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Fair Credit Reporting: 9.2.2.3.3 Effects of the extended fraud alert

By submitting the identity theft report and providing satisfactory proof of identification to a nationwide CRA, the consumer may add to their credit file an extended fraud alert that can last for seven years.75 As with the initial fraud alert, the CRA must refer the alert to the other nationwide CRAs, all of whom must provide a “clear and conspicuous view” of the alert each time they generate the consumer’s credit score.76

Fair Credit Reporting: 9.2.2.4 Active Military Duty Alerts

Consumers on active military duty can inform users of their status by adding an alert to their files.82 The FCRA defines an “active duty military consumer” to mean “a consumer in military service who . . . is on active duty or a reservist called to active duty . . . and who is assigned to service away from the usual duty station of the consumer.”83 As of May 24, 2019, the term also includes members of the National Guard.84

Fair Credit Reporting: 9.2.2.5 Effects of Alerts

All three varieties of alerts must notify users that the consumer does not authorize new credit, an additional credit card on an existing account, or any increase in the credit limit of any existing account.92 However, an extension of credit under an existing open-end credit account (e.g., a credit card) is exempt from this limitation.93

Fair Credit Reporting: 9.2.3.1 Generally

As a result of the Equifax data breach,105 Congress included a number of consumer reporting provisions when it passed the “Economic Growth, Regulatory Relief, and Consumer Protection Act” in May 2018.106 The most significant provision is that Congress added subsection 1681c-1(i) to the FCRA,107 which requires the nationwide consumer reporting agencies108 to provide for free security freezes.

Fair Credit Reporting: 9.2.3.3 Removal and Thaws

Once placed, a nationwide consumer reporting agency may remove a security freeze only under three circumstances: (1) upon the direct request of the consumer;123 (2) in the case of protected consumers, upon the direct request of the consumer’s representative;124 or (3) if the security freeze was placed “due to a material misrepresentation of fact” by the consumer125 or a protected consumer’s representative.126

Fair Credit Reporting: 9.2.3.4 Effective of a Freeze; Exemptions

If a creditor or other third party seeks a consumer report that is frozen and the consumer does not allow access to the report, the creditor may treat the application is incomplete. A nationwide CRA may advise a third party that it has placed a security freeze with respect to a consumer.131

The security freeze provision provides for a number of exceptions to the general right to freeze a file, summarized as follows:

Fair Credit Reporting: 9.2.3.5 Notice of Right to a Freeze

Any time a consumer has the right to receive a summary of rights under section 1681g, that summary must include a designated notice that describes the consumer’s right to obtain a security freeze.143 The Consumer Financial Protection Bureau has created a model summary of such a notice.144

Fair Credit Reporting: 9.2.3.6 Remedies; Preemption

Consumers may bring a cause of action for negligent or intentional violation of the federal security freeze provision.145 State laws with respect to the subject matter regulated by the security freeze provisions at section 1681c-1(i) and (j) are preempted.146 Thus, for example, any state laws that apply security freezes to employment or insurance use of a consumer report are preempted.147 Since the federal security freeze provisions only apply to n

Fair Credit Reporting: 9.2.4.1 Access to Thief’s Transaction Information

The FCRA requires businesses that have dealt with an identity thief to provide information about their transactions to the victim and to law enforcement agencies.148 This requirement was intended to help victims document fraud transactions and find the thief. Finding the thief is necessary to prosecute and convict the thief.

Fair Credit Reporting: 9.2.5.1.4 Resellers and check verification companies

Resellers178 also have blocking responsibilities, but only if the reseller has a file that contains the information sought to be blocked.179 If the consumer notifies a reseller that a report contains identity-theft information, the reseller must block the report from subsequent use by the reseller.180 Upon blocking the file, the reseller must notify the consumer of the block and provide the name, address, and telephone number of the CRA from which

Fair Credit Reporting: 9.2.5.1.5 Enforcement and preemption

Consumers may enforce the blocking requirements under the FCRA’s liability provisions.183 The consumer may only seek liability for a CRA’s failure to comply with section 1681c-2 if the consumer has notified the CRA directly of the identity theft.184 States are preempted from regulating the conduct required of CRAs and resellers under the FCRA’s blocking provisions.185

Fair Credit Reporting: 9.2.6.1.2 2008 Clarification Act

In response to the slew of truncation lawsuits in the mid-2000s, Congress in 2008 adopted a narrow amendment that shielded merchants from liability under the FCRA’s provision authorizing suits for willful noncompliance.

Fair Credit Reporting: 9.2.6.1.3 Electronic transactions

Merchants have advanced a number of arguments against lawsuits seeking to enforce the truncation provision. One of the most frequent arguments involved Internet-based shopping, seeking to exclude these sales from the truncation provision’s protections. These arguments have had some success.

Fair Credit Reporting: 9.2.6.1.5 Damages in a truncation case

If the plaintiff can establish a concrete injury for purposes of standing, they need not prove actual damages in order to seek statutory damages.249 However, when a claim arising from a failure to comply with the truncation provision seeks actual, rather than statutory, damages, costs for credit monitoring services may not suffice to serve as actual damages.250 Furthermore, one court reasoned that the absence of actual injury suffered by putative class members was a factor that the court could c

Fair Credit Reporting: 9.2.6.1.6 Other issues in a truncation case

Courts have dismissed truncation claims that arose when a merchant mistakenly gave the plaintiff the merchant’s copy of the receipt, which included the expiration date, rather than the customer’s copy.253 One court noted that these allegations could not establish a willful violation of the truncation provision, but at most a negligent violation.254 Indeed, the FTC has opined that the truncation requirement “does not apply to receipts other than those provided to the cardholder, such as those ret

Fair Credit Reporting: 9.2.6.3 Disposal of Consumer Information

Regulations promulgated by the FTC, the Securities and Exchange Commission, and the banking regulators267 require users to properly dispose of the consumer information they acquire through consumer reports.268 These regulations are intended to help prevent the illicit disclosure of consumer financial information.

Fair Credit Reporting: 9.2.7.1 Generally

The FACTA Amendments of 2003 attempted to go beyond the surface problem of identity theft by addressing its underlying cause: the failure of businesses to properly respond to warning signs of identity theft and verify the consumer’s identity. These provisions include requirements to implement programs responding to identity theft “red flags,” address discrepancies, and change of address notices.

Fair Credit Reporting: 9.2.7.2.1 Introduction

The FCRA calls for the FTC, the Securities and Exchange Commission (SEC), the Commodities Futures Trading Commission (CFTC), and the banking regulators to issue “red flag” guidelines for use by financial institutions283 and creditors284 regarding identity theft.285 In response, the federal banking agencies and the FTC have issued joint final regulations, which implement not only the red flag guidelines, but also change of address

Fair Credit Reporting: 13.2.4.1 Generally

The Dodd-Frank Act gives the CFPB exclusive enforcement authority, relative to other federal agencies, over a number of defined categories of “covered persons.”23 The definition completely excludes the entities discussed above (insured depository institutions and federal credit unions), but includes any entity which meet one of several other criteria, as described below. Some of these criteria are defined directly in the statute while the details of others are left for regulations promulgated by the CFPB.

Fair Credit Reporting: 13.2.4.2 Mortgage Lenders, Servicers, and Foreclosure Relief Providers

The CFPB has exclusive enforcement authority, relative to other federal agencies, over any person who:

[O]ffers or provides origination, brokerage, or servicing of loans secured by real estate for use by consumers primarily for personal, family, or household purposes, or loan modification or foreclosure relief services in connection with such loans.24

In the context of FCRA enforcement, these institutions are likely to be either furnishers or users.

Fair Credit Reporting: 13.2.4.3 Private Student Lenders

The CFPB has exclusive enforcement authority, relative to other federal agencies, over any person who “offers or provides to a consumer any private education loan, as defined in section 140 of the Truth in Lending Act (15 U.S.C. § 1650), notwithstanding section 1027(a)(2)(A) and subject to section 1027(a)(2)(C).”25 In the context of FCRA enforcement, private student lenders are likely to be either furnishers or users.