Fair Credit Reporting Act
The 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. Along with the Fair Debt Collection Practices Act (FDCPA), it forms the base of consumer credit rights in the United States. It was originally passed in 1970, and is enforced by the US Federal Trade Commission and private litigants.
The Fair Credit Reporting Act, as originally enacted, was title VI of Pub.L. 91–508, 84 Stat. 1114, enacted October 26, 1970, entitled An Act to amend the Federal Deposit Insurance Act to require insured banks to maintain certain records, to require that certain transactions in United States currency be reported to the Department of the Treasury, and for other purposes. It was written as an amendment to add a title VI to the Consumer Credit Protection Act, Pub.L. 90–321, 82 Stat. 146, enacted June 29, 1968.
Consumer reporting agencies
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 per year. The free report can be requested by telephone, mail, or through the government-authorized website, annualcreditreport.com.
- If 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).
The 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 Texas, if a consumer tries to dispute information with Equifax directly, they must go through CSC Credit Services, a subsidiary of Equifax.
Nationwide specialty consumer reporting agencies
In 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(x) 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 relating to:
- medical records or payments;
- residential or tenant history;
- check writing history;
- employment history; or
- insurance claims.
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 consumer who requests disclosure. A partial list of companies classified as nationwide specialty consumer reporting agencies under FCRA includes: Telecheck, ChoicePoint, Acxiom, Integrated Screening Partners, 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.
A creditor, as defined by the FCRA, is a company that furnishes information to consumer reporting agencies. Typically, these are creditors, with which a consumer has some sort of credit agreement (such as credit card companies, auto finance companies and mortgage banking institutions).
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. Lenders have an important role to play in ensuring credit reports are accurate. Under the FCRA, these information furnishers may only report a consumer's credit report under the following guidelines:
- They must provide complete and accurate information to the credit reporting agencies.
- The 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.
(This 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):
Notice 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.
Notice 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.
- They must notify the consumer when an adverse action is taken on the basis of such reports.
- 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.
Under the FCRA, employers are required to follow specific procedures when they use consumer reporting agencies to obtain consumer reports or investigative consumer reports on employees and / or job applicants for “employment purposes.” Covered reports can include credit checks, motor vehicle records and driving history and criminal background information, and other types of information.  The Consumer Financial Protection Bureau has issued updated FCRA notices that employers and consumer reporting agencies must use when conducting background checks on employees or job applicants. The revised forms, which must be used effective January 1, 2013, are available in Appendices K, M and N at the end of Title 12 of the Code of Federal Regulations Part 1022 and are substantively the same as the previously used forms. 
Credit report errors
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." In 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 Michigan insurance department in 2002. By law, consumers can invoke their rights under the FCRA to review and correct their credit reports.
The Fair and Accurate Credit Transactions Act ("FACTA") of 2003 has allowed easier access to consumers wishing to view their reports and dispute items.
For willful noncompliance with the act, a consumer may, under § 616 (15 U.S.C. § 1681n), recover the greater of either actual damages or a statutory minimum of $100 to maximum of $1000, plus possible punitive damages, as well as reasonable attorney's fees and costs. 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 a suit in state or federal court to enforce the Act, and the statute of limitations is the earlier of two years from discovery of the violation or five years from the date of the violation. (15 U.S.C. § 1681p.)
While database companies like LexisNexis, Westlaw, ChoicePoint, and eFunds (owner of ChexSystems) do not create credit reports per se, they may gather the same types of information and as a result may subject some of their actions to FCRA, e.g. when they provide such information to insurance companies, banks and other entities which may deny services, or favorable rates for services, based on that information.
An excerpt of the 1999 FTC advisory opinion states:
- An 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 record" sources.
- 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 ...". In 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.
- Adverse Credit History
- Background check
- Credit card
- Credit history
- Credit rating agency
- Credit score
- Fair and Accurate Credit Transactions Act
- Fair Credit Billing Act
- Identity theft
- Identity Theft Resource Center
- Political and Economic Research Council -- think tank who did much of the research for FCRA reauthorization
- Tenant Screening
- Dlabay, Les R.; Burrow, James L.; Brad, Brad (2009). Intro to Business. Mason, Ohio: South-Western Cengage Learning. p. 471. ISBN 978-0-538-44561-0.
- "Budgeting Tools". Money Management. Retrieved 2 October 2012.
- "Provisions of New Fair and Accurate Credit Transactions Act Will Help Reduce Identity Theft and Help Victims Recover: FTC". Ftc.gov. 2011-06-24. Retrieved 2012-10-02.
- [dead link]
- "Home". E-Oscar. Retrieved 2012-10-02.
- "Text of the Fair Credit Reporting Act, 15 U.S.C. § 1681a". Ftc.gov. Retrieved 2012-10-02.
- [dead link]
- "Do a Total Background Check on Yourself - Annual Consumer Reporting Agencies". AnnualMedicalReport.com. Retrieved 2012-10-02.
- "WILLIAMS: Credit agencies are the messengers". Washington Times. 2009-01-19. Retrieved 2012-10-02.
- Rumbaugh, Eric H.; Jason A. Kunschke; Michael Best & Friedrich LLP (August 8, 2013). "Fair Credit Reporting Act Background Checks Remain a Hot Topic for Employers". The National Law Review. Retrieved 10 November 2013.
- Cooper, Marion B.; Drinker Biddle & Reath LLP (February 1, 2013). "January 1, 2013: New Fair Credit Reporting Act “FCRA” Forms Required by New Enforcement Agency". The National Law Review. Retrieved 10 November 2013.
- "Mistakes Do Happen: A Look at Errors in Consumer Credit Reports". United States Public Interest Research Group. Archived from the original on 2006-06-15. Retrieved 2006-09-04.
- "Statement for the Record Before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate". Gao.gov. Retrieved 2012-10-02.
- "Credit Report Accuracy and Access to Credit". Federalreserve.gov. Retrieved 2012-10-02.
- [dead link]
- "Allstate Insurance Company’s Additional Written Testimony: July 23, 2002". Michigan.gov. Retrieved 2012-10-02.
- "FCRA Staff Opinion: Haynes-Sum". Ftc.gov. 2011-06-24. Retrieved 2012-10-02.
- Text of the law from the Federal Trade Commission
- FTC Opinions on the Fair Credit Reporting Act
- Consumer attorney's testimony testifying as to how credit report disputes are actually normally handled, in violation the Act.
- Mymoney.gov, U.S. Financial Literacy and Education Commission
- The Fair Credit Reporting Act (FCRA) and the Privacy of Your Credit Report Electronic Privacy Information Center (EPIC)