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Fair Credit Reporting: 5.2.3.6 Suits and Judgments

Information concerning suits and judgments is obsolete after seven years from their “date of entry” or until the governing statute of limitations has expired, whichever is longer.191 For suits, the “date of entry”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

Fair Credit Reporting: 5.2.3.7 Tax Liens

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.

Fair Credit Reporting: 5.2.3.8.1 Convictions

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.

Fair Credit Reporting: 5.2.3.8.2 Records of arrests

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.

Fair Credit Reporting: 5.2.3.8.3 Other criminal records

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.

Fair Credit Reporting: 5.2.3.10 Prescreening Inquiries

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

Fair Credit Reporting: 5.2.3.11 Government-Backed Student Loans

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

Fair Credit Reporting: 5.2.4 Transactions Exceeding Monetary Thresholds

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

Fair Credit Reporting: 5.2.5.1 Generally

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.

Fair Credit Reporting: 5.2.5.2 What Are “Reasonable” Procedures?

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

Fair Credit Reporting: 5.2.5.3 Specific Procedural Requirements Regarding Obsolete Information

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

Fair Credit Reporting: 5.2.5.4 Procedures Determining Whether an Exemption Applies

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

Fair Credit Reporting: 17.2.7.5 Fraud and Deception

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.

Fair Credit Reporting: 17.2.8.2.2 Article III Standing

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.

Fair Credit Reporting: 17.2.8.3 Liability Not Limited to Credit Repair Organizations

Liability under the Act is not confined to credit repair organizations, but applies to “any person” who fails to comply with the Act,289 and certain Act provisions place requirements on any person.290 Thus, liability may extend to any person or entity that is directly or indirectly involved in deception or other violations of the Act—such as assignees of a credit repair organization’s contracts,291 related corporations involved in a deceptive credi

Fair Credit Reporting: 17.2.8.4.1 Introduction

Credit repair organizations often include clauses in their consumer contracts that require any dispute to be resolved by binding arbitration, thus attempting to keep consumer litigation out of the courts. This subsection first reviews three challenges to arbitration clauses that the Supreme Court has rejected and then summarizes other potential challenges. Another NCLC treatise, Consumer Arbitration Agreements,305 examines the enforcement of arbitration clauses in more detail.