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Fair Credit Reporting: 15.3.2.2 Two Exceptions that Specifically Apply to Employment Purposes

Pursuant to a specific exception in the Act, interviews and investigations conducted by employment agencies are usually not investigative consumer reports.80 If the employment agency is communicating to a prospective employer, with the consent of the consumer, either for the purpose of procuring a work opportunity for the consumer or for the purpose of procuring an employee for the employer, then the communication is not a consumer report at all.

Fair Credit Reporting: 15.3.3 Reports for Landlords

A third basis for an investigative report might be to evaluate a prospective tenant on behalf of a landlord. Such reports are increasingly less likely these days, but they pose a high likelihood that landlords will not comply with the FCRA’s requirements concerning such reports.

Fair Credit Reporting: 15.3.4 Other Types of Investigative Reports

Although most investigative consumer reports involve queries by employers, insurers, or landlords, an investigative report can be produced for any purpose that a consumer report is issued. An investigative report is just a consumer report that includes subjective information from third-party interviewees.98

Fair Credit Reporting: 15.4.1.1 Generally

Any “person” requesting an investigative report must provide notice to the consumer that an investigative consumer report may be made;101 the FCRA defines person as including individuals, corporations, trusts, governments, governmental subdivisions or agencies, or any other entity.102 In addition, the user must certify to the consumer reporting agency (CRA) that it has provided this notice to the consumer and will upon proper request disclose the nature and scope of the investigation.

Fair Credit Reporting: 15.4.1.2 When Notice Must Be Sent

The user must mail a notice of the investigative report to the consumer not later than three days after the user’s first request to the CRA that it prepare a report on the consumer.105 The obligation to provide this notice arises if the CRA collects information, even if the investigation is called off before the CRA delivers any oral or written report to the requesting party.106 Unfortunately, arguably the user may issue this notice at any time prior to the request for an investigation,

Fair Credit Reporting: 15.4.1.3 Content of Notice

The notice should inform the consumer that a request for an investigative consumer report may be made and should describe the information that the report will seek, including, as applicable, information on the consumer’s character, general reputation, personal characteristics, and mode of living.116 The disclosure must also state that an investigative consumer report involves personal interviews with sources such as friends, neighbors, and associates.117 This is the information that will

Fair Credit Reporting: 15.4.1.4 Form of Notice

The notice must be in writing124 and must be mailed or otherwise delivered to the consumer.125 The notice must clearly and accurately disclose that an investigative consumer report may be made.126 The FTC staff has drafted and published a form that it deems adequate.127

Fair Credit Reporting: 15.4.1.6 Relationship to Notice of Adverse Action Based on Consumer Report

Consumers who may be the subject of an investigative consumer report may receive from the user two different notices. The requisite notice of the possibility that a user may procure an investigative consumer report alerts a consumer that an investigation may occur. The first, given in writing no later than three days after the user’s request for the report, describes the information the investigation will seek.

Fair Credit Reporting: 15.4.2.1 Generally

Within a reasonable amount of time from the receipt of the initial notice, the consumer can seek from the person that requested the report a complete and accurate disclosure of the nature and scope of the investigation requested.140 The disclosure is provided by the person requesting the investigation (that is, the user), and not from the individual who in fact conducts the investigation. Thus, the requester/user is disclosing what the requester is asking the investigator to investigate, not what in fact is investigated.

Fair Credit Reporting: 15.4.2.2 User Must Disclose Questions Asked, Not Answers Given

The FCRA requires that upon the consumer’s request, the person procuring the report must completely and accurately disclose “the nature and scope of the investigation requested.”143 According to the FTC Staff Summary, the requester’s disclosure must include a complete and accurate description of the types of questions asked, the number and types of persons interviewed, and the name and address of the investigating agency.144 The user need not provide the consumer with a copy of the actua

Fair Credit Reporting: 15.4.2.3 Disclosure of Names of Sources Interviewed Not Required

The FTC Staff Summary states that users need not disclose the names of sources of information, that is, the names of individuals interviewed.156 This is derived from the FCRA’s provision that protects CRAs (though not users) from the obligation to provide names of individuals interviewed for investigative consumer reports.157 This FCRA exception was inserted in response to claims by the reporting industry that if the identities of the persons interviewed in investigations were not kept c

Fair Credit Reporting: 15.4.2.4 Form of Disclosure

The user must disclose to the consumer the nature and scope of the requested investigation in writing, and must mail or otherwise deliver it to the consumer within five days of receipt of the consumer’s request for the disclosure or of the date the investigation was requested, whichever is later.162 The FTC Staff Summary suggests that the user can properly disclose the nature and scope of the requested investigation by providing the consumer with a blank copy of the standardized form used to transmit the report from the CRA to the user.

Fair Credit Reporting: 15.4.3 Users’ Reasonable Procedures Defense

Users may be required to make three different disclosures: disclosure that an investigatory consumer report may be requested, the provision of additional information about an investigative consumer report upon the consumer’s request, and notification that a consumer report is at least in part the basis for an adverse determination against the consumer.164 Users cannot be held liable for a violation of any of their three disclosure requirements relating to investigative reports if the user can show “by a preponderance of the evidence that

Fair Credit Reporting: 15.4.5 Waiver of Consumer Rights

Employers, insurers, or others requesting investigative reports may attempt to avoid the FCRA notice requirements by seeking a waiver from the consumer. For example, an employer might require all job applicants to sign a form that contains an express waiver of their right to request disclosure of the nature and scope of any investigative report. The employer might even seek a broader waiver of all disclosure rights the consumer might have concerning any consumer report.

Fair Credit Reporting: 15.5.2 Keeping Inaccurate Information Out of the Investigative Report

To ensure that the information in an investigative report is accurate, the consumer should first respond to the notice that an investigatory report may be requested by asking the user for additional information about the requested investigation. The consumer should seek this information promptly, because the Act requires the user to provide additional information only if the consumer requests it within a reasonable period after receiving the first notice of the user’s request for an investigatory report.

Fair Credit Reporting: 15.6.2.1 Information from Personal Interviews

To guard against the inclusion of unsubstantiated information in investigative consumer reports, a CRA that interviews a consumer’s neighbor, friend, or other associate must follow “reasonable procedures” to confirm any interview information that is adverse to the consumer with an additional source having independent and direct knowledge of the information.211 The CRA may escape this confirmation requirement, however, if the person interviewed is the “best possible source of the information.”212

Fair Credit Reporting: 15.6.2.3 Verification of Information for Re-use in Subsequent Investigative Report

If a CRA prepares an investigative consumer report that contains adverse information, the CRA may not include that information in a subsequent consumer report unless the information “has been verified in the process of making such subsequent consumer report.”217 The required verification does not refer to the initial process to obtain the information, but to a verification made at the time of a subsequent report of the same information.

Fair Credit Reporting: D.1 Introduction

In July 2011, the Federal Trade Commission issued a report entitled 40 Years of Experience with the Fair Credit Reporting Act: An FTC Staff Report with Summary of Interpretations (hereinafter FTC, 40 Years Staff Report Accompanying FTC Staff Summary). This report included a summary of the FTC’s key interpretations and guidance concerning the Fair Credit Reporting Act.

Fair Credit Reporting: H.1 Introduction

This appendix provides a state-by-state analysis of state laws that affect a consumer’s credit report. Most states have a state fair credit reporting statute. A number of states have also enacted statutes that: