Fair Credit Reporting Act

Written By ESR News Blog Editor Thomas Ahearn

The Federal Trade Commission (FTC) – a United States government agency that works to protect and educate consumers – has submitted a report to Congress updating lawmakers on the agency’s efforts to educate consumers about their rights to dispute and correct errors in their credit reports under the federal Fair Credit Reporting Act (FCRA), according to a press release from the FTC dated May 5, 2020.

Congress requested the report – “Fair Credit Reporting Act: Efforts to Promote Consumer Report Accuracy and Disputes” – as part of the fiscal year 2020 spending bill that funds the FTC and other federal agencies. Under the FCRA, consumer reporting agencies (CRAs) must have reasonable procedures to ensure the accuracy of consumer reports and give consumers the ability to dispute and correct errors.

Consumer reports are used to determine eligibility for credit, insurance, housing, employment, and other benefits. Errors in consumer reports can cause consumers to be denied credit or other benefits. The FTC has issued numerous articles and blog posts to inform consumers about how to spot errors in credit reports and correct problems, and provided guidance to furnishers and users of credit reports.

In December 2019, as part of its efforts to examine current trends that might affect consumer reporting accuracy, the FTC co-hosted a workshop with the Consumer Financial Protection Bureau (CFPB) that examined issues affecting the accuracy of both traditional credit reports and employment and tenant background screening reports. In addition, the FTC (“Commission”) has brought several actions to enforce the FCRA.

According to the FTC report: In the last decade, the Commission has brought more than 30 actions to enforce the FCRA against consumer reporting agencies (“CRAs”), users of consumer reports, and furnishers of information to CRAs. Approximately half of those cases involve allegations related to processes for handling consumer disputes of inaccurate information or procedures for ensuring the accuracy of information in consumer reports.

The report from the FTC – which has helped implement, enforce, and interpret the FCRA – continued: With the advent in 2011 of the CFPB’s supervisory authority over the nationwide consumer reporting agencies and the coordination efforts between the federal agencies, the FTC has focused its FCRA law enforcement efforts on other entities in the credit reporting area and other aspects of the consumer reporting industry more broadly.

The report found the FTC focused on CRAs that performed background screening: As to the CRAs themselves, the FTC has settled cases against background screening CRAs that compile background reports on consumers that may include driving records, employment and education history, eviction records, criminal records, and credit history for use in making employment and housing decisions.

Enacted by Congress in 1970, the Fair Credit Reporting Act (FCRA) 15 U.S.C § 1681 is federal legislation that promotes the accuracy, fairness, and privacy of consumer information contained in the files of CRAs, and was intended to protect consumers from the willful and/or negligent inclusion of inaccurate information in their credit reports. The full text of the FCRA is available on the FTC website.

U.S. government agencies such as the FTC and the CFPB – which both help to enforce the FCRA that regulates background checks in America – are taking a closer look at the background screening industry is 2020, according to the “ESR Top Ten Background Check Trends” for 2020 compiled by leading global background check provider Employment Screening Resources® (ESR).

Employment Screening Resources® (ESR) – which is located in Northern California – offers FCRA compliant background screening services to help employers make informed hiring decisions. In November 2019, ESR was named one of the top background screening firms for enterprise-level organizations by HRO Today Magazine. To learn more about services from ESR, visit www.esrcheck.com.

NOTE: Employment Screening Resources® (ESR) does not provide or offer legal services or legal advice of any kind or nature. Any information on this website is for educational purposes only.

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