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The Fair Credit Reporting Act (FCRA)
Fair Credit Reporting Act (FCRA) is a United States federal law (codified at 15
U.S.C. § 1681 et seq.) that regulates the collection, dissemination, and use of
consumer information, including consumer credit information. (Full
Statute PDF) Along with the Fair Debt Collection Practices Act (FDCPA), it
forms the base of consumer credit rights in the
Consumer reporting agencies (CRAs) are entities that collect and disseminate
information about consumers to be used for credit evaluation and certain other
purposes, including employment. Credit bureaus, a type of consumer reporting
agency, hold a consumer's credit report in their databases. CRAs have a number
of responsibilities under FCRA, including the following:
Provide a consumer with information about him or her in the agency's files and
to take steps to verify the accuracy of information disputed by a consumer.
Under the Fair and Accurate Credit Transactions Act (FACTA), an amendment to the
FCRA passed in 2003, consumers are able to receive one free credit report a
year. The free report can be requested by telephone, mail, or through the
government-authorized website, annualcreditreport.com.
negative information is removed as a result of a consumer's dispute, it may not
be reinserted without notifying the consumer within five days, in writing.
CRAs may not retain negative information for an excessive period. The FCRA
describes how long negative information, such as late payments, bankruptcies,
tax liens or judgments may stay on a consumer's credit report — typically seven
years from the date of the delinquency. The exceptions: bankruptcies (10 years)
and tax liens (seven years from the time they are paid).
three big CRAs — Experian, TransUnion, and Equifax — do not interact with
information furnishers directly as a result of consumer disputes. They use a
system called E-Oscar. In some areas of the country, however, there are other
credit bureaus. For example, in
Consumer Reporting Agencies
addition to the three big CRAs, the FCRA also classifies dozens of other
information technology companies as "nationwide specialty consumer reporting
agencies" that produce individual consumer reports used to make credit
determinations. Under Section 603(w) of the Fair Credit Reporting Act, the term
“nationwide specialty consumer reporting agency” means a consumer reporting
agency that compiles and maintains files on consumers on a nationwide basis
1. medical records or payments
2. residential or tenant history
3. check writing history
4. employment history
Because these nationwide specialty consumer reporting agencies sell consumer credit report files, they are required to provide annual disclosures of their report files to any consumers who request disclosure. A partial list of companies classified as nationwide specialty consumer reporting agencies under FCRA includes: ChoicePoint, Acxiom, Innovis, the Insurance Services Office (ISO), Tenant Data Services, LexisNexis, Retail Equation, Central Credit, TeleTrack, the Medical Information Bureau (MIB aka, MIB Group, Inc.), UnitedHealth Group (Ingenix Division), and Milliman.
Although the major CRAs Experian, Equifax, and TransUnion are required by law to
provide a central source website for consumers to request their reports, the
nationwide specialty consumer reporting agencies are not required to provide a
centralized online source for disclosure. The FCRA Section 612(c) merely
requires nationwide specialty consumer reporting agencies to establish a
streamlined process for consumers to request consumer reports, which shall
include, at a minimum, the establishment by each such agency of a toll-free
telephone number for such consumer disclosure requests.
information furnisher, as defined by the FCRA, is a company that provides
information to consumer reporting agencies. Typically, these are creditors, with
which a consumer has some sort of credit agreement (credit card companies, auto
finance companies and mortgage banking institutions, to name a few). However,
other examples of information furnishers are collection agencies (third-party
collectors), state or municipal courts reporting a judgment of some kind, past
and present employers and bonders. Under the FCRA, these information furnishers
may only report to a consumer's credit report under the following guidelines:
Lenders have an important role to play in ensuring credit reports are accurate:
They must provide complete and accurate information to the credit reporting
duty to investigate disputed information from consumers falls on them, and they
must correct an error, or explain why the credit report is correct within 30
days of receipt of notice of a dispute.
They must inform consumers about negative information which has been or is about
to be placed on a consumer's credit report within 30 days.
notice doesn't have to be sent as a separate notice, but may be placed on a
consumer's monthly statement. If sent as part as the monthly statement, it needs
to be conspicuous, but need not be in bold type. Required wording (developed by
the US Federal Treasury Department):
before negative information is reported: We may report information about your
account to credit bureaus. Late payments, missed payments, or other defaults on
your account may be reflected in your credit report.
after negative information is reported: We have told a credit bureau about a
late payment, missed payment or other default on your account. This information
may be reflected in your credit report.)
Users of the information
for credit, insurance, or employment purposes
of the information for credit, insurance, or employment purposes (including
background checks) have the following responsibilities under the FCRA:
They must notify the consumer when an adverse action is taken on the basis of
2.Users must identify the company that provided the report, so that the accuracy
and completeness of the report may be verified or contested by the consumer.
Likelihood of errors on a
large portion of consumer credit reports contain errors. A study released by the
U.S. Public Interest Research Group in June 2004 found that 79% of the consumer
credit reports surveyed contained some kind of error or mistake. However, the
General Accountability Office released a study disputing US PIRG numbers. The
Federal Reserve Board issued a similar study noting that "the proportion of
individuals affected by any single type of data problem appears to be small."
2007, the Consumer Data Industry Association which represents the credit bureaus
testified that less than two percent of 52 million credit reports had data
deleted because it was in error. The accuracy of credit report data was also
mentioned in written testimony by Allstate Insurance before the
Fair and Accurate Credit Transactions Act ("FACTA") of 2003 has allowed easier
access to consumers wishing to view their reports and dispute items.
Civil liability for
willful or negligent violations of the FCRA
§ 616 of the Act, (15 U.S.C. § 1681n), a consumer may recover either actual
damages or a minimum of $100 and a maximum of $1000 plus punitive damages and
reasonable attorney's fees and costs for willful noncompliance with the Act.
Under § 617 of the Act, (15 U.S.C. § 1681o), recovery for a negligent violation
is of actual damages, plus attorney's fees. Under § 618, a consumer may file
suit in state or federal court to enforce the Act, and the statute of
limitations is the earlier of 2 years from discovery and 5 years from the
violation. (15 U.S.C. § 1681p.)
Which companies are
regulated by the FCRA?
database companies like Lexis, Westlaw, ChoicePoint, and eFunds (owner of
ChexSystems) do not create credit reports, they may gather the same types of
information and as a result may subject some of their actions to FCRA.
An excerpt of the 1999 FTC
advisory opinion states:
entity that meets the definitional requirement for a "consumer reporting agency"
(CRA) in Section 603(f) of the FCRA is covered by the law even if the only
information it collects, maintains, and disseminates is obtained from "public
Section 603(f) defines a "consumer reporting agency" as any person "which, for
monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in
whole or in part in the practice of assembling or evaluating consumer credit
information or other information ... for the purpose of furnishing consumer
reports to third parties ...".
turn, Section 603(d) defines a "consumer report" as the communication of "any
information" by a CRA that bears on a consumer's "credit worthiness, credit
standing, credit capacity, character, general reputation, personal
characteristics, or mode of living" that is "used or expected to be used or
collected in whole or in part" for the purpose of serving as a factor in
establishing eligibility for credit or insurance to be used primarily for
personal, family, or household purposes, employment purposes, or any other
purpose authorized under Section 604.
If the commercial service you describe regularly provides information for the purposes set forth in the definition of consumer report in Section 603(d), the agency is a consumer reporting agency and the information it collects from public record sources and maintains in its computerized files is subject to the FCRA.
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