FCRA

The Fair Credit Reporting Act governs consumer reports: credit reports, background checks, tenant screening and similar reports that are used to decide whether someone gets credit, insurance, a job or housing. It sets who may obtain a report and why, how accurate reports must be, and what people are told when a report is used against them.

It reaches three groups: the consumer reporting agencies that compile reports, the users that rely on them (such as lenders, landlords and employers), and the furnishers that supply data to the agencies.

• Consumer reporting agencies: anyone who regularly assembles or evaluates information about consumers to furnish consumer reports to third parties, including many background screening firms.
• Users of consumer reports, such as employers, lenders, insurers and landlords.
• Furnishers that supply information about consumers to agencies, such as lenders and collectors.
• A report is a consumer report when it bears on a person's creditworthiness, character, reputation, personal characteristics or mode of living and is used or expected to be used for an eligibility decision.

Consumers can get their file and a free annual report from the nationwide agencies, dispute inaccurate information and have it investigated (generally within 30 days), be told when a report was used to take adverse action against them, limit prescreened offers, and place fraud alerts and security freezes. Employers must get written authorization before obtaining a report.

Consumers can sue: for willful violations, actual damages or statutory damages per consumer, plus punitive damages and attorneys' fees; for negligent violations, actual damages and fees. The CFPB and FTC enforce, and state attorneys general can too. Background check class actions over disclosure forms are common.

1. Confirm permissible purpose before any report is obtained, and document it.
2. For employment, use a standalone disclosure with no extra terms, and get written authorization.
3. Run the adverse action sequence: pre-adverse action notice with the report and summary of rights, a pause, then the adverse action notice.
4. Check your vendors: a screening vendor may be a consumer reporting agency.
5. Dispose of report information securely, as the Disposal Rule requires.
6. If you furnish data, keep accuracy policies and handle direct disputes.