The federal Fair Credit Reporting Act (FCRA) went into effect in 1971. It regulates consumer reporting agencies (CRAs), the use of reports, and furnishers of information to CRAs. Some states have similar statutes.
CRAs must utilize reasonable procedures to ensure maximum possible accuracy of information and must conduct an investigation after a consumer disputes the accuracy of information.
Violation may lead to damages and attorney fees if negligent, and also statutory damages and attorney fees if willful.
- Use of Reports
Users of consumer reports must give written notice of adverse action. The notice must contain
- A statement of the adverse action taken;
- The name, address, and phone number of the CRA that supplied the report;
- A statement that the CRA did not make the decision and cannot supply the reasons for the adverse action;
- A notice that, upon a request by the consumer made within sixty days, the consumer may obtain a free copy of his or her consumer report;
- Disclosure of the consumer’s right to dispute with the CRA the accuracy or completeness of the report; and
- The credit score used by the person in taking the adverse action and related information.
Denial of a lease based on a consumer report is an adverse action.
The 7th Circuit Court of Appeals has held there is no private cause of action for violations of adverse action duties under federal law. However, state law must also be considered.