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What is the Fair Credit Reporting Act (FCRA)?

The Fair Credit Reporting Act is a federal statute passed in 1970. The statute drafts out the the basic credit reporting rights of all consumers. In specific, FCRA is designed to protect consumers in regards to their privacy, fair treatment and accuracy of their credit files with consumer reporting agencies (CRA) including Credit Bureaus, and specialty reporting agencies such as employment history, check screening, medical records and payday lending agencies.

Information reported by creditor, debt collectors, and the credit bureaus (Experian, Equifax, and Transunion) must all conform to the Fair Credit Reporting Act or the could be held liable for damages.

What Are My Rights Under FCRA?

Under the FCRA you have basic rights concerning any information consumer reporting agencies have collected on you. Some of the major rights under the FCRA include:

  1. If at any time information about you has been used against you by a third party that 3rd party must provide you with the information (Name of CRA, phone #, address,etc) of the CRA they received your consumer information from. Eg. if you are applying for a mortgage and the bank rejects your loan after seeing your credit score they must provide you with the necessary contact information of the credit reporting agency that they used.

  2. You have the right to know what information (including your credit score) is in your file with any CRA. if at any time you are interested to know what information a CRA has on you may request a file disclosure with that agency. Most of the time the CRA will charge you a standard fee, however, in some situations it will be free (in cases such as identity theft, to dispute inaccuracies or if any information has been used against as exemplified above). In addition with the case of credit reporting agencies you can request your credit report for free once a year.

  3. If you have requested your file and find inaccuracies you can file a dispute with that CRA. If you file a dispute the CRA the agency MUST investigate your claims. Any discrepancies they confirm MUST be removed or appropriately adjusted within 30 days.

  4. In addition to false information in your file, CRAs MUST remove any outdated negative information about you. That means after 7 years any adverse information such as failed child support payments, delinquent accounts, or filed lawsuits/judgements MUST be removed from your file. The one exception is bankruptcy which will stay on your record for 10 years before it can be removed.

  5. Any employer MUST seek out your expressed written consent before they can access your records from a CRA.

If your rights have been violated you may be able to seek out damages from the infringing party.

Recent Developments with the Fair Credit Reporting Act

In the past two years there has been a huge increasing trend of class action lawsuits involving FCRA violations. This trend is in direct correlation to widespread implication of online job applications by many companies. When the FCRA passed it had a clause in it that stated that in order for an employers must get the expressed written consent of their applicants in order to seek out CRA reports on said applicants. This provision requires that employers seeking consumer reports on potential employees first have these applicants fill out a separate form for a background check. In the recent years many corporations have been transitioning to the use of online job application processes. Many of these online job applications lump in the background check instead of following the law of providing separate forms leading companies violating the rights of thousands of applicants in the process. While this business practice has been going on for years it went largely unnoticed until 2014. Since this practice was brought to light hundreds of class action lawsuits have been brought up against some of the largest corporations in the country (including Whole Foods and Century 21). In the case of each violation each violated party received $1000 in statutory damages, some receiving additional punitive damages on top of that.

Recent FCRA Cases

in 2014 in the case of The UNITED STATES OF AMERICA v. TELECHECK SERVICES the Federal Trade Commision levied $3.5 million in penalties against TeleCheck Services for violations of FCRA. TeleCheck is a CRA that deals with check authorizations allowing companies to look in to consumer histories to see if they have a history of bouncing checks. Under the FCRA consumers have the power to dispute the information on their file and have the CRA investigate those claims. Telecheck was found to be rejecting disputes and refusing to investigate. In addition to this Telecheck was also found to ignoring proper procedure in what cases the did elect to investigate. The $3.5 million in penalties brought up against Telecheck was the 2nd largest FCRA settlement the FTC has ever brought up in a FCRA case.

Earlier this month in the case of FRANCESCA FORD, ISABEL RODRIGUEZ v CEC ENTERTAINMENT, INC. D/B/A CHUCK E. CHEESE’S a $1.75 million class action lawsuit was granted by a California district court. In the case Chuck E Cheese’s failed to provide job applicants with separate background check disclosure forms violating the rights of over 28,000 people’s FCRA rights. In addition 400 applicants had adverse action taken against them as a result of the illegal background check. The case have its final approval hearing this coming December.

A similar case to the class action lawsuit above is Fernandez v. Home Depot USA, Inc. In this case Home Depot failed to provide over 120,000 applicants proper background check forms. For violating the FCRA requirements for background check disclosure forms Home Depot was hit with $1.8 million in damages. Since this ruling came down this past April, Home Depot has apparently failed to learn from their mistakes as they have already found themselves in yet another lawsuit for FCRA violations.

Credit Lawyer in New York City

If you have information on your credit report that you believe to be erroneous, contact our knowledgeable credit lawyers. Our New York City law offices provide assistance across New York with fixing credit, credit correction, credit repair, and credit rehabilitation.

Contact us today.

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