Fair Credit Reporting Act


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Fair Credit Reporting Act

The Fair Credit Reporting Act (FCRA) is legislation embodied in title VI of the Consumer Credit Protection Act (15 U.S.C.A. § 1681 et seq. [1968]), which was enacted by Congress in 1970 to ensure that reporting activities relating to various consumer transactions are conducted in a manner that is fair to the affected individual, and to protect the consumer's right to privacy against the informational demands of a credit reporting company.

FCRA represents the first federal regulation of the consumer reporting industry, covering all credit bureaus, investigative reporting companies, detective and collection agencies, lenders' exchanges, and computerized information reporting companies.

The consumer is guaranteed several rights under the FCRA, including the right to a notice of reporting activities, the right of access to information contained in consumer reports, and the right to the correction of erroneous information that may have been the basis for a denial of credit, insurance, or employment. When a consumer is denied an extension of credit, insurance, or employment owing to information contained in a credit report, the consumer must be given the name and address of the credit bureau that furnished the credit report. Consumers are also entitled to see any report that led to a denial, but agencies are not required to disclose risk scores to them. Risk scores (or other numerical evaluation, however named) are assigned by consumer reporting agencies to help clients interpret the agency's report. Credit agencies may not report adverse information older than seven years or bankruptcies older than ten years.

The provisions of the FCRA apply to any report by an agency relating to a consumer's creditworthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living. The FCRA covers information that is used or expected to be used in whole or part as a factor in establishing the consumer's eligibility for one of four purposes:(1) employment; (2) credit or insurance for personal, family, or household use; (3) government benefits and licenses to operate particular businesses or practice a profession; and (4) other legitimate business needs. Under the FCRA, an agency may also furnish a report in response to a court order or a federal Grand Jury subpoena, to a written authorization from the consumer, or to a summons from the Internal Revenue Service.

The FCRA creates civil liability for consumer reporting agencies and users of consumer reports that fail to comply with its requirements. For example, the Joneses, owners and operators of a real estate appraisal business, sued a consumer reporting agency under the FCRA. The Joneses claimed that the agency incorrectly reported a judgment against their business. The Supreme Court of Appeals upheld a jury's award, which included compensatory and Punitive Damages (Jones v. Credit Bureau of Huntington, Inc., 184 W.Va. 112, 399 S.E.2d 694[1990]). A consumer reporting agency includes any person or corporation that, for monetary fees, dues, or on a cooperative nonprofit basis, regularly assembles or evaluates credit information or other information on consumers for the purpose of furnishing consumer reports to third parties, and uses any means or facility of interstate commerce for the purpose of preparing or furnishing consumer reports. A retail department store or another comparable business that furnishes information to consumer reporting agencies based on its experience with consumers is not considered a consumer reporting agency under the FCRA (DiGianni v. Stern's, 26 F.3d 346 [2d Cir. 1994], cert. denied, 513 U.S. 897, 115 S. Ct. 252, 130 L. Ed. 2d 173).

Since its enactment, the FCRA has not undergone major reform. However, legislation has been proposed to address the issues that have arisen from a technological explosion created by a large increase in consumer debt and the information that it generates. In addition, states have enacted comparable statutes covering consumer's rights.

Further readings

American Marketplace Business Publishers. 1992. House Panel Approves Overhaul of Fair Credit…."

Askew, Kim J. 2001. "The Fair Credit Reporting Act: Congress Expands the Privacy Rights of Employees." Corporate Counsel's Quarterly 17 (April).

"Bank's Reporting to a Local Credit Bureau of Its Own Credit Experience with a Delinquent Borrower Was Not Covered by the Fair Credit Reporting Act." 1995. The Banking Law Journal.

Blair, Roger D., and Virginia G. Maurer. 1984. "Statute Law and Common Law: The Fair Credit Reporting Act." Missouri Law Review 49 (spring).

Jacquez, Albert S., and Amy S. Friend. 1993."The Fair Credit Reporting Act: Is It Fair for Consumers?" Loyola Consumer Law Reporter.

Porter, J. Isaac. 1994. "Protecting Against Disclosure of Consumer Data: A Complicated Issue." Banking Policy Report.

Smith, Nancy. 1996. "The SEC Speaks." Practising Law Institute. Corporate Law and Practice Course Handbook Series. 949:487.

Worsley, David E. 2002. "Fair Credit Reporting Cases Illustrate Risks for Credit Reporting Agencies, Creditors, and Lawyers." Consumer Finance Law Quarterly Report 56 (winter).

Cross-references

Consumer Credit; Consumer Protection.

References in periodicals archive ?
Specifically, the Board is revising and expanding the delegation of authority to the Director of Division of Consumer and Community Affairs to include: issuing interpretations under the Fair Credit Reporting Act, adjusting the dollar amount to determine coverage under the Home Ownership and Equity Protection Act, adjusting the depository institution exemption threshold under the Home Mortgage Disclosure Act, making certain determinations under the Community Reinvestment Act regulations, and holding public hearings on financial service issues in keeping with congressional mandates.
After an 11th-hour attempt by two Senate Democrats to add a controversial amendment, the full Senate reauthorized the Fair Credit Reporting Act, which frees insurers and bankers from having to contend with 50 different states' privacy laws.
The proposed rulemaking would implement the affiliate marketing provisions in section 214 of the Fair and Accurate Credit Transactions Act of 2003 (FACT Act), which adds a new section 624 to the Fair Credit Reporting Act (FCRA).
Pete Sessions (R-TX) would amend the Fair Credit Reporting Act to allow employers to conduct certain investigations without notifying the employee in question.
The Fair Credit Reporting Act allows you to receive one free report every 12 months if(I) you are unemployed, but plan to get a job within 60 days, (2) you are on welfare or (3) your report is inaccurate due to fraud.
5) (i) To a consumer reporting agency in accordance with the Fair Credit Reporting Act (15 U.
Be forewarned that the Fair Credit Reporting Act identifies employment as a just reason for an employer to check your credit.
Carter has defended numerous class actions in both state and federal courts, including actions for violation of the consumer fraud statutes, the Fair Debt Collection Practices Act, the Credit Repair Organization Act, and the Fair Credit Reporting Act.
ControlPath's automated compliance tools will manage the efforts of all three firms as they comply with all applicable governmental regulations and laws including the Sarbanes-Oxley Act (SOX), Gramm-Leach-Bliley Act (GLBA), Fair Credit Reporting Act (FCRA), Payment Card Industry Data Security Standard (PCIDSS), Health Insurance Portability and Accountability Act (HIPAA), and state privacy laws.
Again, privacy is on Congress' agenda because several provisions of the Fair Credit Reporting Act are due to sunset in 2003.
Fena says eventually Internet privacy laws may need to take the shape of the Federal Fair Credit Reporting Act, which gives people the ability to find out what is in their report and who has accessed it, as well as correct mistakes.
Federal banking agencies announced on March 14, 2001, that any final Fair Credit Reporting Act (FRCA) rule will not require depository institutions to revise Gramm-Leach-Bliley (GLB) Act privacy notices prepared in accordance with existing FCRA law and delivered to consumers before January 2002.