Debt Defense: Fair Credit Reporting Act (FCRA) & Fair and Accurate Credit Transactions Act (FACTA)

Credit reporting agencies are those companies which regularly engage in the practice of assembling, evaluating, and maintaining reports for third parties based on information from both public records and third parties who provide it.  These reports allow others to make determinations about your apparent credit worthiness, standing, and/or credit capacity.  These reporting agencies and companies or entities that furnish those agencies with information are regulated by the Fair Credit Report Act (FCRA).

Since its initial passage into law in 1970, the FCRA has undergone three major revisions.  First, it was amended extensively by the Consumer Credit Reporting Reform Act of 1996.  Then in 2003, Congress made significant changes to the FCRA by passing the Fair and Accurate Credit Transactions Act (FACTA).  Most recently, the Dodd-Frank amendments, effective July 21, 2011, primarily made changes which granted most of the rulemaking as well as some of the enforcement authority to the Bureau of Consumer Financial Protection.

When it was originally created, Congress found it necessary to pass this legislation because:

1. The banking system is dependent upon fair and accurate credit reporting.  Inaccurate credit reports directly impair the efficiency of the banking system, and unfair credit reporting methods undermine the public confidence which is essential to the continued functioning of the banking system.
2. An elaborate mechanism has been developed for investigating and evaluating the creditworthiness, credit standing, credit capacity, character, and general reputation of consumers.
3. Consumer reporting agencies have assumed a vital role in assembling and evaluating consumer credit and other information on consumers.
4. There is a need to insure that consumer reporting agencies exercise their grave responsibilities with fairness, impartiality and a respect for the consumer’s right to privacy.

So with that purpose in mind, congress passed the FCRA.  It instructed reporting agencies to adopt reasonable procedures for meeting the needs of commerce for consumer credit, personnel, insurance, and other information in a manner which is fair and equitable to consumers, with regard to the confidentiality, accuracy, relevancy, and proper utilization of the information in accordance with the requirements of the Act.

You may be asking yourself how does this apply to you? There are a few main provisions of FCRA , FACTA and its amendments that we can use to help you in any debt collection action.  Also, our credit record has become such an important factor in so many key areas of our lives.  It affects our ability to obtain gainful employment or obtain loans for a variety of important purchases such as a house, car or even for insurance.  If not prevented from those purchases altogether by a negative credit history, you will at the very least have to pay much more than someone with a clean credit report.

So even if you are not being pursued for a debt, you have rights to protect this valuable information relied upon by so many others when making key decisions in your life.  At Rosen & Rosen, we are thoroughly knowledgeable regarding every facet of this vast body of consumer protection law and are prepared to fight for your rights against anyone who may have improperly damaged your credit.

LEGITIMATE REPORTING

A consumer reporting agency may furnish your consumer report ONLY under the following circumstances:         

1. in response to the order of court or subpoena issued in connection to federal grand jury proceedings;
2. in accordance with your written instructions;
3. to a person, subject to various requirements, which intends to use the information to;
   1. conduct a credit transaction with you, or review or attempt to collect on one of your accounts,
   2. consider you for employment,
   3. consider you for insurance,
   4. consider your eligibility for a license or other government benefit in which the law requires a review of your financial status,
   5. use as a potential investor or servicer, or current insurer, regarding an existing credit obligation,
   6. analyze the information for a legitimate business need in connection with a business transaction or to review an existing account to see if they meet the terms of the account, or
   7. consider you for a government-sponsored individually billed travel charge card.
4. to a head of a State or local child support enforcement agency (or a other governmental official authorized by such agencies), if the report is needed for the purpose of establishing your capacity to make and the amount of any child support payments.  Various requirements must be met for this first.
5. to an agency administering a State plan to set an initial or modified child support award.
6. to the Federal Deposit Insurance Corporation or the National Credit Union Administration, if you are being considered for an appointment as a conservator, receiver, or liquidating agent in connection with the resolution or liquidation of a failed or failing insured depository institution or insured credit union, as applicable.

MEDICAL INFORMATION EXCLUDED
A credit bureau cannot provide in their reports being used for any employment, credit or insurance purposes which includes any of your medical information unless you consent or it pertains solely to any debt arising from medical care.

HOW LONG CAN ITEMS REMAIN ON YOUR CREDIT REPORT
A very common question pertains to how long certain items remain on your credit.  The Fair Credit Reporting Act addresses this.  Bankruptcy must be removed after 10 years.   After seven years, the following must be removed:

1. Civil suits, civil judgments and records of arrest, starting from the date of entry
2. Paid tax liens, starting from the date of payment
3. Accounts placed for collection or charged to profit and loss (contact us for more information on this as the start date can be complicated),
4. Any other adverse item of information,
5. The name, address, and telephone number of any medical information unless that information is restricted or reported using codes that do not identify, or provide information sufficient to infer, the specific provider or the nature of such services, products, or devices to a person other than the consumer or the report is being provided to an insurance company other than for property and casualty insurance.

However, timelines do NOT apply for:

1. a credit transaction involving, or which may reasonably be expected to involve, a principal amount of $150,000 or more;
2. the underwriting of life insurance involving, or which may reasonably be expected to involve, a face amount of $150,000 or more; or
3. the employment of any individual at an annual salary which equals, or which may reasonably be expected to equal $75,000, or more.

As for student loans guaranteed by the U.S. government, student loans may be reported until they are paid in full.  However, information received from the Secretary of Education or a guaranty agency, eligible lender, or subsequent holder regarding the status your defaulted student loan may no longer be reported on your credit file after:

1. 7 years from the date on which the Secretary or the agency paid a claim to the holder on the guaranty;
2. 7 years from the date the Secretary, guaranty agency, eligible lender, or subsequent holder first reported the account to the consumer reporting agency; or
3. If you reenter payment after defaulting on a loan and subsequently go back into default, 7 years from the date the loan entered default the last time.

VARIOUS INFORMATION THAT MUST BE ON YOUR CREDIT REPORT
If you filed for bankruptcy, the specific type of bankruptcy, i.e. chapter 7, 11, or 13 must be noted.  If you withdrew your Bankruptcy petition, that too must be stated.

On your credit score, there must be a clear and conspicuous statement that a key factor in determining your score was the number of inquiries into your credit file, if that does actually adversely affect your score.

If you close your account voluntarily or dispute it, that too must be included in the report.

Overdue child support obligations must be included on your credit report, so long as it is provided or verified by the appropriate governmental authority and is less than seven years old.

CARD NUMBER ON CREDIT CARD RECIEPTS
This statute also regulates merchants who accept credit and debit cards.  No person can print a receipt showing more than the last five digits of the card number or the expiration date.   This applies only to receipts that are electronically printed, and not handwritten or manually imprinted receipts.

FRAUD ALERTS / IDENTITY THEFT
If you have a good faith suspicion that you have been or are about to become a victim of fraud, including identity theft, you can request the credit bureaus to put a fraud alert on your credit file.  The fraud alert stays on your file for at least 90 days and notifies potential issuers of credit that there might be someone attempting to fraudulently use your identification to obtain credit.  If such an alert is on your file, companies cannot issue credit to you without first properly verifying your identity.  In such instances you are entitled to obtain a free credit report and certain disclosures about your rights within three days of your request.

If you submit an “identity theft report,” the credit bureaus must then include a fraud alert on your file and credit score generated during the next seven years.   During the next five years, you will be excluded from any lists given to other entities seeking to solicit credit or insurance business from you.  You will also be entitled to two free credit reports during the next twelve months.

While we recommend you notify all the credit reporting agencies if you suspect fraud or identity theft, there is a provision in the Act that requires any agency receiving your notice to forward it to the other ones as well.  The Act also provides that any information that ends up on your credit file as a result of identity theft must be removed from your credit report within four days of receipt of certain information you are required to provide.  The credit bureaus must also inform any entity furnishing the fraudulently obtained credit information on your file of various information, including that their newly opened and reported account may have been obtained via fraud.   Also, creditors are prohibited from selling or placing in collection a debt for which they have been notified is a result of identity theft.

ACTIVE DUTY ALERTS
If you are in the military, you have the right to notify the credit reporting agencies when you go on active duty.  Those agencies must then put an alert on your file to be included on any report and/or credit score for at least the next twelve months.  For two years, the credit agencies must remove your name from any lists prepared and sold by the agencies to companies who wish to solicit you for credit or insurance offers.   Also, any credit report agency who receives such a notice from you, must forward that information to the other credit agencies.   Also, just like with fraud alerts, no entity can issue new credit in your name without first properly verifying your identity.

NOTICES
The Act requires notice to you for various transactions.  For example, if you are seeking a loan to purchase one to four units of residential property, you must be provided with the following:

Notice to the Home Loan Applicant
In connection with your application for a home loan, the lender must disclose to you the score that a consumer reporting agency distributed to users and the lender used in connection with your home loan, and the key factors affecting your credit scores.

The credit score is a computer generated summary calculated at the time of the request and based on information that a consumer reporting agency or lender has on file. The scores are based on data about your credit history and payment patterns. Credit scores are important because they are used to assist the lender in determining whether you will obtain a loan. They may also be used to determine what interest rate you may be offered on the mortgage. Credit scores can change over time, depending on your conduct, how your credit history and payment patterns change, and how credit scoring technologies change.

Because the score is based on information in your credit history, it is very important that you review the credit-related information that is being furnished to make sure it is accurate. Credit records may vary from one company to another.

If you have questions about your credit score or the credit information that is furnished to you, contact the consumer reporting agency at the address and telephone number provided with this notice, or contact the lender, if the lender developed or generated the credit score. The consumer reporting agency plays no part in the decision to take any action on the loan application and is unable to provide you with specific reasons for the decision on a loan application.
If you have questions concerning the terms of the loan, contact the lender.

PROCEDURE TO DISPUTE INFORMATION ON YOUR CREDIT REPORT
If you want to dispute an item or account on your credit file, you can notify the credit agency and they will, free of charge, conduct a reasonable reinvestigation to determine whether the disputed information is inaccurate and record the current status of the disputed information, or delete the item from the file within 30 days.   There is a 15 day extension period in certain circumstances.  The investigation begins within 5 days of receiving your notice and involves the credit agency or bureau notifying the account holder of your dispute.  If it is determined that your dispute is frivolous or irrelevant, the agency may terminate the investigation.

Any information that has been deleted can only be reinserted if the creditor or supplier of that information certifies that it is complete and accurate.  You have to be notified within 5 business days of the item being reinserted.  That notice must inform you of your right to add a statement to your credit file disputing the accuracy or completeness of the disputed information.

DUTY OF THOSE WHO PROVIDE INFORMATION TO CREDIT BUREAUS
First and foremost, it is illegal to furnish information to a credit bureau or reporting agency if that person knows or has reasonable cause to believe that the information is inaccurate.  This also means they cannot report information if they have been notified, by you, that specific information is inaccurate, so long as it is in fact so.  Any account that is the result of identity theft must also not be reported.

Entities that regularly and in the ordinary course of business furnish information to one or more reporting agencies must notify the agency if they find that any of the information they have provided is incomplete or inaccurate.  These entities must also provide notice of any account under dispute by you, accounts which have been voluntarily closed by you and, if you are delinquent on an account, the date you became delinquent must be provided within 90 days of your delinquency.  Lastly, if you fall behind with a financial institution that extends credit and regularly and in the ordinary course of business furnishes information to the reporting agencies, that institution must tell you, in writing, at least one time, that they are reporting any negative information to the credit agency or bureau.

After receiving a dispute letter, the person or entity providing the information to the credit bureau must:

1. conduct an investigation,
2. review all relevant information you provide,
3. complete the investigation and report results within 30 days, (45 if there was an extension), and
4. if the investigation reveals the information is inaccurate, promptly notify the credit reporting agency with the correct information advising them to modify, delete or permanently block that information.

DUTY OF END USERS
If someone using your credit report, makes an “adverse action” against you on the basis of information contained in consumer reports, that person must provide you with:

1. notice of the action,
2. your credit score,
3. the name, address and phone number of the credit agency from which they received the information,
4. a statement that the agency did not make the decision,
5. notice of your right to receive a free credit report, and
6. notice regarding your ability to dispute any inaccurate or incomplete information.

Adverse action is defined as:

1. a denial or cancellation of, an increase in any charge for, or a reduction or other unfavorable change in the terms of coverage or amount of, any insurance, either existing  or for which has an application has been made;
2. a denial of employment or any other decision for employment purposes that adversely affects any current or prospective employee;
3. a denial or cancellation of, an increase in any charge for, or any other adverse or unfavorable change in the terms of, any government license or benefit , and
4. an action taken or determination that is, made in connection with an application that was made by, or a transaction that was initiated by you, or in connection with a review of an account and adverse to your interests.

Conditions on denial of employment or other adverse action based on Consumer Report used for Employment Purposes
If a potential employer wants to take any action that is adverse to you in an employment context including deciding not to hire you, that employer must provide you with a copy of the report and a description of your rights.  There are various other conditions that can apply to this provision of the Act and there are certain exceptions that have been carved out under the Patriot Act for national security investigations.

FREE CREDIT REPORT
All nationwide consumer reporting agencies shall make a credit report available once during any 12-month period upon your request and free of charge.  The official website for this is www.annualcreditreport.com.  You are also entitled to a free credit report after you receive an

1. “adverse” notice,
2. are unemployed and intend to apply for employment within 60 days,
3. receive public welfare assistance, or
4. have reason to believe there is inaccurate information on your file resulting from fraud.

REMOVAL FROM LISTS
You can remove your name and address from any list of consumers which credit bureaus provide to entities in order to solicit you for credit or insurance offers.  This can be done in writing, over the phones at (888) 567-8688, or online at www.optoutprescreen.com.  It takes effect in 5 days and last for 5 years.   This can also have the effect of reducing your junk mail.

CIVIL LIABILITY FOR WILLFUL NONCOMPLIANCE
Any person who willfully fails to comply with any requirement imposed under the Act would be liable to you for any actual damages you sustain as a result or for damages between $100 to $1,000.   If someone tries to obtain your credit report under false pretenses, they would be liable to you for your actual damages or $1,000, whichever is greater.    A court can also award your costs, attorney’s fees and punitive damages, which are damages to punish the wrongdoer.

CIVIL LIABITY FOR NEGLIGENT NONCOMPLIANCE
Any person who is negligent in failing to comply with any requirement imposed under this Act would be liable to you for any actual damages sustained, costs and attorney’s fees.

HOWEVER, THERE IS NO LIMIT ON LIABILITY WHATSOEVER FOR A PERSON WHO KNOWLINGLY FURNISHES FALSE INFORMATION TO THE CREDIT AGENCIES

STATUTE OF LIMITATIONS
Any action to seek damages under this Act may brought in any appropriate United States district court or in any other court of competent jurisdiction, within 2 years of the date you discovered the violation or within 5 years of the date which the violation occurred.

If you or anyone you know is being pursued by a debt collector or creditor or have had your rights violated by someone improperly damaging your credit, please contact us today!  Let the lawyers and staff at Rosen & Rosen serve you.

We are a debt relief agency.  In addition to other legal services, we help clients file for bankruptcy relief under the Bankruptcy Code.

Debt Defense
Fair Credit Reporting Act (FCRA) & Fair and Accurate Credit Transactions Act (FACTA)
Florida Consumer Collection Practices Act (FCCPA)
Fair Debt Collection Practice Act (FDCPA)
Florida’s Deceptive and Unfair Trade Practices Act (FDUTPA)