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Fair Credit Reporting: Introduction and Table of Contents

This report is available online at www.ftc.gov. The online version of this report contains live hyperlinks.

Contents

Staff Report

I. Introduction

II. Evolution of the Fair Credit Reporting Act

III. FTC Enforcement of the FCRA

IV. FTC’s Regulatory and Interpretive Roles

V. FTC Staff Summary and Relationship to 1990 Commentary

Fair Credit Reporting: I. Introduction

The Fair Credit Reporting Act6 (“FCRA”) governs the collection, assembly, and use of consumer report information and provides the framework for the credit reporting system in the United States. The FCRA was enacted in 1970, and it has been amended several times in the ensuing years.

Fair Credit Reporting: V. FTC Staff Summary and Relationship to 1990 Commentary

Through the passage of time and the adoption of significant amendments to the FCRA, the 1990 Commentary has become partially obsolete, and does not reflect the most current interpretive guidance on the FCRA. Prior to the passage of the CFPA, FTC staff had been working on an updated Commentary as a replacement for the 1990 Commentary. As a result of the CFPA, however, much of the authority of the Commission and the federal financial agencies to publish rules, regulations, or guidelines under the FCRA transfers to the CFPB.

Fair Credit Reporting: Section 605(b)

Section 605(b) states that the time period limitations in section 605(a) “are not applicable in the case of any consumer credit report to be used in connection with (1) a credit transaction involving, or which may reasonably be expected to involve, a principal amount of $150,000 or more; (2) the underwriting of life insurance involving, or which may reasonably be expected to involve, a face amount of $150,000 or more; or (3) the employment of any individual at an annual salary which equals, or which may reasonably be expected to equal $75,000, or more.”

Fair Credit Reporting: Section 605(c)

Section 605(c) provides that the seven-year period for reporting accounts placed for collection, charged to profit or loss, or similar action by a creditor, “shall begin, with respect to any delinquent account that is placed for collection (internally or by referral to a third party, whichever is earlier), charged to profit and loss, or subjected to any similar action, upon the expiration of the 180-day period beginning on the date of the commencement of the delinquency which immediately preceded the collection activity, charge to profit and loss, or similar action.”

Fair Credit Reporting: Section 605(d)(1)

Section 605(d)(1) requires a CRA that provides a consumer report with bankruptcy information to include “an identification of the chapter of [Title 11, United States Code] under which such case arises if provided by the source of the information” and any voluntary withdrawal by the consumer before a final judgment “upon receipt of documentation certifying such withdrawal.”

Fair Credit Reporting: Section 605(d)(2)

Section 605(d)(2) requires most CRAs, in consumer reports that include a score, to disclose those cases in which the number of enquiries (requests for reports on the consumer) are a key factor that adversely affects the score.

Fair Credit Reporting: Sections 605(e), 605(f)

If an account has been voluntarily closed by the consumer, section 605(e) requires CRAs to include that fact in a report that refers to the account. If a consumer disputes an item, section 605(f) requires the CRA to indicate that fact in a consumer report that includes the disputed information.

Fair Credit Reporting: Section 605(g)

Section 605(g) provides that “no person that accepts credit cards or debit cards for the transaction of business shall print more than the last 5 digits of the card number or the expiration date upon any receipt provided to the cardholder at the point of the sale or transaction.” This section specifies that it requires card number truncation only on “electronically printed” receipts.

1. SCOPE

Fair Credit Reporting: Sections 605(h)(1), 605(h)(2)

Section 605(h)(1) provides that when a nationwide CRA receives a request for a consumer report that “includes an address for the consumer that substantially differs from the addresses in the file of the consumer,” the CRA shall notify the requester of the existence of the discrepancy when it provides the report.

Fair Credit Reporting: Section 605A—Identity Theft Prevention; Fraud Alerts and Active Duty Alerts 15 USC 1681c-1

Section 605A imposes duties on nationwide CRAs with respect to identity theft. Section 605A(a) requires such CRAs to include a 90-day initial fraud alert in a consumer’s file when the consumer “asserts in good faith a suspicion that the consumer has been or is about to become a victim of fraud or related crime.” Section 605A(b) requires nationwide CRAs to include a seven-year extended fraud alert when the consumer submits an “identity theft report” and to exclude the consumer from any “prescreening” lists for 5 years.

Fair Credit Reporting: Section 605B—Block of Information Resulting From Identity Theft 15 USC 1681c-2

Section 605B(a) requires CRAs to “block” the reporting of any information that the consumer identifies as information that resulted from an alleged identity theft, within 4 business days after it receives “(1) appropriate proof of the identity of the consumer; (2) a copy of an identity theft report; (3) the identification of such information by the consumer; and (4) a statement by the consumer that the information is not information relating to any transaction by the consumer.”

Fair Credit Reporting: Section 606—Disclosure of Investigative Consumer Reports 15 USC 1681d

Section 606(a) states that a person may not order an investigative consumer report on any consumer unless it is clearly and accurately disclosed to the consumer that an investigative consumer report including information as to his character, general reputation, personal characteristics, and mode of living (as applicable) may be made. The disclosure must be provided to the consumer no later than three days after the date on which the report was requested, and must inform the consumer of his or her right to request additional disclosures.

Fair Credit Reporting: Section 603(c)

Section 603(c) defines “consumer” to mean “an individual.”

1. GENERAL

The term “consumer” includes only a natural person. It does not include artificial entities, such as partnerships, corporations, trusts, estates, cooperatives, associations or entities created by statute, such as governmental agencies.67

Fair Credit Reporting: Section 607(c)

Section 607(c) states: “A consumer reporting agency may not prohibit a user of a consumer report furnished by the agency on a consumer from disclosing the contents of the report to the consumer, if adverse action against the consumer has been taken by the user based in whole or in part on the report.”

Fair Credit Reporting: Section 607(d)

Section 607(d) requires CRAs to “provide to any person (A) who regularly and in the ordinary course of business furnishes information. . . . with respect to any consumer; or (B) to whom a consumer report is provided by the agency, a notice of such person’s responsibilities” under the FCRA that is substantially similar to the content prescribed by the Commission. (Starting July 21, 2011, the Bureau assumes the authority to prescribe the content of the notice.)

1. PRESCRIBED NOTICES

Fair Credit Reporting: Section 607(e)

Section 607(e)(1) states, “A person may not procure a consumer report for purposes of reselling the report (or any information in the report) unless the person discloses to the consumer reporting agency that originally furnishes the report (A) the identity of the end-user of the report (or information); and (B) each permissible purpose under section 604 [§ 1681b] for which the report is furnished to the end-user of the report (or information).” Section 607(e)(2) requires persons who procure consumer reports for others to establish and comply with reasonabl

Fair Credit Reporting: Sections 609(a), 609(b)

Section 609(a) requires CRAs, upon request, to disclose to the consumer (1) “all information in the consumer’s file at the time of the request” (but not credit scores or other risk predictors), except that the CRA must truncate the consumer’s Social Security number if requested; (2) “sources of the information; except that the sources of information acquired solely for use in preparing an investigative consumer report and actually used for no other purpose need not be disclosed;” (3) except for some cases involving federal agencies and classified information, identificatio

Fair Credit Reporting: Section 609(c)

Section 609(c) directed the Commission to “prepare a model summary of the rights of consumers” under the FCRA, which CRAs must include in all written file disclosures to consumers. Starting July 21, 2011, the Bureau assumes responsibility for the summary. Nationwide CRAs also must include “a toll-free telephone number established by the agency, at which personnel are accessible to consumers during normal business hours.”

1. PRESCRIBED SUMMARY

Fair Credit Reporting: Section 603(d)(2)(A)(i)

Section 603(d)(2)(A)(i) excludes from the definition of consumer report “any report containing information solely as to transactions or experiences between the consumer and the person making the report.”

1. TRANSACTION OR EXPERIENCE INFORMATION

Fair Credit Reporting: Section 603(d)(2)(B)

Section 603(d)(2)(B) exempts from the definition of consumer report “any authorization or approval of a specific extension of credit directly or indirectly by the issuer of a credit card or similar device.”

1. GENERAL

A credit or debit card issuer’s written, oral, or electronic communication of its decision whether to authorize a charge, in response to a request from a merchant or other party that the consumer has asked to honor the card, is not a “consumer report.”98