The Fair Credit Reporting Act is a federal law that requires credit bureaus and background-check companies to use reasonable procedures for accurate reports. It also requires them to reinvestigate information a consumer disputes, generally within 30 days. The statute assigns separate duties to a bureau, to a business that reported the information, and to a company that used the report. An FCRA lawyer handles claims under this law.
A surprise on a report can raise these questions for a consumer. An account they never opened may sit on their credit file. A loan or apartment may have been turned down. A background check may have cost them a job offer because of a record that is not theirs. Or they disputed an error, and the bureau's answer changed nothing. On top of the stress, there is often a quiet embarrassment, and real uncertainty about whether federal law has anything to say about what happened.
This page explains who the law covers, what it requires, what a consumer may do, and what remedies the statute sets out.
What the Fair Credit Reporting Act Covers
The Fair Credit Reporting Act (FCRA) begins at 15 U.S.C. § 1681. In that section, Congress states its purpose: consumer reporting agencies must adopt reasonable procedures that are "fair and equitable to the consumer." Those procedures must respect the "confidentiality, accuracy, relevancy, and proper utilization" of a consumer's information. The FCRA is federal law and applies across the United States. State law may add protections, and those protections differ from state to state.
A consumer reporting agency, under 15 U.S.C. § 1681a(f), is a person that, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties, and that uses any means or facility of interstate commerce for the purpose of preparing or furnishing consumer reports. The CFPB describes these companies as ones that "compile and sell credit reports." Equifax, Experian and TransUnion are the three nationwide credit bureaus. The CFPB notes that specialty reporting companies may also collect "employment and tenant history" (CFPB). Background-screening companies are part of the same system.
A consumer report is defined in 15 U.S.C. § 1681a(d). It is a communication from a consumer reporting agency bearing on a person's "credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living." The report must be used, or expected to be used, as a factor in eligibility for one of these:
- personal or household credit or insurance
- employment
- another purpose authorized by 15 U.S.C. § 1681b
The definition has exclusions. One is a report covering only the reporting company's own dealings with the consumer.
A furnisher is a business that supplies information about consumers to a consumer reporting agency. Lenders, creditors and collection agencies that report account data are furnishers.
What the FCRA Requires of Consumer Reporting Agencies and Furnishers
Accuracy. 15 U.S.C. § 1681e(b) sets the core accuracy duty. When a consumer reporting agency prepares a consumer report, it must "follow reasonable procedures to assure maximum possible accuracy" of the information about the person the report concerns.
Reinvestigation. A reinvestigation is the review an agency must conduct when a consumer disputes the completeness or accuracy of an item in the consumer's file. Under 15 U.S.C. § 1681i(a), the agency generally must do the following, free of charge:
- Conduct a reasonable reinvestigation, then either record the item's current status or delete it.
- Finish within 30 days of receiving the dispute.
- Notify whoever provided the disputed information within 5 business days.
The 30 days may be extended by up to 15 days if the consumer sends relevant information during that period. The extension does not apply if the item is found inaccurate, incomplete or unverifiable within the 30 days. The CFPB's model summary adds that an agency need not investigate a dispute that is frivolous (CFPB summary of rights).
Furnisher duties. 15 U.S.C. § 1681s-2(b) applies once a furnisher receives notice of a dispute from an agency. The furnisher must:
- investigate
- review all relevant information the agency sent
- report the results to the agency
- if the investigation finds the information incomplete or inaccurate, report those results to all other nationwide consumer reporting agencies it furnished the information to
- promptly modify, delete or permanently block an item found inaccurate, incomplete or unverifiable
The furnisher must finish within the agency's own reinvestigation period.
Adverse action. Adverse action is defined in 15 U.S.C. § 1681a(k). It includes a denial of employment and certain adverse actions on insurance, and for credit it has the same meaning as in 15 U.S.C. § 1691(d)(6). Under 15 U.S.C. § 1681m(a), a person that takes an adverse action based in whole or in part on any information contained in a consumer report has notice duties. The CFPB's summary states that anyone who uses a report to take adverse action "must tell you." It also states that the user must give "the name, address, and phone number of the agency that provided the information." A separate notice under 15 U.S.C. § 1681m(h) applies in some cases where credit is offered on materially less favorable terms based on a report, subject to exceptions.
Finding a wrong entry on a report can feel like being blamed for someone else's history. The FCRA gives consumers several concrete options.
Getting a copy of the report. 15 U.S.C. § 1681g(c) requires a model summary of consumer rights to be prepared. That summary must describe, among other things, a consumer's right to obtain a copy of a consumer report from each consumer reporting agency. The FTC states that AnnualCreditReport.com is the "only one website" authorized to fill orders for the free annual reports. It also states that federal law requires each nationwide bureau to provide a free report once every 12 months on request. In addition, the bureaus have permanently extended free weekly access (FTC). Questions specific to one bureau are covered in disputing an Experian credit report.
Disputing with the bureau. A consumer may dispute an item with the consumer reporting agency, which triggers the reinvestigation duty in 15 U.S.C. § 1681i(a). The CFPB describes a written dispute that explains what is wrong and why, with copies of supporting documents (CFPB).
Disputing with the furnisher. A consumer may also dispute directly with the furnisher. The CFPB states that furnishers "generally must investigate and respond to your dispute within 30 days." This is separate from the duty in 15 U.S.C. § 1681s-2(b), which begins when the bureau forwards a dispute.
Identity theft. Several tools protect a person whose information has been stolen:
- Security freeze. Under 15 U.S.C. § 1681c-1(i), a nationwide agency must place a freeze free of charge when a consumer asks directly and provides proper identification. It must act within 1 business day of a phone or secure electronic request, or within 3 business days of a mail request.
- Fraud alert. The same section also addresses fraud alerts.
- Identity theft block. 15 U.S.C. § 1681c-2 provides for blocking information that results from identity theft, subject to exceptions that include certain resellers and check services companies.
After an unresolved dispute. The CFPB states that, for an unresolved dispute submitted to a credit reporting company, a consumer may ask that a brief statement of the dispute be included in the file. A consumer may also submit a complaint to the CFPB or to the state attorney general (CFPB).
What the FCRA Makes Potentially Available When Its Requirements Are Not Met
The FCRA sets out remedies in two sections. Which one applies depends on whether a court finds the failure willful or negligent.
Willful noncompliance. Under 15 U.S.C. § 1681n, a person who willfully fails to comply with a requirement of the FCRA is liable to the consumer. The statute makes the following potentially available:
- either actual damages, or statutory damages within limits the statute sets
- punitive damages "as the court may allow"
- in a successful action, costs and "reasonable attorney's fees as determined by the court"
Negligent noncompliance. Under 15 U.S.C. § 1681o, a negligent failure makes actual damages potentially available. In a successful action, it also makes costs and reasonable attorney's fees potentially available.
Bad-faith filings. Both sections provide that, on a finding that an unsuccessful pleading, motion, or other paper filed in an action under the section was filed in bad faith or for purposes of harassment, the court shall award the prevailing party attorney's fees reasonable in relation to the work expended in responding to it.
What these remedies depend on. Each remedy depends on findings: that a requirement applied, that it was not met, and whether the failure was willful or negligent. Actual damages also depend on harm the consumer proves was caused by the failure. Not every inaccuracy, and not every unsatisfying reinvestigation, creates liability. Under 15 U.S.C. § 1681s-2(c), and except as provided in 15 U.S.C. § 1681s(c)(1)(B), 15 U.S.C. § 1681n and 15 U.S.C. § 1681o do not apply to a violation of subsection (a) of 15 U.S.C. § 1681s-2, the furnisher's duty to provide accurate information. The furnisher duties described above are those of 15 U.S.C. § 1681s-2(b).
The CFPB notes that "time limits apply to bringing a lawsuit." The structure of a lawsuit is covered in consumer lawsuits under federal law. Whether a particular situation gives rise to a civil action depends on its facts and the applicable law.
Which Party Had Which Duty
The FCRA assigns duties by party. There are three possible parties:
- the consumer reporting agency, which had the accuracy and reinvestigation duties
- the furnisher, which had duties once it received notice of a dispute
- the user of the report, which had the notice duties after adverse action
A single error can involve all three. Each party's obligations are set by different sections of the statute.
The facts that matter are usually concrete:
- What did the report say, and when?
- Was a dispute made, to whom, and what came back?
- Did the error reappear later?
- Was a denial explained with the notice the law describes?
The answers determine whether conduct may fall short of a requirement. That requires a requirement that applied and a failure to meet it. Whether a particular situation violates the FCRA depends on its facts.
Background-check errors follow the same framework. The FTC states that an employer must:
- tell the applicant in writing, in a standalone document, that a report may be used
- get the applicant's written permission before the report is run
- before deciding against the applicant based on the report, give a copy of the report and a "Summary of Rights"
The FTC also states that a person may ask the background company for an additional free report within 60 days of the employer's decision (FTC). Tenant-screening reports from specialty agencies fall under the same statute.
This page covers consumer-reporting rights under federal law. It does not cover credit repair services, debt settlement, credit counseling or bankruptcy. This page also does not describe fees or the cost of legal help. A broader overview of the field appears under consumer rights attorney.
A wrong credit entry can involve a collection account as well. When that is the case, two separate federal laws may be in play.
The FDCPA. The Fair Debt Collection Practices Act (FDCPA) governs debt collectors as it defines them. Under 15 U.S.C. § 1692a(6), a debt collector is a person in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect debts owed or due or asserted to be owed or due another. That statute's rules govern how a collector communicates, including collectors calling family members. When a collection agency reports an account to a bureau, the FCRA's furnisher duties apply to that reporting.
The TCPA. The Telephone Consumer Protection Act (TCPA) governs certain calls and texts. It is separate from both the FCRA and the FDCPA.
Keeping the laws apart. Each statute has its own requirements, deadlines and remedies. One statute's deadline or remedy does not carry over to another.
State law. The CFPB's summary of rights notes that "many states have their own consumer reporting laws." In some cases, a consumer may have more rights under state law. Those rules differ from state to state, and this page does not state any state's rules.
Requesting a Consumer Rights Case Review
Credit-reporting problems turn on sequence and paperwork: which company reported what, which company published it, and how each answered a dispute. Federal Consumer Rights offers a way to request a consumer rights case review about a credit-report or background-check problem.
