FTC Press Release - September 29, 1997
PRIVACY, ACCURACY AND FAIRNESS OF
SENSITIVE PERSONAL
INFORMATION ENHANCED FOR CONSUMERS UNDER AMENDED CREDIT
REPORTING STATUTE
Employers, Creditors and Credit Bureaus
Have Major New Responsibilities
Beginning tomorrow 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,
contained in amendments to the Fair Credit Reporting Act, were
highlighted today at a press conference hosted by the Federal Trade Commission.
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. Attending today's press conference
were Senator Richard Bryan (D-NV); representatives from the Board of Governors
of the Federal Reserve System; the Associated Credit Bureaus; VISA; MasterCard;
and Consumers Union. The bill to amend the FCRA was authored by Senator
Bryan and Senator Christopher Bond (R-MO).
"Tuesday will be a big day for consumers as they
gain important new powers to fix errors found on their
credit reports," Senator Richard Bryan said.
"Any consumer who has gone through the process of
getting errors on their reports fixed, knows how helpful
these new rights will be. Finally, the burden of proof
will be on the credit reporting agency, not the consumer,
when mistakes are found on credit reports."
"This new law is long overdue," said Senator
Christopher Bond. "I have met with many constituents
over the years who have told horror stories of trying to
fix mistakes on their credit reports. They have met with
many of the same obstacles that millions of other
consumers have faced -- months of waiting for their
credit reports to be fixed, credit card companies who are
unresponsive, and no one to talk to who will listen to
their complaints. This legislation will make it easier
for consumers to fight inaccurate credit information, and
simply to get information about their credit
history."
"Protecting consumers' credit records and
ensuring their privacy is a critical component of
consumer protection for state Attorneys General.
Consumers deserve legislation that holds credit bureaus
to the highest standards of accuracy and
accountability," said Wisconsin Attorney General
James E. Doyle, President of the National Association of
Attorneys General. "Credit-related complaints remain
a concern of consumers nationwide, ranking third on the
national consumer complaint list that NAAG compiled
earlier this year. We applaud the new amendments to the
Fair Credit Reporting Act for protecting consumer rights
in this important area and for continuing to ensure that
states will still be able to guarantee consumer
protections as well."
"In the past, consumers were often frustrated
because they were denied credit or employment based on
inaccurate information in their credit reports which they
had trouble correcting," said Jodie Bernstein.
"The new amendments to the Fair Credit Reporting Act
expand consumers' rights by enhancing the accuracy,
privacy and fairness of their 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:
- Conduct an investigation.
- Review all relevant information.
- Report inaccurate or incomplete information to
all national credit bureaus.
If the consumer reports directly to the creditor that
the information it has furnished is inaccurate, the
creditor may no longer report that information if it is
in fact inaccurate. If the creditor continues to report
any item disputed by the consumer, it must include a
notation of its disputed status.
New Responsibilities for Credit Bureaus
The amendments also impose new requirements on the
credit bureaus concerning file information that is
disputed by consumers. In response to consumers'
complaints that documentation in support of their
disputes was disregarded, the credit bureaus for the
first time have to consider and transmit to the furnisher
all relevant evidence submitted by the consumer.
In addition, whereas under the old FCRA,
investigations had to take place within a reasonable
period of time, the new amendments establish a 30-day
limit for the credit reporting agencies to resolve
consumers' disputes. Also, consumers now will receive
written notice of the results of the investigation within
five days of its completion, including a copy of his or
her credit file if it has changed based on the dispute.
Once information is deleted, the credit bureaus can no
longer reinsert it unless the entity supplying the
information certifies that the item is complete and
accurate and the credit bureau notifies the consumer
within five days.
The new amendments require that national credit
reporting agencies provide toll-free numbers with trained
personnel accessible during normal business hours. They
also increase the circumstances in which consumers can
receive their credit histories without charge, and limit
the fee to eight dollars ($8.00) in other cases.
ENFORCEMENT STRENGTHENED
The Federal Trade Commission is responsible for
enforcing the FCRA. The new amendments now allow the
agency to sue violators in most cases for up to $2500 per
violation, in addition to obtaining injunctive relief.
States for the first time will be able to enforce the
amended FCRA in federal or state courts on behalf of
consumers in order to halt illegal conduct, and in
certain cases to recover damages on behalf of state
residents of up to $1000 per violation.
FTC NOTICES PRESCRIBED
As required by the amendments to the FCRA, the FTC has
prescribed three notices that credit bureaus will use
beginning tomorrow:
- A summary of FCRA rights to be provided to consumers with every credit report;
- A notice to be sent to users or purchasers of information regarding their
responsibilities under the law; and
- A notice to be sent to furnishers of information (creditors) regarding their
new responsibilities.
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