Decisions based on consumer reports of credit and financial histories directly influence the rates consumers pay for utilities, loans, insurance, and chances of being hired by employers. Approvals of rental applications, professional licensing and personal relationships when individual’s daily lives are affected by the collection of credit-based decisions and judgments.[i] According to a 2015 study by the U.S. Federal Trade Commission (FTC), 23 percent of consumer reports contain inaccurate information.[ii] The Fair Credit Reporting Act (FCRA) is the consumer reporting law regulating the collection, dissemination and the use of consumer credit information.[iii] The FCRA is enforced by the FTC, the Consumer Financial Protection Bureau (CFPB) and through private party lawsuits.
The FCRA regulates consumer reports, “any written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer’s eligibility for (a) credit or insurance to be used primarily for personal, family, or household purposes; (b) employment purposes; or (c) any other purpose authorized under 604 [§ 1681b].[iv]”
Responsibilities and remedies for violations of the FCRA apply to users of consumer reports, furnishers of information, employee background checks and the activity of the consumer reporting agencies.
TransUnion, Equifax and Experian are the three major credit reporting agencies that collect and disseminate consumer credit information from furnishers who share reports with users, all defined by the FCRA. Additionally, there are dozens of nationwide specialty consumer reporting agencies that focus on specific information. The consumer reporting agencies must keep procedures to provide the most accurate information about a consumer and provide that consumer with information about them, to verify that the consumer data is accurate. When consumers dispute and receive removals of negative credit information, that information may not be listed on any future reports without notifying the consumer within five days. There is also a limit of how long negative information may be listed on a consumer report. Most negative information must be removed within seven years, and 10 years when bankruptcy information is reported.
Creditors, defined by the FCRA are furnishers of consumer reporting information, with financial relationships with the consumer, such as credit card companies, auto finance and mortgage banking institutions. The Act requires creditors to provide complete and accurate information to the credit reporting agencies, and the creditors must investigate consumer disputes they receive from credit reporting agencies. Creditors have 30 days to respond to a consumer dispute and must verify, correct or delete the information on the consumer’s report. If a creditor reports negative information about a consumer to a consumer-reporting agency, the creditor must first provide the consumer with notice, within one month, and the notice is usually language about the creditor reporting negative information, which is located on monthly statements and communications.
Users of consumer reports are individuals and organizations with access to consumer reports who use the information contained in consumer reports to review background information to make decisions on insuring or lending money or credit to a consumer. A consumer report user may only obtain consumer reports for purposes identified as permissible under the Act, and that user must notify the consumer when an adverse decision or action is based on the review of the consumer report. When notifying the consumer, a report is required by the Act to identify the company or credit-reporting agency providing the reported information, so that the consumer may verify or contest the information in their report.
Employer conducting employment background checks require written consent of an applicant who must be told how the employer wishes to use and not misuse the information they obtain. If an employer decides against a hiring decision, they must furnish a copy of the credit report used and notify the applicant of their opportunity to dispute the information contained in their credit report before the employer makes their final adverse decision.[v]
Remedies for FCRA violations include actual and statutory damages, attorney’s fees and court costs as well as punitive damages.
It can be difficult determining the value of actual damages suffered by a consumer, when their consumer report information or rights are compromised under the FCRA, and statutory damages are allowed to identify a damage amount to award to a victim of a violation. In addition to the actual or statutory damage allowance, the attorney’s fees incurred by the individual plaintiff’s attorney are recoverable against the offender, as well as court costs incurred in litigating the claims for violations.
When a FCRA violation is done willfully, punitive damages may also be awarded to the individual or class of individuals in class action, with the intent in punishing and deterring an offender from continuing to violate the FCRA. Punitive damage awards can be significant, worth millions of dollars, and are often reported in the news which is good for consumer awareness and can urge more consumers to pay attention to credit and consumer reports.
There are many definitions, rules and exceptions set forth in the FCRA and the law interpreting its application in a variety of situations. An experienced consumer rights attorney working frequently with FCRA clients and cases can help violated consumers enforce their rights.
The Zamparo Law Group, P.C. is a consumer protection law and litigation firm that files lawsuits against violators of the FCRA and federal and state consumer protection laws. Teaching consumers how to spot consumer rights violations is important because informed consumers can stand up to those who violate the law.
To learn more about consumer protection law and the Zamparo Law Group, please visit the firm’s website. You may also ask for a free case review. The Zamparo Law Group is connected on social media, please follow us and share our resources we share on our Facebook page. You may call the Zamparo Law Group with any questions by dialing (224) 875-3202.