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Federal R eserve
N e w
York,
AREA
CODE
Ba n k of
N.Y.
2 12
N ew Yo r k
10045
7 3 2-5700
M a y 25, 1971
G uidelines for Banks in Complying
Wi t h Fair Credit Reporting Act
To A l l State Member Banks in the
Second Federal Reserve District:
Following is the text of a statement issued b y the Board of Governors
of the Federal Reserve System and released today:
The Board of Governors of the Federal Reserve System today
issued a series of questions and answers to assist financial
institutions in complying with the Fair Credit Reporting Act
(a portion of Public L a w 91-508)*
The general purpose of the
Act, w hich became effective on A p ril 25 , is to assure fair and
accurate reporting of information regarding consumers.
The questions and answers were prepa r e d jointly b y the
staffs of the Board, the Comptroller of the Currency, the
Federal Deposit Insurance Corporation, and the Federal Home
Loan Bank Board, each of w hich will issue them to institutions
under their supervision. The information is not a regulation
of the Board, and is m e r e l y designed to provide guidance to
financial institutions.
Institutions that act in accordance
with the information, however, will be regarded b y the Board's
examiners as acting in compliance with the Act.
Enclosed is a copy of the questions and answers, together with the
text of the Fair Credit Reporting Act.
If you have any questions concerning
the guidelines, you m a y contact our Consumer Information and Securities
Regulations Department (Telephone Extension 8209)*
A ddit i o n a l copies of the enclosure will be furnished upon request.
A L F R E D HAYES,
President.
F IN A N C IA L
IN S T IT U T IO N S
AND THE
F A I R C R E D IT R E P O R T IN G ACT
On April 25, 1971, the Fair Credit R e p o r t i n g Act became
effective (Public L a w 91-508, Title VI of the Consumer Credit Protection
A c t ) . It is designed to insure fair and accurate r e p orting of information
regarding consumers.
It restricts the use of reports on consumers, and in
certain situations requires the d eletion of obsolete information.
It requires
notice to consumers w h e n the use of a credit report contributes to the denial
or increase in the cost of credit or insurance, or denial of employment.
Disclosures must also be m a d e w h e n credit is denied or the cost is increased on
the basis of other information from third parties, and w h e n investigative
consumer reports are used.
Under the Act consumers are entitled to disclosure
of the information m a intained in their files b y consumer reporting agencies,
and procedures are provided for the corre c t i o n of erroneous information.
The
collection, use, and referral of information on consumers for credit, insurance,
employment and other purposes by financial institutions is directly affected by
this Act.
Financial institutions are likely to be subject to the Act as
credit grantors, purchasers of dealer paper, issuers of credit cards, and
employers.
In some instances, a financial institution may even b e a
consumer reporting agency under the Act as a result of the type of information
about consumers that it provides to others.
In general, the Act does not
apply to commercial transactions.
This pamphlet contains the text of the Act and questions and
answers explaining the Act's applicability to the operations of a financial
institution.
It has b e e n prepared to inform financial institution examiners
of the principal statutory requirements of the Act, and to serve as a guide
for its enforcement.
The pamphlet is not designed to answer all questions
that might arise under the Act; rather, it is to assist financial institutions
in d e v eloping a w o r k i n g k n o w ledge of the Act and its requirements.
The
questions and answers are b e i n g distributed jointly by the Federal Reserve
Board, Office of the C omptroller of the Currency, Federal D e posit Insurance
C o r p o r a t i o n and Federal Home L o a n B a n k Board, and are applicable to the
operations of financial institutions subject to the enforcement authority
of these agencies.
The statute is unclear in some instances as to its application
to financial institutions.
Court decisions may ultimately construe p r o
v i s i o n of the statute in ways contrary to the information in this pamphlet.
A l t h o u g h copies of the pamphlet are b e i n g ma d e available to financial
institutions, the information in the pamphlet should not be relied upon
w i t h o u t advice of counsel.
Nevertheless, institutions that act in accordance
w i t h them will be regarded by examiners as acting in compliance w i t h the Act.
The questions and answers are grouped into the following
categories:
Page Number
I.
The Financial I n s t i tution As A User Of
C onsumer Reports 1 - 1 5 .................................... 3 -
7
II.
The Financial Institution As A Consumer
Re p o rting A g e n c y 16-26
.................................. 7 - 1 0
III.
R e s p o n sibilities Of A Financial I nstitution
To Consumers Wh e n It Is A C o nsumer Rep o r t i n g
Agen c y 27-35
.............................................. 10 - 12
IV.
Disputes A b o u t Material In A Consumer R e p orting
A g ency's File 3 6 - 4 1 .......................................1 2 - 1 4
V.
The Financial I n s t i tution As A Purchaser Of
Dealer Paper 42-43
.......................................14 - 15
VI.
VII.
VIII.
Investigative Consumer Reports 44-49
................. 15 - 16
R e s ponsibilities Of A Financial Institution
W h e n It Furnishes Or Uses Consumer Reports
For Employment Purposes 50-56 .......................... 16 - 18
Penalties, Liabilities And The A c t ’s Effect On
State L a w 5 7 - 6 1 ........................................... 1 8 - 1 9
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QUESTIONS AND A NSWERS*
I.
The Financial Institution As A User Of Consumer Reports
1. May a financial i nstitution obtain a consumer report from a
consumer reporting agency in connection with a consumer's a p p l i cation for
an extension of credit?
Y e s . Reports may be obtained for this purpose, as well as certain
other legitimate b usiness purposes.
Reports (known as "consumer r e p o r t s ”
under the statute) may also be obtained in conne c t i o n with the rev i e w or
collection of an account, in connection w i t h employment, or the under w r i t i n g
of insurance.
§ 604 (See question 25 for a list of permissible purposes.)
2.
Are new procedures required to obtain a consumer report?
Y e s . The financial institution must identify itself and certify
to the reporting agency (called a "consumer reporting agency" under the
statute) the purposes for w hich the information is sought.
It must also
certify that the i nformation will be used for no other purpose.
§ 607
3. Must c e r tification be given each time a consumer report
is requested?
N o . A w r i t t e n b l a nket cert i f i c a t i o n by the financial i n s t i tution
could cover all inquiries to a particular consumer reporting agency.
4. Does a financial i n stitution w hich uses a consumer report
have any new responsibilities to the consumer?
Y e s . If a financial institution denies employment or if it denies
credit or insurance for personal, family, or household purposes, or if it
increases the cost, even partially be c a u s e of information in a consumer report
from a consumer reporting a g e n c y , it must make disclosures to the consumer.
It must advise h i m orally or in w r i t i n g that i nformation in the report caused
or contributed to the denial or increase in cost, and inform h i m of the
name and address of the consumer reporting agency issuing the report. The
financial i nstitution is not required to disclose the nature of the i nformation
in the report.
§ 615(a)
(See question 56 w hich deals wit h the denial of
employment based on a consumer report.)
Answers should b e read in the context of the surrounding questions and
answers, which, in many cases, are structured to relate to each other.
-3-
5.
What w o u l d constitute a "denial" of credit?
If any c o n d ition is imposed, wi t h o u t w h i c h credit w ould not be
extended, and it is imposed b e c a u s e of i nformation in the consumer report,
there is a "denial" w h i c h w ould require disclosures.
This would include
cases w h e r e a larger downpayment, a shorter maturity, a co-signer, guarantor,
or additional collateral is required as a c o n dition of extending credit.
If a consumer applies, for example, for a credit card limit of $1,500, and
only $1,000 is approved b e cause of information in a consumer report, a
"denial" has occurred.
6. Does a financial institution have any responsibility to the
consumer w h e n it obtains information from someone other than a consumer
reporting a g e n c y ?
Yes.
Disclosures mus t be m a d e w h e n credit for personal, family,
or household purposes is denied or the charge is increased even partially
be c a u s e of information obtained from someone other than a consumer reporting
agency be a r i n g up o n the consumer's credit worthiness, credit standing,
credit capacity, character, general reputation, personal characteristics, or
m o d e of living.
Discl o s u r e would not b e required if the denial is based on
the financial institution's own experience w i t h the consumer, on his credit
application, or on the institution's own credit policies.
Where disclosures
are required they mu s t be m a d e regardless of w h ether the information is
obtained currently, or is already in the files. At the time credit is denied
of the charge increased, the financial institution must inform the consumer
orally or in w r i t i n g of his right to m a k e a w r i t t e n request for disclosure
of the "nature" of the information.
If the consumer requests this information
w i t h i n 60 days, the financial i n stitution must tell h i m the nature of the
information orally or in writing.
Note that these requirements apply only
in the case of credit, and not in the case of insurance or employment w here
disclosures are required w h e n a report from a consumer reporting agency is
involved.
§ 615(b) (See question 4.)
7.
What w o u l d the "nature" of the i nformation include?
It w ould include information that the consumer's credit history
with another financial institution is poor, his income is not what he
represented it to be, he has not b e e n employed or has not lived at the
address indicated on the a p p l ication for the period specified, that his
debts are greater than represented, that a statement that his debts are
current is inaccurate, and so on. The nature of the information should be
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given with enough detail to enable the consumer to question the accuracy of
the i nformatio n if he believes it is erroneous.
8. In discl o s i n g the "nature" of the information, must the source
b e disclosed?
A l t h o u g h the statute does not require that the source b e disclosed,
it may b e impossible to identify the "nature" of certain i nformation w i thout
also r e v e aling the source.
9. D o the requirements of disclosure by a user of i nformation
discussed in question 4 through 8 apply in the case of i n f o rmation about
a co-maker, guarantor, or surety?
Y e s . In these instances disclosures, as indicated above, should
b e m a d e to the co-maker, guarantor or surety to w h o m the info r m a t i o n relates.
10. Are these rules applicable w h e n a financial i n s t i tution decides
not to honor an overdraft on a checking account on the basis of i nformation
from a third party?
Yes.
If an overdraft is denied on the basis of information from
any outside s o u r c e , disclosures must be made.
This is so w h ether or not
the account ordinarily includes overdraft credit privileges (for example,
"check credit").
No disclosures need to be m a d e if the denial is b a s e d on
the financial institution's general policy not to honor overdrafts.
11. Must disclosures be m a d e w h e n a financial institution w hich
issues credit cards refuses to authorize a merc h a n t to honor a credit card,
or, itself, refuses to honor a credit card, because of information received
from any outside sou r c e ?
Yes.
The issuer w ould have to d i sclose the name and address of
the consumer reporting agency, or the consumer's right to k n o w the nature
of the i nforma tion w h e n it was received from someone other than a consumer
reporting agency.
In the latter instance, w h e r e a merch a n t is involved, it
would appear that he w ould need to m a k e disclosures on the issuer's behalf,
since the consumer mus t receive notice of his right "at the time such
adverse action is communicated to the consumer." However, if the i n f o r mation
does not bear upon the customer's credit worthiness, credit standing, credit
capacity, character, general reputation, personal characteristics, or m o d e of
living (for example, if the i nformation is simply that the card is lost, stolen
or b e i n g used in an unauthorized m a n n e r ) , or if the i nformation is not obtained
from an outside source, disclosures w ould not b e required.
-5 -
12. D o these requirements for disclosure by users of information
apply to business or commercial tr a n s a c t i o n s ?
N o . The "user" requirements of disclosure apply only in the
case of credit or insurance for personal, family, or household purposes, or
in c o nnection w i t h employment.
In other words, in the case of credit, they are
applicable to the general type of consumer credit transactions covered by
R e g u l a t i o n Z, but do not include agricultural credit.
13. Must a financial institution ma k e any disclosure to the
consumer w h e n it denies credit or increases the charges solely on the basis
of its prior transactions or experiences w i t h the consumer, or on the basis
of unverified i n formation furnished by the consumer on his application?
N o . There is no responsibility of disclosure in these circumstances.
However, if credit is denied or the cost increased be c a u s e of information
obtained from third parties in the process of v e r i f y i n g i nformation on the
application, then disclosures must be made.
§ 603(d)(3)(A).
14. If one department or branch of a financial institution obtains
information on the consumer from some other department or b r a n c h of the
same financial ins t i t u t i o n as to its prior transactions or experiences, and
denies credit or increases the charge based on this information, must
disclosures be made?
N o . Disclosures are required only w h e n i nformation is obtained
from an outside source.
However, disclosures must b e m a d e if the department
or bra n c h transmitting the i n f o r mation relays i n formation obtained from
third parties outside the financial institution, and the institution either
denies or increases the cost of credit based u p o n the information.
15. What are some actions that a financial i nstitution should
co nsider taking to insure that it can comply with the requirements imposed
on a user of consumer reports?
First, file the appropriate c e r t i f ication men t i o n e d in question 2
w i t h each consumer reporting agency w hose services are expected to b e used.
R e t a i n a file copy.
Instruct employees that consumer reports m a y be obtained
only for the purposes specified in the Act and certification. Develop
procedures for m a k i n g required disclosures to consumers w h e n credit, insurance,
or employment is denied, or w h e n the cost of credit or insurance is increased,
b ased on i n formation obtained from outside sources.
Record all inquiries
to reporting agencies or others, as well as the information obtained through
those inquiries, so that accurate disclosure can be m a d e to consumers.
-6-
Forms m a y be useful to adivse the consumer of the name and
address of the consumer reporting agency (when a consumer report is
i n v o l v e d ) , or to advise h i m of his rights to request the nature of the
information w h e n other outside sources are involved.
II.
The Financial Institution As A Consumer R e p o rting Age n c y
16.
Is it possible that a financial institution could be a
consumer reporting agency?
Y e s . If the financial institution regularly passes on information
in its files about a consumer, other than information solely as to its
transactions or experiences wit h the consumer, it may be considered a
consumer reporting agency. A consumer reporting agency is any entity
which, for m o n e t a r y fees, dues, or on a cooperative nonprofit basis,
regularly engages in whole or in part in the practice of assembling or
e valuating consumer credit information or other information on consumers
for the purpose of furnishing consumer reports to third parties, and
w hich uses any means or facility of interstate commerce for the purpose
of preparing or furnishing consumer reports.
§ 603(d), (f)
17. Does this apply to the regular exchange of information
b e t w e e n correspondent financial institutions, or b e tween a h o lding company
and its subsidiaries, or b e t w e e n subsidiaries of the h o lding company?
Y e s . However, a branch or department of a financial institution
ma y furnish information to another branch or department of that financial
institution without beco m i n g a consumer reporting agency.
18. W h a t information may a financial institution give to third
parties in response to inquiries about a consumer, without becoming a consumer
reporting agency?
The financial institution may relate information solely as to its
transactions or experiences wit h the consumer.
For example, the financial
institution may disclose that the consumer had a h i story of delinquency, or
was current, and could give other information as to the status of any loans
or deposits w i t h it. To assure that it does not become a consumer reporting
agency, it should not regularly give out information contained in credit
applications bearing on the consumer's credit worthiness, credit standing,
credit capacity, character, general reputation, personal characteristics,
or m o d e of living.
In addition it should not regularly give out information
obtained in reports from consumer reporting agencies, or any other information
obtained from third parties.
For example, a financial institution w h i c h
obtained information as a "user" m a y become a consumer reporting agency
if it subsequently conveys the information to another financial institution.
-7 -
19. Does a financial institution become a consumer reporting
agency by transmitting information obtained from outside sources to another
party involved in the same t r a n s a c t i o n ?
No. The financial institution would not become a consumer
r eporting agency since it is a joint user of the same information with the
other party involved in the same transaction.
For example, a financial
institution does not become a consumer reporting agency by transmitting
such information to an insurer or guarantor (as in the case of FHA, VA,
private insurers or insured student loan p r o g r a m s ) , or to a participating
financial institution in connection w i t h the same transaction, or to a
collection agency in connection wi t h its efforts to collect on the
transaction.
Furthermore, the procurement and transmission of a consumer
report to FHA, VA, or other similar insuring or guaranteeing entity is
for determining whether the entity will issue its insurance or guaranty
to the holder of an obligation and not whether it will issue insurance to
the consumer involved.
20.
If a financial institution regularly obtains information
for its customers about the sufficiency of funds to cover checks on drawee
banks and gives the information to such customers does it become a consumer
r eporting agency?
No.
21.
If a financial institution becomes a consumer reporting
agency are there any restrictions on the type of information w h i c h may
be furnished?
Yes. C e r t a i n obsolete information m a y not be furnished by a
consumer reporting agency. The Act defines obsolete information to
include information about the following:
--Bankruptcies w h i c h antedate the report by more than 14 years;
--Suits and judgments, paid tax liens, and accounts placed
for c o llection or charged to profit and loss w h ich antedate
the report by mor e than 7 years;
--Arrests, indictments, or convictions of crime w h i c h antedate
the report by mor e than 7 y e a r s ; and
--Any adverse information w hich antedates the report by
m or e than 7 years.
Refer to § 605 of the Act for information as to wh e n the time
periods b egin to run.
-8-
22. A r e there any situations in w h i c h these restrictions on
obsolete information do not apply?
Y e s . T h e y do not apply in connection wit h
expected to involve $50,000 or more in principal, or
insurance w h i c h is expected to involve a face amount
T h e y also do not apply to information for employment
of $20,000 or more. § 605(b)
a credit transaction
the underwriting of
of $50,000 or more.
at an annual salary
23. Must a financial institution w h i c h is a consumer r e p o rting
agency remove this obsolete information from its own files after the 7 and
14 year periods, although it wishes to use the information solely for its
own use?
N o . It need not remove the information from its files. However,
by not removing it, the financial institution may be exposed to civil
liability in the event that prohibited information is negligently released.
§ 617
24. W h a t are the responsibilities of a financial institution
w hich regularly furnishes information other than as to its own transactions
and experiences with a consumer and thus becomes a consumer reporting
agency?
It must m a i n t a i n procedures to assure that the obsolete information
specified in the Act is not released, except w here permitted as indicated
in question 22. Procedures should be maintained to assure that the i n f o r
m a t i o n is given only for the permissible purposes listed in § 604 of the
Act. Reaso n a b l e procedures are necessary to assure m a x i m u m possible
accuracy of the information in any consumer report. Certifications must
be obtained from all users of the information that it will be used only
for authorized purposes. The identity of new users must be verified.
A consumer reporting agency may not furnish a consumer report to any
person if it has reasonable grounds for believing that the report will not
be used for an authorized purpose.
§ 604, § 605, § 607
In addition, a consumer reporting agency has other responsibilities
to consumers as discussed in S e ction III of these questions and answers.
25. W h a t are the authorized purposes for w hich consumer reports
can be furnished?
Reports may be furnished only in the following circumstances:
--In response to a court order;
--In accordance w i t h the w r i t t e n instructions of the
consumer to w h o m it relates;
-9 -
--In c o n nection w i t h an extension of credit involving the consumer
(or review or collection of his a c c o u n t ) ;
--For employment purposes;
--In connection w i t h the underwriting of insurance;
--In c o nnection wi t h a d e t e r m i n a t i o n of the consumer's
e l igibility for a license or other benefit granted by
a governmental instrumentality in w h i c h the determination
of an applicant's financial r esponsibility or status is
required by law, or
--For any other legitimate business need in connection with
a business transaction involving the consumer (for example, on
a consumer w h o wishes to establish a checking account in the
financial institution, or a builder checking the financial
condition of a prospective b u y e r ) . § 604
26. A r e there any other situations in w h i c h a consumer reporting
agency may furnish information?
Y e s . It m a y also furnish identifying information to a governmental
agency for other purposes, limited to the consumer's name, address, e m p l o y m e n t ,
and former addresses and places of employment.
§ 608
III.
R e s p o n sibilities Of A Financial Institution To Consumers W h e n It Is A
Consumer Re p o r t i n g A g e n c y
27. Does a financial institution that is a consumer reporting
agency have responsibilities to consumers wi t h respect to the information
it has on file?
Y e s . Upon the request and proper identification of any consumer,
the financial institution must disclose to him the "nature and substance"
of all information, except medical, that it has in its files.
In addition,
it must disclose the sources of the information, except in the case of
investigative consumer reports as noted in question 49. The financial
institution must also d i sclose the recipients of any consumer report
w i t h i n six months p r e ceeding the request (two years in the case of reports
furnished for employment p u r p o s e s ) . Accordingly, a financial institution
wh i c h is a consumer reporting agency should keep a dated record of each
recipient of information about a consumer, even w h e n the inquiry is oral.
§ 609
-1 0 -
28. Must the consumer m a k e a specific request for disclosure
of sources and recipients of reports?
No. A consumer's general request about information in his file
requires d i sclosure of the nature and substance of the information and
sources and recipients.
29.
to consumers?
A r e there any limitations on w h e n disclosures must be made
Y e s . Di s c l o s u r e need be ma d e only during normal business hours
and only on reasonable notice by the consumer.
§ 610(a)
30. Can the consumer require that disclosure be mad e either in
person or by telephone?
Y e s . D isclosures must be made to h i m if he appears in person
and furnishes proper identification. Disclosures must also be ma d e by
telephone if the consumer makes a w r i t t e n request for telephone discl o s u r e
and properly identifies himself.
In m a k i n g disclosures b y telephone, the
financial institution can require that any toll charge must be borne by the
consumer.
§ 610(b)
31.
If the consumer asks for disclosure in person, can he be
accompanied by another party?
Y e s . He can be accompanied b y one other person of his choosing,
wh o must furnish reasonable identification. T h e consumer m a y be required
to furnish a w r i t t e n statement granting p e rmission to- the financial
institution to discuss the customer's file in that person's presence.
§ 610(d)
32.
How must disclosures be ma d e to the consumer?
D isclosures m a y be made either in w r i t i n g or orally.
If given
orally, the consumer or his representative should be given reasonable
opportunity to make notations of the information being disclosed.
33. Does the financial institution have to explain the i nfor
m a t i o n in the consumer's file?
Y e s . It must provide trained personnel to explain any information
furnished to the consumer. § 610(c)
-1 1 -
34.
W h a t is the m e a n i n g of the c o n s u m e r 1s "file"?
It means all of the information on that consumer (bearing on
his credit worthiness, credit standing, credit capacity, character,
general reputation, personal characteristics, or mode of living) recorded
and retained b y the financial institution, regardless of how the information
is stored. A n y financial institution w h i c h is a consumer reporting agency
under the Act should m a i n t a i n a central file of information on the consumer,
or be capable of collecting all the information it might have on the consumer
in its various departments or branches for disclosure to the consumer.
§ 603(g)
35. C a n the financial institution charge the consumer for making
disclosures to h i m in connection wit h his file?
Yes, d e p ending on the time w h e n the consumer requests information
about his file.
If he makes the request either w i t h i n 30 days after receiving
notice that a user of a consumer report has denied or increased the charge for
credit or insurance (or denied employment) on the basis of the report, or
w i t h i n 30 days of n o t i f i c a t i o n from a debt collection agency affiliated wi t h
the financial institution that the c o n s u m e r ’
s credit rating may be, or has
been, adversely affected, the information must be furnished free of charge.
However, the financial institution m a y impose a reasonable charge for making
disclosures to the consumer if the request is not made wit h i n the 30 day time
limit, and the charge is indicated to the consumer prior to making disclosures.
§ 612
IV.
Disputes About Mate r i a l in a Consumer Re p o r t i n g A gency's File
36. W h a t must a financial institution w h i c h is a consumer reporting
agency do w h e n a consumer questions the completeness or accuracy of an item
of information in his file?
The financial institution must, with i n a reasonable period of
time, reinve stigate and record the current status of the questioned infor
mation, unless it has reasonable grounds to believe that the dispute is
frivolous or irrelevant.
The Act provides that the presence of information
in the consumer's file contradicting his contention does not, in and of
itself, constitute reasonable grounds for believing the dispute is frivolous
or irrelevant.
§ 611(a)
37. W h a t must the financial institution do if reinvestigation
indicates that the information was inaccurate, or if it can no longer be
verified?
The information must be promptly deleted from the file.
-1 2 -
§ 611(a)
38.
What if reinvestigation appears to confirm the information?
If r e i nvestigation does not resolve the dispute w i t h the consumer,
he is entitled to file a b rief statement setting forth the nature of the
dispute.
This statement may be limited to 100 words, if the financial
institution provides the consumer w i t h assistance in wr i t i n g a clear
summary of the dispute. Unless there are reasonable grounds to believe
that the dispute is frivolous or irrelevant, all subsequent consumer
reports containing the information in question must clearly note that
it is disputed by the consumer, and provide either the consumer's statement
or a clear and accurate codification of summary of it.
§ 611(b), (c)
39.
Is there any requirement that the financial institution
noti f y past recipients of reports on the consumer in the event disputed
information is deleted or a statement or notification of the dispute is
filed by the consumer?
Y e s . The consumer may request that a financial institution
w h ich is a consumer reporting agency provide prior recipients wit h n o t i
fication that the information has been deleted, or a copy of the statement,
codification or summary of the dispute.
It must be given to any person
specifically designated by the consumer w h o has received a consumer report
containing the disputed information w i t h i n the preceeding two years for
employment purposes, or w i t h i n the preceeding six months for any other
purpose.
§ 611(d)
40. Mus t the financial institution disclose the consumer's
right to request this notification to prior recipients?
Y e s . The financial institution must orally or in w r i t i n g clearly
and conspicuously disclose to the consumer his right to make the request.
The disclosure must be made at, or prior to, the time the information is
deleted or the consumer's statement regarding the disputed information is
received.
§ 611(d)
41. M a y a financial institution charge the consumer for furnishing
notification of deleted or disputed material to prior recipients of his report?
Y e s , depending on the time w h e n the consumer makes the request,
wh e t h e r the financial institution normally charges users of reports for
furnishing them, and whether the material is found to be inaccurate or can
no longer be verified.
If the consumer makes the request either w i t h i n
30 days after h e receives notice that a user of a report has denied or
increased the charge for credit or insurance (or denied employment) on the
basis of the report, or with i n 30 days of n o t i fication from a debt collection
agency affiliated wit h the financial institution that the consumer's credit
-1 3 -
rating may be, or has been, adversely affected, the information must be
furnished free of charge.
If the request is received after 30 days, a
charge may be made for furnishing notification to prior recipients.
The
amount must be indicated to the consumer prior to furnishing the information
and it may not exceed the charge that the financial institution w ould impose
on each designated recipient for a consumer report.
If the financial
institution makes no such charge, then it may not charge the consumer for
furnishing information about the dispute to prior recipients.
In any event,
the statute prohibits the imposition of any charge for notifying prior
recipients of the deletion of information w hich is found to be inaccurate
or w h i c h can no longer be verified.
§ 612
V.
The Financial Institution As A Purchaser Of Dealer Paper
42.
Does a financial institution w h ich regularly purchases
dealer paper have specific responsibilities with regard to those transactions?
Yes, if the financial institution wishes to avoid becoming a
consumer reporting agency. When a dealer calls the financial institution
before credit is extended to inquire whether the institution will either
extend credit directly to his customer or purchase the retail contract,
and the financial institution denies the credit or increases the cost,
even partially because of information from outside sources, the dealer
and the financial institution must each make certain disclosures to the
consumer to keep the financial institution from being considered a
consumer reporting agency.
Whenever such a request is made, the dealer must advise the
consumer of the name and address of the financial institution.
If the
financial institution denies credit or increases its cost, it must follow
the normal procedures of a user of information from outside sources.
If
the financial institution's decision was based on a report from a consumer
reporting agency, it must give the consumer the name and address of the
agency.
If its decision was based on information from a third party, w h i c h
is not a consumer reporting agency, the financial institution must disclose
to the consumer his right to make a wr i t t e n request to the financial
institution w i t h i n 60 days for disclosure of the nature of the information.
If the decision to deny credit or increase its cost is based on
the financial institution's prior experience with the consumer or its general
credit policy (for example, size of downpayment or m a t u r i t y required) it
w o uld not need to make any disclosure to the consumer. However, a denial
requiring disclosures occurs w h e n any condition is imposed on the dealer
-14-
contract on the basis of information from any outside s o u r c e . This may
include increasing the discount or dealer reserve or taking the paper with
recourse.
It may also include requiring a larger d o w n p a y m e n t , shorter
maturity, a co-signer or guarantor.
§ 603(d)(3)(C), § 615
43.
If, subsequent to an extension of credit to a consumer, a
financial institution sells the consumer's obligation to a third party
(including a collection agency), and furnishes information on the consumer
w h i c h was obtained from outside sources to the third party in connection
w i t h that sale, does the financial institution become a consumer reporting
agency?
No. Such a transaction is a business transaction w h ich is
generally beyond the scope of the Act.
VI.
Investigative Consumer Reports
44.
What is an "investigative consumer report"?
This w o u l d be a consumer report compiled from personal interviews
wit h neighbors, friends, associates or others as to the consumer's character,
general reputation, personal characteristics, or mode of living. § 603(e)
45. What are the responsibilities of a financial institution
as a user of an investigative consumer report?
W he n such a report is requested from a consumer reporting agency,
the financial institution must mail or deliver w r i t t e n notice to the consumer
with i n three days that an investigative report including information as to
his character, general reputation, personal characteristics, and mode of
living may be made. He must also be informed that he may make a w r i t t e n
request for the "nature and scope" of the investigation.
If the consumer
makes a w r i t t e n request w i t h i n a reasonable period of time, the financial
i nstitution must make a complete and accurate disclosure of the "nature and
scope" of the investigation.
One w a y to do this (although not required by
the law) w o u l d be to furnish the consumer a copy of any questionnaires to
be used in the investigation. Within 5 days after the consumer's request
(or 5 days after the time the report was first requested by the financial
institution, w h i c h e v e r is later) these disclosures must be made in w r i t i n g
by mailing them or otherwise delivering them to the consumer.
§ 603(e),
§ 606, § 609(a)(2)
46. Are disclosures required in all instances w h e n investigative
consumer reports are used?
No. They are
employment purposes and
position.
§ 606(a)(2)
institution conducts an
employees.
not applicable w h e n the report is to be used for
the consumer has not specifically applied for the
In addition, they are not required if the financial
investigation for its own purposes, using its own
47. What if a financial institution denies credit, insurance or
employment or increases the charge for credit or insurance based upon
information in an investigative consumer report?
The financial institution must make the "user" disclosures
described in Section I.
48. Are special requirements imposed on a financial institution
that is a consumer r e p o rting agency if it prepares an investigative consumer
report for a third party?
Y e s . Adverse
in such a report cannot
v e rified in the process
wi t h i n the three months
furnished.
§ 614
information (other than public record information)
be included in a subsequent consumer report unless
of maki n g the subsequent report, or unless received
preceedin g the date the subsequent report is
49.
If a consumer requests disclosure of information in his file,
must the financial institution disclose the nature and substance of the
information contained in the investigative consumer report?
Y e s . However, the source of information acquired solely for use
in preparing an investigative consumer report and actually used for no
other purpose, need not be disclosed.
§ 609(a)(2)
VII.
Responsibilities Of A Financial Institution When It Furnishes Or Uses
Consumer Reports For Employment Purposes
50. Can a financial institution give out information on a consumer
in response to an inquiry about the consumer for employment purposes?
Y e s . However, if it regularly furnishes information other than
as to its own transactions or experiences w i t h the individual, it may
become a consumer reporting agency.
§ 603(d), § 604
51.
What is the definition of a report used for "employment
purposes"?
It means a report used for the purpose of evaluating a consumer
for employment, promotion, reassignment or retention as an employee.
§ 603(h)
-16-
52. Do the restrictions on furnishing obsolete information
apply to information furnished by a financial institution for employment
purposes if it is a consumer reporting agency?
Yes, except w here the information is to be used in connection
with the employment of an individual at an annual salary w h i c h equals, or
wh i c h may reasonably be expected to equal, $20,000 or more.
In that case,
the restrictions on obsolete information do not apply.
§ 605(b)
53. Are there special requirements if a financial institution,
w h i c h is a consumer r e p orting agency, furnishes a report for employment
purposes w h ich contains matters of public record (such as liens, judgments,
pending law suits, arrests, convictions, etc.) w hich are likely to have
an adverse effect on the consumer's ability to obtain employment?
Y e s . At the time the information is reported to the user, the
financial institution must notify the consumer of the fact that public
record information is being reported, together w i t h the name and address
of the person to w h o m such information is being reported.
As an alternative, the financial institution need not make these
disclosures if it maintains strict procedures designed to insure that,
w h e n e v e r public record information w h i c h is likely to have an adverse
effect on a consumer's ability to obtain employment is reported, it is
complete and up-to-date.
The statute provides that items of public
record relating to arrests, indictments, convictions, suits, tax liens,
and outstanding judgments shall be considered up-to-date if the institution
reports the current public record status of the item at the time the
report is reported.
§ 613
54.
In evaluating a potential employee, m a y a financial
institution obtain a consumer report from a consumer reporting agency
or other information from present or former employers?
Y e s . However, financial institutions insured by the Federal
Deposit Insurance Corporation should not rely entirely upon a consumer
report to obtain information as to w h ether an individual has been con
victed of a crime involving dishonesty or breach of trust to meet
Section 19 of the Federal Deposit Insurance Act (12 U.S.C. 1829).
Information r elating to such crimes is relevant to m e e t i n g the r e q u i r e
ments of Section 19 regardless of wh e n the conviction occurred, whereas
such information, if older than 7 years, will probably not be contained
in a report from a consumer reporting agency, unless the report is to
be used in connection w i t h employment at an annual salary of $20,000 or
more.
-1 7 -
55. Must the consumer be notified if the report takes the
form of an investigative consumer report?
Generally y e s , if the financial institution requests the report
from a consumer reporting agency. However, notification w o u l d not be
required if the report is obtained in connection with employment, promotion,
or reassignment for w h i c h the consumer has not specifically applied.
Otherwise, he must be notified of the request for an investigative
report with i n 3 days of the request, and the financial institution must
otherwise comply w i t h § 606, as outlined in questions 45, 46 and 47.
56.
Does the financial institution have any responsibilities
to the prospective employee if employment is denied on the basis of a
consumer report?
Y e s . If employment is denied, even partially on the basis of
information in a consumer report from a consumer reporting agency, the
individual must be given the name and address of the consumer reporting
agency mak i n g the report. However, if employment is denied because of
information from a source other than a consumer reporting a g e n c y , no
disclosures are necessary.
§ 615
VIII.
Penalties, Liabilities And The Act's Effect On State Law
57.
Wha t are the civil liabilities for failing to comply with
the Act?
The Act provides civil liabilities for either w i l l f u l l y or
negligently failing to comply w i t h the requirements of the Act. The
liabilities apply to financial institutions as users of consumer reports
and as consumer reporting agencies w here they are acting in that capacity.
In the case of negligent noncompliance, a financial institution may be
liable to the consumer for any actual damages substained by the consumer,
court costs and r e asonable attorney's fees.
If the failure to comply is
willful, a financial institution may also be liable to the consumer for
punitive damages.
§ 616, § 617
58.
Is there any protection w h e r e a financial institution which
is a "user" has made a good faith attempt to comply?
Y e s . A user of information will not be held liable if he shows
by a preponderance of evidence that at the time of an alleged vio l a t i o n he
m a intained reasonable procedures to assure compliance.
§ 606(c), § 615(c)
59.
What is the statute of limitations on civil liability?
-1 8 -
Any action must be brought w i t h i n two years from the date on
which the liability arises, except in certain situations w here there has
been a material and w i l lful misrepresentation, in w hich case the action
may be brought w i t h i n two years after discovery by the consumer of the
misrepresentation.
§ 618
60.
Are there any criminal penalties?
Y e s . The Act provides for a fine of not more than $5,000 or
imprisonment of not more than one year, or both, in the case of any person
who w i l l f u l l y and knowingly obtains information from a consumer reporting
agency under false pretenses.
The same criminal penalty can be imposed
upon any officer or employee of a financial institution w h ich is a consumer
reporting agency w h o w i l l f u l l y and knowingly provides information from a
financial i n s t i t u t i o n ’
s files about a consumer to a person not authorized
to receive it.
§ 619, § 620
61.
What effect does the Act have upon State law?
This Act does not annul, alter, affect, or exempt any person
subject to the provisions of this Act from complying w i t h the laws of
any State wit h respect to the collection, distribution, or use of any
i nformation on consumers, except to the extent that those laws are
i nconsistent with any provisions of this Act, and then only to the extent
of the inconsistency.
§ 622
-19-
T IT L E V I — P R O V IS IO N S R E L A T IN G T O C R E D IT
R E P O R T IN G A G E N C IE S
AMENDM ENT
OF CONSUMER CREDIT PROTECTION ACT
S ec . 601. The Consumer Credit Protection A ct is amended by add- 82 stat. 146.
ing at the end thereof the follow in g new title :
15 use 1601
note,
“ TITLE VI—CONSUMER CREDIT REPORTING
“ Sec.
“ 601.
“ 602.
“ 603.
"604.
“ 605.
“ 606.
“ 607.
“ 608.
“ 609.
“ 610.
“ 611.
“ 612.
“ 613.
“ 614.
“ 615.
“ 616.
“ 617.
“ 618.
“ 619.
“ 620.
“ 621.
“ 622.
Short title.
Findings and purpose.
Definitions and rules o f construction.
Perm issible purposes o f reports.
Obsolete inform ation.
D isclosure o f investigative consumer reports.
Com pliance procedures.
Disclosures to governm ental agencies.
D isclosure to consumers.
Conditions o f disclosure to consumers.
Procedure in case o f disputed accuracy.
Charges fo r certain disclosures.
Public record inform ation for employment purposes.
Restrictions on investigative consum er reports.
Requirem ents on users o f consum er reports.
Civil liability fo r w illfu l noncompliance.
Civil liability for negligent noncompliance.
Jurisdiction o f courts ; lim itation o f actions.
Obtaining inform ation under false pretenses.
Unauthorized disclosures by officers or employees.
Adm inistrative enforcement.
Relation to State laws.
-20-
Pub. L a w 9 1 - 5 0 8
October 26, 1970
84 STAT. 1128
Citation of
title .
Ҥ 601. Short title
“ This title may be cited as the Fair Credit Reporting Act.
Ҥ 602. Findings and purpose
“ ( a ) The Congress makes the follow ing findings:
“ (1) The banking system is dependent upon fair and accurate
credit reporting. Inaccurate credit reports directly impair the e f
ficiency o f the banking system, and unfair credit reporting methods
undermine the public confidence which is essential to the continued
functioning o f the banking system.
“ ( 2 ) A n elaborate mechanism has been developed for investigating
and evaluating the credit worthiness, credit standing, credit capacity,
character, and general reputation o f consumers.
“ (3) Consumer reporting agencies have assumed a vital role in
assembling and evaluating consumer credit and other inform ation on
consumers.
“ (4) There is a need to insure that consumer reporting agencies
exercise their grave responsibilities with fairness, im partiality, and
a respect fo r the consumer’s right to privacy.
“ (b ) It is the purpose o f this title to require that consumer report
ing agencies adopt reasonable procedures for meeting the needs o f
commerce for consumer credit, personnel, insurance, and other in
form ation in a manner which is fair and equitable to the consumer,
with regard to the confidentiality, accuracy, relevancy, and proper
utilization o f such inform ation in accordance with the requirements
o f this title.
Ҥ 603. Definitions and rules of construction
Post-> P» 1133.
“ (a ) Definitions and rules o f construction set forth in this section
are applicable for the purposes o f this title.
“ (b ) The term ‘person’ means any individual, partnership, corpo
ration, trust, estate, cooperative, association, government or govern
mental subdivision or agency, or other entity.
“ (c ) The term ‘consumer’ means an individual.
“ (d ) The term ‘consumer report’ means any written, oral, or other
communication o f any inform ation by a consumer reporting agency
bearing on a consumer’s credit worthiness, credit standing, credit
capacity, character, general reputation, personal characteristics, or
mode o f living which is used or expected to be used or collected in
whole or in part for the purpose o f serving as a factor in establishing
the consumer's eligibility for ( 1 ) credit or insurance to be used p ri
marily for personal, fam ily, or household purposes, or ( 2 ) em ploy
ment purposes, or (3 ) other purposes authorized under section 604.
The term does not include (A ) any report containing inform ation
solely as to transactions or experiences between the consumer and
the person making the report; (B ) any authorization or approval o f
a specific extension o f credit directly or indirectly by the issuer o f
a credit card or similar device; or (C ) any report in which a person
who has been requested by a third party to make a specific extension
o f credit directly or indirectly to a consumer conveys his decision
with respect to such request, if the third party advises the consumer
o f the name and address o f the person to whom the request was made
and such person makes the disclosures to the consumer required under
section 615.
“ (e) The term ‘ investigative consumer report’ means a consumer
report or portion thereof in which inform ation on a consumer’s
character, general reputation, personal characteristics, or mode o f liv
ing is obtained through personal interviews with neighbors, friends,
or associates o f the consumer reported on or with others with whom
he is acquainted or who may have knowledge concerning any such
-21-
October 26, 1970
P ub. L aw 9 1 -5 0 8
---- ------- ~54 STAT. 1129
items o f inform ation. However, such inform ation shall not include
specific factual inform ation on a consumer's credit record obtained
directly from a creditor o f the consumer or from a consumer re
porting agency when such inform ation was obtained directly from a
creditor o f the consumer or from the consumer.
“ ( f ) The term ‘consumer reporting agency’ means any person
which, fo r monetary fees, dues, or on a cooperative nonprofit basis,
regularly engages in whole or in part in the practice o f assembling
or evaluating consumer credit inform ation or other inform ation on
consumers for the purpose o f furnishing consumer reports to third
parties, and which uses any means or facility o f interstate commerce
fo r the purpose o f preparing or furnishing consumer reports.
“ (g ) The term ‘file , when used in connection with inform ation on
any consumer, means all o f the inform ation on that consumer recorded
and retained by a consumer reporting agency regardless o f how the
inform ation is stored.
“ (h ) The term ‘employment purposes’ when used in connection with
a consumer report means a report used for the purpose o f evaluating
a consumer fo r employment, promotion, reassignment or retention as
an employee.
“ (i) The term ‘medical inform ation’ means inform ation or records
obtained, with the consent o f the individual to whom it relates, from
licensed physicians or medical practitioners, hospitals, clinics, or other
medical or medically related facilities.
Ҥ604. Permissible purposes of reports
“ A consumer reporting agency may furnish a consumer report under
the follow in g circumstances and no other:
“ ( 1 ) In response to the order o f a court having jurisdiction to issue
such an order.
“ (2) In accordance with the written instructions o f the consumer
to whom it relates.
“ (3) T o a person which it has reason to believe—
“ ( A ) intends to use the inform ation in connection with a credit
transaction involving the consumer on whom the inform ation is
to be furnished and involving the extension o f credit to, or
review or collection o f an account o f, the consumer; or
“ (B ) intends to use the inform ation for employment purposes;
or
“ (C ) intends to use the inform ation in connection with the
underwriting o f insurance involving the consumer; or
“ (D ) intends to use the inform ation in connection with a deter
mination o f the consumer’s eligibility for a license or other benefit
granted by a governmental instrumentality required by law to
consider an applicant’s financial responsibility or status: or
“ (E ) otherwise has a legitimate business need fo r the inform a
tion in connection with a business transaction involving the
consumer.
Ҥ 605. Obsolete information
“ (a ) E xcept as authorized under subsection ( b ), no consumer
reporting agency may make any consumer report containing any o f
the follow in g items o f in form ation :
“ (1) Bankruptcies which, from date o f adjudication o f the most
recent bankruptcy* antedate the report by more than fourteen years.
“ ( 2 ) Suits and judgments which, from date o f entry, antedate the
report by more than seven vears or until the governing statute o f
limitations has expired, whichever is the longer period.
“ ( 3 ) Paid tax liens which, from date o f payment, antedate the
report by more than seven years.
-22-
Pub. L a w 9 1 - 5 0 8
October 26, 1970
84 STAT. 1130____________________
" ( 4 ) Accounts placed for collection or charged to profit and loss
which antedate the report by more than seven years.
“ (5) Records o f arrest, indictment, or conviction o f crime which,
from date o f disposition, release, or parole, antedate the report by
more than seven years.
“ ( 6 ) A ny other adverse item o f inform ation which antedates the
report by more than seven years.
“ (b ) The provisions o f subsection (a) are not applicable in the
case o f any consumer credit report to be used in connection with—
“ ( 1 ) a credit transaction involving, or which may reasonably
be expected to involve, a principal amount o f $50,000 or more;
“ ( 2 ) the underwriting o f life insurance involving, or which
may reasonably be expected to involve, a face amount o f $50,000
or m ore; or
“ ( 3 ) the employment o f any individual at an annual salary
which equals, or which may reasonably be expected to equal
$20,000, or more.
Ҥ 606. Disclosure of investigative consumer reports
“ (a) A person may not procure or cause to be prepared an investi
gative consumer report on any consumer unless—
“ ( 1 ) it is clearly and accurately disclosed to the consumer that
an investigative consumer report including inform ation as to his
character, general reputation, personal characteristics, and mode
o f living, whichever are applicable, may be made, and such dis
closure ( A ) is made in a writing mailed, or otherwise delivered,
to the consumer, not later than three days after the date on which
the report was first requested, and (B ) includes a statement in
form ing the consumer o f his right to request the additional
disclosures provided for under subsection (b ) o f this section; or
“ ( 2 ) the report is to be used for employment purposes for which
the consumer has not specifically applied.
“ (b ) A n y person who procures or causes to be prepared an investi
gative consumer report on any consumer shall, upon written request
made by the consumer within a reasonable period o f time after the
receipt by him o f the disclosure required by subsection (a) ( 1), shall
make a complete and accurate disclosure o f the nature and scope o f
the investigation requested. This disclosure shall be made in a writing
mailed, or otherwise delivered, to the consumer not later than five
days after the date on which the request for such disclosure was
received from the consumer or such report was first requested, which
ever is the later.
“ (c ) N o person may be held liable for any violation o f subsection
(a ) or (b ) o f this section if he shows by a preponderance o f the
evidence that at the time o f the violation he maintained reasonable
procedures to assure compliance with subsection (a) or (b ).
Ҥ 607. Compliance procedures
“ (a) Every consumer re {porting agency shall maintain reasonable
procedures designed to avoid violations o f section 605 and to limit
the furnishing o f consumer reports to the purposes listed under
section 604. These procedures shall require that prospective users o f the
inform ation identify themselves, certify the purposes fo r which the
inform ation is sought, and certify that the inform ation will be used
for no other purpose. Every consumer reporting agency shall make a
reasonable effort to verify the identity o f a new prospective user and
the uses certified by such prospective user prior to furnishing such user
a consumer report. No consumer reporting agency may furnish a con
sumer report to any person if it has reasonable grounds for believing
that the consumer report will not be used for a purpose listed in section
604.
-2 3 -
October 26, 1970
Pub. L a w 9 1 - 5 0 8
___________ 84 STAT. 1131
“ (b ) Whenever a consumer reporting agency prepares a consumer
report it shall follow reasonable procedures to assure maximum possi
ble accuracy o f the inform ation concerning the individual about whom
the report relates.
Ҥ 608. Disclosures to governmental agencies
‘Notwithstanding the provisions o f section 604, a consumer report
ing agency may furnish identifying inform ation respecting any
consumer, limited to his name, address, form er addresses, places o f
employment, or form er places o f employment, to a governmental
agency.
Ҥ 609. Disclosures to consumers
“ (a) E very consumer reporting agency shall, upon request and
proper identification o f any consumer, clearly and accurately disclose
to the consum er:
“ ( 1 ) The nature and substance o f all inform ation (except medical
inform ation) in its files on the consumer at the time o f the request.
“ ( 2 ) The sources o f the inform ation; except that the sources o f
inform ation acquired solely fo r use in preparing an investigative con
sumer report and actually used for no other purpose need not be dis
closed : Provided , That in the event an action is brought under this
title, such sources shall be available to the plaintiff under appropriate
discovery procedures in the court in which the action is brought.
“ (3) The recipients o f any consumer report on the consumer w’hich
it has furnished—
“ ( A ) fo r employment purposes w’ ithin the two-year period
preceding the request, and
“ (B ) for any other purpose within the six-month period pre
ceding the request.
“ (b ) The requirements o f subsection (a) respecting the disclosure
o f sources o f inform ation and the recipients o f consumer reports do
not apply to inform ation received or consumer reports furnished prior
to the effective date o f this title except to the extent that the matter
involved is contained in the files o f the consumer reporting agency on
that date.
Ҥ 610. Conditions of disclosure to consumers
“ (a) A consumer reporting agency shall make the disclosures
required under section 609 during normal business hours and on
reasonable notice.
“ (b ) The disclosures required under section 609 shall be made to the
consumer—
“ ( 1 ) in person if he appears in person and furnishes proper
identification; or
“ ( 2 ) by telephone if be has made a written request, with
proper identification, fo r telephone disclosure and the toll charge,
if any, fo r the telephone call is prepaid by or charged directly to
the consumer.
“ (c ) A n y consumer reporting agency shall provide trained person
nel to explain to the consumer any inform ation furnished to him pur
suant to section 609.
“ (d ) The consumer shall be permitted to be accompanied by one
other person o f his choosing, who shall furnish reasonable identifica
tion. A consumer reporting agency may require the consumer to fu r
nish a written statement granting permission to the consumer
reporting agency to discuss the consumer’s file in such person’s
presence.
“ (e) E xcept as provided in sections 616 and 617, no consumer may
bring any action or proceeding in the nature o f defamation, invasion o f
privacy, or negligence with respect to the reporting o f inform ation
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Pub. L a w 9 1 - 5 0 8
October 26, 1970
84 STAT. 1132___________________
against any consumer reporting agency, any user o f inform ation, or
any person who furnishes inform ation to a consumer reporting agency,
based on inform ation disclosed pursuant to section 609, 610, or 615,
except as to false inform ation furnished with malice or w illful intent
to injure such consumer.
Ҥ 611. Procedure in case of disputed accuracy
u (a) I f the completeness or accuracy o f any item o f inform ation con
tained in his file is disputed by a consumer, and such dispute is directly
conveyed to the consumer reporting agency by the consumer, the con
sumer reporting agency shall within a reasonable period o f time
reinvestigate and record the current status o f that inform ation unless
it has reasonable grounds to believe that the dispute by the consumer
is frivolous or irrelevant. I f after such reinvestigation such inform a
tion is found to be inaccurate or can no longer be verified, the consumer
reporting agency shall prom ptly delete such information. The pres
ence o f contradictory inform ation in the consumer's file does not in
and o f itself constitute reasonable grounds for believing the dispute is
frivolous or irrelevant.
“ (b ) I f the reinvestigation does not resolve the dispute, the con
sumer may file a brief statement setting forth the nature o f the dispute.
The consumer reporting agency may limit such statements to not more
than one hundred words if it provides the consumer with assistance in
w riting a clear summary o f the dispute.
“ (c) W henever a statement o f a dispute is filed, unless there is
reasonable grounds to believe that it is frivolous or irrevelant, the
consumer reporting agency shall, in any subsequent consumer report
containing tlie inform ation in question, clearly note that it is dis
puted bv the consumer and provide either the consumer's statement
or a clear and accurate codification or summary thereof.
‘‘ (d ) Follow ing any deletion o f inform ation which is found to be
inaccurate or whose accuracy can no longer be verified or any notation
as to disputed inform ation, the consumer reporting agency shall, at
the request o f the consumer, furnish notification that the item has
l>een deleted or the statement, codification or summary pursuant to
subsection (b ) or (c) to any person specifically designated by the
consumer who has within tw o years prior thereto received a con
sumer report for employment purposes, or within six months prior
thereto received a consumer report fo r any other purpose, which
contained the deleted or disputed inform ation. The consumer re
porting agency shall clearly and conspicuously disclose to the con
sumer his rights to make such a request. Such disclosure shall be
made at or prior to the time the inform ation is deleted or the con
sumer's statement regarding the disputed inform ation is received.
Ҥ 612. Charges for certain disclosures
“ A consumer reporting agency shall make all disclosures pursuant
to section 609 and furnish all consumer reports pursuant to section
611(d) without charge to the consumer if, within thirty (fays after
receipt by such consumer o f a notification pursuant to section 615 or
notification from a debt collection agency affiliated with such con
sumer reporting agency stating that the consumer's credit rating may
be or has been adversely affected, the consumer makes a request under
section 609 or 6 1 1 (d ). Otherwise, the consumer reporting agency
may impose a reasonable charge on the consumer for making dis
closure to such consumer pursuant to section 609, the charge for which
shall be indicated to the consumer prior to making disclosure; and
for furnishing notifications, statements, summaries, or codifications
to person designated by the consumer pursuant to section 6 1 1 (d ), the
charge for which shall be indicated to the consumer prior to furnish
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Pub. L a w 9 1 - 5 0 8
October 26, 1970
__ ______________________84 S T A T ,
ing such inform ation and shall not exceed the charge that the con
sumer reporting agency would impose on each designated recipient
fo r a consumer report except that no charge may be made for notifying
such persons o f the deletion o f inform ation which is found to be
inaccurate or which can no longer be verified.
Ҥ 613. Public record information for employment purposes
“ A consumer reporting agency which furnishes a consumer report
for employment purposes and which for that purpose compiles and
reports items o f inform ation on consumers which are matters o f
public record and are likely to have an adverse effect upon a con
sumer's ability to obtain employment shall—
“ ( 1 ) at the time sucn public record inform ation is reported to
the user o f such consumer report, notify the consumer o i the fact
that public record inform ation is being reported by the consumer
reporting agency, together with the name and address o f the per
son to whom such inform ation is being reported; or
“ ( 2 ) maintain strict procedures designed to insure that when
ever public record inform ation which is likely to have an adverse
effect on a consumer's ability to obtain employment is reported
it is complete and up to date. F or purposes o f this paragraph,
items o f public record relating to arrests, indictments, convic
tions, suits, tax liens, and outstanding judgments shall be con
sidered up to date if the current public record status o f the item
at the time o f the report is reported.
Ҥ 614. Restrictions on investigative consumer reports
“ W henever a consumer reporting agency prepares an investigative
consumer report, no adverse inform ation in the consumer report (other
than inform ation which is a matter o f public record) may be included
in a subsequent consumer report unless such adverse inform ation has
been verified in the process o f making such subsequent consumer
report, or the adverse inform ation was received within the threemonth, period preceding the date the subsequent report is furnished.
Ҥ 615. Requirements on users of consumer reports
“ (a ) W henever credit or insurance fo r personal, fam ily, or house
hold purposes, or employment involving a consumer is denied or the
charge fo r such credit or insurance is increased either wholly or partly
because o f inform ation contained in a consumer report from a con
sumer reporting agency, the user o f the consumer report shall so
advise the consumer against whom such adverse action has been taken
and supply the name and address o f the consumer reporting agency
m aking the report.
“ (b ) W henever credit fo r personal, fam ily, or household purposes
involving a consumer is denied or the charge for such credit is
increased either wholly or partly because o f inform ation obtained
from a person other than a consumer reporting agency bearing upon
the consumer’s credit worthiness, credit standing, credit capacity,
character, general reputation, personal characteristics, or mode o f
living, the user o f such inform ation shall, within a reasonable period
o f time, upon the consumer’s written reauest for the reasons for such
adverse action received within sixty days after learning o f such
adverse action, disclose the nature o f the inform ation to the con
sumer. The user o f such inform ation shall clearly and accurately
disclose to the consumer his right to make such written request at the
time such adverse action is communicated to the consumer.
“ (c) No person shall be held liable for any violation o f this section
if he shows by a preponderance o f the evidence that at the time o f the
alleged violation he maintained reasonable procedures to assure com
pliance with the provisions o f subjections (a ) and (b ).
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1133
Pub. L a w 9 1 - 5 0 8
84 S T A T .
October 26, 1970
1134 ________________________________
Ҥ 616. Civil liability for willful noncompliance
“ A ny consumer reporting agency or user o f inform ation which
w illfu lly fails to com ply with any requirement imposed under this
title with respect to any consumer is liable to that consumer in an
amount equal to the sum o f—
“ ( 1 ) any actual damages sustained by the consumer as a n su lt
o f the failure;
‘‘ ( 2 ) such amount o f punitive damages as the court may allow ;
and
“ ( 3 ) in the case o f any successful action to enforce any liability
under this section, the costs o f the action together with reasonable
attorney's fees as determined by the court.
Ҥ617. Civil liability for negligent noncompliance
“ A ny consumer reporting agency or user o f inform ation which is
negligent in failin g to com ply with any requirement imposed under
this title with respect to any consumer is liable to that consumer in an
amount equal to tne sum o f—
“ ( 1 ) any actual damages sustained by the consumer as a result
o f the failure;
“ (*2 ) in the case o f any successful action to enforce any liability
under this section, the costs o f the action together with reasonable
attorney's fees as determined by the court.
Ҥ618. Jurisdiction of courts; limitation of actions
“ A n action to enforce any liability created under this title may be
brought in any appropriate United States district court without
regard to the amount in controversy, or in any other court o f com pe
tent jurisdiction, within two years from the date on which the liability
arises, except that where a defendant has materially and w illfully
misrepresented any inform ation required under this title to be dis
closed to an individual and the inform ation so misrepresented is ma
terial to the establishment o f the defendant's liability to that
individual under this title, the action may be brought at any time
within two years after discovery by the individual o f the
misrepresentation.
Ҥ 619. Obtaining information under false pretenses
“ Any person who knowingly and w illfully obtains inform ation on a
consumer from a consumer reporting agency under false pretenses
shall be fined not more than $5,000 or imprisoned not more than
one year, or both.
Ҥ620. Unauthorized disclosures by officers or employees
“ A ny officer or employee o f a consumer reporting agency who knowingly and w illfully provides inform ation concerning an individual
from the agency's files to a person not authorized to receive that in
formation shall be fined not more than $5,000 or imprisoned not more
than one year, or both.
Ҥ 621. Administrative enforcement
38 Stat. 717;
52 Stat, 114,
15 USC 58.
“ (a) Compliance with the requirements imposed under this title
shall be enforced under the Federal Trade Commission A ct by the
Federal Trade Commission with respect to consumer reporting agen
cies and all other persons subject thereto, except to the extent that
enforcement o f the requirements imposed under this title is specifically
committed to some other government agency under subsection (b )
hereof. F or the purpose o f the exercise by the Federal Trade Com
mission o f its functions and powers under the Federal Trade Commis
sion A ct, a violation o f any requirement or prohibition imposed
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October 26, 1970
Pub. L a w 9 1 - 5 0 8
___________ 84 STAT. 1135
under this title shall constitute an unfair or deceptive act or prac
tice in commerce in violation o f section 5 (a ) o f the Federal
Trade Commission A ct and shall be subject to enforcement by
the Federal Trade Commission under section 5 (b ) thereof with
respect to any consumer reporting agency or person subject to
enforcement by the Federal Trade Commission pursuant to this sub
section, irrespective o f whether that person is engaged in commerce
or meets any other jurisdictional tests in the Federal Trade Commis
sion A ct. The Federal Trade Commission shall have such procedural,
investigative, and enforcement powers, including the power to issue
procedural rules in enforcing compliance with the requirements
imposed under this title and to require the filing o f reports, the p ro
duction o f documents, and the appearance o f witnesses as though the
applicable terms and conditions o f the Federal Trade Commission A ct
were part o f this title. A n y person violating any o f the provisions o f
this title shall be subject to the penalties and entitled to the privileges
and immunities provided in the Federal Trade Commission A ct as
though the applicable terms and provisions thereof were part o f this
title.
“ (b ) Com pliance with the requirements imposed under this title
with respect to consumer reporting agencies and persons who use
consumer reports from sucli agencies shall be enforced under—
“ ( 1 ) section 8 o f the Federal Deposit Insurance A ct, in the
case o f :
“ (A ) national banks, by the Com ptroller o f the Currency;
“ (B ) member banks o f the Federal Reserve System (other
than national banks), by the Federal Reserve B oard; and
“ (C ) banks insured by the Federal Deposit Insurance
Corporation (other than members o f the Federal Reserve
System ), by the Board o f Directors o f the Federal Deposit
Insurance Corporation.
“ (2) section 5 (a ) o f the Home Owners Loan A ct o f 1933,
section 407 o f the National Housing A ct, and sections 6 (i) and 17
o f the Federal H om e Loan Bank A ct, by the Federal H om e Loan
Bank Board (acting directly or through the Federal Savings and
Loan Insurance C orporation), in the case o f any institution subject to any o f those provisions;
“ (3 ) the Federal Credit Union A ct, by the Adm inistrator o f
the National Credit Union Adm inistration with respect to any
Federal credit union;
“ (4) the A cts to regulate commerce, by the Interstate Commerce Commission with respect to any common carrier subject
to those A cts;
“ ( 5 ) the Federal Aviation A ct o f 1958, by the Civil Aeronautics
Board with respect to any air carrier or foreign air carrier subject
to that A c t; and
“ ( 6 ) the Packers and Stockyards A ct, 1921 (except as p ro
vided in section 406 o f that A c t), by the Secretary o f A griculture
with respect to any activities subject to that Act.
“ (c ) F or the purpose o f the exercise by any agency referred to in
subsection (b ) o f its powers under any A ct referred to in that sub
section, a violation o f any requirement imposed under this title shall
be deemed to be a violation o f a requirement imposed under that Act.
In addition to its powers under any provision o f law specifically
referred to in subsection (b ). each o f the agencies referred to in that
subsection may exercise, for the purpose o f enforcing compliance with
any requirement imposed under this title any other authority conferred
on it by law.
-28-
66 stat. 632.
15 use 45.
52 s ta t. 112.
64 stat. 879j
80 stat. 1046,
1054«
12 usc 1818»
80 stat. 1028.
12 usc 1464•
80 sta t» 1036.
12
use 1730.
6g s^ t ‘
12 usc 1426 *
1437.
’
73 stat. 628j
Ante, pp. 49,
994.
12 usc 1751.
49 usc 1
5JLSL*
12
J .,1*
note
42 stat. 159.
7 usc 181,
226> 22 7*
Pub. L a w 9 1 - 5 0 8
84 STAT.
October 26, 1970
1136__________________
Ҥ 622. Relation to State laws
‘‘ This title does not annul, alter, affect, or exempt any person subject
to the provisions o f this title from com plying with the laws o f any
State with respect to the collection, distribution, or use o f any inform a
tion on consumers, except to the extent that those laws are inconsistent
with any provision o f this title, and then only to the extent o f the
inconsistency.”
EFFECTIVE DATE
82
stat.
167.
Sec. 60*2. Section 504 o f the Consumer Credit Protection A ct is
amended by adding at the end thereof the follow ing new subsection:
“ (d ) Title V I takes effect upon the expiration o f one hundred and
eighty days follow in g the date o f its enactment."
A p p r o v e d O c to b e r 2 6 , 1 9 7 0 .
LEGISLATIVE HISTORY:
HOUSE REPORTS: No. 9 1 -9 7 5 (Comm, on Banking and C u rren cy) and
No. 9 1 - 1 5 8 7 (Comm, o f C o n fe r e n c e ) ,
SENATE REPORT No. 9 1 -1 1 3 9 accom panying S . 3678 (Comm, on Banking
and C u r r e n c y ).
CONGRESSIONAL RECORD, V o l . 116 ( 1 9 7 0 ) :
May 2 5 , c o n s id e r e d and p a sse d House.
S e p t , 1 8 , c o n s id e r e d and p a sse d S e n a te , amended.
O c t . 9 , S en a te a g re e d t o c o n fe r e n c e r e p o r t .
O c t. 1 3 , House a g re e d t o c o n fe r e n c e r e p o r t .
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@FedFRASER