On May 1, 2024, the Federal Trade Commission (FTC) – which has played a key role in the implementation, enforcement, and interpretation of the Fair Credit Reporting Act (FCRA) – proposed a $43.6 million settlement in a lawsuit that claims a financing company allegedly violated the FCRA “including a first-of-its-kind complaint allegation,” according to an FTC Business Blog.
The FTC complaint alleged multiple FCRA violations including failing to implement reasonable policies and procedures about the accuracy and integrity of information furnished to consumer reporting agencies (CRAs), failing to investigate consumer disputed information, failing to report investigation results to consumers, and failing to notify CRAs of disputed information.
In a first for an FTC case involving the FCRA, the complaint also alleged that the financing company mishandled identity theft reports received from consumers. Under Section 623(a)(6)(B) of the FCRA, if consumers notify companies that an account is the result of identity theft by submitting an identity theft report, the company cannot report that negative information to a CRA.
The FTC said even when consumers sent police reports or other official documentation of identity theft, the financing company continued to furnish information about those suspect accounts to CRAs. The $43.6 million financial remedy in the proposed settlement includes $20 million in consumer refunds and an additional $23.6 million in debt forgiveness for people harmed.
Enacted by the U.S. Congress in 1970, the Fair Credit Reporting Act 15 U.S.C. § 1681 protects information collected in the files of CRAs. Information in a consumer report cannot be provided to anyone who does not have a purpose specified in the FCRA. Furnishers who provide information to CRAs also have legal obligations under the FCRA. To read the FCRA, click here.
ClearStar is a consumer reporting agency (CRA) specializing in background checks, drug testing, and occupational health screening. ClearStar offers employers compliance services that include a full understanding of the FCRA and other laws affecting background screening in the United States and around the globe. To learn more about ClearStar, please contact us.
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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 checks, drug testing, and occupational health screening. He writes about a variety of topics in the background screening industry including Artificial Intelligence (AI), "Ban the Box," class action lawsuits, credit reports, criminal records, drug testing, Equal Employment Opportunity Commission (EEOC), Fair Credit Reporting Act (FCRA), Form I-9, identity theft, privacy, social media screening, and workplace violence.
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