The
Fair Credit Reporting Act (FCRA) is a complex statute that has been significantly
altered since 1970 by Congress and the courts. The Act's primary protection requires
that Credit Reporting Agencies (CRAs) follow "reasonable procedures"
to protect the confidentiality, accuracy and relevance of credit information.
Originally, the FCRA was passed to address a growing credit reporting industry
in the United States that compiled "consumer credit reports" and "investigative
consumer reports" on individuals. The FCRA was the first federal law to regulate
the use of personal information by private businesses. Comprehensive
amendments to the FCRA were made in the "Consumer Credit Reporting Reform
Act of 1996" as well as the "Fair and Accurate Credit Transactions Act
of 2003." Credit reports are subject
to regulations that follow a framework of "fair information practices,"
because they can include sensitive personal information and because credit reports
are used to evaluate the ability to participate in so many different activities
in modern life. The FCRA establishes rights and responsibilities for "consumers,"
"furnishers" and "users" of credit reports. Consumers are
individuals. Furnishers are entities that send information to CRAs regarding creditworthiness
in the normal course of business. Users of credit reports are entities that request
a report to evaluate a consumer for some purpose. Permissible
Uses of the Credit Report The FCRA
limits the use of the credit report to certain purposes, which include the following:
-
Applications
for credit, insurance and rentals;
-
Employment,
which includes hiring, promotion, reassignment or retention; A CRA may not release
a credit report for employment decisions without consent;
-
Court
orders, including grand jury subpoenas;
-
"Legitimate"
business needs in transactions initiated by the consumer;
-
Account
review: Periodically, companies review credit files to determine whether they
wish to retain an individual as a customer;
-
-
Child
support payment determinations; and
-
Law
enforcement access: Government agencies with authority to investigate terrorism
and counterintelligence have secret access to credit reports. The USA PATRIOT
Act, broadened law enforcement access to credit reports. This law allows any government
agency that is authorized to conduct intelligence or counterintelligence investigations
or analysis of international terrorism to gain access to credit reports.
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