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T

Credit Reports:

What Information

Providers Need

to Know

he Fair Credit Reporting Act (FCRA) is designed to protect the

privacy of credit report information and to guarantee that information supplied by consumer reporting agencies (CRAs) is as

accurate as possible. If you provide information to a CRA, such

as a credit bureau, be aware that amendments to the law spell out new legal

obligations. These amendments were effective September 30, 1997.

Does the FCRA Affect Me?

If you report information about consumers to a CRA, you are considered a

ìfurnisherî of information under the FCRA. CRAs include many types of

databases ó credit bureaus, tenant screening companies, check verification

services, and medical information services ó that collect information to help

businesses evaluate consumers. If you provide information to a CRA regularly,

the FCRA requires that the CRA send you a notice of your responsibilities.

What Are My Responsibilities?

The responsibilities of information providers are found in Section 623 of the

FCRA, 15 U.S.C. ß 1681s-2, and are explained here. Items 2 and 5 apply only

to furnishers who provide information to CRAs ìregularly and in the ordinary

course of their business.î All information providers must comply with the other

responsibilities.
Facts for Business

1. General Prohibition on Reporting Inaccurate Information ó Section 623(a)(1)(A)

and Section 623(a)(1)(C).

You may not furnish information that you

know ó or consciously avoid knowing ó is

inaccurate. If you ìclearly and conspicuouslyî provide consumers with an address

for dispute notices, you are exempt from this

obligation but subject to the duties discussed

in Item 3.

What does ìclear and conspicuousî mean?

Reasonably easy to read and understand. For

example, a notice buried in a mailing is not

clear or conspicuous.

2. Correcting and Updating Information ó

Section 623(a)(2).

If you discover youíve supplied one or more

CRAs with incomplete or inaccurate information, you must correct it, resubmit to each

CRA, and report only the correct information in the future.

3. Responsibilities After Notice of a Consumer Dispute from a Consumer ó Sections 623(a)(1)(B) and 623(a)(3).

If a consumer writes to the address you

specify for disputes to challenge the accuracy of any information you furnished, and

if the information is, in fact, inaccurate, you

must report only the correct information to

CRAs in the future. If you are a regular

furnisher, you also will have to satisfy the

duties in Item 2.

Once a consumer has given notice that he or

she disputes information, you may not give

that information to any CRA without also

telling the CRA that the information is in

dispute.

4. Responsibilities After Receiving Notice

from a Consumer Reporting Agency ó

Section 623(b).

If a CRA notifies you that a consumer

disputes information you provided:

ï You must investigate the dispute and

review all relevant information provided

by the CRA about the dispute.

ï You must report your findings to the

CRA.

ï If your investigation shows the information to be incomplete or inaccurate, you

must provide corrected information to all

national CRAs that received the information.

ï You should complete these steps within

the time period that the FCRA sets out for

the CRA to resolve the dispute ó normally 30 days after receipt of a dispute

notice from the consumer. If the consumer provides additional relevant information during the 30-day period, the

CRA has 15 days more. The CRA must

give you all relevant information that it

gets within five business days of receipt,

and must promptly give you additional

relevant information provided from the

consumer. If you do not investigate and

respond within the specified time periods,

the CRA must delete the disputed information from its files.

5. Reporting Voluntary Account Closings ó

Section 623(a)(4).

You must notify CRAs when consumers

voluntarily close credit accounts. This is

important because some information users

may interpret a closed account as an indicator of bad credit unless it is clearly disclosed

that the consumer ó not the creditor ó

closed the account.

6. Reporting Delinquencies ó Section

623(a)(5).

If you report information about a delinquent

account thatís placed for collection, charged

to profit or loss, or subject to any similar
Facts for Business

action, you must, within 90 days after you

report the information, notify the CRA of

the month and the year of the commencement of the delinquency that immediately

preceded your action. This will ensure that

CRAs use the correct date when computing

how long derogatory information can be kept

in a consumerís file.

How do you report accounts that you have

charged off or placed for collection? For

example:

ï A consumer becomes delinquent on March

15, 1998. The creditor places the account

for collection on October 1, 1998.

In this case, the delinquency began on

March 15, 1998. The date that the creditor places the account for collection has

no significance for calculating how long

the account can stay on the consumerís

credit report. In this case, the date that

must be reported to CRAs within 90 days

after you first report the collection action

is ìMarch 1998.î

ï A consumer falls behind on monthly

payments in January 1998, brings the

account current in June 1998, pays on

time and in full every month through

October 1998, and thereafter makes no

payments. The creditor charges off the

account in December 1999.

In this case, the most recent delinquency

began when the consumer failed to make

the payment due in November 1998 The

earlier delinquency is irrelevant. The

creditor must report the November 1998

date within 90 days of reporting the

charge-off. For example, if the creditor

charges off the account in December

1999, and reports this charge-off on

December 31, 1999, the creditor must

provide the month and year of the delinquency (i.e., ìNovember 1998î) within

90 days of December 31, 1999.

ï A consumerís account becomes delinquent

on December 15, 1997. The account is

first placed for collection on April 1,

1998. Collection is not successful. The

merchant places the account with a

second collection agency on June 1, 2003.

The date of the delinquency for reporting

purposes is ìDecember 1997.î Repeatedly placing an account for collection

does not change the date that the delinquency began.

ï A consumerís credit account becomes

delinquent on April 15, 1998. The consumer makes partial payments for the next

five months but never brings the account

current. The merchant places the account

for collection in May of 1999.

Since the account was never brought

current during the period that partial

payments were made, the delinquency that

immediately preceded the collection

commenced in April 1998 when the

consumer first became delinquent.

For More Information

The FTC works for the consumer to prevent

fraudulent, deceptive and unfair business

practices in the marketplace and to provide

information to help consumers spot, stop and

avoid them. To file a complaint or to get free

information on consumer issues, visit

www.ftc.gov or call toll-free, 1-877-FTCHELP (1-877-382-4357); TTY: 1-866-653-

4261. The FTC enters Internet, telemarketing,

identity theft and other fraud-related complaints

into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal

law enforcement agencies in the U.S. and

abroad.
Federal Trade Commission

Bureau of Consumer Protection

Office of Consumer and Business Education

March 1999

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1-877-FTC-HELP www.ftc.gov

Facts for Business

Your Opportunity to Comment

The Small Business and Agriculture Regulatory

Enforcement Ombudsman and 10 Regional

Fairness Boards collect comments from small

business about federal enforcement actions.

Each year, the Ombudsman evaluates enforcement activities and rates each agencyís responsiveness to small business. To comment on

FTC actions, call 1-888-734-3247.