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40 Years Experience Fair Credit Reporting Act

T. This report is available on the internet at The online version of this report contains live hyperlinks. July 2011 | Federal Trade Commission 40 Years OF Experience WITH THE fair Credit Reporting ACT. Contents Staff Report Introduction 1. Evolution of the fair Credit Reporting Act 2. FTC Enforcement of the FCRA 3. FTC's Regulatory and Interpretive Roles 5. FTC Staff Summary and Relationship to 1990 Commentary 7. Other Significant Interpretations in the FTC Staff Summary 12. Summary of Interpretations Overview 17. Reference to multiple sections 17. Summary references to FCRA 17. Terminology 17. Citations to FACT Act rules 18. Section 601 Short Title 19.

The FCRA regulates the practices of consumer reporting agencies (“CRAs”) that collect and compile consumer information into consumer reports for use by credit grantors, insurance companies, employers, landlords, and other entities in making eligibility decisions affecting

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Transcription of 40 Years Experience Fair Credit Reporting Act

1 T. This report is available on the internet at The online version of this report contains live hyperlinks. July 2011 | Federal Trade Commission 40 Years OF Experience WITH THE fair Credit Reporting ACT. Contents Staff Report Introduction 1. Evolution of the fair Credit Reporting Act 2. FTC Enforcement of the FCRA 3. FTC's Regulatory and Interpretive Roles 5. FTC Staff Summary and Relationship to 1990 Commentary 7. Other Significant Interpretations in the FTC Staff Summary 12. Summary of Interpretations Overview 17. Reference to multiple sections 17. Summary references to FCRA 17. Terminology 17. Citations to FACT Act rules 18. Section 601 Short Title 19.

2 Section 602 Findings and Purpose 19. Section 603 Definitions and Rules of Construction 19. Section 604 Permissible Purposes of Reports 40. Section 605 Requirements Relating to Information Contained in Consumer Reports 55. Section 605A Identity Theft Prevention; Fraud Alerts and Active Duty Alerts 60. Section 605B Block of Information Resulting From Identity Theft 61. Section 606 Disclosure of Investigative Consumer Reports 62. Section 607 Compliance Procedures 64. Section 608 Disclosures to Governmental agencies 70. Section 609 Disclosures to Consumers 70. Section 610 Conditions and Form of File Disclosure to Consumer 74. Section 611 Procedure in Case of Disputed Accuracy 75.

3 AN FTC STAFF REPORT WITH SUMMARY OF INTERPRETATIONS. Section 612 Charges for Certain Disclosures 79. Section 613 Public Record Information for Employment Purposes 81. Section 614 Restrictions on Investigative Consumer Reports 82. Section 615 Requirements on Users of Consumer Reports 82. Sections 616-617 Civil Liability for Negligent or Willful Noncompliance 89. Section 618 Jurisdiction of Courts; Limitation of Actions 89. Section 619 Obtaining Information Under False Pretenses 89. Section 620 Unauthorized Disclosures by Officers or Employees 89. Section 621 Administrative Enforcement 89. Section 622 Information on Overdue Child Support Obligations 91.

4 Section 623 Duties of Furnishers of Information to CRAs 92. Section 624 Affiliate Marketing 97. Section 625 Relation to State Laws 97. Section 626 Disclosures to FBI for Counterintelligence Purposes 97. Section 627 Disclosures to Governmental agencies for Counterterrorism Purposes 98. Section 628 Disposal of Records 98. Section 629 Corporate and Technological Circumvention Prohibited 98. 1990 Comments not incorporated into 2011 Summary 99. Endnotes 100. List of FTC FCRA Cases 108. 40 Years OF Experience WITH THE fair Credit Reporting ACT. AN FTC STAFF REPORT WITH SUMMARY OF INTERPRETATIONS. I. Introduction The fair Credit Reporting Act1 ( FCRA ) governs the collection, assembly, and use of consumer report information and provides the framework for the Credit Reporting system in the United States.

5 The FCRA was enacted in 1970, and it has been amended several times in the ensuing Years . The two most extensive amendments were the Consumer Credit Reporting Reform Act of 1996 (the 1996 amendments )2 and the fair and Accurate Credit Transactions Act of 2003. ( FACT Act ).3. The FCRA regulates the practices of consumer Reporting agencies ( CRAs ) that collect and compile consumer information into consumer reports for use by Credit grantors, insurance companies, employers, landlords, and other entities in making eligibility decisions affecting consumers. Information included in consumer reports generally may include consumers' Credit history and payment patterns, as well as demographic and identifying information4 and public record information ( , arrests, judgments, and bankruptcies).

6 Consumer report information may be used by entities to predict the risk of future nonpayment, default, or other adverse events. The FCRA was enacted to (1) prevent the misuse of sensitive consumer information by limiting recipients to those who have a legitimate need for it; (2) improve the accuracy and integrity of consumer reports; and (3) promote the efficiency of the nation's banking and consumer Credit systems. As described below, since its initial passage in 1970, the Federal Trade Commission ( FTC . or Commission ) has played a key role in the implementation, oversight, enforcement, and interpretation of the FCRA. Under the Consumer Financial Protection Act of 2010 ( CFPA ),5.

7 The FTC retains its enforcement role but will share that role in many respects with the newly- created Consumer Financial Protection Bureau ( CFPB ). The CFPB also will take on primary 1. 15 1681 et seq. The FCRA's provisions are sections 601-629 of the Consumer Credit Protection Act and are commonly cited by those section numbers. The full text of the FCRA, as published on the Commission website, uses both citation forms. 2. Title II, Subtitle D, Chapter 1, of the Omnibus Consolidated Appropriations Act for Fiscal Year 1997 (Pub. L. No. 104-208, Sept. 30, 1996). 3. Pub. L. No. 108-159 (Dec. 4, 2003). 4. The demographic and identifying information ( , name, address) generally is not considered consumer report information under the FCRA, unless it is used for eligibility determinations.

8 See In re Trans Union Corp., 2000 FTC LEXIS 23 (2000), aff'd sub nom. Trans Union Corp. v. FTC, 245 809, reh. denied, 267. 1138 ( Cir. 2001), cert. denied, 122 S. Ct. 2386 (2002); FTC v. TRW, Inc., Civil No. 3-91-CV2661-H. ( Tex. 1993) (consent decree); Dotzler v. Perot, 914 F. Supp. 328 ( Mo. 1996). If a CRA obtains demographic and identifying information from a financial institution, however, any redisclosure of that information is subject to the privacy restrictions of the Gramm-Leach-Bliley Act, 15 6801 et seq. 5. Title X of Pub. L. 111-203 (Dodd-Frank Wall Street Reform and Consumer Protection Act). 1. 40 Years OF Experience WITH THE fair Credit Reporting ACT.

9 Regulatory and interpretive roles under the FCRA. As the FTC role evolves, the staff seeks to share its extensive Experience with the CFPB and the public through a summary of its key interpretations and guidance. The following report gives a brief overview of the FTC's role in the enforcement and the interpretation of the FCRA, followed by an FTC Staff Summary of Interpretations of the FCRA ( Staff Summary ) in a section-by-section Commission staff anticipates that this report and the Staff Summary will be of aid to the CFPB as it takes over many of the interpretive functions under the FCRA as of July 21, 2011. II. Evolution of the fair Credit Reporting Act When it was originally enacted, the FCRA imposed requirements exclusively on CRAs such as Credit bureaus, except for those sections of the Act requiring users of consumer reports and other third parties to provide certain notices to consumers.

10 The FCRA established the Commission as the primary federal enforcement agency, with jurisdiction over CRAs and all consumer report users ( , retailers, finance companies, employers, insurers, and landlords), except for certain entities over which the Commission does not have Under the FCRA, CRAs are required to establish procedures to ensure that they report consumer information only to those with a legitimate purpose for it and to achieve maximum possible accuracy in the information they report. The FCRA further sought to improve the accuracy of data in CRA files by requiring CRAs to disclose information in their files to consumers and investigate items disputed in good faith by them.


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