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6500 - Consumer Protection
Section 604--General
1. Furnishing of Consumer Reports to Other Consumer
Reporting Agencies
A consumer reporting agency may furnish a consumer report to another
consumer reporting agency for it to furnish pursuant to a subscriber's
request. In these circumstances, one consumer reporting agency is
acting on behalf of another.
2. Consumer's Permission not Needed
When permissible purposes exist, parties may obtain, and consumer
reporting agencies may furnish, consumer reports without the consumers'
permission or over their objection. Similarly, parties may furnish
information concerning their transactions with consumers to consumer
reporting agencies and others, and consumer reporting agencies may
gather information, without consumers' permission.
{{4-29-94 p.7195}}
3. User's Disclosure of Report to Subject Consumer
The FCRA does not prohibit a consumer report user from giving a copy
of the report, or otherwise disclosing it, to the consumer who is the
subject of the report.
Section 605--Obsolete
Information
"(a) Except as authorized under subsection (b), no
consumer reporting agency may make any consumer report containing any
of the following items of information * * *:
(b) The provisions of subsection (a) are not applicable in
the case of any consumer credit report to be used in connection with--
(1) a credit transaction involving, or which may reasonably
be expected to involve, a principal amount of $50,000 or more;
(2) the underwriting of life insurance involving, or which
may reasonably be expected to involve, a face amount of $50,000 or
more; or
(3) the employment of any individual at an annual salary
which equals, or which may reasonably be expected to equal $20,000, or
more."
1. General
Section 605(a) provides that most adverse information more than
seven years old may not be reported, except in certain circumstances
set out in section 605(b). With respect to delinquent accounts,
accounts placed for collection, and accounts charged to profit and
loss, there are many dates that could be deemed to commence seven year
reporting periods. The discussion in subsections (a)(2), (a)(4), and
(a)(6) is intended to set forth a clear, workable rule that effectuates
Congressional intent.
2. Favorable Information
The Act imposes no time restriction on reporting of information that
is not adverse.
3. Retention of Information in Files
Consumer reporting agencies may retain obsolete adverse information
and furnish it in reports for purposes that are exempt under subsection
(b) (e.g., credit for a principal amount of $50,000 or
more).
4. Use of Shorter Periods
The section does not require consumer reporting agencies to report
adverse information for the time periods set forth, but only prohibits
them from reporting adverse items beyond those time periods.
5. Inapplicability to Users
The section does not limit creditors or others from using adverse
information that would be "obsolete" under its terms, because it
applies only to reporting by consumer reporting agencies. Similarly,
this section does not bar a creditor's reporting such adverse obsolete
information concerning its transactions or experiences with a consumer,
because the report would not constitute a consumer report.
6. Indicating the Existence of Nonspecified, Obsolete
Information
A consumer reporting agency may not furnish a consumer report
indicating the existence of obsolete adverse information, even if no
specific item is reported. For example, a consumer reporting agency may
not communicate the existence of a debt older than seven years by
reporting that a credit grantor cannot locate a debtor whose debt was
charged off ten years ago.
7. Operative Dates
The times or dates set forth in this section, which relate to the
occurrence of events involving adverse information, determine whether
the item is obsolete. The date that the consumer reporting agency
acquired the adverse information is irrelevant to how long that
information may be reported.
{{4-29-94 p.7196}}
Section 605(a)(1)--"Cases under title 11 of the United
States Code or under the Bankruptcy Act that, from the date of entry of
the order for relief or the date of adjudication, as the case may be,
antedate the report by more than 10 years."
1. Relation to Other Subsections
The reporting of suits and judgments is governed by subsection
(a)(2), the reporting of accounts placed for collection or charged to
profit and loss is governed by subsection (a)(4), and the reporting of
other delinquent accounts is governed by subsection (a)(6). Any such
item, even if discharged in bankruptcy, may be reported separately for
the applicable seven year period, while the existence of the bankruptcy
filing may be reported for ten years.
2. Wage Earner Plans
Wage earner plans may be reported for ten years, because they are
covered by Title 11 of the United States Code.
3. Date for Filing
A voluntary bankruptcy petition may be reported for ten years from
the date that it is filed, because the filing of the petition
constitutes the entry of an "order for relief" under this
subsection, just like a filing under the Bankruptcy Act (11 U.S.C.
301).
Section 605(a)(2)--"Suits and judgments which, from date of
entry, antedate the report by more than seven years or until the
governing statute of limitations has expired, whichever is the longer
period."
1. Operative Date
For a suit, the term "date of entry" means the date the suit
was initiated. A protracted suit may be reported for more than seven
years from the date it was entered, if the governing statute of
limitations has not expired. For a judgment, the term "date of
entry" means the date the judgment was rendered.
2. Paid Judgments
Paid judgments cannot be reported for more than seven years after
the judgment was entered, because payment of the judgment eliminates
any "governing statute of limitations" under this subsection that
might otherwise lengthen the period.
Section 605(a)(3)--"Paid tax liens which, from date of
payment, antedate the report by more than seven years."
1. Unpaid Liens
If a tax lien (or other lien) remains unsatisfied, it may be
reported as long as it remains filed against the consumer, without
limitation, because this subsection addresses only paid tax liens.
Section 605(a)(4)--"Accounts placed for collection or
charged to profit and loss which antedate the report by more than seven
years."
1. Placement for Collection
The term "placed for collection" means internal collection
activity by the creditor, as well as placement with an outside
collector, whichever occurs first. Sending of the initial past due
notices does not constitute placement for collection. Placement for
collection occurs when dunning notices or other collection efforts are
initiated. The reporting period is not extended by assignment to
another entity for further collection, or by a partial or full payment
of the account. However, where a borrower brings his delinquent account
to date and returns to his regular payment schedule, and later defaults
again, a consumer reporting agency may disregard any collection
activity with respect to the first delinquency and measure the
reporting period from the date the account was placed for collection as
a result of the borrower's ultimate default. A consumer's repayment
agreement with a collection agency can be treated as a new account that
has its own seven year period.
{{4-29-94 p.7196.01}}
2. Charge to Profit and Loss
The term "charged to profit and loss" means action taken by
the creditor to write off the account, and the applicable time period
is measured from that event. If an account that was charged off is
later paid in part or paid in full by the consumer, the reporting
period of seven years from the charge-off is not extended by this
subsequent payment.
3. Reporting of a Delinquent Account That is Later Placed
for Collection or Charged to Profit and Loss
The fact that an account has been placed for collection or charged
to profit and loss may be reported for seven years from the date that
either of those events occurs, regardless of the date the account
became delinquent. The fact of delinquency may also be reported for
seven years from the date the account became delinquent.
Section 605(a)(5)--"Records of arrest, indictment, or
conviction of crime which, from date of disposition, release, or
parole, antedate the report by more than seven years."
1. Records
The term "records" means any information a consumer reporting
agency has in its files relating to arrest, indictment or conviction of
a crime.
2. Computation of Time Period
The seven year reporting period runs from the date of disposition,
release or parole, as applicable. For example, if charges are dismissed
at or before trial, or the consumer is acquitted, the date of such
dismissal or acquittal is the date of disposition. If the consumer is
convicted of a crime and sentenced to confinement, the date of release
or placement on parole controls. (Confinement, whether continuing or
resulting from revocation of parole, may be reported until seven years
after the confinement is terminated.) The sentencing date controls for
a convicted consumer whose sentence does not include confinement. The
fact that information concerning the arrest, indictment, or conviction
of crime is obtained by the reporting agency at a later date from a
more recent source (such as a newspaper or interview) does not serve to
extend this reporting period.
Section 605(a)(6)--"Any other adverse item of information
which antedates the report by more than seven years."
1. Relation to Other Subsections
This section applies to all adverse information that is not covered
by section 605(a)(1)--(5). For example, a delinquent account that has
neither been placed for collection, nor charged to profit and loss, may
be reported for seven years from the date of the last regularly
scheduled payment. (Accounts placed for collection or charged to profit
and loss may be reported for the time periods stated in section
605(a)(4).)
2. Non Tax Liens
Liens (other than paid tax liens) may be reported as long as they
remain filed against the consumer or the consumer's property, and
remain effective (under any applicable statute of limitations). (See
discussion under section 605(a)(3), supra.)
Section
606--Disclosure of Investigative Consumer Reports
"(a) A person may not procure or cause to be prepared an
investigative consumer report on any consumer unless--
(1) it is clearly and accurately disclosed to the consumer that an
investigative consumer report including information as to his
character, general reputation, personal characteristics, and mode of
living, whichever are applicable, may be made, and such disclosure (A)
is made in a writing mailed, or otherwise delivered, to the consumer,
not later than three days after the date on which the report was first
requested, and (B) includes a statement informing the consumer of his
right to request the additional disclosures provided for under
subsection (b) of this section; or
{{4-29-94 p.7196.02}}
(2) the report is to be used for employment purposes for which
the consumer has not specifically applied.
(b) Any person who procures or causes to be prepared an
investigative consumer report on any consumer shall, upon written
request made by the consumer within a reasonable period of time after
receipt by him of the disclosure required by subsection (a)(1), make a
complete and accurate disclosure of the nature and scope of the
investigation requested. This disclosure shall be made in a writing
mailed, or otherwise delivered, to the consumer not later than five
days after the date on which the request for such disclosure was
received from the consumer or such report was first requested,
whichever is the later.
(c) No person may be held liable for any violation of subsection
(a) or (b) of this section if he shows by a preponderance of the
evidence that at the time of the violation he maintained reasonable
procedures to assure compliance with subsection (a) or (b)."
1. Relation to Other Sections
The term "investigative consumer report" is defined at
section 603(e) to mean a consumer
report, all or a portion of which contains information obtained through
personal interviews (in person or by telephone) with persons other than
the subject, which information relates to the subject's character,
general reputation, personal characteristics or mode of living.
2. Inapplicability to Consumer Reporting Agencies
The section applies only to report users, not consumer reporting
agencies. The FCRA does not require consumer reporting agencies to
inform consumers that information will be gathered or that reports will
be furnished concerning them.
3. Inapplicability to Noninvestigative Consumer Reports
The section does not apply to noninvestigative reports.
4. Exemptions
An employer who orders investigative consumer reports on a current
employee who has not applied for a job change need not notify the
employee, because the term "employment purposes" is defined to
include "promotion, reassignment or retention" and subsection (b)
provides that the disclosure requirements do not apply to
"employment purposes for which the consumer has not specifically
applied."
5. Form and Delivery of Notice
The notice must be in writing and delivered to the consumer. The
user may include the disclosure in an application for employment,
insurance, or credit, if it is clear and conspicuous and not obscured
by other language. A user may send the required notice via first class
mail. The notice must be mailed or otherwise delivered to the consumer
not later than three days after the report was first requested.
6. Content of Notice of Right to Disclosure
The notice must clearly and accurately disclose that an
"investigative consumer report" including information as to the
consumer's character, general reputation, personal characteristics and
mode of living (whichever are applicable), may be made. The disclosure
must also state that an investigative consumer report involves personal
interviews with sources such as neighbors, friends, or associates. The
notice may include any additional, accurate information about the
report, such as the types of interviews that will be conducted. The
notice must include a statement informing the consumer of the right to
request complete and accurate disclosure of the nature and scope of the
investigation.
7. Content of Disclosure of Report
When the consumer requests disclosure of the "nature and
scope" of the investigation, such 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
{{4-29-94 p.7196.03}}investigating agency. The user need not
disclose the names of sources of information, nor must it provide the
consumer with a copy of the report. A report user that provides the
consumer with a blank copy of the standardized form used to transmit
the report from the agency to the user complies with the requirement
that it disclose the "nature" of the investigation.
Section
607--Compliance Procedures
"(a) Every consumer reporting agency shall maintain reasonable
procedures designed to avoid violations of section 605 and to limit the
furnishing of consumer reports to the purposes listed under section
604. These procedures shall require that prospective users of the
information identify themselves, certify the purposes for which the
information is sought, and certify that the information will be used
for no other purpose. Every consumer reporting agency shall make a
reasonable effort to verify the identity of a new prospective user and
the uses certified by such prospective user prior to furnishing such
user a consumer report. No consumer reporting agency may furnish a
consumer report to any person if it has reasonable grounds for
believing that the consumer report will not be used for a purpose
listed in Section 604.
(b) Whenever a consumer reporting agency prepares a consumer report
it shall follow reasonable procedures to assure maximum possible
accuracy of the information concerning the individual about whom the
report relates."
1. Procedures to Avoid Reporting Obsolete Information
A. General. A consumer reporting agency should
establish procedures with its sources of adverse information that will
avoid the risk of reporting obsolete information. For example, the
agency should either require a creditor to supply the date an account
was placed for collection or charged off, or the agency should use a
conservative date for such placement or charge off (such as the date of
the last regularly scheduled payment), to be sure of complying with the
statute.
B. Retention of obsolete information for reporting in
excepted circumstances. If a consumer reporting agency retains
adverse information in its files that is "obsolete" under section
605(a) (e.g., information about a satisfied judgment that is
more than seven years old), so that it may be reported for use in
transactions described by section 605(b) (i.e., applications
for credit or life insurance for $50,000 or more, or employment at an
annual salary of $20,000 or more), it must have procedural safeguards
to avoid reporting the information except in those situations. The
procedure should require that such obsolete information be released
only after an internal decision that its release will not violate
section 605.
2. Procedures to Avoid Reporting for Impermissible Purposes
A. Verification. A consumer reporting agency should
have a system to verify that it is dealing with a legitimate business
having a "permissible purpose" for the information reported. What
constitutes adequate verification will vary with the circumstances. If
the consumer reporting agency is not familiar with the user,
appropriate procedures might require an on-site visit to the user's
place of business, or a check of the user's references.
B. Required certification by user. A consumer
reporting agency should adopt procedures that require prospective
report users to identify themselves, certify the purpose for which the
information is sought, and certify that the information will be used
for no other purpose. A consumer reporting agency should determine
initially that users have permissible purposes and ascertain what those
purposes are. It should obtain a specific, written certification that
the recipient will obtain reports for those purposes and no others. The
user's certification that the report will be used for no other purposes
should expressly prohibit the user from sharing the report or providing
it to anyone else, other than the subject of the report or to a joint
user having the same purpose. A consumer reporting agency should refuse
to provide reports to those refusing to provide such
certification.
{{4-29-94 p.7196.04}}
C. Blanket or individual certification. Once the
consumer reporting agency obtains a certification from a user
(e.g., a creditor) that typically has a permissible purpose
for receiving a consumer report, stating that it will use those reports
only for specified permissible purposes (e.g., for credit or
employment purposes), a certification of purpose need not be furnished
for each individual report obtained, provided there is no reason to
believe the user may be violating its certification. However, in
furnishing reports to users that typically could have both permissible
and impermissible purposes for ordering consumer reports (e.g.,
attorneys and detective agencies), the consumer reporting agency
must require the user to provide a separate certification each time it
requests a consumer report.
D. Procedures to avoid recipients' abuse of certification.
When doubt arises concerning any user's compliance with its
contractual certification, a consumer reporting agency must take steps
to insure compliance, such as requiring a separate, advance
certification for each report it furnishes that user, or auditing that
user to verify that it is obtaining reports only for permissible
purposes. A consumer reporting agency must cease furnishing consumer
reports to users who repeatedly request consumer reports for
impermissible purposes.
E. Unauthorized access. A consumer reporting agency
should take several other steps when doubt arises concerning whether a
user is obtaining reports for a permissible purpose from a computerized
system. If it appears that a third party, not a subscriber, has
obtained unauthorized access to the system, the consumer reporting
agency should take appropriate steps such as altering authorized users'
means of access, such as codes and passwords, and making random checks
to ensure that future reports are obtained only for permissible
purposes. If a subscriber has inadvertently sought reports for
impermissible purposes or its employee has obtained reports without a
permissible purpose, it would be appropriate for the consumer reporting
agency to alter the subscriber's means of access, and require an
individual written certification of the permissible purpose for each
report requested or randomly verify such purposes. A consumer reporting
agency should refuse to furnish any further reports to a user that
repeatedly violates certifications.
F. Use of computerized systems. A consumer reporting
agency may furnish consumer reports to users via terminals, provided
the consumer reporting agency has taken the necessary steps to ensure
that the users have a permissible purpose to receive the reports. (The
agency would have to record the identity of consumer report recipients
for each consumer, to be able to make any disclosures required under
section 609(a)(3) or section 611(d)).
G. Activity reports. If a consumer reporting agency
provides "activity reports" on all customers who have open-end
accounts with a credit grantor, it must make certain that the credit
grantor always notifies the agency when accounts are closed and paid in
full, to avoid furnishing reports on former customers or other
customers for whom the credit grantor lacks a permissible purpose. (See
also discussion in section 604(3)(A), item 1, supra.)
3. Reasonable Procedures to Assure Maximum Possible
Accuracy
A. General. The section does not require error free
consumer reports. If a consumer reporting agency accurately
transcribes, stores and communicates consumer information received from
a source that it reasonably believes to be reputable, and which is
credible on its face, the agency does not violate this section simply
by reporting an item of information that turns out to be inaccurate.
However, when a consumer reporting agency learns or should reasonably
be aware of errors in its reports that may indicate systematic problems
(by virtue of information from consumers, report users, from periodic
review of its reporting system, or otherwise) it must review its
procedures for assuring accuracy. Examples of errors that would require
such review are the issuance of a consumer report pertaining entirely
to a consumer other than the one on whom a report was requested, and
the issuance of a consumer report containing information on two or more
consumers (e.g.,
{{4-29-94 p.7196.05}}information that was mixed in the file)
in response to a request for a report on only one of those consumers.
B. Required steps to improve accuracy. If the agency's
review of its procedures reveals, or the agency should reasonably be
aware of, steps it can take to improve the accuracy of its reports at a
reasonable cost, it must take any such steps. It should correct
inaccuracies that come to its attention. A consumer reporting agency
must also adopt reasonable procedures to eliminate systematic errors
that it knows about, or should reasonably be aware of, resulting from
procedures followed by its sources of information. For example, if a
particular credit grantor has often furnished a significant amount of
erroneous consumer account information, the agency must require the
creditor to revise its procedures to correct whatever problems cause
the errors or stop reporting information from that creditor.
C. Use of automatic data processing equipment.
Consumer reporting agencies that use automatic data processing
equipment (particularly for long distance transmission of information)
should have reasonable procedures to assure that the data is accurately
converted into a machine-readable format and not distorted by machine
malfunction or transmission failure. Reasonable security procedures
must be adopted to minimize the possibility that computerized consumer
information will be stolen or altered by either authorized or
unauthorized users of the information system.
D. Reliability of sources. Whether a consumer
reporting agency may rely on the accuracy of information from a source
depends on the circumstances. This section does not hold a consumer
reporting agency responsible where an item of information that it
receives from a source that it reasonably believes to be reputable
appears credible on its face, and is transcribed, stored and
communicated as provided by that source. Requirements are more
stringent where the information furnished appears implausible or
inconsistent, or where procedures for furnishing it seem likely to
result in inaccuracies, or where the consumer reporting agency has had
numerous problems regarding information from a particular source.
E. Undesignated information in credit transactions.
"Undesignated information" means all credit history
information in a married (or formerly married) consumer's file, which
was not reported to the consumer reporting agency with a designation
indicating that the information relates to either the consumer's joint
or individual credit experience. The question arises what is meant by
reasonable procedures under this section for treatment of credit
history in the file of only one (present or former) spouse (usually the
husband) that has not been designated by the procedure in Regulation B,
12 CFR 202.10, which
implements the Equal Credit Opportunity Act. (This situation exists
only for certain credit history file information compiled before June
1, 1977, and certain accounts opened before that date.) A consumer
reporting agency may report information solely in the file of spouse A,
when spouse B applies for a separate extension of credit, only if such
information relates to accounts for which spouse B was either a user or
was contractually liable, or the report recipient has a permissible
purpose for a report on spouse A. A consumer reporting agency may not
supply all undesignated information from the file of a consumer's
spouse in response to a request for a report on the consumer, because
some or all of that information may not relate to both spouses.
Consumer reporting agencies must honor without charge the request of a
married or formerly married individual that undesignated information
(that appears only in the files of the individual's present or former
spouse) be segregated--i.e., placed in a separate file that
is accessible under that individual's name. This procedure insures
greater accuracy and protection of the privacy of spouses than does the
automatic reporting of undesignated information.
F. Reporting of credit obligation--(1) Past due
accounts. A consumer reporting agency must employ reasonable
procedures to keep its file current on past due accounts (e.g.,
by requiring its creditors to notify the credit bureau when a
previously past due account has been paid or discharged in bankruptcy),
but its failure to show such activity in particular instances, despite
the maintenance of reasonable procedures to keep files current,
does not violate this section. For example, a consumer reporting agency
that
{{4-29-94 p.7196.06}}reports accurately in 1985 that as of 1983 the
consumer owed a retail store money, without mentioning that the
consumer eventually paid the debt, does not violate this section if it
was not informed by the store or the consumer of the later payment.
(2) Significant, verified information. A consumer
reporting agency must report significant, verified information it
possesses about an item. For instance, a consumer reporting agency may
continue to report a paid account that was previously delinquent, but
should also report that the account has been paid. Similarly, a
consumer reporting agency may include delinquencies on debts discharged
in bankruptcy in consumer reports, but must accurately note the status
of the debt (e.g., discharged, voluntarily repaid). Finally,
if a reported bankruptcy has been dismissed, that fact should be
reported.
(3) Guarantor obligations. Personal guarantees for
obligations incurred by others (including a corporation) may be
included in a consumer report on the individual who is the guarantor.
The report should accurately reflect the individual's involvement
(e.g., as guarantor of the corporate debt).
4. Effect of Criminal Sanctions
Notwithstanding the fact that section
619 provides criminal sanctions against persons who knowingly
and willfully obtain information on a consumer from a consumer
reporting agency under false pretenses, a consumer reporting agency
must follow reasonable procedures to limit the furnishing of reports to
those with permissible purposes.
5. Disclosure of Credit Denial
When reporting that a consumer was denied a benefit (such as
credit), a consumer reporting agency need not report the reasons for
the denial.
6. Content of Report
A consumer report need not be tailored to the user's needs. It may
contain any information that is complete, accurate, and not obsolete on
the consumer who is the subject of the report. A consumer report may
include an account that was discharged in bankruptcy (as well as the
bankruptcy itself), as long as it reports a zero balance due to reflect
the fact that the consumer is no longer liable for the discharged debt.
A consumer report may include a list of recipients of reports on the
consumer who is the subject of the report.
7. Completeness of Reports
Consumer reporting agencies are not required to include all existing
derogatory or favorable information about a consumer in their reports.
(See, however, discussion in section 611, item 14, infra,
concerning conveying consumer dispute statements.) However, a
consumer reporting agency may not mislead its subscribers as to the
completeness of its reports by deleting nonderogatory information and
not disclosing its policy of making such deletions.
8. User Notice of Adverse Action Based on a Consumer Report
A consumer reporting agency need not require users of its consumer
reports to provide any notice to consumers against whom adverse action
is taken based on a consumer report. The FCRA imposes such notice
requirements directly on users, under the circumstances set out in
section 615.
Section
608--Disclosures to Governmental Agencies
"Notwithstanding the provisions of section 604, a consumer
reporting agency may furnish identifying information respecting any
consumer limited to his name, address, former addresses, places of
employment, or former places of employment, to a governmental
agency."
1. Permissible Purpose Necessary for Additional Information
A consumer reporting agency may furnish limited identifying
information concerning a consumer to a governmental agency (e.g.,
an agency seeking a fugitive from justice) even if
{{6-28-96 p.7196.07}}that
agency does not have a "permissible purpose" under section 604 to
receive a consumer report. However, a governmental agency must have a
permissible purpose in order to obtain information beyond what is
authorized by this section.
2. Entities Covered by Section
The term "governmental agency" includes federal, state, county
and municipal agencies, and grand juries. Only governmental agencies
may obtain disclosures of identifying information under this section.
Section
609--Disclosures to Consumers
"(a) Every consumer reporting agency shall, upon request and
proper identification of any consumer, clearly and accurately disclose
to the consumer:
(1) The nature and substance of all information (except medical
information) in its files on the consumer at the time of the request.
(2) The sources of the information; except that the sources of
information acquired solely for use in preparing an investigative
consumer report and actually used for no other purpose need not be
disclosed: Provided, That in the event an action is brought under this
title, such sources shall be available to the plaintiff under
appropriate discovery procedures in the court in which the action is
brought.
(3) The recipients of any consumer report on the consumer which
it has furnished.
(A) for employment purposes within the two-year period preceding
the request, and
(B) for any other purpose within the six-month period preceding
the request.
(b) The requirements of subsection (a) respecting the disclosure of
sources of information and the recipients of consumer reports do not
apply to information received or consumer reports furnished prior to
the effective date of this title except to the extent that the matter
involved is contained in the files of the consumer reporting agency on
that date."
1. Relation to Other Sections
This section states what consumer reporting agencies must disclose
to consumers, upon request and proper identification. Section 610 sets
forth the conditions under which those disclosures must be made, and
section 612 sets forth the circumstances under which consumer reporting
agencies may charge for making such disclosures. The term "file"
as used in section 609(a)(1) is defined in section 603(g). The term
"investigative consumer report," which is used in section
609(a)(2), is defined in section 603(e). The term "medical
information," which is used in section 609(a)(1), is defined in
section 603(i).
2. Proper Identification
A consumer reporting agency must take reasonable steps to verify the
identity of an individual seeking disclosure under this section.
3. Manner of ``Proper Identification''
If a consumer provides sufficient identifying information, the
consumer reporting agency cannot insist that the consumer execute a
"request for interview" form, or provide the items listed on it,
as a prerequisite to disclosure. However, the agency may use a form to
identify consumers requesting disclosure if it does not use the form to
inhibit disclosure, or to obtain any waiver of the consumers' rights. A
consumer reporting agency may provide disclosure by telephone without a
written request, if the consumer is properly identified, but may insist
on a written request before providing such disclosure.
4. Power of Attorney
A consumer reporting agency may disclose a consumer's file to a
third party authorized by the consumer's written power of attorney to
obtain the disclosure, if the third party presents adequate
identification and fulfills other applicable conditions of disclosure.
However, the agency may also disclose the information directly to the
consumer.
{{6-28-96 p.7196.08}}
5. Nature of Disclosure Required
A consumer reporting agency must disclose the nature and substance
of all items in the consumer's file, no matter how or where they are
stored (e.g., in other offices of the consumer reporting
agency). The consumer reporting agency must have personnel trained to
explain to the consumer any information furnished in accordance with
the Act. Particularly when the file includes coded information that
would be meaningless to the consumer, the agency's personnel must
assist the consumer to understand the disclosures. Any summary must not
mischaracterize the nature of any item of information in the file. The
consumer reporting agency is not required to provide a copy of the
file, or any other written disclosure, or to read the file verbatim to
the consumer or to permit the consumer to examine any information in
its files. A consumer reporting agency may choose to usually comply
with the FCRA in writing, by providing a copy of the file to the
consumer or otherwise.
6. Medical Information
Medical information includes information obtained with the
consumer's consent from physicians and medical facilities, but does not
include comments on a consumer's health by non-medical personnel. A
consumer reporting agency is not required to disclose medical
information in its files to consumers, but may do so. Alternatively, a
consumer reporting agency may inform consumers that there is medical
information in the files concerning them and supply the name of the
doctor or other source of the information. Consumer reporting agencies
may also disclose such information to a physician of the consumer's
choice, upon the consumer's written instructions pursuant to
section 604(2).
7. Ancillary Information
A consumer reporting agency is not required to disclose information
consisting of an audit trail of changes it makes in the consumer's
file, billing records, or the contents of a consumer relations folder,
if the information is not from consumer reports and will not be used in
preparing future consumer reports. Such data is not included in the
term "information in its files" which must be disclosed to the
consumer pursuant to this section. A consumer reporting agency must
disclose claims report information only if it has appeared in consumer
reports.
8. Information on Other Consumers
The consumer has no right to information in the consumer reporting
agency's files on other individuals, because the disclosure must be
limited to information "on the consumer." However, all
information in the files of the consumer making the request must be
disclosed, including information about another individual that relates
to the consumer (e.g., concerning that individual's dealings
with the subject of the consumer report).
9. Disclosure of Sources of Information
Consumer reporting agencies must disclose the sources of
information, except for sources of information acquired solely for use
in preparing an investigative consumer report and actually used for no
other purpose. When it has used information from another consumer
reporting agency, the other agency should be reported as a source.
10. Disclosure of Recipients of Consumer Reports
Consumer reporting agencies must maintain records of recipients of
prior consumer reports sufficient to enable them to meet the FCRA's
requirements that they disclose the identity of recipients of prior
consumer reports. A consumer reporting agency that furnishes a consumer
report directly to a report user at the request of another consumer
reporting agency must disclose the identity of the user that was the
ultimate recipient of the report, not the other agency that acted as an
intermediary in procuring the report.
{{6-28-96 p.7196.09}}
11. Disclosure of Recipients of Prescreened Lists
A consumer reporting agency must furnish to a consumer requesting
file disclosure the identity of recipients of any prescreened lists
that contained the consumer's name when submitted to creditors (or
other users) by the consumer reporting agency.
12. Risk Scores.
A consumer reporting agency is not required to disclose a risk score
(or other numerical evaluation, however named) that is provided to the
agency's client (based on an analysis of data on the consumer) but not
retained by the agency. Such a score is not information "in (the
agency's) files at the time of the request" by the consumer for file
disclosure.
Section 610—Conditions of Disclosure
"(a) A consumer reporting agency shall make the disclosures
required under section 609 during normal business hours and on
reasonable notice.
(b) the disclosures required under section 609 shall be made to the
consumer--
(1) in person if he appears in person and furnishes proper
identification; or
(2) by telephone if he has made a written request, with proper
identification, for telephone disclosure and the toll charge, if any,
for the telephone call is prepaid by or charged directly to the
consumer.
(c) Any consumer reporting agency shall provide trained personnel
to explain to the consumer any information furnished to him pursuant to
section 609.
(d) The consumer shall be permitted to be accompanied by one other
person of his choosing, who shall furnish reasonable identification. A
consumer reporting agency may require the consumer to furnish a written
statement granting permission to the consumer reporting agency to
discuss the consumer's file in such person's presence.
(e) Except as provided in section 616 and 617, no consumer may
bring any action or proceeding in the nature of defamation, invasion of
privacy, or negligence with respect to the reporting of information
against any consumer reporting agency, any user of information or any
person who furnishes information to a consumer reporting agency, based
on information disclosed pursuant to section 609, 610, or 615, except
as to false information furnished with malice or willful intent to
injure such consumers."
1. Time of Disclosure
A consumer reporting agency must make disclosures during normal
business hours, upon reasonable notice. However, the consumer reporting
agency may waive reasonable notice, and the consumer may agree to
disclosure outside of normal business hours. A consumer reporting
agency may make in-person disclosure to consumers who have made
appointments ahead of other consumers, because the disclosures are only
required to be made "on reasonable notice."
2. Extra Conditions Prohibited
A consumer reporting agency may not add conditions not set out in
the FCRA as a prerequisite to the required disclosure.
3. Manner of Disclosure
A consumer reporting agency may, with the consumer's actual or
implied consent, meet its disclosure obligations by mail, in lieu of
the in-person or telephone disclosures specified in the statute.
4. Disclosure in the Presence of Third Parties
When the consumer requests disclosure in a third party's presence,
the consumer reporting agency may require that a consumer sign an
authorization before such disclosure is made. The consumer may choose
the third party to accompany him or her for the disclosure.
{{6-28-96 p.7196.10}}
5. Expense of Telephone Calls
A consumer reporting agency is not required to pay the telephone
charge for a telephone interview with a consumer obtaining disclosure.
6. Qualified Defamation Privilege
The privilege extended by subsection 610(e) does not apply to an
action brought by a consumer if the action is based on information not
disclosed pursuant to sections 609, 610 or 615. A disclosure to a
consumer's representative (e.g., based on the consumer's
power of attorney) constitutes "information disclosed pursuant to
section 609" and is thus covered by this privilege.
Section 611--Procedure
in Case of Disputed Accuracy
"(a) If the completeness or accuracy of any item of information
contained in his file is disputed by a consumer, and such dispute is
directly conveyed to the consumer reporting agency by the consumer, the
consumer reporting agency shall within a reasonable period of time
reinvestigate and record the current status of that information unless
it has reasonable grounds to believe that the dispute by the consumer
is frivolous or irrelevant. If after such reinvestigation such
information is found to be inaccurate or can no longer be verified, the
consumer reporting agency shall promptly delete such information. The
presence of contradictory information in the consumer's file does not
in and of itself constitute reasonable grounds for believing the
dispute is frivolous or irrelevant.
(b) If the reinvestigation does not resolve the dispute, the
consumer may file a brief statement setting forth the nature of the
dispute. The consumer reporting agency may limit such statements to not
more than one hundred words if it provides the consumer with assistance
in writing a clear summary of the dispute.
(c) Whenever a statement of a dispute is filed, unless there is
reasonable grounds to believe that it is frivolous or irrelevant, the
consumer reporting agency shall, in any subsequent consumer report
containing the information in question, clearly note that it is
disputed by the consumer and provide either the consumer's statement or
a clear and accurate codification or summary thereof.
(d) Following any deletion of information which is found to be
inaccurate or whose accuracy can no longer be verified or any notation
as to disputed information, the consumer reporting agency shall, at the
request of the consumer, furnish notification that the item has been
deleted or the statement, codification or summary pursuant to
subsection (b) or (c) to any person specifically designated by the
consumer who has within two years prior thereto received a consumer
report for employment purposes, or within six months prior thereto
received a consumer report for any other purpose, which contained the
deleted or disputed information. The consumer reporting agency shall
clearly and conspicuously disclose to the consumer his rights to make
such a request. Such disclosure shall be made at or prior to the time
the information is deleted or the consumer's statement regarding the
disputed information is received."
1. Relation to Other Sections
This section sets forth procedures consumer reporting agencies must
follow if a consumer conveys a dispute of the completeness or accuracy
of any item of information in the consumer's file to the consumer
reporting agency. Section 609 provides for disclosures by consumer
reporting agencies to consumers, and section 610 sets forth conditions
of disclosure. Section 612 permits a consumer reporting agency to
impose charges for certain disclosures, including the furnishing of
certain information to recipients of prior reports, as provided by
section 611(d).
2. Proper Reinvestigation
A consumer reporting agency conducting a reinvestigation must make a
good faith effort to determine the accuracy of the disputed item or
items. At a minimum, it must check with the original sources or other
reliable sources of the disputed information and inform
them
{{6-28-96 p.7196.10-A}}of
the nature of the consumer's dispute. In reinvestigating and attempting
to verify a disputed credit transaction, a consumer reporting agency
may rely on the accuracy of a creditor's ledger sheets and need not
require the creditor to produce documentation such as the actual signed
sales slips. Depending on the nature of the dispute, reinvestigation
and
{{4-29-94 p.7196.11}}verification may require more than asking the
original source of the disputed information the same question and
receiving the same answer. If the original source is contacted for
reinvestigation, the consumer reporting agency should at least explain
to the source that the original statement has been disputed, state the
consumer's position, and then ask whether the source would confirm the
information, qualify it, or accept the consumer's explanation.
3. Complaint of Insufficient File, or Lack of File
The FCRA does not require a consumer reporting agency to add new
items of information to its file. A consumer reporting agency is not
required to create new files on consumers for whom it has no file, nor
is it required to add new lines of information about new accounts not
reflected in an existing file, because the section permits the consumer
to dispute only the completeness or accuracy of particular items of
information in the file. If a consumer reporting agency chooses to add
lines of information at the consumer's request, it may charge a fee for
doing so.
4. Explanation of Extenuating Circumstances
A consumer reporting agency has no duty to reinvestigate, or take
any other action under this section, if a consumer merely provides a
reason for a failure to pay a debt (e.g., sudden illness or
layoff), and does not challenge the accuracy or completeness of the
item of information in the file relating to a debt. Most creditors are
aware that a variety of circumstances may render consumers unable to
repay credit obligations. Although a consumer reporting agency is not
required to accept a consumer dispute statement that does not challenge
the accuracy or completeness of an item in the consumer's file, it may
accept such a statement and may charge a fee for doing so.
5. Reinvestigation of a Debt
A consumer reporting agency must reinvestigate if a consumer conveys
to it a dispute concerning the validity or status of a debt, such as
whether the debt was owed by the consumer, or whether the debt had
subsequently been paid. For example, if a consumer alleges that a
judgment reflected in the file as unpaid has been satisfied, or
notifies a consumer reporting agency that a past due obligation
reflected in the file as unpaid was subsequently paid, the consumer
reporting agency must reinvestigate the matter. If a file reflects a
debt discharged in bankruptcy without reflecting subsequent
reaffirmation and payment of that debt, a consumer may require that the
item be reinvestigated.
6. Status of a Debt
The consumer reporting agency must, upon reinvestigation, "record
the current status" of the disputed item. This requires inclusion of
any information relating to a change in status of an ongoing matter
(e.g., that a credit account had been closed, that a debt
shown as past due had subsequently been paid or discharged in
bankruptcy or that a debt shown as discharged in bankruptcy was later
reaffirmed and/or paid).
7. Dispute Conveyed to Party Other Than the Consumer
Reporting Agency
A consumer reporting agency is required to take action under this
section only if the consumer directly communicates a dispute to it. It
is not required to respond to a dispute of information that the
consumer merely conveys to others (e.g., to a source of
information). (But see, however, discussion in section 607, item 3A, of
consumer reporting agencies' duties to correct errors that come to
their attention.)
8. Dispute Conveyed to the Consumer Reporting Agency by a
Party Other Than the Consumer
A consumer reporting agency need not reinvestigate a dispute about a
consumer's file raised by any third party, because the obligation under
the section arises only where an "item of information in his file is
disputed by the consumer."
{{4-29-94 p.7196.12}}
9. Consumer Disclosures and Adverse Action Not
Prerequisites to Reinvestigation Duty
A consumer reporting agency's obligation to reinvestigate disputed
items is not contingent upon the consumer's having been denied a
benefit or having asserted any rights under the FCRA other than
disputing items of information.
10. Reasonable Period of Time
A consumer reporting agency is required to reinvestigate and record
the current status of disputed information within a reasonable period
of time after the consumer conveys the dispute to it. Although consumer
reporting agencies are able to reinvestigate most disputes within 30
days, a "reasonable time" for a particular reinvestigation may be
shorter or longer depending on the circumstances of the dispute. For
example, where the consumer provides documentary evidence (e.g.,
a certified copy of a court record to show that a judgment has
been paid) when submitting the dispute, the creditor may require a
shorter time to reinvestigate. On the other hand, where the dispute is
more complicated than normal (e.g., the consumer alleges in
good faith that a creditor has falsified its report of the consumer's
account history because of a personal grudge), the "reasonable
time" needed to conduct the reinvestigation may be longer.
11. Frivolous or Irrelevant
The mere presence of contradictory information in the file does not
provide the consumer reporting agency "reasonable grounds to believe
that the dispute by the consumer is frivolous or irrelevant." A
consumer reporting agency must assume a consumer's dispute is bona
fide, unless there is evidence to the contrary. Such evidence may
constitute receipt of letters from consumers disputing all information
in their files without providing any allegations concerning the
specific items in the files, or of several letters in similar format
that indicate that a particular third party (e.g., a
"credit repair" operator) is counselling consumers to dispute all
items in their files, regardless of whether the information is known to
be accurate. The agency is not required to repeat a reinvestigation
that it has previously conducted simply because the consumer reiterates
a dispute about the same item of information, unless the consumer
provides additional evidence that the item is inaccurate or incomplete,
or alleges changed circumstances.
12. Deletion of Accurate Information That has not Been
Disputed
The consumer reporting agency is not required to delete accurate
information that could not be verified upon reinvestigation, if it has
not been "disputed by a consumer." For example, if a creditor
deletes adverse information from its files with the result that
information could not be reverified if disputed, it is still
permissible for a consumer reporting agency to report it (subject to
the obsolescence provisions of section 605) until it is disputed.
13. Consumer Dispute Statements on Multiple Items
A consumer who disputes multiple items of information in his file
may submit a one hundred word statement as to each disputed item.
14. Conveying Dispute Statements to Recipients of
Subsequent Reports.
A consumer reporting agency may not merely tell the recipient of a
subsequent report containing disputed information that the consumer's
statement is on file but will be provided only if requested, because
subsection (c) requires the agency to provide either the statement or
"a clear and accurate codification or summary thereof."
Section 612--Charges
for Certain Disclosures
"A consumer reporting agency shall make all disclosures pursuant
to section 609 and furnish all consumer reports pursuant to section
611(d) without charge to the consumer if, within thirty days after
receipt by such consumer of a notification pursuant to section 615 or
notification from a debt collection agency affiliated with such
consumer reporting agency stating that the consumer's credit rating
may be or has been adversely affected, the
{{4-29-94 p.7196.13}}consumer makes a request under
section 609 or
611(d). Otherwise, the consumer
reporting agency may impose a reasonable charge on the consumer for
making disclosure to such consumer pursuant to section 609, the charge
for which shall be indicated to the consumer prior to making
disclosure; and for furnishing notifications, statements, summaries, or
codifications to persons designated by the consumer pursuant to section
611(d), the charge for which shall be indicated to the consumer prior
to furnishing such information and shall not exceed the charge that the
consumer reporting agency would impose on each designated recipient for
a consumer report except that no charge may be made for notifying such
persons of the deletion of information which is found to be inaccurate
or which can no longer be verified."
1. Irrelevance of Subsequent Grant of Credit or Reason for
Denial
A consumer denied credit because of a consumer report from a
consumer reporting agency has the right to a free disclosure from that
agency within 30 days of receipt of the section 615(a) notice, even if
credit was subsequently granted or the basis of the denial was that the
references supplied by the consumer are too few or too new to appear in
the credit file.
2. Charge for Reinvestigation Prohibited
This section does not permit consumer reporting agencies to charge
for making the reinvestigation or following other procedures required
by section 611(a)--(c).
3. Permissible Charges for Services Requested by Consumers
A consumer reporting agency may charge fees for creating files on
consumers at their request, or for other services not required by the
FCRA that are requested by consumers.
Section 613--Public
Record Information for Employment Purposes
"A consumer reporting agency which furnishes a consumer report
for employment purposes and which for that purpose compiles and reports
items of information on consumers which are matters of public record
and are likely to have an adverse effect upon a consumer's ability to
obtain employment shall--
(1) at the time such public record information is reported to the
user of such consumer report, notify the consumer of the fact that
public record information is being reported by the consumer reporting
agency, together with the name and address of the person to whom such
information is being reported; or
(2) maintain strict procedures designed to insure that whenever
public record information which is likely to have an adverse effect on
a consumer's ability to obtain employment is reported it is complete
and up to date. For purposes of this paragraph, items of public record
relating to arrests, indictments, convictions, suits, tax liens, and
outstanding judgments shall be considered up to date if the current
public record status of the item at the time of the report is
reported."
1. Relation to Other Sections
A consumer reporting agency that complies with section 613(1) must
also follow reasonable procedures to assure maximum possible accuracy,
as required by section 607(b).
2. Alternate Methods of Compliance
A consumer reporting agency that furnishes public record information
for employment purposes must comply with either subsection (1) or (2),
but need not comply with both.
3. Information From Another Consumer Reporting Agency
If a consumer reporting agency uses information or reports from
other consumer reporting agencies in a report for employment purposes,
it must comply with this section.
{{4-29-94 p.7196.14}}
4. Method of Providing Notice
A consumer reporting agency may use first class mail to provide the
notice required by subsection (1).
5. Waiver
The procedures required by this section cannot be waived by the
consumer to whom the report relates.
Section
614--Restrictions on Investigative Consumer Reports
"Whenever a consumer reporting agency prepares an investigative
consumer report, no adverse information in the consumer report (other
than information which is a matter of public record) may be included in
a subsequent consumer report unless such adverse information has been
verified in the process of making such subsequent consumer report, or
the adverse information was received within the three-month period
preceding the date the subsequent report is furnished."
Section
615--Requirements on Users of Consumer Reports
(a) Whenever credit or insurance for personal, family, or household
purposes, or employment involving a consumer is denied or the charge
for such credit or insurance is increased either wholly or partly
because of information contained in a consumer report from a consumer
reporting agency, the user of the consumer report shall so advise the
consumer against whom such adverse action has been taken and supply the
name and address of the consumer reporting agency making the report.
(b) Whenever credit for personal, family, or household purposes
involving a consumer is denied or the charge for such credit is
increased either wholly or partly because of information obtained from
a person other than a consumer reporting agency bearing upon the
consumer's credit worthiness, credit standing, credit capacity,
character, general reputation, personal characteristics, or mode of
living, the user of such information shall, within a reasonable period
of time, upon the consumer's written request for the reasons for such
adverse action received within 60 days after learning of such adverse
action, disclose the nature of the information to the consumer. The
user of such information shall clearly and accurately disclose to the
consumer his right to make such written request at the time such
adverse action is communicated to the consumer.
(c) No person shall be held liable for any violation of this
section if he shows by a preponderance of the evidence that at the time
of the alleged violation he maintained reasonable procedures to assure
compliance with the provisions of subsections (a) and (b)."
1. Relation to Other Sections and Regulation B
Sections 606 and 615 are the only two sections that require users of
reports to make disclosure to consumers. Section 606 applies only to
users of "investigative consumer reports." Creditors should not
confuse compliance with section 615(a), which only requires disclosure
of the name and address of the consumer reporting agency, and
compliance with the Equal Credit Opportunity Act, 15 U.S.C. 1691
et seq. and Regulation B, 12 C.F.R. 202, which require
disclosure of the reasons for adverse action. Compliance
with section 615(a), therefore, does not constitute compliance with
Regulation B.
2. Limited Scope of Requirements
The section does not require that creditors disclose their credit
criteria or standards or that employees furnish copies of personnel
files to former employees. The section does not require that the user
provide any kind of advance notification to consumers before a consumer
report is obtained. (See section 606 regarding notice of investigative
consumer reports.)
3. Method of Disclosure
The disclosures required by this section need not be made in
writing. However, users will have evidence that they have taken
reasonable steps to comply with this section if they
{{4-29-94 p.7196.15}}provide written disclosures and retain copies
for at least two years, the applicable statute of limitations for most
civil liability actions under the FCRA.
4. Adverse Action Based on Direct Information
This section does not require that a user send any notice to a
consumer concerning adverse action regarding that consumer that is
based neither on information from a consumer reporting agency nor on
information from a third party. For example, no disclosures are
required concerning adverse action based on information provided by the
consumer in an application or based on past experience in direct
transactions with the consumer.
5. Creditors Using ``Prescreened'' Mailing Lists
A creditor is not required to provide notices regarding consumer
reporting agencies that prepare mailing lists by "prescreening"
because they do not involve consumer requests for credit and credit has
not been denied to consumers whose names are deleted from a list
furnished to the agency for use in this procedure. See discussion of
"prescreening," under section 604(3)(A), item 6, supra.
6. Applicability to Users of Motor Vehicle Reports
An insurer that refuses to issue a policy, or charges a higher than
normal premium, based on a motor vehicle report is required to comply
with subsection (a).
7. Securities and Insurance Transactions
A consumer report user that denies credit to a consumer in
connection with a securities transaction must provide the required
notice, because the denial is of "credit * * * for personal
purposes," unless the consumer engages in such transactions as a
business.
8. Denial of Employment
An employer must provide the notice required by subsection (a) to an
individual who has applied for employment and has been rejected based
on a consumer report. However, an employer is not required to send a
notice when it decides not to offer a position to an individual who has
not applied for it, because in this case employment is not
"denied." (See discussion in section 606, item 4,
supra.)
9. Adverse Action Involving Credit
A creditor must provide the required notice when it denies the
consumer's request for credit (including a rejection based on a scoring
system, where a credit report received less than the maximum number of
points possible and caused the application to receive an insufficient
score), denies the consumer's request for increased credit, grants
credit in an amount less than the consumer requested, or raises the
charge for credit.
10. Adverse Action Not Involving Credit, Insurance or
Employment
The Act does not require that a report user provide any notice to
consumers when taking adverse action not relating to credit, insurance
or employment. For example, a landlord who refuses to rent an apartment
to a consumer based on credit or other information in a consumer report
need not provide the notice. Similarly, a party that uses credit or
other information in a consumer report as a basis for refusing to
accept payment by check need not comply with this section. Checks have
historically been treated as cash items, and thus such refusal does not
involve a denial of credit, insurance or employment.
11. Adverse Action Based on Nonderogatory Adverse
Information
A party taking adverse action concerning credit or insurance or
denying employment, "wholly or partly because of information
contained in a consumer report," must provide the required notice,
even if the information is not derogatory. For example, the user must
give the notice if the denial is based wholly or partly on the absence
of a file or on the fact that the file contained insufficient
references.
{{4-29-94 p.7196.16}}
12. Name and Address of the Consumer Reporting Agency
The "section 615(a)" notice must include the consumer
reporting agency's street address, not just a post office box address.
13. Agency To Be Identified
The consumer report user should provide the name and address of the
consumer reporting agency from which it obtained the consumer report,
even if that agency obtained all or part of the report from another
agency.
14. Denial Based Partly on a Consumer Report
A "section 615(a)" notice must be sent even if the adverse
action is based only partly on a consumer report.
15. Denial of Credit Based on Information From ``Third
Parties''
Subsection (b) imposes requirements on a creditor when it denies (or
increases the charge for) credit for personal, family or household
purposes involving a consumer, based on information from a "third
party" source, which means a source other than the
consumer reporting agency, the creditor's own files, or the consumer's
application (e.g., creditor, employer, landlord, or the
public record). Where a creditor denies a consumer's application based
on information obtained directly from another lender, even if the
lender's name was furnished to the creditor by a consumer reporting
agency, the creditor must give a "third party" disclosure.
16. Substances of Required ``Third Party'' Disclosures
When the adverse action is communicated to the consumer, the
creditor must clearly and accurately disclose to the consumer his or
her right to make a written request for the disclosure of the nature of
the third party information that led to the adverse action. Upon timely
receipt of such a request, however, the creditor need disclose only the
nature of the information that led to the adverse action (e.g.,
history of late rent payments or bad checks); it need not identify
the source that provided the information or the criteria that led to
the adverse action. A creditor may comply with subsection (b) by
providing a statement of the nature of the third party information that
led to the denial when it notifies the consumer of the denial. A
statement of principal, specific reasons for adverse action based on
third party information that is sufficient to comply with the
requirements of the Equal Credit Opportunity Act (e.g.,
"unable to verify employment") is sufficient to constitute
disclosure of the "nature of the information" under subsection
(b).
Section 616--Civil
Liability for Willful Noncompliance
Section 616 permits consumers who sue and prove willful
noncompliance with the Act to recover actual damages, punitive damages,
and the costs of the action, together with reasonable attorney's fees.
Section 617--Civil
Liability for Negligent Noncompliance
Section 617 permits consumers who sue and prove negligent
noncompliance with the Act to recover actual damages and the costs of
the action, together with reasonable attorney's fees.
Section
618--Jurisdiction of Courts; Limitation of Actions
Section 618 provides that any action brought under section 616 or
section 617 may be brought in any United States district court or other
court of competent jurisdiction. Such suit must be brought within two
years from the date on which liability arises, unless a defendant has
materially and willfully misrepresented information the Act requires to
be disclosed, and the information misrepresented is material to
establishment of the defendant's liability. In that event, the action
must be brought within two years after the individual discovers the
misrepresentation.
{{6-28-96 p.7196.17}}
Section 619--Obtaining
Information Under False Pretense
Section 619 provides criminal sanctions against any person who
knowingly and willfully obtains information on a consumer from a
consumer reporting agency under false pretenses.
1. Relation to Other Sections
The presence of this provision does not excuse a consumer reporting
agency's failure to follow reasonable procedures, as required by
section 607(a), to limit the furnishing of consumer reports to the
purposes listed under section 604.
Section
620--Unauthorized Disclosures by Officers or Employees
Section 620 provides criminal sanctions against any officer or
employee of a consumer reporting agency who knowingly and willfully
provides information concerning an individual from the agency's file to
a person not authorized to receive it.
Section
621--Administrative Enforcement
This section gives the Federal Trade Commission authority to enforce
the Act with respect to consumer reporting agencies, users of reports,
and all others, except to the extent that it gives enforcement
jurisdiction specifically to some other agency. Those excepted from the
Commission's enforcement jurisdiction include certain financial
institutions regulated by Federal agencies or boards, Federal credit
unions, common carriers subject to acts to regulate commerce, air
carriers, and parties subject to the Packers and Stockyards Act, 1921.
1. General
The Commission can use its cease-and-desist power and other
procedural, investigative and enforcement powers which it has under the
FTC Act to secure compliance, irrespective of commerce or any other
jurisdictional tests in the FTC Act.
2. Geographic Coverage
The Commission's authority encompasses the United States, the
District of Columbia, the Commonwealth of Puerto Rico, and all United
States territories but does not extend to activities outside those
areas.
3. Status of Commission Commentary and Staff
Interpretations
The FCRA does not give any Federal agency authority to promulgate
rules having the force and effect, of statutory provisions. The
Commission has issued this Commentary, superseding the eight formal
Interpretations of the Act (16 CFR 600.1-600.8), previously issued
pursuant to § 1.73 of the Commission's Rules, 16 CFR 1.73. The
Commentary does not constitute substantive rules and does not have the
force or effect of statutory provisions. It constitutes guidelines to
clarify the Act that are advisory in nature and represent the
Commission's views as to what particular provisions of the Act mean.
Staff opinion letters constitute staff interpretations of the Act's
provisions, but do not have the force or effect of statutory provisions
and, as provided in § 1.72 of the Commission's Rules, 16 CFR 1.72, do
not bind the Commission.
Section 622—Relation to State Laws
"This title does not annul, alter, affect, or exempt any person
subject to the provisions of this title from complying with the laws of
any State with respect to the collection, distribution, or use of any
information on consumers, except to the extent that those laws are
inconsistent with any provision of this title, and then only to the
extent of the inconsistency."
1. Basic Rule
State law is pre-empted by the FCRA only when compliance with
inconsistent state law would result in violation of the
FCRA.
{{6-28-96 p.7196.18}}
2. Examples of Statutes that are not Pre-Empted
A state law requirement that an employer provide notice to a
consumer before ordering a consumer report, or that a consumer
reporting agency must provide the consumer with a written copy of his
file, would not be pre-empted, because a party that complies with such
provisions would not violate the FCRA.
3. Examples of Statutes that are Pre-empted
A state law authorizing grand juries to compel consumer reporting
agencies to provide consumer reports, by means of subpoenas signed by a
court clerk, is pre-empted by the FCRA's requirement that such reports
be furnished only pursuant to an "order of the court" signed by a
judge (section 604(1)), or furnished for other purposes not applicable
to grand jury subpoenas (section 604(2)--(3)), and by section 607(a). A
state statute requiring automatic disclosure of a deletion or dispute
statement to every person who has previously received a consumer report
containing the disputed information, regardless of whether the consumer
designates such persons to receive this disclosure, is pre-empted by
section 604 of the FCRA, which permits disclosure only for specified,
permissible purposes and by section 607(a), which requires consumer
reporting agencies to limit the furnishing of consumer reports to
purposes listed under section 604. Absent a specific designation by the
consumer, the consumer reporting agency has no reason to believe all
past recipients would have a present, permissible purpose to receive
the reports.
4. Statute Providing Access for Enforcement Purposes
A state "little FCRA" that permits state officials access to a
consumer reporting agency's files for the purpose of enforcing that
statute just as Federal agencies are permitted access to such files
under the FCRA, is not pre-empted by the FCRA.
[Codified to 16 C.F.R. Part 600, Appendix]
[Source: Appendix added at 55 Fed. Reg. 18808, May 4, 1990;
amended at 57 Fed. Reg. 4935, February 11, 1992; 60 Fed. Reg. 45660,
September 1, 1995]
[The page following this is 7197.]
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