On July 7, 2022, the Consumer Financial Protection Bureau (CFPB) issued a new advisory opinion titled “Fair Credit Reporting; Permissible Purposes for Furnishing, Using, and Obtaining Consumer Reports” to ensure that companies using and sharing credit reports and background check reports have a “permissible purpose” under the Fair Credit Reporting Act (FCRA).
“Americans are now subject to round-the-clock surveillance by large commercial firms seeking to monetize their personal data,” CFPB Director Rohit Chopra stated in a press release about the advisory opinion. “The CFPB will be taking steps to use the Fair Credit Reporting Act to combat misuse and abuse of personal data on background screening and credit reports.”
The FCRA ensures fair and accurate reporting and requires users who buy credit reports and background check reports to have a legally permissible purpose so that companies cannot check an individual’s personal information without a bona fide reason such as using the reports for credit, insurance, housing, or employment decisions. The advisory opinion makes clear:
- Insufficient matching procedures can result in credit reporting companies providing reports to entities without a permissible purpose, which would violate consumers’ privacy rights.
- It is unlawful to provide credit reports of multiple people as “possible matches.”
- Disclaimers about insufficient matching procedures do not cure permissible purpose violations.
- Users of credit reports must ensure that they do not violate a person’s privacy by obtaining a credit report when they lack a permissible purpose for doing so.
The advisory opinion also outlines some of the criminal liability provisions in the FCRA. Covered entities can face criminal liability for obtaining a background report on an individual under false pretenses or by providing a background report to an unauthorized individual. Violators can face criminal penalties and imprisonment. In addition, the CFPB has:
- Highlighted the experiences of military families with medical billing, credit reporting, and debt collection.
- Spotlighted medical billing challenges faced by millions of American consumers.
- Identified credit reporting companies the public can hold accountable.
- Issued a bulletin to prevent unlawful medical debt collection and credit reporting.
- Taken action to stop the false identification of consumers by background screeners.
The CFPB is a 21st century agency that implements and enforces federal consumer financial law and ensures that markets for consumer financial products are fair, transparent, and competitive. Consumers can submit credit reporting complaints, or complaints about other financial products or services, by calling (855) 411-CFPB (2372) or visiting www.consumerfinance.gov.
Enacted by the United States Congress in 1970, the FCRA is legislation that promotes the accuracy, fairness, and privacy of consumer information contained in the files of consumer reporting agencies (CRAs) and shields consumers from the willful and/or negligent inclusion of erroneous data in their credit reports. A complete copy of the FCRA is available here.
ClearStar is a leading Human Resource (HR) technology company specializing in background, drug, and health screening for employment. ClearStar offers a variety of background check services that can include credit history searches that comply with the FCRA and other state laws for credit reports and background checks. To learn more, contact ClearStar today.
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Thomas Ahearn - Digital Content Editor
Thomas Ahearn is a Digital Content Editor at ClearStar, a leading Human Resources (HR) technology company specializing in background, drug, and health screening for employment. He writes about a variety of topics in the background screening industry including "Ban the Box," class action lawsuits, credit reports, criminal records, drug testing, the Equal Employment Opportunity Commission (EEOC), the Fair Credit Reporting Act (FCRA), HR technology, identity theft and fraud, privacy, social media background checks, and workplace violence.
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