Business Law Today
June 2016
The Fair Credit Reporting Act: Not Just About Credit
David Neal Anthony and Julie Diane Hoffmeister
Jun 20, 2016
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17 min read
Business Regulation & Regulated Industries
Federal Trade Commission
Consumer Finance
Consumer Financial Protection Bureau
Summary
Part I describes the various individuals and entities that fall within the FCRA’s reach.
Part II illustrates the potentially staggering damages that may result from an FCRA violation.
Part III explores some of the common claims that typically are asserted against employers
and CRAs.
Part IV explains the emerging scrutiny on furnishers of consumer information.
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Jump to:
Introduction →
I. The FCRA’s Expansive Reach →
II. Potential Damages under the FCRA →
III. Common Claims Against FCRA Players →
IV. Emerging Trends: Increased Scrutiny on Furnishers →
Conclusion →
Introduction
Many companies believe that they are beyond the reach of the Fair Credit Reporting Act (FCRA)
because they do not engage in typical “credit” reporting; however, such beliefs are enormously
mistaken. Rather, the FCRA regulates a sprawling spectrum of products and industries ranging from
insurance to retail to energy. The FCRA further governs all those involved in the consumer report
chain of custody – furnishers, consumer reporting agencies (CRAs), and users of consumer
information. Indeed, it is difficult to imagine an employer or a consumer-facing business that is not
subject to the FCRA’s strict, technical requirements. Given the innumerable number of products
offered by the plethora of specialty CRAs in the marketplace today, users may even unknowingly
purchase a regulated consumer report. The bottom line is that the FCRA is likely regulating your
client’s business, even if you do not think it is, and with regulation comes risk – both monetary and
reputational. Besides the ever-expanding FCRA class-action arena, federal regulatory enforcement
has become just as prominent, with the Consumer Financial Protection Bureau (CFPB) and Federal
Trade Commission (FTC) taking the lead in prosecuting FCRA violators. Counsel must take notice of
this ever-increasingly prominent statute and advise their clients accordingly.
This article explores the broad scope and expansive reach of the FCRA. Part I describes the various
individuals and entities that fall within the FCRA’s reach. Part II illustrates the potentially staggering
damages that may result from an FCRA violation. Part III then explores some of the common claims
that typically are asserted against employers and CRAs. Part IV explains the emerging scrutiny on
furnishers of consumer information.
I. The FCRA’s Expansive Reach
Although its name insinuates a limited scope, the FCRA governs more than just traditional credit
reports. Rather, the FCRA focuses on any information that can be broadly defined as a “consumer
report.” A “consumer report” means “any written, oral, or other communication of any information
by a consumer reporting agency bearing on a consumer’s credit worthiness, credit standing, credit
capacity, character, general reputation, personal characteristics, or mode of living which is used or
expected to be used or collected in whole or in part for the purpose of serving as a factor in
establishing the consumer’s eligibility” for credit, insurance, or employment purposes. A “consumer
reporting agency,” in turn, is defined as “any person which, for monetary fees, dues, or on a
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