1997 Amendments to Fair Credit Reporting Act
Extensive amendments to the Fair Credit Reporting Act ("FCRA") took effect on September 30, 1997. In large part, these amendments appear to be favorable to the interests of consumers. Following if a brief description of some of the important new provisions of the FCRA.
Several new provisions addressed the use of consumer reports. All persons and entities are now prohibited from obtaining or using a consumer credit report without a permissible purpose as defined in the FCRA. Before this amendment, consumer reporting agencies were prohibited from distributing reports to users who could not show a permissible purpose, but there was no companion prohibition applicable to the user who obtained or used the report without a permissible purpose. Under another amendment, businesses that procure consumer reports from consumer reporting agencies for the purpose of reselling the information are now required to certify to the consumer reporting agency the identity and permissible purpose of each person or entity to whom the reports are resold.
A number of the amendments have established new duties for creditors and others who provide information to consumer reporting agencies. Creditors who furnish information to consumer reporting agencies now have the duty to provide accurate information. Specifically, the FCRA prohibits the reporting of information when the creditor knows it is inaccurate or when the creditor "consciously avoids knowing" whether or not it is accurate. Creditors now have the duty to inform consumer reporting agencies when a consumer voluntarily elects to close a credit account. Creditors have also been given the duty to investigate information when notified by a consumer reporting agency that a consumer has disputed information provided by the creditor. The results of this investigation must be reported back to the consumer reporting agency within 30 days, even if the creditor has found the dispute to be frivolous. Further, if the creditor's investigation reveals that the information was incomplete or inaccurate, the creditor must also report these results to all other consumer reporting agencies to which it has provided this information.
The opportunity for consumers to receive information has been expanded. When a consumer requests to see the contents of his file and provides proper identification, consumer reporting agencies are now required to provide the consumer with copies of all information contained in the file, including the sources of that information. Consumer reporting agencies are further required to inform the consumer of all persons or businesses who have obtained reports regarding this consumer within the past year (or the past two years, if obtained for employment purposes). Before this amendment, the FCRA required only that the consumer be provided with a summary of the "nature and substance" of the information in his file.
In each instance in which file contents are disclosed to a consumer, consumer reporting agencies are now further required to provide the consumer with a written notice of the consumer's rights under the FCRA. These notices must include an explanation of procedures for exercising the consumer's rights and the name, address, and telephone number of all federal agencies responsible for enforcement of the FCRA. Model notices have been promulgated by the Federal Trade Commission ("FTC"), and consumer reporting agencies are allowed to use the FTC form or another form that is "substantially similar."
Two additional notice requirements have also been added to the FCRA. Consumer reporting agencies are now required to provide notices to (i) regular furnishers of information to be included in consumer reports and (ii) users of consumer reports, which describe these entities' responsibilities under the FCRA. The FTC has promulgated model forms for these notices as well, and consumer reporting agencies are allowed to use the FTC forms or other forms that are "substantially similar." The FTC will also publish guidelines regarding when and how often these notices must be provided, in order to assuage concerns that have been raised regarding repeat furnishers and repeat users.
Several amendments addressed the accuracy of the information contained in consumer reports. When a consumer disputes an item of information contained in a report, the consumer reporting agency is now required to note on all subsequent reports that a dispute exists. When a consumer disputes an item of information, consumer reporting agencies now have only 30 days to complete an investigation regarding the accuracy of the information. Before this amendment, the FCRA required that this investigation be completed within a "reasonable period of time." When a consumer reporting agency deletes information from a report because it was inaccurate or could not be verified, it must now take measures to ensure that this information does not reappear again later. Consumer reporting agencies are now required to state in reports that a consumer has voluntarily elected to close a credit account.