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Fair Credit Reporting: 4.3.9.2 Problems in the Reporting of Charged-Off, Transferred, and Closed Accounts

A number of courts have held that it is not inaccurate to report a balance or a scheduled payment for a debt that is charged off, reasoning that such information is historical in nature, and thus not inaccurate or misleading.565 These cases have all held that the failure to follow the Metro 2 format,566 which requires that the scheduled payment amount be reported as “$0” for charged off accounts,567 did not render the reporting inaccurate.

Fair Credit Reporting: 8.1.1 Overview and Structure of Chapter

Information about consumers flows freely from creditors and public record vendors to consumer reporting agencies (CRAs). In turn, often unsuspected by consumers, this information can be recirculated back to creditors, employers, and others. When that information is inaccurate, the flow of information unfairly deprives people of opportunities for credit, employment, or other improvements to their lives.

Fair Credit Reporting: 8.1.2 The Importance of Notices to Consumers in the FCRA’s Scheme

The FCRA requires a number of notices to be provided to consumers in various circumstances. Perhaps most importantly, the receipt of a notice may compel a consumer to inquire into just what personal information is being reported and what the consumer can do to correct misinformation. The chain of events that leads consumers to seek legal counsel about an FCRA matter often begins with an FCRA-required notice to the consumer. These notices can, in turn, trigger a number of statutorily mandated responses, a variety of additional notices, and possible corrective action.

Fair Credit Reporting: 8.2.1 Content of Notice

The “Summary of Consumer Rights” notice that a CRA must provide consumers is one of the most significant disclosure requirements of the FCRA.20 For practical purposes, this notice will serve as the consumer’s guide to the following:

Fair Credit Reporting: 8.2.2 Time and Manner of Notice; Enforcement

A CRA must provide the FCRA Summary of Consumer Rights notice every time it makes a disclosure to a consumer under section 1681g. These qualifying disclosures include a disclosure of the CRA’s file relating to the consumer32 or a disclosure of a credit score relating to the consumer.33

Fair Credit Reporting: 8.3.1 Content of Notice

The FCRA requires consumer reporting agencies to provide a notice of rights to consumers who are believed to be victims of fraud or identity theft involving credit, an electronic funds transfer, or an account or transaction at or with a financial institution or other creditor.35

Fair Credit Reporting: 8.3.2 Time and Manner of Notice; Enforcement

The duty of a CRA to provide the ID Theft Rights Notice is triggered any time that a consumer contacts the CRA and expresses a belief that they are a victim of fraud or identity theft involving credit, an electronic fund transfer, or an account or transaction involving a financial institution or creditor.46 The notice for identity theft victims is in addition to any other disclosures that the CRA is required to provide.

The failure of a CRA to deliver the prescribed notice is subject to the usual private remedies of the FCRA.

Fair Credit Reporting: 8.4.2.1 Nature and Content of Notice

Under the FCRA, consumers may request and obtain disclosure of their credit score at any time for a fee.50 Even though these scores are part of the consumer’s file, which the consumer can review once a year free of charge,51 credit scores need not be disclosed absent a specific request from the consumer52 and payment of a fee.53

Fair Credit Reporting: 8.4.2.2 Time and Manner of Notice; Enforcement of Right

CRAs must disclose a credit score and provide the credit score notice “within the same timeframes and manner” as they would provide a disclosure of the consumer’s file under subsection 1681g(a).61 Given that the Act does not actually specify a timeframe for disclosures under subsection 1681g(a), one interpretation would be that CRAs must provide credit scores and the credit scoring notice at the same time as disclosures of the consumer’s credit file when the consumer requests both.

Fair Credit Reporting: 8.4.3.1.1 Introduction

In those instances where a credit score is used in conjunction with the extension of credit secured by residential real estate, the user must provide the credit score free of charge, as well as information regarding the factors used in making up the credit score and additional disclosures relating to the scoring process.65 This requirement applies to both open-end and closed-end credit secured by one- to four-family residential real estate, including purchase and refinance transactions.66 This requi

Fair Credit Reporting: 8.4.3.1.3 Home loan notice

Credit applicants whose mortgage application for a loan is to be secured by one to four units of residential real property are entitled to a specific notice describing how credit scores are used and their role in the mortgage process, along with information on where the consumer may learn more about the scores relating to their application. The language of the notice is prescribed by the Act.88

Fair Credit Reporting: 8.4.3.2 Time and Manner of Notice

The FCRA requires that the user provide notices under section 1681g(g) as soon as is reasonably practicable.89 As such, the user should provide this notice at the time the mortgage user receives and makes use of the score. However, some small processing delay may be acceptable, and showing willfulness or actual damages resulting from such a delay is difficult.90

Fair Credit Reporting: 8.4.3.3 Enforcement of Right

In general, a mortgage user’s failure to deliver the notices relating to the preparation and use of the score is subject to the usual private remedies of the FCRA, including actual damages, punitive damages, costs, and attorney fees.91 However, the Act provides a significant safe harbor to mortgage users.

Fair Credit Reporting: 6.1.1 Overview

Before 1996, furnishers of information to consumer reporting agencies (CRAs) were essentially outside the scope of the FCRA. Despite their central role, furnishers were effectively immune from federal oversight. Before 1996, furnishers were under no federal duty to provide CRAs with correct information, to respond to or investigate a consumer’s dispute, or to cooperate with a CRA’s reinvestigation of the completeness or accuracy of the information which the furnisher itself provided.

Fair Credit Reporting: 6.2.1 Furnishers Provide Information to Consumer Reporting Agencies

Anyone who furnishes consumer information to a consumer reporting agency is a “furnisher” of information under the FCRA.34 No special attribute is required and, in fact, the terms furnisher and furnishing are not defined by the Act.35 The FCRA simply refers to “a person who furnishes information to a consumer reporting agency,” or similar terms.36 Regulation V defines “furnisher,” for the purposes of the furnisher accuracy guidelines, as an entity that f

Fair Credit Reporting: 6.2.2.1 Special Rules for Affiliate Sharing

The rules of the FCRA, including those that apply to furnishers, generally do not apply to companies furnishing information to other entities affiliated by common ownership or corporate control, even if the receiving affiliate functions as an in-house credit reporting agency. Such affiliate sharing of information is generally outside the scope of the FCRA.59 However, a consumer may opt out of the use by an affiliate of this exempt information when the information is used to market its products or services.

Fair Credit Reporting: 6.2.2.2 Direct Selling of Information Not Covered

Creditors sometimes sell information about their customers. In addition to sharing information with their own affiliates, they will sell lists of customers meeting different criteria to other creditors, to direct marketers, and to other compilers of marketing databases. Although such a creditor or other business may be furnishing information, it is not furnishing information to a CRA.

Fair Credit Reporting: 6.3.2.1 Generally

Metro 2 is a standardized reporting format used by furnishers to provide information about consumer accounts to the nationwide CRAs.78 The Metro format software had been around since the 1970s. Metro 2 is the version created after the 1996 amendments to the FCRA and was designed by the nationwide CRAs.

Fair Credit Reporting: 6.3.2.3 Obtaining The Metro 2 Manual in Litigation

The credit reporting industry distributes The Metro 2 Manual widely. Even so, when information about the Metro 2 format is provided in discovery, many defendants routinely insist on confidentiality agreements or protective orders. The justification for these discovery restrictions is doubtful, given that no competitive advantage is at stake and given the availability of much Metro 2 information on various websites.