Companies Told to Be Careful With Credit Reports
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Companies Told to Be Careful With Credit Reports

News Desk

Highly confidential consumer information is blowing in the wind just about everywhere. Companies too often sell, trade and share information not only without consumers' permission but also without their knowledge and the Consumer Financial Protection Bureau (CFPB) says it has to stop.

“Americans are now subject to round-the-clock surveillance by large commercial firms seeking to monetize their personal data,” said CFPB Director Rohit Chopra. “While Congress and regulators must do more to protect our privacy, the CFPB will be taking steps to use the Fair Credit Reporting Act to combat misuse and abuse of personal data on background screening and credit reports.”

The CFPB today cautioned companies that use and share credit reports and background reports that they must take steps to protect the public's prvivacy, and reminded them that there are criminal penalties for certain types of misconduct.

One law that includes privacy protections across multiple sectors is the Fair Credit Reporting Act (FCRA), enacted by Congress in 1970 to ensure that companies “exercise their grave responsibilities with fairness, impartiality, and a respect for the consumer’s right to privacy.” FCRA regulates companies that assemble dossiers on individual consumers, including credit reporting companies, tenant screeners, and other data brokers.

Companies need "permissible purposes"

Among other things, the Fair Credit Reporting Act requires users who buy these dossiers to have a "legally permissible purpose."

This ensures that companies cannot check an individual’s personal information, including their credit history, without a bona fide reason. Some common permissible purposes include using consumer reports for credit, insurance, housing, or employment decisions. For example, a bank may request a credit report in order to determine the terms on which it will offer someone a line of credit.

Criminal penalties possible

The CFPB is cautioning companies that they can face criminal liability for obtaining a background report on an individual under false pretenses or by providing a background report to an unauthorized individual.

For example, one section of the Fair Credit Reporting Act imposes criminal liability on any officer or employee of a consumer reporting agency who knowingly provides information concerning an individual from the agency’s files to an unauthorized person. Violators can face criminal penalties and imprisonment.

Read today’s advisory opinion, Fair Credit Reporting; Permissible Purposes for Furnishing, Using, and Obtaining Consumer Reports.

Consumers can submit credit reporting complaints, or complaints about other financial products or services, by visiting the CFPB’s website or by calling (855) 411-CFPB (2372).

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