Beginning September 30, 1997, an
employer must get a job applicant's written permission before obtaining a copy
of the applicant's credit report. Also, for the first time, creditors and others
that furnish information to credit reporting agencies -- the companies that
compile and disseminate credit information -- will have new duties under federal
law to ensure the accuracy of the information they supply. Credit bureaus will
have increased duties as well, especially in the way they handle disputes from
consumers about information in their files. These important new consumer
protections are contained in amendments to the Fair
Credit Reporting Act. The amendments, passed by Congress last year and
effective Sept. 30, were designed to better ensure the accuracy and privacy of
the information contained in consumer or credit reports.
Consumers told both Congress and
the Commission that they had difficulty contacting personnel at the credit
bureaus; that investigations of disputed information took too long; that they
never learned the results of investigations; and that inaccurate information
often reappeared on their consumer reports even after they had successfully
disputed it with the credit bureau. The amended FCRA addresses each of these
problems.
In addition, consumers also
complained that the old FCRA imposed no responsibilities on businesses that
reported information to credit bureaus concerning the accuracy of the data, and
thus the law did not help with disputes with information providers. If the
information in a credit report was wrong, the business had no obligation under
the old FCRA to have reported accurate information or to have corrected
mistakes. Now, for the first time, in addition to the duties imposed on credit
bureaus, the law imposes legal duties on creditors and others that furnish
information to credit bureaus regarding the accuracy of that information.
PRIVACY PROTECTIONS
ENHANCED
The new statute gives consumers
added protections over the privacy of their credit bureau files and the
sensitive information they contain. In addition to the requirement that
employers must obtain an applicant's written permission before obtaining a
credit report, employers who deny employment because of something in the
applicant's report, now must provide the applicant with a copy of the credit
report used before making the adverse decision, rather than just a post-denial
notice that their report played a role in the denial. Consumers also now must
consent to the release of any consumer report that contains medical information
about them.
Consumers also gain protections
against unsolicited credit and insurance offers, including the multiple credit
card offers that many consumers receive on a daily basis. Under the old law,
creditors and insurers were able to use the credit reporting agencies' file
information as a basis for developing lists of consumers to whom they send
offers. Under the new law, consumers can follow a simple procedure to "opt
out" of inclusion on future lists. They can call a toll-free number that
each bureau must establish (that will appear prominently on each offer), and
have their name removed from these lists for two years; if they request, they
will be sent a form that will allow them to take their names off of these credit
bureau lists permanently.
ACCURACY AND
FAIRNESS IMPROVED
In order to enhance the accuracy
and fairness of consumer reports, Congress imposed major new responsibilities on
the credit reporting agencies and those businesses that report information to
the credit bureaus.
New Duties for Creditors
and Businesses Supplying Information to Credit Bureaus
In practice, the most significant
of the new obligations for creditors relate to information specifically disputed
by consumers, whether to the credit bureau or directly to the creditor. When a
consumer disputes information in his or her file with the credit bureau, the creditor
now must do a number of things:
