The 1999 Fair Credit Act

The Fair Credit Reporting Act regulates the consumer reporting industry.

The Fair Credit Reporting Act of 1999 was enacted to protect consumers' financial privacy, according to the Federal Trade Commission, which enforces the act. The act puts limits on how and when a company can use a consumer's personal financial data. It also regulates the consumer reporting industry that collects and sells personal financial data to companies.

Consumer Reporting Agencies

Consumer reporting agencies collect personal information that ranges from credit cards, loans and insurance to employment, home addresses, legal history and criminal history, according to the Federal Citizen Information Center. Consumer reporting agencies, which often are credit bureaus, sell that information in the form of credit reports to creditors, employers and other businesses who request it. The act limits the disclosure of personal information on consumer reports to "permissible purposes," such as evaluating an individual's credit worthiness. It also limits the disclosure primarily to instances in which the consumer applies for credit or a job.

Items Not Permissible on Credit Reports and Time Limits

The act mandates that medical information, including names, addresses and contact information, cannot be included in a credit report. In addition, medical information cannot be used to determine a consumer's eligibility for credit. Chapter 11 bankruptcies can only be included for up to 10 years. Civil suits, judgments and arrest records can only be included for up to seven years, or until the statute of limitation expires, whichever is longer. Paid tax liens, child support information and accounts in collections also have a seven-year time limit.

Disputes, Noncompliance and Unlawful Acts

A consumer reporting agency must conduct an investigation when a consumer disputes the accuracy of information in a consumer report. Inaccuracies must be corrected within 30 days of receiving the complaint. Companies that obtain a consumer report by unlawful means face criminal charges. The act makes consumer reporting agencies and companies that buy the information civilly liable for not complying with the act willingly and through negligent behavior. They are liable to the consumer for actual damages and attorneys' fees. Those who willingly violate the act also face up to $2,500 per violation from the Federal Trade Commission.

Exceptions

Not all instances involving a consumer's personal information are covered under the act. Businesses can distribute and sell information about their own transactions and experiences with consumers. That information can include account balances, credit limits, payment history and method of payment. In addition, companies can share consumer report information with their affiliates for free. Affiliated companies cannot use the information for marketing purposes to the consumer, however, unless the consumer is notified that such marketing may occur.

References

• Federal Trade Commission: Prepared Statement of the Federal Trade Commission
• Federal Trade Commission: The Fair Credit Reporting Act
• Federal Citizen Information Center: Fair Credit Reporting