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Fair Credit Reporting: 7.2.8.2.2.3 Business transaction must relate to eligibility
The FTC staff has interpreted the business transaction provision to apply only at the point of initiation—that is, for the purpose of determining the consumer’s eligibility for the business transaction at hand.364 The existence of a separate business transaction provision that provides a permissible purpose for account reviews,365 which applies after an account has been established, bolsters the view that the first provision applies only to initial eligibility decisions.
Fair Credit Reporting: 7.2.8.2.3 Initiated by the consumer
The business transaction must be “initiated by the consumer.”372 Prior to the 1996 Reform Act amendments, the business transaction needed only to “involve” the consumer.373 The language now makes clear that the consumer must at least evidence interest in a transaction and perhaps take an explicit first step to initiate the transaction in order for the business to have a legitimate permissible use of a consumer report.
Fair Credit Reporting: 7.2.8.2.4 Legitimate business need
Even if the consumer has initiated a business transaction, the user must still have “a legitimate business need” for the report.
Fair Credit Reporting: 7.2.8.3 Business Need to Review a Consumer’s Account
Even if the consumer has not initiated a new transaction, businesses and others who hold consumer accounts have a permissible purpose to obtain a consumer report if they have a legitimate business need “to review an account to determine whether the consumer continues to meet the terms of the account.”394 The user does not have to be a creditor and can be anyone with consumer accounts.395 In fact, a creditor has a permissible purpose to obtain a consumer report to review a credit account under th
Fair Credit Reporting: 7.2.9 Use by Officials to Determine Child Support Payment Levels
Two separate provisions permit government agencies to obtain consumer reports for use in connection with determining ability to pay and the appropriate level of child support awards. The first allows releases to child support enforcement agencies, which may be state or local.409 The second applies to the single state agency that administers the federal child support enforcement state plan.410
Fair Credit Reporting: 7.2.10.1 Generally
Although the permissible purposes section of the FCRA states that consumer reports may be released under the listed circumstances “and no other,”418 the FCRA actually contains a smattering of provisions elsewhere in the Act that authorize various releases to and uses by government agencies. Even if a government use is impermissible, however, sovereign immunity may provide an obstacle to relief under the FCRA.419
Fair Credit Reporting: 7.2.10.2 Identifying Information Furnished to the Government
Even if a government agency does not have a permissible purpose described by the Act, a CRA may furnish certain “identifying information” short of a full consumer report to governmental agencies.420 This information is the consumer’s name, address, former addresses, places of employment, or former places of employment.421 A government agency without an otherwise permissible purpose cannot obtain information beyond that specified above.422
Fair Credit Reporting: 7.2.10.3 Investigation of FCRA Violations
The FCRA provides the FTC with investigational powers concerning FCRA violations, including the power to require the production of documents.426 This gives the FTC the power to subpoena consumer reports in connection with any investigation under the Fair Credit Reporting Act.427 Other federal agencies with enforcement authority under the FCRA should have the same power,428 as should state officials with authority under state credit reporting statut
Fair Credit Reporting: 7.2.10.4 Permissible Use by FBI for Counterintelligence Purposes
The FCRA grants the FBI access to three different types of consumer information from CRAs if the FBI430 certifies that the information is “sought for the conduct of an authorized investigation to protect against international terrorism or clandestine intelligence activities, provided that such an investigation of an United States person is not conducted solely upon the basis of activities protected by the first amendment to the Constitution of the United States.”431 The 2001 USA PATRIOT Act remo
Fair Credit Reporting: 7.2.10.5 Disclosures to Governmental Agencies for Counterterrorism Purposes
The FCRA requires CRAs to provide consumer reports and any other information in a consumer’s file to a federal government agency authorized to conduct investigations, intelligence or counterintelligence, or analysis related to international terrorism.438 The federal agency must present the CRA with a certification that the information “is necessary” for the agency’s activities.439
Fair Credit Reporting: 7.2.10.6 FDIC and NCUA As Conservators, Receivers, or Liquidating Agents
The Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Administration (NCUA) have a permissible purpose to obtain consumer reports in connection with their regulation of insured depository institutions or insured credit unions.
Fair Credit Reporting: 7.3.1 Overview
Users often seek from consumer reporting agencies lists of consumers with certain relevant characteristics, or lists which specify the varying characteristics of individuals on the list. Many, but not all, of these lists are considered to be a series of consumer reports on each consumer on the list. If the list is considered to be series of consumer reports, the user must have a permissible purpose for every consumer on the list.
Fair Credit Reporting: 7.3.2.1 Generally
A list of consumers is considered to be a series of consumer reports on each individual named on the list if the list meets the general definition of “consumer report”: that is, the list bears on “a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living” and is collected, used, or expected to be used for the purpose of establishing the consumer’s eligibility for credit, insurance, employment, or another permissible purpose set forth in the FCRA.448
Fair Credit Reporting: 7.3.2.2 Target Marketing Lists
CRAs compile and sell many kinds of mailing lists to retailers to use to solicit business from consumers. These so-called target marketing lists compete with thousands of other mailing lists of consumers sold by every imaginable kind of business.
Fair Credit Reporting: 7.3.3.1.1 Introduction
The FCRA permits CRAs to furnish lists containing limited consumer information, short of a full consumer report, for purposes of making a “firm offer of credit or insurance.”461 The title of this section of the FCRA refers to “credit or insurance transaction that are not initiated by the consumer,”462 but in the popular vernacular, it is simply called prescreening.
Fair Credit Reporting: 7.3.3.1.2 Restrictions for younger consumers
The Credit CARD Act of 2009 added a provision restricting the CRAs from including younger consumers on prescreened consumer lists. CRAs may not include consumers under age 21 on prescreened lists if the consumer’s report includes a date of birth revealing their age, unless the consumer has consented to being included.469
Fair Credit Reporting: 7.3.3.2.1 How prescreening reports are compiled
Prescreening is the process whereby CRAs compile or edit lists of consumers who meet specific criteria, and then provide the lists to the user or third party (such as a mailing service) who uses the lists to solicit consumers with a firm offer for the users’ products or services, usually by mail.470
Fair Credit Reporting: 7.3.3.2.2 Only limited information may be supplied
A CRA may supply only limited information for prescreening purposes. The user can receive little more than the name and the address of the consumer.475 The offer may include an identifier, but it must not be unique to the consumer, such as a Social Security number, and is to be used solely for the purpose of verifying the identity of the consumer.
Fair Credit Reporting: 7.3.3.3.1 Introduction
A CRA may provide a prescreened list of consumers only if the user makes a so-called “firm offer” of credit or insurance to each consumer on the list, or if the consumer authorizes a CRA to include the consumer’s name and address on prescreening lists.477 A firm offer is necessary in the logic of the statute because the report can be used only in connection with a consumer transaction. Having a firm offer apparently is close enough.
Fair Credit Reporting: 7.3.3.3.2 User may place three types of conditions on firm offer
The Act permits an offer to be considered a “firm offer,” even if it is qualified by three contingencies.
Fair Credit Reporting: 7.3.3.3.3 What must an offer include to be “firm”?
The statute does not otherwise describe what amount of detail must be in the offer or how firm the details described in the offer must be. The Seventh Circuit, in Cole v. U.S.
Fair Credit Reporting: 7.3.3.4 Consumers Can Elect to Be Excluded from Prescreening Lists
Recognizing the intrusive nature of direct marketing campaigns,546 the FCRA gives consumers the right to remove their names from prescreening lists; requires CRAs to maintain a joint notification system for removing names from prescreening lists; and requires that both CRAs and users of prescreened lists notify consumers of their right to be removed and the procedures for doing so.547
Fair Credit Reporting: 7.4.1 Introduction
The FCRA does not itemize impermissible purposes. Those impermissible purposes discussed in the following sections constitute only a partial list of some of the more common wrongful uses which arise. The rule is that a user must have a permissible purpose for obtaining a report; all other uses are impermissible. A user can be liable for either using or obtaining a consumer report impermissibly.559