By law, a company is a “consumer reporting agency” if it assembles and evaluates consumer report information and provides those reports to third parties, for monetary purposes. Therefore, any business that uses consumer reports for employment purposes has to comply with the FCRA.
However, when most people think of the FCRA they think more along the lines of credit reporting and consumer protection. A CRA, in the eyes of the FTC, whether reporting credit or personal information for other purposes, such as employment, is one in the same. Meaning the methods by which one can dispute the accuracy of that information is also the same. Failing to implement any of the accuracy, dispute, or other safeguards required by the law could harm applicant reputations and employment prospects.
In today’s post, the focus remains on the flipside of the FCRA: credit information.
The headlines rippled among Fair Credit Reporting Act insiders, attorneys and privacy watchdogs:
- Law360.com writes – $18M Equifax Verdict Will Send Consumers Rushing To Court
- Mississippi-based Kittel Law Firm exclaims – WOW!!! Huge verdict against Equifax!!!
- Privacy Times discusses Trans Union’s Losing Streak
If you weren’t paying attention, you probably missed them. But these verdicts to award millions of dollars to individual victims of credit report fraud will have lasting implications on your credit protection. They will also serve as a reminder to credit bureaus that they must take seriously complaints or concerns about identity theft, or they may have to pay a hefty price for their ignorance.
But what is credit protection and how is it enforced? Let’s take a look.
FCRA Basics
According to the Federal Trade Commission (FTC), “The Fair Credit Reporting Act (FCRA) helps ensure the accuracy, fairness, and privacy of the information provided by consumer reporting agencies. The FCRA also holds consumer reporting agencies and the creditors that provide the information in your credit report responsible for correcting inaccurate or incomplete information in your report.”
In other words, we got your back, Jack. If any of your personal information relating to your credit data and/or credit report is inaccurate, compromised and somehow used against you, the FCRA protects you and your financial interests. This is important because your credit history – which is collected, compiled and stored by Consumer Reporting Agencies (CRAs), commonly called credit bureaus – may be used by employers, landlords, utilities, courts, banks, creditors and other financial institutions to make decisions about your credibility and reliability. Other examples of CRAs include specialty agencies that sell information about check writing histories, medical records, and rental history records.
As we wrote about in ‘The Evolution of Background Screening,’ the FCRA originally popped up in 1970 around the same time as the Consumer Credit Protection Act. These bills set guidelines for employers to protect employees, mainstreaming an official process for what we now call background screening.
The FTC states that the FCRA provides you certain rights when it comes to your credit. Here’s a summary:
- You must be told if information in your file has been used against you
- You have the right to know what is in your file (you can request a free credit report every 12 months from each nationwide credit bureau and from nationwide specialty consumer reporting agencies).
- You have the right to ask for a credit score.
- You must give your consent for reports to be provided to employers.
- You may limit “prescreened” offers of credit and insurance you get based on information in your credit report.
- You may seek damages from violators.
FCRA Remedies
NOLO.com, one of the nation’s leading legal websites, outlines several key ways the FCRA works in your favor in this post. The gist is, if there is an FCRA violation, you can sue on these grounds (head to the NOLO post to read all the legal stuff):
- Willful violation
- Negligent violation
This Wikipedia paragraph exposes some shocking information about credit bureaus: “In the United States, 90% of credit reports provided by credit bureaus contain inaccuracies.[7] According to the U.S. General Accounting Office (GAO), common causes of errors broadly fall into one of two categories: inclusion of incorrect information and exclusion of correct information.[8] Reasons for the inaccuracies include consumers providing inaccurate information to the credit bureaus; incorrect or incomplete data input by furnishers, or failing to provide data to the credit bureau; and incorrect or incomplete data (or data applied to the wrong consumer) by the credit bureau.[8] According to Avery, Calem, and Canner in Credit Report Accuracy and Access to Credit, “the parties that bear the costs of correcting errors or providing more timely and complete information [data furnishers and credit bureaus] may not receive much benefit from the improvement in accuracy.”[3]
This is a lot to digest. We get it. If you have questions about the FCRA and your credit protection, please let us know. If we don’t know the answer right away, we’ll find it for you.
But the biggest piece of advice we can give is to be an active participant in your credit history. You will be better prepared for your next background screening and – who knows? – you could even discover something fishy and end up like Julie Miller.