Commentary

 

FRAMEWORK OF THE FAIR CREDIT REPORTING ACT

The Fair Credit Reporting Act (FCRA) is the first United States privacy law. FCRA was enacted in 1970 and incorporates privacy principles that are the standard for subsequently enacted privacy laws and privacy principles. It also established the U.S. framework of having privacy legislation that addresses specific industries or sectors of the economy rather than an overarching privacy regime.

However, although the name of the statue includes the word, “credit,” FCRA goes beyond issues involving only credit. And, it goes beyond only privacy protections. FCRA is a comprehensive consumer protection statute that addresses rights that  consumers should have regarding information that is collected about them, and imposes duties and obligations on the collectors of the information.

Below is a short summary of the consumer rights and protection established by FCRA and how the law addresses them.

                                           I.            Privacy

FCRA deals with privacy in a number of ways:

a.   Customers of a consumer reporting agency (CRA) must be approved to receive consumer reports. A CRA must maintain reasonable procedures to qualify customers by doing the following:

1.      Customers must identify themselves.

2.      They must certify the purpose for which they will use consumer reports.

3.      They must certify that reports will be used for no other purpose

4.      The CRA must verify the identity of customers and the accuracy of the certifications, often by doing an on-site visit.

b.     Once an agreement is in place, reports can only be issued to users who have the certified permissible purposes.

                                        II.            Accuracy

FCRA does not require complete accuracy, but only that CRA’s follow reasonable procedures to assure maximum possible accuracy. For example, a risk of inaccuracy occurs when an individual uses variations of his or her name when making credit applications. The CRA must determine whether a “Robert Smith” is the same as a “Bob Smith” is the same as a “Roberta Smith”  when it receives account or collects public record information. And, a CRA must decide whether a social security number entered as 789-45-6123 is the same as 789-54-6123 because of a typographical error or whether they belong to a different persons. FCRA requires not that absolute accuracy be achieved, but that the matching procedures used by a CRA are reasonable.

In addition, the specific ways that FCRA attempts to achieve accuracy are the following:

a.       Disclosure

FCRA requires that CRAs disclose to consumers all information in their files pertaining the consumer on request. A fee can be charged for the disclosure, unless the consumer certifies that he or she is unemployed, on public assistance or the victim of fraud. In that case, the report must be disclosed without cost. In addition, consumers can receive one free copy per year.

Further, if a consumer has been denied the benefit of a transaction because of the information in a consumer report, an adverse action notice must be provided to the consumer and the CRA must disclose all information in its files pertaining to that consumer free of charge on request.

After reviewing the information, the consumer can dispute its accuracy, and the CRA must reinvestigate disputed information and report the results to the consumer as well as send corrected reports to prior recipients of the erroneous report if requested to do so by the consumer.

b.      Furnisher responsibilities

Furnishers of information must not report information that they know is inaccurate and must notify the CRA if they have reported information and learn that it is inaccurate. If a consumer disputes information with them, they must report the fact of the dispute with the information when reporting it to a CRA.

                                     III.            Fairness

To assure that CRAs operate in a fair manner, the length of time for reporting derogatory information in consumer reports is regulated. Bankruptcies may be reported for 10 years. Other types of derogatory information may generally be reported for 7 years. Also, closed accounts must be reported as closed, disputed information must be reported as disputed and the title of the bankruptcy chapter must be reported along with the bankruptcy.

 

For more information, please contact me at omarquis@omarquislaw.com

 

















 

 

 

 


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