DATE: July 2014 - Be Aware of the FCRA
Most of you know that FCRA stands for the Fair Credit Reporting Act, but do you know its history and why it is so important to know
your obligations? Whether you are a CRA, End User, Furnisher, Reseller, or Consumer you are affected by and have duties under the
FCRA. So let’s start from the beginning….
The FCRA was originally enacted in 1970 to primarily target the traditional credit reporting agencies. However, amendments in 1996,
2003, and in connection with the Consumer Financial Protection Act (CFPA) in 2000 have drastically changed the impact of the FCRA.
Under the CFPA the Federal Trade Commission (FTC) shares enforcement authority with the Consumer Financial Protection Bureau
(CFPB). The biggest impact these changes have had are on the background screening industry.
The five groups that are affected by the FCRA are Consumer Reporting Agencies (CRA’s), End Users, Furnishers, Resellers, and
Consumers. The first group, Consumer Reporting Agencies or CRA’s are any person which, for monetary fees, dues, or on a
cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit
information or other information on consumers for the purpose of furnishing consumer reports to third parties. Commercial
Investigations LLC is a CRA and as a CRA we have five basic duties under the FCRA. We must maintain “reasonable procedures” to
assure “maximum possible accuracy”, we can only provide consumer reports to those with a “permissible purpose”, we conduct
“reinvestigations” in the event of a consumer dispute, we make “disclosures” to consumers, and we must always properly dispose of
The second group is End Users, which are the persons/entities who intend to make use of the information contained in a consumer
report for a “permissible purpose”. End Users are our clients, such as employers and landlords. As an End User our clients have three
basic duties. They must provide a certification to the CRA, they must make disclosure to and obtain authorization from the consumer,
and they must comply with the adverse action requirements.
The third group affected by the FCRA is the Furnishers. The Furnishers are persons/entities that supply information to CRAs, which
information is included in consumer reports. Examples of this are banks and other credit grantors. Furnishers have two basic duties.
First they must report accurate information and second they have to conduct reinvestigations when disputes occur.
The fourth group is the Resellers. A Reseller is 1. any consumer reporting agency that assembles and merges information contained
in the database of another consumer reporting agency or multiple consumer reporting agencies concerning any consumer for
purposes of furnishing such information to any third party and 2. does not maintain a database of the assembled or merged information
from which new consumer reports are produced. Resellers have two basic duties under the FCRA. First they must inform the CRA
from which it obtained the report of the identity and permissible purposes of the End User and second they must maintain reasonable
procedures to insure that the End User has a permissible purpose.
The fifth group affected by the FCRA is the Consumer. This is the last group but possibly the most important. The Consumer is the
subject of the background investigation. Unlike the other groups affected by the FCRA the Consumer has many rights and few duties.
The Consumer has the right to reasonable procedures and an accurate report, disclosures, authorization, adverse action protections,
and dispute/reinvestigations. The only duty the Consumer has is to not make a frivolous dispute.
As your Proactive Truth Partner, Commercial Investigations is a Concerned CRA and takes their duties under the FCRA very
seriously. This is why Commercial Investigations uses Primary Source Verification and NOT Simultaneous Notice (please see our July
Webinar Series for more information). In addition to being a member of Concerned CRAs , Commercial Investigations is also a
member of the National Association of Professional Background Screeners (NAPBS). NAPBS offers a basic and an advanced FCRA
certification. Five of the staff members at Commercial Investigations have their basic FCRA certification and one has their advanced
FCRA certification. This is just one of the many things that separates Commercial Investigations from other Background Screening
So, whether you are a CRA, End User, Furnisher, Reseller, or Consumer you should always be aware of your obligations under the
FCRA. Commercial Investigations is always here to guide you and answer any questions you might have regarding your rights or
duties with the FCRA.