In plain terms. The Fair Credit Reporting Act (FCRA) limits when consumer credit reports can be pulled and used, and holds credit-reporting agencies accountable for handling that data carefully.
Who it applies to. Consumer reporting agencies, and businesses (including employers) that request or use consumer credit reports.
What it requires.
- A reporting agency may release a credit report only in narrow circumstances: at the consumer's request, under a court order, to assess a loan or insurance application, to evaluate a job candidate, or for a legitimate business need.
- Before issuing a report, agencies must keep reasonable procedures to confirm the consumer's identity and that the request is for a permitted purpose.
Why it matters. If the conditions are met and there is no fault by a preponderance of the evidence, there is no liability. Otherwise, violators face civil and criminal penalties: a consumer harmed by a willful violation may recover actual and punitive damages plus costs and attorneys' fees; for negligent violations, actual damages plus costs and fees. Obtaining a report under false pretenses, or making unauthorized disclosures, are federal misdemeanors.
Citation. Pub. L. 91-508 (Oct. 26, 1970).
FTC and CFPB FCRA rules and enforcement; the FTC Safeguards/Disposal Rules for consumer-report information; permissible-purpose and adverse-action procedures.