Part 3

Furnisher Duties

furnishers violate the FRCA if it provides a CRA with information that it "knows or has reasonable cause to believe" is inaccurate -only the FTC and CFPB can enforce this obligation. Private litigants cannot. Furnishers are under an independent duty to correct and update information -private litigants can enforce this obligation, but the dispute must go through the CRA. Some courts hold that information can be technically accurate, but "misleading"

Post Adverse Action

the employer must: -provide notice of the adverse action to the consumer -provide the consumer with contact information for the CRA that prepared the report -provide the consumer with a summary of rights under the FCRA -include a statement that the consumer reporting agency did not make the decision to take adverse action

CRAs: Adverse Action, Employment Decisions

A CRA may be held liable for violations of the adverse action requirements if it adjudicates the employment decision. Absent adjudication, a CRA may still be considered to have taken an adverse action if it plays an active role in the end user's employment decisions.

What does not Constitute an Adverse Action?

A preliminary decision to take an adverse action does not constitute an adverse action. Internal deliberations regarding the effects of a consumer report on a hiring decision do not constitute adverse actions.

Furnishers

Although not defined by the FCRA, the case law defines as persons/entities that supply information to CRAs, which information is included in credit reports. Examples:banks and other credit grantors Courts/clerks and other government agencies, like the DMV, are not furnishers.

Pre-adverse Action

Before taking adverse action based in whole or in part on the report, the employer must provide the consumer with: a copy of the report and a summary of the consumer's rights under the FCRA. The report must be unredacted notice must be given if the information in the report disqualifies the applicant

Furnishers duty to reinvestigate

Consumers can now dispute the accuracy of the information directly with the furnishers of that information. The reinvestigation must be reasonable and include consideration of all relevant information provided by the consumer. Furnishers are required to conduct a reinvestigation of the accuracy of the information in dispute. If the information is determined to be inaccurate, furnishers must notify each CRA to which they provided the information

Adverse Action

End users have certain obligations upon taking "adverse actions" against a consumer based on the contents of a consumer report. "Adverse Action" is given a broad construction. Ex) denial, cancelation or unfavorable change in insurance. denial of employment. denial of rental application. denial of credit or offer of credit on less favorable terms.

Furnishers Duty to Reinvestigate cont.

If the consumer's dispute is "frivolous or irrelevant" the furnisher can terminate the reinvestigation. Generally speaking the reinvestigation must be completed within 30 days of the time that consumer initiates the dispute. The furnisher must communicate the results of the reinvestigation to the CRA.

Resellers two basic Duties.

Inform the CRA from which it obtained the report the identity and permissible purposes of the end user. Maintain reasonable procedures to insure that the end user has a permissible purpose.

Resellers Duties are Limited

Resellers are essentially conduits of information. They are not required to conduct traditional reinvestigations. -however they must pass along all information received in a timely manner to the originating CRA. They are not required to provide consumer disclosures.

Authorization Request

The authorization must be in writing, may be on the disclosure, can be a blanket authorization, covering the duration of employment, and the FCRA does not prohibit an employer from taking adverse action against an applicant who refuses to give authorization

Disclosure Requirement cont.

Whether a document consists "soley of the disclosure" has given rise to scores of lawsuits Many courts have found that including a liability waiver on the same documents as the disclosure violates the statute Additionally, other "extraneous information that may give rise to liability includes contact information or a requirement on the document that consumer indicate whether they have previously convicted of a crime. Logos and trademarks have also been challenged.

The waiting requirement:

before taking an adverse action, the employer must wait a reasonable amount of time. -the idea is to give the consumer time to dispute the accuracy of the report -"there is no specific time period an employer must wait after providing a pre-adverse action notice before taking adverse action. Consider: 1 week minimum -there can be no claim for not reconsidering an application during the waiting period.

Certification Requirement

end users must certify to the CRA: their identity, the purpose for obtaining the report, and that the information in the report will be used for no other purpose. CRAs relying on blanket certification have been subject to lawsuits. Intermittent verification is recommended. For a consumer report used for employment purpose, the employer must certify that the CRA that it has complied with: the disclosure requirement, adverse action procedures, and that it will not use the information in violation of equal opportunity laws.

Disclosure Requirement

end users must inform the consumer it will obtain a consumer report. This disclosure: should be clear, conspicuous and in writing in a document that consists "soley of the disclosure" should not be part of an employment application should be made before the report is procured blanket disclosures are permitted for the duration of the employment.

End users: Duties attendant to "Adverse Action" Generally

end users taking an adverse action based in whole or part on a consumer report have obligations both before and after taking an adverse action The pre-adverse action requirements give the consumer the opportunity to dispute information on the report. The post-adverse action requirements provide the consumer with information regarding the report and the CRA.

Consumers

individuals, not corporate entities. are protected under the FCRA. Thus they have rights and very few if any duties. rights are the flip side of CRAs duties. Thus consumers have a right to: -reasonable procedures/an accurate report -disclosures -authorization -adverse action protections -dispute/reinvestigation

End Users

persons/entities who intend to make use of the information contained in a consumer report for a "permissible reason" Ex) employers, landlords, insurance companies, banks and other credit grantors.

Resellers

resellers obtain consumer reports from other sources and pass the information on to end users or other resellers. FCRA defines as "a consumer reporting agency that assembles and merges information contained in the database or another consumer reporting agency or multiple consumer reporting agencies concerning any consumer for purposes of furnishing such information to any third party...and does not maintain a database of assembled or merged information from which new consumer reports are produced.