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1.3.1 Overview

The Fair Credit Reporting Act (FCRA)25 is a federal statute that was signed into law in October 26, 1970, and first became effective April 25, 1971. It regulates the activities of consumer reporting agencies (CRAs), the users of reports, and those who furnish information to CRAs (furnishers). The Act also provides remedies to consumers affected by such reports.

A separate, related statute, the federal Credit Repair Organization Act (CROA),26 regulates credit repair organizations—businesses which, for a fee, help improve a consumer’s credit history. These Acts are part of the larger “package” of acts contained in the federal Consumer Credit Protection Act,27 such as the Truth in Lending Act and the Fair Debt Collection Practices Act. Like other chapters of the federal Consumer Credit Protection Act, the Fair Credit Reporting Act is to be construed liberally.28 As the Third Circuit has noted:

[T]he breadth and scope . . . is both evident and extraordinary . . . Moreover, it is undeniably a remedial statute that must be read in a liberal manner in order to effectuate the congressional intent underlying it . . . [I]t is imperative that we do not allow a company that traffics in the reputations of ordinary people a free pass to ignore the requirements of the FCRA each time it creatively incorporates a new piece of personal consumer information in its reports.29

The FCRA’s purpose is “to require that consumer reporting agencies adopt reasonable procedures for meeting the needs of commerce for consumer credit, personnel, insurance, and other information in a manner which is fair and equitable to the consumer, with regard to the confidentiality, accuracy, relevancy, and proper utilization of such information.”30 In general, the Act applies to situations in which a person collects information on a “consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living.”31 This information is used by a third party as a basis for denying or increasing the charge for “credit or insurance to be used primarily for personal, family, or household purposes.”32 The Act also applies if this information is used for purposes relating to employment opportunities, government benefits, or certain other business transactions.33

The FCRA attempts to protect consumers’ privacy and reputations by placing various obligations on persons who use or disseminate credit information about consumers. Consumer reporting agencies must adopt reasonable procedures to ensure that the information they disseminate is accurate and up-to-date and that it is furnished only to users with certain permissible purposes.34

The Act imposes disclosure obligations for both CRAs and users. These are designed to ensure that consumers will know when a consumer report has been used as the basis of action adverse to their interest35 and that consumers will know what information is being disseminated about them.36 CRAs also must reinvestigate information that consumers dispute and inform users of the report of the dispute.37 Those who furnish information to CRAs must participate in an agency’s reinvestigation and are subject to other duties.38 Additionally, the Act makes it an offense for a user to obtain information on a consumer under false pretenses,39 or for an officer or an employee of a reporting agency to furnish such information to an unauthorized person.40

The Act contains a number of measures designed to prevent identity theft and provide victims with tools to remedy the harms caused by such theft.41 The Act limits the amount of time that harmful information can stay on a consumer report, providing a type of fresh start for some consumers.42 It also has requirements for disputed information and restricts certain kinds of sensitive information from being disseminated.43 The Act provides consumers with a civil remedy for most violations of the Act.44

Note that the FCRA’s fundamental premise that credit reporting is permitted, albeit with certain restrictions, is not universally accepted around the world. Other countries, such as France and Argentina, have restricted the reporting of consumers’ credit information to third parties that seek to create databases of such information.45

Footnotes

  • 25 15 U.S.C. §§ 1681 to 1681x.

  • 26 15 U.S.C. §§ 1679 to 1679j.

  • 27 15 U.S.C. §§ 1601 to 1693r.

  • 28 Jones v. Federated Fin. Reserve Corp., 144 F.3d 961, 964 (6th Cir. 1998) (FCRA is to be construed liberally in favor of consumer); Wagner v. TRW, Inc., 139 F.3d 898 (5th Cir. 1998) (per curiam; same); Guimond v. Trans Union Credit Info. Co., 45 F.3d 1329 (9th Cir. 1995). See also Miller v. Trans Union, L.L.C., 644 Fed. Appx. 444, 450–451 (6th Cir. 2016) (“[t]o the extent ambiguities reside in the text of the Act, it ‘is to be liberally construed in favor of the consumer,’” quoting Jones v. Federated); Simonoff v. Expedia, Inc., 643 F.3d 1202, 1210 (9th Cir. 2011) (FCRA “as a remedial statute, should be construed liberally, and its exceptions should be read narrowly”); Kates v. Crocker Nat’l Bank, 776 F.2d 1396, 1397 (9th Cir. 1985) (FCRA is to be liberally construed, though read in such a way that provisions give meaning to each other); Freckleton v. Target Corp., 81 F. Supp. 3d 473, 481 (D. Md. 2015) (“consumer oriented objectives support a liberal construction of the FCRA,” citing Guimond); Williams v. First Advantage LNS Screening Sols., Inc., 155 F. Supp. 3d 1233, 1251 (N.D. Fla. 2015) (same); Ramos v. Genesis Healthcare, L.L.C., 141 F. Supp. 3d 341, 347 (E.D. Pa. 2015) (FCRA “should be broadly construed and its exceptions be narrowly applied,” citing Cortez v. Trans Union); Haley v. TalentWise, Inc., 9 F. Supp. 3d 1188, 1192 (W.D. Wash. 2014) (“consumer oriented objectives support a liberal construction of the FCRA,” citing Guimond); Taylor v. Screening Reports, Inc., 294 F.R.D. 680, 685 (N.D. Ga. 2013) (FCRA is “a remedial statute with ‘consumer oriented objectives support[ing] a liberal construction’ of its terms in favor of the consumer,” quoting Jones and Guimond); Toliver v. Experian Info. Solutions, Inc., 973 F. Supp. 2d 707, 713 (S.D. Tex. 2013) (“[t]he FCRA is to be liberally construed in favor of the consumer,” quoting Wagner v. TRW, Inc.); Howley v. Experian Info. Solutions, Inc., 813 F. Supp. 2d 629, 634 (D.N.J. 2011) (Congress’s consumer oriented objectives support liberal construction); Johnson v. ADP Screening & Selection Services, Inc., 768 F. Supp. 2d 979, 983 (D. Minn. 2011) (remedial statutes such as FCRA construed liberally; however, court must always consider Act’s precise language to define its parameters); Holmes v. Telecheck Int’l, Inc., 556 F. Supp. 2d 819, 830 (M.D. Tenn. 2008) (“Court should liberally construe the FCRA in favor of the consumer”); Saunders v. Equifax Info. Services, L.L.C., 469 F. Supp. 2d 343, 356 (E.D. Va. 2007), aff’d sub nom. Saunders v. Branch Banking & Trust Co., 526 F.3d 142 (4th Cir. 2008) (FCRA must be liberally construed in support of purpose to protect consumers from inaccurate information, citing Jones); Boris v. Choicepoint Services, Inc., 249 F. Supp. 2d 851, 863 (W.D. Ky. 2003) (FCRA is intended to protect consumers and is to be liberally construed, citing Jones); Lewis v. Ohio Prof’l Elec. Network L.L.C., 190 F. Supp. 2d 1049, 1056 (S.D. Ohio 2002) (same).

  • 29 Cortez v. Trans Union, L.L.C., 617 F.3d 688, 721–722 (3d Cir. 2010). Accord Seamans v. Temple Univ., 744 F.3d 853, 868 (3d Cir. 2014).

  • 30 15 U.S.C. § 1681(b). See also S. Rep. No. 91-139 (1970); Hearings on H.R. 16340, Before the Subcomm. on Consumer Affairs of the H. Comm. on Banking and Currency, 91st Cong. (1970); Dea, FTC Informal Staff Opinion Letter (May 1, 1974), available online as companion material to this treatise (purpose of Act to “protect privacy of consumers from unrestricted dissemination of information about them by third parties in the business of compiling and selling reports,” and to ensure accuracy of reported information).

  • 31 15 U.S.C. § 1681a(d)(1).

  • 32 15 U.S.C. § 1681a(d)(a)(A).

  • 33 See 15 U.S.C. § 1681(b). See also 15 U.S.C. §§ 1681b(a)(3), 1681d, 1681m. See generally Chs. 2 and 7, infra.

  • 34 15 U.S.C. §§ 1681e, 1681k, 1681l. See generally Chs. 4 and 7, infra.

  • 35 15 U.S.C. § 1681m. See generally Ch. 8, infra.

  • 36 15 U.S.C. §§ 1681d, 1681g, 1681h.

  • 37 15 U.S.C. § 1681i. See generally Ch. 4, infra.

  • 38 15 U.S.C. § 1681s-2. See generally Ch. 6, infra.

  • 39 15 U.S.C. § 1681q. See generally Ch. 7, infra.

  • 40 15 U.S.C. § 1681r.

  • 41 15 U.S.C. §§ 1681c-1, 1681c-2, 1681s-2. See generally Ch. 9, infra.

  • 42 15 U.S.C. § 1681c. See generally Ch. 5, infra.

  • 43 15 U.S.C. §§ 1681c, 1681s-2. See generally Ch. 5, infra.

  • 44 15 U.S.C. §§ 1681n, 1681o. See generally Ch. 11, infra.

  • 45 Lawrence J. Speer, French Data Protection Authority Nixes Request to Build Credit History Database, 88 Banking Rep. (BNA) 17, at 767 (Apr. 30, 2007) (French regulator refused to authorize Experian’s proposed comprehensive database on the credit history of French consumers); David Haskel, Argentina High Court Denies Credit Reporters Access to Delinquent Credit Card Information, 88 Banking Rep. (BNA) 11, at 512 (Mar. 19, 2007) (Argentina’s Supreme Court ruling that credit cardholder’s information cannot be revealed to commercial credit reporting firms based on Argentinean credit card law).