Fair Credit Reporting: 15.2.1 Overview
The Act’s definition of “investigative consumer report” provides as follows:
The Act’s definition of “investigative consumer report” provides as follows:
The first element deals with the report’s subject matter, which must concern character, general reputation, personal characteristics, or mode of living.16 In contrast, an ordinary consumer report can arise from information regarding any of these four qualities, or regarding a consumer’s creditworthiness, credit standing, or credit capacity.17 This distinction suggests that the special provisions for investigative consumer reports are not thought necessary when only credit-related informa
The second principle element of the definition of an investigative report involves the manner in which the report’s information was procured.
The Act specifically excludes from the definition of investigative consumer report a report that consists solely of specific factual information on a consumer’s credit record obtained directly from a creditor or a CRA (where the CRA obtained the information from a creditor or the consumer).29 A report with both non-investigative and investigative information is still an investigative consumer report, since the statutory definition of an investigative consumer report is a consumer report “or portion thereof” that contains investig
The FCRA was amended in 2003 by FACTA to meet a rising demand by employers to exempt certain reports about employees from the requirements for investigative consumer reports. Employers had complained that the FCRA unfairly undercut meaningful investigations of employee misconduct by requiring the employer to provide FCRA notices ahead of time, notices that effectively alerted the employee to the employer’s suspicions.35
The second qualifying reason for the exclusion, compliance with federal, state, or local laws, is potentially quite broad. For example, an employer’s investigation of an employee’s discrimination complaints was ruled to be in connection with “compliance with Federal, State, or local laws” and thus exempt from the definition of a consumer report.45 The applicability of the exclusion does not depend on the particular motive or purpose of the participants.46
With respect to the third and fourth qualifying reasons, one concern is that they are within the employer’s control and thus could allow employers to create their own loopholes to the FCRA.
To limit the exclusion’s scope, the FCRA further requires that the communication must not be for the purpose of investigating a consumer’s creditworthiness, credit standing, or credit capacity (in other words, the communication must only bear on the employee’s character, general reputation, personal characteristics, or mode of living). These limitations appear designed so that consumer credit reports from the three major nationwide CRAs will not fall within the exclusion.
The FCRA does maintain some regulation over employee misconduct investigation reports, notwithstanding that they are not “consumer reports.” An employer who takes any adverse action based in whole or in part on the exempted communication must disclose to the consumer a summary of the communication, although the employer need not disclose any sources of information for use in preparing what would be, except for the exception, an investigative consumer report.63 However, if a report is not a consumer report at all, the exclusion is not impl
Insurance purposes are the most common basis for an investigative consumer report.
Pursuant to a specific exception in the Act, interviews and investigations conducted by employment agencies are usually not investigative consumer reports.80 If the employment agency is communicating to a prospective employer, with the consent of the consumer, either for the purpose of procuring a work opportunity for the consumer or for the purpose of procuring an employee for the employer, then the communication is not a consumer report at all.
Specific requirements and protections apply to consumer reports requested for employment purposes, whether or not the report is an investigative one.
A third basis for an investigative report might be to evaluate a prospective tenant on behalf of a landlord. Such reports are increasingly less likely these days, but they pose a high likelihood that landlords will not comply with the FCRA’s requirements concerning such reports.
Although most investigative consumer reports involve queries by employers, insurers, or landlords, an investigative report can be produced for any purpose that a consumer report is issued. An investigative report is just a consumer report that includes subjective information from third-party interviewees.98
Any “person” requesting an investigative report must provide notice to the consumer that an investigative consumer report may be made;101 the FCRA defines person as including individuals, corporations, trusts, governments, governmental subdivisions or agencies, or any other entity.102 In addition, the user must certify to the consumer reporting agency (CRA) that it has provided this notice to the consumer and will upon proper request disclose the nature and scope of the investigation.
The user must mail a notice of the investigative report to the consumer not later than three days after the user’s first request to the CRA that it prepare a report on the consumer.105 The obligation to provide this notice arises if the CRA collects information, even if the investigation is called off before the CRA delivers any oral or written report to the requesting party.106 Unfortunately, arguably the user may issue this notice at any time prior to the request for an investigation,
The notice should inform the consumer that a request for an investigative consumer report may be made and should describe the information that the report will seek, including, as applicable, information on the consumer’s character, general reputation, personal characteristics, and mode of living.116 The disclosure must also state that an investigative consumer report involves personal interviews with sources such as friends, neighbors, and associates.117 This is the information that will
The user procuring an investigative consumer report must specifically notify the consumer that a report may be made and that the consumer has the right to request that the nature and scope of the investigation be completely and accurately disclosed.
Consumers who may be the subject of an investigative consumer report may receive from the user two different notices. The requisite notice of the possibility that a user may procure an investigative consumer report alerts a consumer that an investigation may occur. The first, given in writing no later than three days after the user’s request for the report, describes the information the investigation will seek.
Within a reasonable amount of time from the receipt of the initial notice, the consumer can seek from the person that requested the report a complete and accurate disclosure of the nature and scope of the investigation requested.140 The disclosure is provided by the person requesting the investigation (that is, the user), and not from the individual who in fact conducts the investigation. Thus, the requester/user is disclosing what the requester is asking the investigator to investigate, not what in fact is investigated.
The FCRA requires that upon the consumer’s request, the person procuring the report must completely and accurately disclose “the nature and scope of the investigation requested.”143 According to the FTC Staff Summary, the requester’s disclosure must include a complete and accurate description of the types of questions asked, the number and types of persons interviewed, and the name and address of the investigating agency.144 The user need not provide the consumer with a copy of the actua
The FTC Staff Summary states that users need not disclose the names of sources of information, that is, the names of individuals interviewed.156 This is derived from the FCRA’s provision that protects CRAs (though not users) from the obligation to provide names of individuals interviewed for investigative consumer reports.157 This FCRA exception was inserted in response to claims by the reporting industry that if the identities of the persons interviewed in investigations were not kept c
The user must disclose to the consumer the nature and scope of the requested investigation in writing, and must mail or otherwise deliver it to the consumer within five days of receipt of the consumer’s request for the disclosure or of the date the investigation was requested, whichever is later.162 The FTC Staff Summary suggests that the user can properly disclose the nature and scope of the requested investigation by providing the consumer with a blank copy of the standardized form used to transmit the report from the CRA to the user.
Users may be required to make three different disclosures: disclosure that an investigatory consumer report may be requested, the provision of additional information about an investigative consumer report upon the consumer’s request, and notification that a consumer report is at least in part the basis for an adverse determination against the consumer.164 Users cannot be held liable for a violation of any of their three disclosure requirements relating to investigative reports if the user can show “by a preponderance of the evidence that