Last updated Oct 21, 2020
Disclaimer: This website is neither an exhaustive summary of the Fair Credit Reporting Act (FCRA) nor legal advice for you to use in complying with it. Instead, it provides background information to help you better understand the FCRA and how it can apply to your business. This legal information is not the same as legal advice, where an attorney applies the law to your specific circumstances, so you should consult an attorney if you’d like advice on your interpretation of this information or its accuracy. You may not rely on this paper as legal advice, nor as an endorsement of any particular legal understanding.
The Fair Credit Reporting Act is not just about credit. Many companies believe that they are beyond the reach of the Fair Credit Reporting Act (FCRA) because they do not engage in typical “credit” reporting; however, such beliefs are erroneous. Rather, the FCRA regulates a sprawling spectrum of products and industries ranging from insurance to retail to energy. The FCRA further governs all those involved in the consumer report chain of custody – furnishers, consumer reporting agencies (CRAs), and users of consumer information.
There are five major groups affected by the FCRA. These five major groups include furnishers, resellers, consumers, consumer reporting agencies, and end-users. Furnishers have a private financial relationship with consumers.
Furnishers have databases and provide credit information to consumer reporting agencies. Furnishers provide both monetary information on consumers and credit history. They also provide information on consumers criminal history or public record history.
Consumers are ordinary people engaged in specific transactions and may request information or file a dispute. These are individuals, not corporate entities, who are protected under FCRA and have no correlating duties. Consumers are provided with several rights, such as the right to reasonable procedures, disclosures, authorization, adverse action procedures and access for disputes and reinvestigations. Consumer Reporting Agencies compile information on the credit worthiness of a client, gather public records and evaluate information in request to a third party.
End-users receive information from consumer reporting agencies and resellers and make employment or credit related decisions. End-users include lenders, property management companies, landlords, employers, insurance companies, banks, and/or anyone granting credit or making a tenant screening decision.
End-users have obligations upon taking “adverse actions” against a consumer based on the contents of a consumer report. An adverse action is an action companies take based on the information in a consumer report that ultimately negatively affects an applicant. A decision to take “adverse action” against a consumer based on the information in a consumer report creates obligations at that time to the consumer and triggers adverse action requirements.
Resellers are a specific type of consumer reporting agency. They are consumer reporting agencies, but they do not maintain their own databases. They submit requests to traditional CRAs to get information regarding a consumer on behalf of an end-user that has contracted with them to gather information on a consumer. Resellers act as conduits just passing on information from another consumer reporting agency.
Reseller duties include:
- Inform CRA from which report was obtained and the identity and permissible purposes of the end user.
- Maintain reasonable procedures to ensure that end user has permissible purpose.
- Passing dispute onto originating CRA.
Resellers are not the originator of information and as such are not required to conduct reinvestigations or required to provide consumer disclosures.
5. Consumer Reporting Agency
A Consumer Reporting Agency is any person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part the practice of assembling or evaluation of consumer credit information.
Consumer Reporting Agencies have five basic duties:
- Maintain “reasonable procedures to assure maximum accuracy” of reports.
- Provide consumer reports to only those with a “permissible purpose.
- Conduct “reinvestigations” in the event of a consumer dispute.
- Make “disclosures” to consumers.
- Properly disclose of consumer information.
Continue to Accuracy and Reasonable Procedures, or jump to a different article.
- Fundamentals of The Fair Credit Reporting Act (FCRA)
- Industry Players Under FCRA
- Accuracy and Reasonable Procedures
- FCRA Permissible Purpose
- Adverse Action Notification
- Reinvestigation, Disclosures, Disposal of Consumer Information
- What is a Consumer Report?
- A summary of consumer rights under FCRA
- FCRA Litigation
- State Versions of FCRA and FCRA California