Finances

FAIR CREDIT REPORTING ACT

The Fair Credit Reporting Act, 15 U.S.C. §§1681-1681u, has as its stated purpose to assure the accuracy, confidentiality, and proper use of information that credit reporting agencies provide about consumers. 15 U.S.C. §1681(b). The Act applies when a consumer-reporting agency supplies a consumer report or an investigative consumer report to a third person. Regulations for the Fair Credit Reporting Act can be found at 16 CFR Part 601, including summaries of consumer rights and user and consumer reporting agency duties. 

"Consumer reporting agency" is defined as a person who, using facilities or means of interstate commerce, assembles or evaluates information on consumers for the purpose of furnishing consumer reports to third persons. 15 U.S.C. §1681a(f). "Consumer report" is defined as information supplied by a consumer reporting agency that bears on the consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living that is used to determine the consumer's eligibility for credit, insurance, or employment. 15 U.S.C. §1681a(d). "Investigative consumer report" is defined as information about the consumer's character, general reputation, personal characteristics, or mode of living, based on interviews with individuals who know the consumer personally. 
15 U.S.C. §1681a(c). 

The consumer reporting agency must maintain reasonable procedures, to verify the accuracy of the information reported, that reports are supplied only to users with a legitimate purpose for them, and that they do not contain obsolete information. These procedures include certification of the identity of the requesting party and the purpose for which the report will be used. 15 U.S.C. §§1681e(a), 1681b, and 1681c. 

The consumer reporting agency can only supply information when it has reason to believe that the recipient intends to use it in connection with a credit transaction, employment decision purposes, insurance underwriting purposes, eligibility for a license or other governmental benefit, or otherwise has a legitimate business need for the information in connection with a business transaction involving the consumer. It can also supply information with the consumer's consent or pursuant to a valid judicial order or a subpoena from Federal Grand Jury proceedings. Additionally, under some circumstances, government officials can request credit reports. 15 U.S.C. §1681b. 

A credit-reporting agency does not have to delete obsolete information, but the agency cannot report it to a user. In general, adverse information can only be reported for seven years from when the action described occurred. However, bankruptcies can be reported for 10 years from when they are filed. 15 U.S.C. §1681c. 

Consumer rights 
The consumer has a right to be told the nature, substance, and source of all information in his or her file. However, the source of information used to prepare investigative reports need not be disclosed. 15 U.S.C. §1681g.

The consumer also has the right to be told the names and addresses of all persons who have received a consumer report about him or her within the past year. When the report has been used for employment purposes, the consumer can get the names and addresses of all who received the information in the past two years. 15 U.S.C. §1681g(a)(3).

The consumer-reporting agency can charge a fee of $8 for providing information to the consumer unless the consumer has been given notice of adverse action based on the credit report (such as a denial of credit) within the last thirty days. A consumer who is unemployed but seeking employment, or is receiving “public welfare” is entitled to one free report per year. 
If the consumer disputes the completeness or accuracy of any information in the agency's file, the consumer-reporting agency is obligated to reinvestigate the matter at no charge or delete the information.

The reinvestigation must be completed within thirty days with one fifteen-day extension allowed in some cases. 

If the consumer reporting agency concludes that the information was inaccurate or can no longer be verified, then it must delete the information immediately and inform the consumer of the right to request that the consumer reporting agency notify every user who has received a consumer report in the past six months (or two years for employment purposes) that the information has been deleted or corrected. 

If the agency decides the information is accurate, it must allow the consumer to add his or her own brief (fewer than 100 words) statement disputing the accuracy of the information to the file. 15 U.S.C. §1681i. 

Consumer remedies 
The consumer can sue both the user and the consumer-reporting agency for negligent noncompliance with the Act and can receive actual damages, costs, and attorney's fees. Punitive damages may be awarded if the noncompliance was willful. 15 U.S.C. §§1681n, 1681o. 

Elements of actual damages might include mental anguish, embarrassment, humiliation, or injury to reputation, family, work, or well being. Since the injury is similar to that in common law defamation, defamation cases may provide support for the plaintiff's damage claim.

The consumer can sue in either state or federal court. The action must be filed within two years from the date when the liability arises, whether or not the consumer was aware of the violation at that time. However, if the defendant materially and willfully misrepresented information that the Act requires to be disclosed, then the consumer can sue within two years of the discovery of the misrepresentation. 15 U.S.C. §1681p. 

This information has been provided by Jay Speer, Virginia Poverty Law Center.

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