5 Elements That Make an Efficient Disputes Management Framework

This blog breaks down the five key elements of a strong disputes management framework that has controls, consistency, accuracy and a customer-first approach.

What does it mean to have a successful disputes management framework? It means you have a customer-first approach that actively identifies and handles consumer disputes – particularly when disputes are on the rise. By creating a straightforward process to organize, investigate and solve disputes fast, you can weather any storm.

Disputes are Rising as Customers Understand and Expect More

Credit reporting dispute volumes are steadily rising. In a recent poll at the CDIA Law and Industry Conference, we asked about credit reporting dispute volumes. Almost half of the respondents reported that their dispute volumes have increased (43% increased, 40% stayed the same, 16% decreased).

The main driver of dispute volumes for most of our clients are frivolous disputes generated by credit repair organizations/FCRA attorneys. However, furnishers can impact their dispute volumes by addressing:

• The furnishing of inaccurate data on customers from fraud attacks
• Incomplete dispute processing
• Ineffective communication about furnishing and disputes to their borrowers

In the wake of the pandemic, consumers have easier access to credit scores and, as a result, many have gained a greater understanding of the credit reporting process. Consequently, they have set high expectations for furnishers and will convey these expectations when experiencing issues related to credit reporting.

A strong disputes resolution process that can withstand the trend of rising dispute volumes starts with a customer-focused framework. Implementing methods to reverse the upward trend on your dispute volumes [see Drivers of Customer Disputes below] is a great way to keep more of your customers happy while also increasing your operational efficiency.

5 Ways to Stem the Tide of Rising Consumer Reporting Disputes

A successful framework that lowers credit reporting disputes in your organization has several elements, including the following five key components.

1. Centralized Governance and Management to Keep Compliant

Consistency in how you manage your disputes process with top-down governance will help all your moving pieces remain in compliance. Regulators expect that compliance management systems will be organized in a way that is most effective for the institution and that the structures of those systems will vary from institution to institution.

When designing your centralized governance, you should consider your plans for risk assessment, prevention, detection and correction.

Centralized governance also gives you full control over how you conduct analysis and understand performance metrics for disputes. Research and reports should be standardized across the organization, allowing your team to gain back some efficiencies.

2. Consistent End-to-End Dispute Processing so That There’s No Confusion

Organizations should fully understand all policies and procedures across the enterprise on receiving, investigating and communicating to customers about the nature and status of disputes. So, we encourage clients to maintain three types of documents:

1. Operational procedures that describe what the end-to-end operational process is. This includes the purpose, scope, specifications, MIS controls and self-audits that will be used to ensure accuracy, control, and sustainability.
2. Desktop procedures / operating instructions that contain additional in-depth details to describe how the process is executed.
3. Process maps to support desktop procedures/operating instructions that provide better clarity of activities occurring within any given process.

Process maps and illustrated procedures can also reveal “checkpoints” for customer interaction. This is where you can ensure that a customer always knows the current status of their dispute. As a result of not understanding their dispute status, customers may submit their dispute multiple times resulting in duplication of the same dispute. End-to-end dispute processing not only keeps you organized, but it delivers an opportunity to preemptively handle any customer worries or concerns.

3. The Ability to Conduct All-Inclusive Reasonable Investigations to Close More Cases

As required by the Fair Credit Reporting Act, a reasonable investigation must be performed on every dispute to determine how it should be resolved. Root cause analysis and the documentation of reasonable investigation efforts are imperative to uncover key components of any dispute.

Reasonable investigations can be done on every dispute by following the often-used “5 Whys” process. Essentially, for each dispute, ask in-depth, drilled down questions about why something is happening–until the root cause is identified. Five cycles of questioning will give you a greater understanding of why credit reporting disputes are rising.

The following fictional example shows how the 5 Whys can determine that disputes are high because their system isn’t properly differentiating customers within the same mailing address:

Problem: Number of disputes are increasing.

• Why has the number gone up? The number of unrecognized account claims are increasing.
• Why is this dispute category more popular? More people are seeing accounts on their credit bureau report(s) that they didn’t create.
• Why are they showing up on the credit bureau report? The mystery accounts were furnished under the same name as the disputer.
• Why are they under the same name as the disputer? The disputer shares the same name as a family member.
• Why is this significant? These two family members live together, therefore our system recognizes the two individuals as the same person.

4. Quality and Accurate Data Makes Disputing Harder in the First Place

Consumer data accuracy is crucial to reducing dispute volumes because it ensures your system is functioning as designed and keeps customer data clean.

If you’re unsure about your data accuracy, try mapping your system of record data. Doing so will confirm functionality for long-term sustainability and provides regular health checks, especially following substantial system enhancements or changes.

Since your outputs will only be as good as the inputs of the system, you should also perform a validation of the data quality transmitted to reporting agencies. This is the most important step thus far as it ensures that credit bureau reports are void of discrepancies in the data, meaning that there’s nothing to dispute. While there are several ways to validate the quality of data, the Bridgeforce Data Quality Scanner serves as the most comprehensive tool on the market today.

5. Automation Allows You to Handle Higher Volumes and Eliminates Manual Handoffs

Once you have a framework that’s designed to lower credit reporting disputes, you should begin looking across your process to identify efficiency gains. Ideally, dispute volumes are further reduced when manual handoffs, data imports, simple customer outreach and other critical processes can be automated.

Manual processes are high risk, time-consuming, repetitive and rely heavily on data capture – and they are all ideal target processes for automation.

• Start by consolidating your data. Gather the same customer/account/dispute into one case.
• Then, extract and aggregate account information from supporting systems.
• Next, identify duplicate, repeat and frivolous disputes.
• Lastly, integrate with e-OSCAR® to receive regular updates and to upload ACDV responses (more on e-OSCAR® integration below).

In a previous blog from Bridgeforce, we identified specific adjustments and efficiency wins for dispute processing. We shared that automation, in tandem with other best practices, can boost disputes management efficiency by 30%.

[Editor’s note: this article was written by Quan Baker, former Bridgeforce Consultant]