Fair Credit Reporting Act (FCRA)

   

The Fair Credit Reporting Act is a Federal law that regulates the The Fair Credit Reporting Act (FCRA) is an American federal law (codified at 15 U.S.C. § 1681 et seq.) that regulates the collection, dissemination, and use of consumer credit information. Along with the Fair Debt Collection Practices Act (FDCPA), it forms the base of consumer credit rights in the United States.

Consumer reporting agencies

Consumer reporting agencies (CRAs) are entities that collect and disseminate information about consumers to be used for credit evaluation and certain other purposes. They hold the databases which are the origins of a consumer's credit report. CRAs have a number of responsibilities under FCRA, including the following:

  1. Provide a consumer with information about him or her in the agency's files and to take steps to verify the accuracy of information disputed by a consumer. Under the Fair and Accurate Credit Transactions Act (FACTA), an amendment to the FCRA passed in 2003, consumers are now able to receive one free credit report a year.[1] The free report can be requested by telephone, mail or through the government authorized website, annualcreditreport.com.[2]
  2. If negative information is removed as a result of a consumer's dispute, it may not be reinserted without notifying the consumer within 5 days, in writing.
  3. CRAs may not retain negative information for an excessive period of time. The FCRA spells out how long negative information, such as late payments, bankruptcies, tax liens or judgments may stay on a consumer's credit report - typically 7 years from the date of the delinquency. The exceptions: bankruptcies (10 years) and tax liens (7 years from the time they are paid).

The 3 big CRAs Experian, Trans Union and Equifax, do not interact with information furnishers directly as a result of consumer disputes. They use a system called E-Oscar.

Information furnishers

An information furnisher, as defined by the FCRA, is a company that provides information to consumer reporting agencies. Typically, these are creditors, with which a consumer has some sort of credit agreement (credit card companies, auto finance companies and mortgage banking institutions, to name a few). However, other examples of information furnishers are collection agencies (third-party collectors), state or municipal courts reporting a judgment of some kind, past and present employers and bonders.

Under the FCRA, these information furnishers may only report to a consumer's credit report under the following guidelines:

  1. They must provide complete and accurate information to the credit rating agencies.
  2. The duty to investigate disputed information from consumers falls on them.
  3. They must inform consumers about negative information which has been or is about to be placed on a consumer's credit report within 30 days.

(This notice doesn't have to be sent as a separate notice, but may be placed on a consumer's monthly statement. If sent as part as the monthly statement, it needs to be conspicuous, but need not be in bold type. Required wording (developed by the US Federal Treasury Department):

Notice before negative information is reported: We may report information about your account to credit bureaus. Late payments, missed payments, or other defaults on your account may be reflected in your credit report.

Notice after negative information is reported: We have told a credit bureau about a late payment, missed payment or other default on your account. This information may be reflected in your credit report.)

Users of the information for credit, insurance, or employment purposes

Users of the information for credit, insurance, or employment purposes have the following responsibilities under the FCRA:

  1. They must notify the consumer when an adverse action is taken on the basis of such reports.
  2. Users must identify the company that provided the report, so that the accuracy and completeness of the report may be verified or contested by the consumer.

Likelihood of errors on a credit report

Some fraction of consumer credit reports contain errors. A study released by the U.S. Public Interest Research Group in June 2004 found that 79% of the consumer credit reports surveyed contained some kind of error or mistake.[3] As a result, many consumers frequently invoke their rights under the FCRA to review and correct their credit reports.

The Fair and Accurate Credit Transactions Act ("FACTA") of 2003 has allowed easier access to consumers wishing to view their reports and dispute items.

Civil liability for willful violations of the FCRA

Under section 15 U.S.C. § 1681n(a) of the FCRA, a consumer may seek a maximum of $1000 in statutory damages, plus actual damages, punitive damages and reasonable attorney's fees and costs for willful noncompliance with the FCRA. Any consumer may file suit in state or federal court to enforce the FCRA.

Which companies are regulated by the FCRA?

While putative database companies like Motznik, Lexis, Westlaw, ChoicePoint, and eFunds (owner of ChexSystems) do not create credit reports, they may gather the same types of information and as a result may subject some of their actions to FCRA.

An entity that meets the definitional requirement for a "consumer reporting agency" (CRA) in Section 603(f) of the FCRA is covered by the law even if the only information it collects, maintains, and disseminates is obtained from "public record" sources.

Section 603(f) defines a "consumer reporting agency" as any person "which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information ... for the purpose of furnishing consumer reports to third parties ...". In turn, Section 603(d) defines a "consumer report" as the communication of "any information" by a CRA that bears on a consumer's "credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living" that is "used or expected to be used or collected in whole or in part" for the purpose of serving as a factor in establishing eligibility for credit or insurance to be used primarily for personal, family, or household purposes, employment purposes, or any other purpose authorized under Section 604.

If the commercial service you describe regularly provides information for the purposes set forth in the definition of consumer report in Section 603(d), the agency is a consumer reporting agency and the information it collects from public record sources and maintains in its computerized files is subject to the FCRA. (excerpt of an 1999 FTC advisory opinion).


 

Responsible Use of Information

Motznik Information Services is committed to the responsible use of information to reduce fraud and mitigate economic and physical risk. Privacy and security are key components to the responsible use of information, but are different.  Privacy is the individual’s interests in the collection, use, maintenance, and dissemination of information about themselves.  Security measures are to safeguard information against unauthorized access, modification, destruction or disclosure.

Motznik’s products contain several elements of information that can often be classified as either Personal Information or Sensitive Personally Identifiable Information (SFII)

Personal Information is individually identifiable information obtained from or about an individual including, but not limited to:

·        First and last name or first initial and last name

·        Home or physical address, which includes at least a street name and name of city or town.

·        Email address

·        Telephone number

·        Social Security Number

·        Credit  and / or debit card information, including credit and or debit card information with expiration date

·        Date of birth

·        Driver’s license number

·        Any other information from or about an individual that is combined with any of the individually identifiable information listed above

Basic Privacy Concepts

Sensitive Personally Identifiable Information (SPII) is directly related to personal information and includes an individual’s name in combination with:

·        Driver’s license or state identification number

·        Social Security number

·        Financial account or card numbers with any required security code, access code or password

Privacy

Motznik stives to collect, maintain, use and desseminate Personally identifiable information in proper, appropriate and respectful ways defined by laws, regulations and policies.  The appropriate use of Personally Identifiable Information is used to help make decisions in a manner that is fair and based on merit which also takes into account the individual’s privacy interests.

Online Privacy

We strive to protect the privacy of Personally Identifiable Information obtained over the Internet and apply our Privacy Principles and evolving standards to the online environment.  We strive to provide additional safeguards for Sensitive Personally Identifiable Information which presents the highest risk of being misused for identity theft or fraud.  The value of this level of responsibility is for many benefits:

·        Benefits the consumer

·        Improves public safety

·        Reduces fraud

·        Improves risk management

·        Facilitates the delivery of goods or services

·        Improves the quality of our services and products

Reputable Sources

We strive to assure that every source we use is reputable and reliable.  We believe in public access to public records and we believe that public record access nourishes values that are critical to the vitality of our democracy.

Consumers

When consumers contact Motznik about the source of information, we provide the information that is on them and the source of the information so that they may have the opportunity to dispute and correct information that is inaccurate.  Motznik also offers consumers the opportunity the opt-out of marketing services we provide businesses from public file sources, free of charge.

Data Security

Motznik strives to protect Personally Identifiable Information which we maintain or disseminate so it is not obtained by unauthorized individuals or used in unauthorized ways.  We strive to know that our customers are legitimate and verify that they have an appropriate and lawful purpose for obtaining information.  We continue implementing and updating security safeguards, as appropriate.

Information Privacy Laws and Regulations

Motznik products and services are subject to important privacy protections provided by federal and state laws and regulations. These laws include:

·        Fair Credit Reporting Act (FCRA)/ FACTA

·        Driver’s Privacy Protection Act

·        Gramm-Leach Bliley Act (GLBA)

Fair Credit Reporting Act (FCRA) / FACTA

·        Consumers reports may be furnished only under certain specified permissible purposes, including purposes such as insurance underwriting, employement and tenant screening, and credit granting

·        Requires consumer reporting agencies to undertake certain steps before providing consumer reports to customers

·        Provides consumers with important rights of notice, access and redress.

   

Driver’s Privacy Protection Act (DPPA)

·        An authorized recipient of “persona information” from a State Dept of Motor Vehicles may resell or disclose the information only for certain permissible purposes, including insurance claims and underwriting, law enforcement, and with the consumer’s written consent.

Gramm-Leach Bliley Act (GLBA)

  • Non-public personal information obtained from a financial institution can only be disclosed to unaffiliated third parties under certain circumstances
  • For Motznik, this means we can only obtain and disclose credit header information under an exemption in GLBA, which includes FCRA-related purposes, fraud prevention, claims investigation and for government purposes