Fair Credit Reporting: 5.2.3.2.1 Furnisher’s duty to provide the date of delinquency
Unless informed by the furnisher, a CRA has no way of knowing when the delinquency commenced and hence when the information becomes obsolete.
Unless informed by the furnisher, a CRA has no way of knowing when the delinquency commenced and hence when the information becomes obsolete.
The standard automated data reporting format created by the credit reporting industry, known as Metro 2,75 refers to the date of commencement of the obsolescence period as the “Date of First Delinquency.” This is the same date which the FCRA requires furnishers to provide in order to establish the start of the obsolescence period.76 The Metro 2 Manual contains several discussions of how to calculate this date.77
As a general rule, any adverse item (other than criminal conviction records and the five types of information specifically listed in the statute) cannot antedate the report by more than seven years.101 This rule applies to information about delinquent loans other than those placed for collection or charged to profit and loss.102
Accounts placed for collection and charged to profit and loss are subject to a slightly different seven-year rule.112 Seven years are counted from the date that the delinquency begins, and then the information can be reported for an extra 180 days.113 If an account is placed for collection, charged to profit or loss, or subjected to similar action, more than 180 days after the preceding delinquency, the debt still may only be included in consumer reports for seven years and 180 days from the beg
The FCRA’s requirement that the period of obsolescence run from 180 days after the first delinquency is intended to establish a single date certain for calculation of the obsolescence period.128 Subsequent events, such as the creditor’s sale of the charged off account or a partial payment by the consumer, do not alter the obsolescence period.129
Problems frequently arise when a debt collector furnishes information to a CRA.150 Debt collectors commonly report the date they received the account or assignment from the creditor as the initial date of delinquency, even though the creditor has almost certainly placed the debt for in-house collection or charged off the debt months or even years earlier.151 Debt collectors also will sometimes report a new date of last activity if the consumer acknowledges the debt or even enquires about it.
The FCRA provides specific rules regarding how debt collectors should designate the date to ensure that the date of delinquency precedes the date the creditor placed the account for collection.164 These rules provide that the debt collector must use the date of delinquency used by the original creditor, if the creditor reported a date to a CRA.165 If the creditor did not report a date of delinquency to a CRA, the collector must establish and follow reasonable procedures to obtain the date of del
Debt collectors may attempt to collect upon a debt even after the account has become obsolete for consumer reporting purposes.
Information concerning suits and judgments is obsolete after seven years from their “date of entry” or until the governing statute of limitations has expired, whichever is longer.191 For suits, the “date of entry” is the date the suit was initiated, and for judgments the “date of entry” is the date judgment was rendered.192 However, the FTC Staff Summary states that if a civil suit is protracted, it may be reported for more than seven years after the case was filed, if the governing statute of l
Paid tax liens may not be reported more than seven years after the date of payment.201 A lien that is otherwise terminated may also be reported for seven years after the date that the lien is rendered ineffective.202 This allows the liens to be reported more than seven years from when the lien was first due.
Criminal convictions may be reported indefinitely. The general seven-year rule explicitly excludes records of convictions of crimes,215 and thus no time limit exists.216 Until November 2, 1998, the seven-year rule applied, but the Consumer Reporting Employment Clarification Act of 1998217 amended the FCRA to allow indefinite reporting of criminal convictions.
Records of arrest (apart from the criminal conviction) are treated like civil suits and judgments.222 They may be reported for seven years or until the governing statute of limitations expires, whichever is longer. The date that the seven-year period runs is the day of arrest.223 It is not clear what is meant by the statute of limitations in connection with an arrest.
No special rule exists for other kinds of criminal records, including criminal complaints, warrants, indictments, parole, probation, and various possible criminal judgments or dispositions other than conviction. These events therefore fall within the general rule for any other adverse item of information,227 which may be reported for only seven years.
Bankruptcies more than ten years old cannot be included in a consumer report.237 The ten-year rule applies to all bankruptcy filings under the United States Bankruptcy Code, whether they be under chapters 7, 11, 12, or 13.238 Both direct and indirect references to a consumer’s bankruptcy should be deleted from reports after ten years.
Prescreening is the process whereby CRAs compile or edit mailing lists of consumers who meet particular credit or insurance-related criteria, used by creditors or insurers to offer services or products to those consumers.252 CRAs must keep a record for one year of all such “inquiries” that identified a consumer for such a list, and include that information in any file disclosure made to the consumer.253 On the other hand, the CRA may not include such information in any consumer report furnished
The Higher Education Act sets out special rules as to when reports on defaulted, federally backed student loans become obsolete. The rules differ depending on whether the student loan is a Federal Family Education Loan (FFEL), a Direct Student Loan, or a Perkins Loan. Despite these special rules that extend the obsolescence period, the Third Circuit has held that student loan furnishers must follow the FCRA’s requirement255 to provide the date of first delinquency.256
The FCRA provides three exemptions to the prohibition against reporting obsolete information, which involve transactions that exceed certain dollar amounts. In these three specific situations, CRAs may furnish consumer reports containing information that would normally be considered obsolete:265
A CRA must “maintain reasonable procedures designed to avoid violations” of the requirements dealing with obsolete information.275 The FTC Staff Summary also states that CRAs should establish procedures with their furnishers that will avoid the risk of reporting obsolete information.276 This means that the CRAs are responsible for obtaining any information necessary to comply with section 1681c(a), such as whether an account was placed for collection or charged off.
The legal standard for what constitutes “reasonable procedures” has been formulated as a “reasonable person” test. The question for the trier of fact is whether the procedures used by the CRA were those which “a reasonably prudent person would [exercise] under the circumstances.”283
CRAs must maintain procedures for discovering and deleting obsolete information contained in their files. In collecting information, CRAs should maintain procedures to ensure that they may properly date information and then be able to determine when information becomes obsolete. For example, the CRA must have procedures to require that furnishers supply the date that an account was placed for collection, charged off, or subject to similar action,285 as required by Section 1681s-2(a)(5).286
CRAs can retain obsolete information in the consumer’s file, and even report that information if a transaction exceeds certain monetary thresholds.291 If the CRA releases obsolete information, it must first verify that the user’s purpose falls within one of these designated situations.292 Consequently, the CRA must maintain procedures which “require that prospective users of the information identify themselves, certify the purposes for which the information is sought, and certify that t
The final prohibition applicable to any person states that no person may “engage, directly or indirectly, in any act, practice, or course of business that constitutes or results in the commission of, or an attempt to commit, a fraud or deception on any person in connection with the offer or sale of the services of a credit repair organization.”251 One court, inexplicably ignoring the reference to deception, held that the reference to fraud meant that the consumer must show reliance and damages.
[Editor’s Note: this subsection has been deleted.]
Article III, section 2 of the United States Constitution limits the judicial power of federal courts to cases and controversies. Article III standing, when seeking statutory damages under a federal consumer protection statute like CROA, has become an important issue since the Supreme Court’s 2016 decision in Spokeo, Inc. v. Robins269 and its 2021 decision in TransUnion L.L.C. v.