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Fair Credit Reporting: Section 604(a)(3)(F)

Section 604(a)(3)(F) allows a CRA to furnish consumer reports to a person which it has reason to believe “otherwise has a legitimate business need for the information (i) in connection with a business transaction that is initiated by the consumer or (ii) to review an account to determine whether the consumer continues to meet the terms of the account.”

1. RELATION TO OTHER SUBSECTIONS OF SECTION 604(a)(3)

Fair Credit Reporting: Section 604(a)(3)(G)

Section 604(a)(3)(G) allows CRAs to provide consumer reports to “executive departments and agencies in connection with the issuance of government-sponsored individually-billed travel charge cards.”

Fair Credit Reporting: Sections 604(a)(4), 604(a)(5)

Sections 604(a)(4) and 604(a)(5) permit child support authorities to obtain consumer reports on parents in connection with the assessment of child support obligations. One of the requirements for a child support enforcement agency to obtain a report is that it has to certify that it “has provided at least 10 days’ prior notice to the consumer whose report is requested by certified or registered mail to the last known address of the consumer.”

1. GENERAL

Fair Credit Reporting: Section 604(a)(6)

Section 604(a)(6) permits the Federal Deposit Insurance Corporation and National Credit Union Administration to obtain consumer reports in connection with their duties as conservator, receiver, or liquidating agent for failed or failing financial institutions under applicable laws.

Fair Credit Reporting: Section 604(b)

Section 604(b) sets forth provisions relating to consumer reports for employment purposes, imposing specific duties on CRAs and employers in this context.

1. SCOPE OF “EMPLOYMENT PURPOSES”

Section 604(b)’s disclosure and authorization requirements apply where the consumer report is obtained for “employment purposes” even where the consumer is not technically an “employee” of the report user. See comment 603(h)-2.

2. SUSPECTED WORKPLACE WRONGDOING

Fair Credit Reporting: Section 604(b)(1)

Section 604(b)(1) requires that, when a CRA furnishes a consumer report for employment purposes, it must obtain a certification from the user stating that the user (1) has obtained the consumer’s consent, (2) will provide the consumer with a copy of his or her report and a summary of rights under the FCRA before taking adverse action, and (3) will not use the report to violate employment opportunity laws.

1. GENERAL

Fair Credit Reporting: Section 604(b)(2)

Section 604(b)(2) provides that, except for employers in the trucking industry, a person may not obtain a consumer report for employment purposes unless the person makes “(i) a clear and conspicuous disclosure in writing to the consumer at any time before the report is procured or caused to be procured, in a document that consists solely of the disclosure, that a consumer report may be obtained for employment purposes; and (ii) the consumer has authorized in writing (which authorization may be made on the document referred to in clause (i)) the procurement of the report by

Fair Credit Reporting: Section 604(b)(3)

Section 604(b)(3) provides that, except for employment in the trucking industry, an employer intending to take adverse action shall, before taking such action, provide the consumer a copy of his or her consumer report and a summary of the consumer’s rights under the FCRA. The summary is to be in a form prescribed by the FTC under section 609(c)(3).

1. GENERAL RULE

Fair Credit Reporting: Section 604(c)

Section 604(c) governs the practice of “prescreening” in connection with credit and insurance solicitations. Subsection (1) allows prescreened solicitations only if the consumer consents or if the “transaction consists of a firm offer of credit or insurance” and the consumer has not opted out of receiving such solicitations. Subsection (2) limits the information that the CRA can provide to the business seeking the information for prescreening purposes.

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