The Consumer Financial Protection Bureau (CFPB) recently released its annual disclosure rule. This rule specifies the maximum amount a consumer reporting agency (CRA) may charge customers for the disclosure under the Fair Credit Reporting Act (FCRA). The new charge allowed by the FCRA will be $15.50, a dollar more than in 2023.

The Process

According to the FCRA, CRAs must give consumers access to all the information a CRA has about them in their files. Section 612(a) also requires CRAs nationwide to provide one free annual consumer report upon a consumer’s request. This requirement applies to the three major credit reporting agencies and national specialty consumer reporting agencies. Furthermore, it limits how much a CRA can charge for file disclosures for people who do not qualify for a free report.

The CFPB calculates the maximum amount that CRAs may charge every year. According to the FCRA, “the charge shall not exceed $8.00 and shall be indicated to the consumer before making the disclosure. Section 612(f)(2) of the FCRA states that the Bureau shall increase the $8.00 maximum amount on January 1 of each year, based proportionally on changes in the Consumer Price Index, with fractional changes rounded to the nearest fifty cents.” The Consumer Price Index (CPI) is a general index that covers urban customers and items.

For this year’s disclosure, the CFPB took the base amount of $8.00 and increased it based on the CPI-U’s percentage increase from 1997 to 2023: 90.936%. Thus, the new charge for consumer reports became $15.27. However, the CFPB rounds fractional numbers to the nearest $0.50 increment. As such, the final amount became $15.50.

Past Adjustments

On September 30, 1997, Section 612 (a) took effect and required the CFPB to start its percentage analysis with the year 1997. Since then, the Bureau has made adjustments accordingly on the following dates: 

• April 3, 2012, 
• December 18, 2012, 
• December 30, 2013, 
• December 15, 2014, 
• November 20, 2015, 
• November 18, 2016, 
• November 16, 2017, 
• December 31, 2018, 
• November 27, 2019, 
• December 23, 2020, 
• November 29, 2021, 
• November 25, 2022, and 
• November 9, 2023. 

The government intended the FCRA to ensure that furnishers deliver fair and accurate consumer reports. This goal remains true and is a core reason the CFPB adjusts the maximum charge for consumer reports. These changes allow consumers to acquire their files at a fair, according to the FCRA’s regulations. As such, consumers can expect the maximum charge to become $15.50 on January 1, 2024.

Did you know that JDP offers resources to help employers stay compliant and incorporate fair chance hiring practices? Contact a sales rep today for more information.

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The Federal Trade Commission (FTC) and Consumer Financial Protection Bureau (CFPB) have recently filed a joint amicus brief. In it, they urged the U.S. Court of Appeals for the Second Circuit to overturn a New York federal district court decision. 

The FCRA Case

The two federal agencies claimed the lower court’s recent decision overlooked a Fair Credit Reporting Act (FCRA) requirement. According to the agencies, the FCRA requires information furnishers to delete information in cases that cannot verify the data’s accuracy. The case’s underlying issues began when the plaintiff filed a dispute with the three largest consumer reporting agencies (CRAs).

The plaintiff expressed concerns regarding credit accounts made under her name. According to the plaintiff, her mother had opened multiple credit accounts in her name without permission. She discovered these accounts after an apartment complex denied her application for a lease. She filed disputes concerning these accounts with the three CRAs, who forwarded the cases to the issuing banks.

The Defendant’s Investigations

In response to the dispute, one bank proceeded to investigate its files. It sought to confirm whether the information on file matched those provided by the plaintiff. In addition, the bank referenced a public database to verify whether the address and telephone number linked to the account matched the plaintiff’s name. The bank found everything matched.

Due to this, the bank reported the plaintiff as the account holder responsible for the credit card debt. In response, the plaintiff filed a lawsuit against the bank alleging violations of the FCRA, specifically Section 1681s-2(b)(1), which requires data furnishers to conduct a reasonable investigation of the dispute and take appropriate action.

The plaintiff argued that the bank took no additional steps to prove fraudulent accounts. However, the district court found that the plaintiff’s argument held no facts to prove the bank would come to another conclusion. Furthermore, the court found that the FCRA does not require a furnisher to rely on a consumer’s allegations without other evidence. Due to the lack of evidence that a reasonable investigation could uncover such evidence, the court granted summary judgment to the defendant.

The FTC’s and CFPB’s Rebuttal

However, the FTC and CFPB’s amicus brief argue that the Second Circuit should reverse this ruling. The federal agencies’ argument centers upon its interpretation of Section 1681s-2(b)(1)(E). This section requires that “when disputed information ‘is found to be inaccurate or incomplete or cannot be verified,’ the furnisher must, ‘as appropriate,’ delete, modify, or permanently cease reporting the disputed information.”

According to the deferral agencies, the district court failed to consider that the defendant had not suitably verified the information. They found this was the case even though the bank could not determine any definitive evidence of fraud. As a result, the agencies claim that it may have been appropriate to cease reporting the information in the absence of a definitive verification.

The Second Circuit has yet to rule on the merits of this argument. Regardless, this case illustrates the importance of accurate consumer reporting. This reminder is particularly true for consumer reports used in employment screening. The best way to ensure the accuracy of these reports is to partner with a trusted background check provider.

Discover the benefits of JDP’s seamless background checks for your business. Contact a sales rep today.

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The Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) recently took action against a rental screening company. This company is a subsidiary of a major consumer reporting agency (CRA) and allegedly violated the Fair Credit Reporting Act (FCRA). According to the suit, the company failed to ensure the accuracy of rental background checks provided to landlords.

Furthermore, the rental screening company kept the identity of the third parties from renters. These third parties allegedly provided inaccurate information, harming the renters’ opportunities and image. The FTC and CFPB have requested a federal court to have the CRA pay $15 million to cover the FCRA violations. They also asked for improvements to how the CRA reports evictions.

Complaint Details

The joint complaint explained that the rental screening company repeatedly failed to ensure they delivered up-to-date reports. Failing this, the CRA revealed it did not use recent public records, missing dismissed evictions. As such, it reported several entries for the same eviction case and included sealed records.

Furthermore, the rental screening company refused to disclose who provided the inaccurate information. Instead, it claimed the criminal or eviction records came from the jurisdictions where the proceedings occurred. If true, the affected individuals had to contact third-party vendors to correct this inaccurate information. However, the company failed to share this information with the renters.

The CRA must pay $8 million for falsely informing consumers that it promptly placed or removed security freezes or locks. Though the CRA claimed it completed the requests to place or remove freezes or locks, it added the requests to a backlog. The law requires CRAs to promptly fulfill an individual’s request to place or remove security freezes or locks. It also mandates the CRAs to provide this service for free.

Another mark against the rental screening company concerns pre-screened offers. CRAs must keep active-duty military personnel off these lists. This requirement reduces the risk of identity theft for such personnel, especially when they travel overseas for long periods.

What Could Happen

If the court enters the order the CFPB and FTC have proposed, the CRA and its subsidiary would pay consumers $11 million. They would also stop the illegal tenant screening practices, such as not reporting more than one filing for a single eviction case. They must also refrain from reporting eviction cases without a final outcome. The company would also pay a $4 million penalty to the CFPB’s victims’ relief fund.

As for the $8 million, $3 million of it would go to consumers, and the remaining $5 million would go to CFPB’s victims’ relief fund. The CFPB also requested that the CRA find and correct its technology problems to prevent further consumer harm. They must fix these issues to ensure compliance when placing or removing security freeze and lock requests.

This case shows the importance of complying with the FCRA. Failure to do so can result in lawsuits, fines, and penalties. The best way for businesses to ensure compliance with the FCRA in their screening processes is to partner with an experienced background-checking company.

Keep your business compliant with new laws and regulations with JDP’s reliable background checks. Contact a sales rep today.

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The Consumer Financial Protection Bureau (CFPB) recently released the “Outline of Proposals and Alternatives Under Consideration for Consumer Reporting Rulemaking.” This outline provides information on the proposals and alternatives for the Fair Credit Reporting Act’s (FCRA) future rulemaking. 

The FCRA

The FCRA took effect in 1970. According to the CFPB, it “promotes the accuracy, fairness, and privacy of information in the files of consumer reporting agencies.” However, the CFPB will now consider some proposals to change the FCRA. Here are several changes under consideration:

• The CFPB seeks feedback in certain areas, such as for the definitions of “consumer reporting agency” and “consumer report.” In the outline, the CFPB stated it would address “whether and how the FCRA applies to newer actors and practices in the credit reporting marketplace, including questions such as coverage of data brokers and certain consumer reporting agency practices regarding marketing and advertising.”
• Another proposal under consideration would interpret several permissible purposes. The FCRA requires consumer reporting agencies to have permissible purposes before providing a consumer report to third parties. In addition, this proposal would clarify the circumstances of consumer reporting agencies violating the permissible purposes provision due to data breaches.
• The CFPB also includes information on proposals to address two types of disputes: “(1) [T]hose that are classified by a consumer reporting agency or furnisher as involving legal matters and (2) those involving systemic issues at a consumer reporting agency or furnisher.”
• The CFPB is considering proposals that ban creditors from obtaining or using medical debt collection information when deciding a consumer’s credit eligibility. It would also prohibit consumer reporting agencies from including medical debt in consumer credit reports.
• The proposals clarify whether “credit header data” constitutes a consumer report.
• The CFPB would also clarify some activities that consumer reporting agencies engage in. For example, it would address how they help third-party users market their reports to consumers. The agency has found many violate the prohibition of furnishing third-party consumer reports for marketing and advertising purposes.

If adopted, these proposals would make many changes to the FCRA. These changes would impact many employers’ policies, requiring them to review the regulations to stay compliant. One way to comply with the FCRA and related regulations, such as background screening laws, is by partnering with a background-checking provider. The right partner will use their experience to keep companies up-to-date and deliver accurate reports.

Keep your business compliant with new laws and regulations with JDP’s reliable background checks. Speak to a Sales Rep today.

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The Director of the Consumer Financial Protection Bureau (CFPB) recently announced plans concerning next month’s rulemaking. The CFPB intends to expand the Fair Credit Reporting Act (FCRA) to encompass additional categories of data.

Notably, it would expand activities that generate a “consumer report” and what constitutes these reports. These potential future regulations would significantly impact how companies treat and transmit related data. It may also affect which companies must comply with the FCRA’s strict rules.

The Expansions

In addition to the announcement, the Bureau released an FAQ concerning the forthcoming proposal. According to the two sources, the proposed rules would classify data brokers as consumer reporting agencies under the FCRA. This change would depend on the activities performed by the data brokers. As such, these brokers must comply with the FCRA’s standards for accuracy and dispute resolution procedures.

Another noteworthy expansion to the FCRA includes the Act now covering the definition of “credit header data.” The CFPB explained that credit header data includes “personally-identifying information like someone’s name, address, or Social Security number, which traditional credit bureaus hold. Much of the existing data broker market relies on credit header data purchased from the big three credit bureaus to create their individual dossier.”

As such, the rules would make selling this data illegal for reasons outside the FCRA’s “permissible purpose.” These include purposes such as employment applications, credit and insurance underwriting, or applications for government benefits.

The Cause

A core driver of these changes concerns the potential to abuse artificial intelligence and predictive decision-making tools. Under these changes, the FCRA’s regulations would encompass data brokers that disclose information used to train AI programs or power automated decision-making tools. One example included in the announcements included those used in employment. However, the effects of these changes would affect more than these purposes.

Many expect the CFPB to disclose more information concerning these proposed regulations next month. In addition, employers and other interested parties will have the opportunity to provide feedback on these expected changes. The final product of this rulemaking process could prove significantly different than those under current scrutiny.

The CFPB and other federal agencies have continued living up to their commitment to increasing focus on the FCRA and artificial intelligence relationship. As such, employers should review their policies concerning consumer reports and hiring tools using artificial intelligence to remain compliant. One way to ensure compliance is by partnering with a background screening company. A trustworthy provider will utilize their experience to provide compliant reporting and assistance in understanding responsible use of these hiring tools.

Keep your business up to date on new laws and regulations with JDP’s free news resources. Contact a sales rep today.

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The Consumer Financial Protection Bureau (CFPB) has begun cracking down on companies using workplace surveillance tools. According to the Bureau, many companies relying on such means during the hiring and firing processes must comply with the Fair Credit Reporting Act (FCRA). However, a comment from the CFPB suggested that many companies have not complied.

The White House’s Office of Science and Technology Policy recently issued an informational request to the CFPB. The Office sought clarification about the automated tools employers used when monitoring and evaluating their workers. In March 2023, the CFPB suggested that the FCRA applies to today’s data surveillance tools. This comment indicates that their position remains steady.

Many know the FCRA for protecting consumer reports. In this situation, the FCRA defines consumer reports as “any written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer’s creditworthiness, 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… employment purposes.” Thus, the FCRA does become relevant in workplace surveillance.

Many companies started using surveillance tools to measure employees’ efforts since the recent increase in remote work. For example, employers use these results when deciding to retain and promote employees. However, the CFPB warns that “automated technologies may produce incomplete or inaccurate information or exacerbate biases.”

The CFPB consequently maintained that the FCRA applies to workplace surveillance tools. As such, the FCRA applies to the data that leads to choices affecting hiring, firing, promotions, transfers, compensation, and retention. The CFPB also voiced concerns about the data reaching the data broker market. The Bureau believes that could impact consumers in various ways, such as background screenings for employment.

These concerns led to the CFPB’s interest in ensuring workplaces comply with the FCRA. As such, companies must remember their responsibility to comply with all applicable laws concerning these workplace surveillance tools. The Bureau also worried about whether the suppliers of these tools have made continued efforts to comply.

Employers should review their hiring and workplace surveillance tool policies to ensure compliance. This review should include how they run background checks, which the FCRA considers a consumer report. The best way to ensure compliance in performing background checks for employment is to work with an experienced screening provider.

JDP makes background checks easy and reliable. Speak with a sales representative today.

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