencies

Furnishers must establish reasonable policies and procedures before they submit any consumer information. They cannot furnish information to consumer reporting agencies if they know the data contains inaccuracies. When furnishers receive notification about incomplete or inaccurate information, they must notify consumer reporting agencies and correct it promptly. Financial institutions must also notify consumers in writing when they furnish negative information (either before or within 30 days after submission). This notification requirement covers delinquencies, late payments, and defaults.

Accuracy Standards for Reporting Consumer Information

The Fourth Circuit’s March 2025 decision in Roberts v. Carter-Young replaced the outdated legal versus factual test with a readily and objectively verifiable standard. This means furnishers cannot dismiss disputes simply because they involve legal questions. When consumers notify furnishers about inaccuracies, the furnisher must stop reporting that information unless they can verify its accuracy through objective means. Furnishers must also report when consumers voluntarily close accounts and provide the date of delinquency within 90 days for accounts placed for collection.

Investigation Procedures When Disputes Arise

When consumers dispute information directly with furnishers, the law mandates specific procedures within defined timelines. Furnishers must conduct reasonable investigations and report findings to credit bureaus promptly. The CFPB documented that approximately 50% of consumer complaints involve credit reporting issues, yet many furnishers treat investigations as mere paperwork exercises. During COVID-19, furnishers who make payment accommodations must report accounts as current when consumers meet accommodation terms. Furnishers who determine disputes are frivolous must notify consumers with detailed explanations and specify what information they need for proper investigation.

Despite these clear requirements, creditors routinely fail to meet their obligations under Section 1681s-2, which creates significant problems for South Carolina consumers.

Common Violations of Section 1681s-2 by Creditors

Creditors systematically violate Section 1681s-2 through three primary methods that harm millions of South Carolina consumers. The Consumer Financial Protection Bureau reports that 50% of consumer complaints involve credit reporting issues, yet most creditors treat compliance as optional rather than mandatory.

Sham Investigations Replace Real Verification

Most creditors conduct sham investigations when consumers dispute information. Instead of verification against original records, they simply check their computer systems and rubber-stamp the existing information. A typical creditor investigation lasts less than 30 seconds and involves no human review of supporting documentation.

Creditors often claim they investigated by stating they confirmed the information with their internal systems. This approach completely misses the point of independent verification. Real investigations require review of original contracts, payment histories, and account documentation. The Fourth Circuit’s Roberts v. Carter-Young decision demands objective verification, yet creditors continue to rely on automated responses that violate federal law.

Continued Reporting After Clear Notification of Errors

Creditors routinely continue to report information they know is inaccurate after they receive dispute notifications from consumers. When consumers provide documentation that proves errors, creditors often ignore this evidence and keep the same false information in their reports month after month.

Section 1681s-2 prohibits the furnishing of information when creditors have reasonable cause to believe it’s inaccurate, yet they persist anyway. Medical debt collectors are particularly notorious for this practice (they continue to report debts that insurance companies already paid). Collection agencies frequently report accounts that consumers never owned, even after they receive identity theft affidavits and police reports.

Missing Documentation Exposes Creditor Violations

Creditors fail to maintain adequate records to support the information they report. This creates impossible situations for consumers who try to dispute errors. Many creditors cannot produce original contracts, payment records, or chain of custody documentation when courts challenge them.

Debt buyers are particularly bad actors because they purchase portfolios that contain thousands of accounts with minimal supporting documentation. These companies report information to credit bureaus without possession of the records needed to verify accuracy. When consumers request validation, creditors often provide generic form letters instead of specific account documentation (this inadequate record-keeping makes proper investigations impossible).

These violations create substantial legal liability for creditors and provide South Carolina consumers with powerful remedies under federal law.

Consumer Rights and Remedies Under Section 1681s-2

South Carolina consumers possess powerful legal weapons when furnishers violate Section 1681s-2 requirements. The law grants you the right to dispute inaccurate information directly with furnishers without credit bureau involvement first. This direct approach often produces faster results because furnishers face immediate legal liability when they fail to investigate properly.

Right to Dispute Inaccurate Information Directly with Furnishers

You can contact furnishers directly about credit report errors instead of disputing through credit bureaus. The Consumer Financial Protection Bureau documented that direct disputes with furnishers resolve issues in 65% of cases compared to only 40% success rates through credit bureau disputes. When you dispute directly, furnishers must conduct reasonable investigations within specific timeframes and cannot continue to report information they cannot verify.

Furnishers must respond to your dispute notifications with concrete action. They cannot dismiss your concerns or provide form letter responses. The law requires them to investigate the specific information you challenge and provide documentation that supports their position (or remove the disputed information entirely).

Monetary Damages Available for Violations

Section 1681s-2 violations trigger substantial financial penalties that make litigation worthwhile for consumers. Statutory damages range from $100 to $1,000 per violation, but actual damages can reach much higher amounts when credit errors cause loan denials or higher interest rates. South Carolina law adds treble damages up to $3,000 per incident for consumer protection violations.

Courts frequently award $15,000 to $25,000 in cases that involve multiple periods of the same false information. Punitive damages apply when furnishers show willful noncompliance, which happens frequently given their systematic violation patterns. These damage awards reflect the serious financial harm that credit reporting errors cause to consumers.

Attorney Fees and Court Costs Recovery Options

The Fair Credit Reporting Act includes fee-shifting provisions that make furnishers pay your attorney fees when you win. This means you can pursue violations without financial risk because successful cases require furnishers to cover all litigation costs. Courts also award reasonable attorney fees for partial victories and settlements (which gives consumers significant leverage in negotiations).

This fee structure forces furnishers to take disputes seriously because their violation costs multiply when attorneys become involved in the process. Consumer protection law firms handle these cases on contingency, so consumers pay nothing unless they recover damages from the violating furnisher.

Final Thoughts

Fair Credit Reporting Act Section 1681s-2 provides South Carolina consumers with strong protection against furnisher violations. The law requires furnishers to maintain accuracy, investigate disputes properly, and stop reports of information they cannot verify. When creditors violate these requirements, consumers can recover substantial damages plus attorney fees.

The Consumer Financial Protection Bureau’s data shows that 50% of consumer complaints involve credit reports, yet most furnishers continue their systematic violations. This creates significant legal liability and provides consumers with powerful remedies through direct litigation. South Carolina consumers who face credit reports with errors should act quickly to protect their rights.

Document all disputes with furnishers and maintain records of their inadequate responses. When furnishers fail to investigate properly or continue to report inaccurate information, legal action becomes necessary (particularly when violations persist after proper notification). We at Hays Cauley, P.C. help consumers fight credit reports with violations and recover damages from non-compliant furnishers.