What Is the Fair Credit Reporting Act (FCRA)?
The federal Fair Credit Reporting Act (FCRA) is an extremely important piece of consumer protection legislation, one that has ramifications for consumers around the country and in various industries – including in one of our focus areas, the vacation, travel, and timeshare sector.
Here’s a quick (and by no means comprehensive) users’ guide to the FCRA – including a dive into its history, and a look at some of the protections and rights it offers to consumers. Put most simply, the Fair Credit Reporting Act, or FCRA, is a federal law that regulates how consumer reporting agencies and other actors may manage and use your information.
It was codified in 1970 as a way to promote the accuracy, fairness, and privacy of information in the files of consumer reporting agencies, a category which most notably includes credit bureaus, also known as credit reporting agencies (though FCRA also applies to other specialized reporting agencies, such as those that, say, specifically deal in information relating to medical records or rental histories).
When it enacted FCRA, Congress made certain findings and a statement of purpose. Of particular note, lawmakers determined that the banking system in this country is ultimately dependent upon fair and accurate credit reporting and that inaccurate credit reporting can negatively impair the efficacy of the banking system, as well as other financial institutions.
What’s more, Congress stated that consumer reporting agencies had a grave responsibility on behalf of all consumers, and mandated that these agencies act with fairness, impartiality, and respect for consumers’ rights to privacy.
What Does FCRA Do For Consumers?
As such, FCRA laid out a requirement for consumer reporting agencies to adopt reasonable procedures, emphasizing the fair and equitable treatment of the consumer with regard to confidentiality, accuracy, and relevancy. So, what does this look like in practice, from a consumer’s point of view?
Broadly speaking, under FCRA, a consumer:
Must be informed if the information in their report is used against them. Under FCRA, notice is required for adverse actions taken with respect to insurance transactions, employment decisions, or credit applications.
In short, if anyone uses information in your credit report to deny you a line of credit or take another adverse action against you, they must inform you.
Has the right to know what is in their file
Consumers have the right to request and obtain the information about themselves held by a consumer reporting agency, provided that they can supply proper and sufficient identification.
Consumers are entitled to one free disclosure per year from each of the three major credit bureaus, under the Fair and Accurate Credit Transactions Act (FACTA), an FCRA amendment passed in 2003. Consumers are also generally entitled to free disclosures in other situations – such as if a person has taken adverse action against them, or if they have placed a fraud alert in their file.
Has the right to request a credit score
A consumer’s credit score is the numerical result of a mathematical algorithm applied to a credit report (and other sources of information), designed to determine a consumer’s creditworthiness or their likelihood of future delinquency. Under FCRA, a consumer may request a credit score from consumer reporting agencies that create or distribute them; in most cases, consumers will have to pay for access to this score.
May reasonably expect the access to their file to be limited
The FCRA specifies those with a valid need for access to a consumer’s information; generally speaking, information is provided to consider an application with a creditor, insurer, employer, landlord, or other business.
A consumer must also give written consent for a report to be given to employers or potential employers and must be given away to opt-out of “prescreened” offers for credit or insurance.
Has the right to dispute incomplete or inaccurate information
If a consumer identifies information in their file that is inaccurate or incomplete, they have the ability to report it to the consumer reporting agency, which has an obligation to investigate the dispute and remove or correct information that is found to be inaccurate within a set window of time (generally 30 days). Similarly, consumer reporting agencies may not report outdated negative information, such as a bankruptcy that is more than 10 years old.
If a consumer believes that a consumer reporting agency, a data furnisher, or some other user of consumer reports has violated the FCRA, a consumer has the power to seek damages in state or federal court. One last thing to remember? It’s important to bear in mind that states enforce the FCRA, and many also have their own unique consumer reporting laws – which may grant consumers additional rights. For more information on your local regulations, you may wish to contact your state’s consumer protection agency or Attorney General.
There are many more facets and restrictions to the FCRA than we could reasonably cover here, and we encourage you to peruse the full text here, via the FTC.
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Led by Attorney Michael D. Finn with 50 years of experience, the Finn Law Group is a consumer protection firm specializing in timeshare law. Our lawyers understand vacation ownership as well as the many pitfalls of the secondary market of timeshare resales. If you feel you have been victimized by a timeshare company, contact our offices for a free consultation. Know your rights as a consumer and don’t hesitate to drop us a line with any questions or concerns.