[Federal Register Volume 89, Number 15 (Tuesday, January 23, 2024)]
[Rules and Regulations]
[Pages 4171-4176]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-00788]


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CONSUMER FINANCIAL PROTECTION BUREAU

12 CFR Part 1022


Fair Credit Reporting; Background Screening

AGENCY: Consumer Financial Protection Bureau.

ACTION: Advisory opinion.

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SUMMARY: The Consumer Financial Protection Bureau (CFPB or Bureau) is 
issuing this advisory opinion to affirm that, when preparing consumer 
reports, a consumer reporting agency that reports public record 
information is not using reasonable procedures to assure maximum 
possible accuracy under section 607(b) of the Fair Credit Reporting Act 
(FCRA) if it does not have certain procedures in place. For example, it 
must have procedures that prevent reporting of information that is 
duplicative or that has been expunged, sealed, or otherwise legally 
restricted from public access. This advisory opinion also highlights 
certain aspects of the reporting period for adverse items under FCRA 
section 605(a)(5).

DATES: This advisory opinion is effective on January 23, 2024.

FOR FURTHER INFORMATION CONTACT: Seth Caffrey, Amanda Quester, or Ruth 
Van Veldhuizen, Senior Counsels, Office of Regulations at (202) 435-
7700 or https://reginquiries. consumerfinance.gov/. If you require this 
document in an alternative electronic format, please contact 
<a href="/cdn-cgi/l/email-protection#53101503110c1230303620203a313a3f3a272a13303523317d343c25"><span class="__cf_email__" data-cfemail="2e6d687e6c716f4d4d4b5d5d474c4742475a576e4d485e4c00494158">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: The Bureau is issuing this advisory opinion

[[Page 4172]]

through the procedures for its Advisory Opinions Policy.\1\ Refer to 
those procedures for more information.
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    \1\ 85 FR 77987 (Dec. 3, 2020).
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I. Advisory Opinion

A. Background

    The majority of landlords and employers conduct background checks 
before renting property or hiring employees.\2\ Landlords and employers 
typically conduct background checks by obtaining consumer reports from 
consumer reporting agencies.\3\ Consumer reporting agencies that 
prepare consumer reports for these purposes are commonly known as 
background screening companies, and the reports that they prepare are 
commonly known as background screening reports.\4\
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    \2\ CFPB, Bulletin 2021-03: Consumer Reporting of Rental 
Information (July 1, 2021), https://files.consumerfinance.gov/f/documents/cfpb_consumer-reporting-rental-information_bulletin-2021-03_2021-07.pdf; CFPB, Market Snapshot: Background Screening Reports, 
at 3-4 (Oct. 2019), https://files.consumerfinance.gov/f/documents/201909_cfpb_market-snapshot-background-screening_report.pdf.
    \3\ See 15 U.S.C. 1681a(d) (defining ``consumer report''); 
1681a(f) (defining ``consumer reporting agency'').
    \4\ See generally CFPB, Market Snapshot: Background Screening 
Reports (Oct. 2019), https://files.consumerfinance.gov/f/documents/201909_cfpb_market-snapshot-background-screening_report.pdf.
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    Background screening companies vary in size, the users they serve, 
the services they provide, and the geographic regions they cover.\5\ 
The reports they provide sometimes include information about a 
consumer's credit history, rental history, employment, salary, 
professional licenses, criminal arrests and convictions, and driving 
records.\6\ Background screening companies also vary in how they obtain 
information and prepare reports. Different companies use different 
identifying information to conduct searches; search different 
databases, external and internal, to access information; apply 
different criteria to determine whether a record in a database matches 
an individual; and employ different procedures for updating 
information.\7\
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    \5\ See id. at 5.
    \6\ See id. at 2.
    \7\ See id. at 8.
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    In many instances, background screening reports contain inaccurate 
information about consumers.\8\ For example, some background screening 
reports contain information about the wrong consumer, such as when a 
report shows an eviction record or criminal conviction that belongs to 
someone else.\9\ Some also contain duplicative information, such as 
when a report shows the same eviction or criminal conviction twice, 
giving the impression that the consumer's eviction or criminal history 
is more extensive than it really is.\10\ In addition, some background 
screening reports omit existing disposition information, such as when 
an eviction action or criminal charges have been dismissed, giving a 
misleading picture of a consumer's rental or criminal history.\11\
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    \8\ See generally Nat'l Consumer Law Ctr., Broken Records Redux: 
How Errors by Criminal Background Check Companies Continue to Harm 
Consumers Seeking Jobs and Housing, at 3 (Dec. 2019), https://www.nclc.org/images/pdf/criminal-justice/report-broken-records-redux.pdf; Sarah E. Lageson & Robert Stewart, Faulty Background 
Checks Are Violating Privacy and Ruining Lives, The Hill (Sept. 28, 
2023), https://thehill.com/opinion/technology/4227081-faulty-background-checks-are-violating-privacy-and-ruining-lives/ 
(describing study that concluded that 74 percent of total criminal 
charges reported on 101 participants' reports did not have matches 
in official state reports and that a background report erroneously 
attributed 50 charges to a participant who in fact had only two drug 
convictions).
    \9\ In November 2021, the Bureau issued an advisory opinion 
highlighting that a consumer reporting agency that prepares consumer 
reports using name-only matching (i.e., matching information to the 
particular consumer who is the subject of a consumer report based 
solely on whether the consumer's first and last names are identical 
or similar to the names associated with the information) does not 
use reasonable procedures to assure maximum possible accuracy under 
FCRA section 607(b). Fair Credit Reporting: Name-Only Matching 
Procedures, 86 FR 62468 (Nov. 10, 2021).
    \10\ See Nat'l Consumer Law Ctr., Digital Denials: How Abuse, 
Bias, and Lack of Transparency in Tenant Screening Harm Renters, at 
37 (Sept. 2023), https://www.nclc.org/wp-content/uploads/2023/09/202309_Report_Digital-Denials.pdf.
    \11\ See id. at 38.
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    Some background screening reports also include arrests, 
convictions, or other court records that should not be included because 
they have been expunged or sealed or otherwise legally restricted from 
public access.\12\ Some States and localities have taken steps to make 
it easier to seal or expunge certain records, including eviction 
records.\13\ Additionally, public access to certain criminal records 
maintained by government entities that reflect a disposition other than 
conviction or that have reached a specified age without active 
prosecution is legally restricted in certain circumstances.\14\ As 
explained in part C.1 below, the CFPB interprets the FCRA to prohibit 
background screening companies from including in consumer reports 
information that would not be publicly available to the user due to 
these restrictions.
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    \12\ See, e.g., id. at 5, 31, 35; Consent Order, In re Gen. 
Info. Servs., Inc., 2015-CFPB-0028 (Oct. 29, 2015), https://files.consumerfinance.gov/f/201510_cfpb_consent-order_general-information-service-inc.pdf; CFPB, Press Release, CFPB Takes Action 
Against Two of the Largest Employment Background Screening Report 
Providers for Serious Inaccuracies (Oct. 29, 2015), https://www.consumerfinance.gov/about-us/newsroom/cfpb-takes-action-against-two-of-the-largest-employment-background-screening-report-providers-for-serious-inaccuracies/; Consent Order, United States v. HireRight 
Sols., Inc., 1:12-cv-01313 (D.D.C. Aug. 8, 2012), https://www.ftc.gov/sites/default/files/documents/cases/2012/08/120808hirerightstip.pdf.
    \13\ See, e.g., Or. Rev. Stat. sec. 105.163 (allowing sealing of 
eviction records in certain circumstances, such as when there is a 
judgment or judgment of dismissal entered in the consumer's favor); 
DC Code sec. 42-3505.09 (requiring that eviction records be sealed 
in certain circumstances, such as (1) after 30 days have passed from 
final resolution if the eviction proceeding does not result in a 
judgment for possession in favor of the housing provider or (2) 
three years after the final resolution of the eviction proceeding if 
the eviction proceeding results in a judgment for possession in 
favor of the housing provider); Cal. Civ. Proc. Code sec. 1161.2 
(requiring certain eviction records to be sealed at filing, and 
limiting access to those records to a small list of exceptions, 
unless judgment is entered for the landlord within 60 days of the 
complaint being filed); see also Margaret C. Love, Collateral 
Consequences Res. Ctr., 50-State Comparison: Expungement, Sealing & 
Other Record Relief (Oct. 2021), https://ccresourcecenter.org/state-restoration-profiles/50-state-comparisonjudicial-expungement-sealing-and-set-aside/.
    \14\ See, e.g., 28 CFR 20.21(b); 18 Pa. Cons. Stat. sec. 
9121(b)(2) (generally restricting State and local police departments 
from disseminating information regarding the initiation of criminal 
proceedings to individuals or noncriminal justice agencies when 
three years have elapsed from the date of arrest, no disposition is 
indicated in the record, and nothing in the record indicates that 
proceedings seeking conviction remain pending); 6 Va. Admin. Code 
20-120-50.A.1 (generally prohibiting dissemination of criminal 
history records to noncriminal justice agencies or individuals when 
one year has elapsed from the date of arrest, no disposition of the 
charge has been recorded, and no active prosecution of the charge is 
pending); see also SEARCH, The Nat'l Consortium for Justice Info. 
and Statistics, Report of the National Task Force on the Commercial 
Sale of Criminal Justice Record Information, at 41 (2005), https://www.search.org/files/pdf/RNTFCSCJRI.pdf (``In most States, 
authorized noncriminal justice requestors receive less than the full 
record; most often they are provided conviction-only 
information.'').
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    Background screening companies sometimes also include obsolete 
criminal record information in background screening reports.\15\ For 
example, the CFPB is aware that, when some consumer reporting agencies 
report criminal cases that have been dismissed, they have used the 
disposition date to start the seven-year reporting period for records 
of arrests and other non-conviction criminal record information, rather 
than the ``date of entry'' for records of arrest or the date of the 
criminal charge for other non-conviction criminal record 
information.\16\ As a result, these

[[Page 4173]]

consumer reporting agencies have included adverse information in 
consumer reports longer than FCRA section 605(a) permits.
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    \15\ The FCRA limits the length of time that certain items of 
information may appear in a consumer report. 15 U.S.C. 1681c. For 
example, the FCRA generally prohibits the reporting of ``[a]ny . . . 
adverse item of information . . . which antedates the report by more 
than seven years.'' 15 U.S.C. 1681c(a)(5). This advisory opinion 
uses the term ``obsolete'' to refer to information that is older 
than the applicable FCRA time limit.
    \16\ See, e.g., Moran v. The Screening Pros, LLC, 25 F.4th 722, 
724-25 (9th Cir. 2022); Moran v. The Screening Pros, LLC, 943 F.3d 
1175, 1182 (9th Cir. 2019); Complaint at ]] 19-20, Bureau of 
Consumer Fin. Prot. v. Sterling Infosys., Inc., No. 1:19-cv-10824 
(S.D.N.Y. Nov. 22, 2019), https://files.consumerfinance.gov/f/documents/cfpb_sterling-infosystems-inc_complaint_2019-11.pdf.
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    When these types of information appear in background screening 
reports, the consequences for consumers can be grave. Consumers' rental 
housing applications may be denied, or they may end up paying more for 
such housing or be limited to locations or types of rental housing that 
they would not otherwise have selected, all of which is particularly 
challenging for consumers in a market characterized by high rents.\17\ 
Consumers' employment applications may be rejected, they may be passed 
over for promotions or denied security clearances, and they may lose 
their jobs. Even if none of these things happen, a consumer may spend 
considerable time and energy, and incur considerable expense, 
attempting to correct inaccuracies. Consumers often do not see their 
reports, if at all, until after they are denied, and efforts to correct 
information with one company may not carry over to the hundreds of 
other background screening companies or those that sell data to them.
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    \17\ See Joint Ctr. for Hous. Studies of Harvard Univ., The 
State of the Nation's Housing, at 1-2, 22 (2023), https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_The_State_of_the_Nations_Housing_2023.pdf (noting that 
``renter cost burdens have risen to their highest recorded level, 
underscoring the worsening affordability challenges facing many 
renters with lower incomes''); CFPB, Tenant Background Checks Market 
at 5 (Nov. 2022), https://files.consumerfinance.gov/f/documents/cfpb_tenant-background-checks-market_report_2022-11.pdf.
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    In 1970, Congress enacted the Fair Credit Reporting Act (FCRA) to 
protect against these types of harms. The FCRA regulates consumer 
reporting and imposes obligations on consumer reporting agencies, the 
entities that furnish information to them, and the users of consumer 
reports.\18\ In passing the FCRA, Congress recognized ``a need to 
insure that consumer reporting agencies exercise their grave 
responsibilities with fairness, impartiality, and a respect for the 
consumer's privacy.'' \19\ Accordingly, Congress designed the FCRA ``to 
prevent consumers from being unjustly damaged because of inaccurate or 
arbitrary information'' and ``to prevent an undue invasion of the 
individual's right of privacy in the collection and dissemination of 
credit information.'' \20\ A primary purpose of the FCRA is ``to 
protect consumers from the transmission of inaccurate information about 
them, and to establish credit reporting practices that utilize 
accurate, relevant, and current information in a confidential and 
responsible manner.'' \21\ The statute is meant to ensure, among other 
things, that consumer reporting agencies provide information ``in a 
manner which is fair and equitable to the consumer, with regard to the 
confidentiality, accuracy, relevancy, and proper utilization of such 
information.'' \22\
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    \18\ 15 U.S.C. 1681-1681x.
    \19\ 15 U.S.C. 1681(a)(4).
    \20\ S. Rep. No. 91-517, at 1 (1969).
    \21\ Guimond v. Trans Union Credit Info., 45 F.3d 1329, 1333 
(9th Cir. 1995) (citations omitted); see also Porter v. Talbot 
Perkins Children's Servs., 355 F. Supp. 174, 176 (S.D.N.Y. 1973) 
(noting that the FCRA was intended ``to protect an individual from 
inaccurate or arbitrary information about himself in a consumer 
report that is being used as a factor in determining the 
individual's eligibility for credit, insurance or employment'').
    \22\ 15 U.S.C. 1681(b).
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    Because of the importance of consumer report accuracy to businesses 
and consumers, the structure of the FCRA creates interrelated legal 
standards and requirements to support the goal of accurate credit 
reporting. Among these is the requirement that, when preparing a 
consumer report, consumer reporting agencies ``shall follow reasonable 
procedures to assure maximum possible accuracy of the information 
concerning the individual about whom the report relates.'' \23\ This 
requirement remains as important today as it was when the statute was 
enacted in 1970, and concerns about the accuracy of information 
included in consumer reports are long standing.
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    \23\ 15 U.S.C. 1681e(b).
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    The CFPB is issuing this advisory opinion to underscore certain 
obligations that the FCRA imposes when background screening reports are 
provided and used. First, this advisory opinion highlights that 
consumer reporting agencies must comply with their FCRA obligation to 
``follow reasonable procedures to assure maximum possible accuracy'' 
under section 607(b). In particular, a consumer reporting agency that 
reports public record information is not using reasonable procedures to 
assure maximum possible accuracy if it does not have reasonable 
procedures in place to ensure that (1) it does not report information 
that is duplicative or that has been expunged, sealed, or otherwise 
legally restricted from public access in a manner that would prevent 
the user from obtaining it directly from the government entities that 
maintain the records and (2) it includes any existing disposition 
information if it reports arrests, criminal charges, eviction 
proceedings, or other court filings.
    Second, consistent with prior cases and guidance discussed below, 
this advisory opinion highlights that, when consumer reporting agencies 
include adverse information in consumer reports, the occurrence of the 
adverse event starts the running of the reporting period for adverse 
items under FCRA section 605(a)(5), which is not restarted or reopened 
by the occurrence of subsequent events. Moreover, a non-conviction 
disposition \24\ of a criminal charge cannot be reported beyond the 
seven-year period that begins to run at the time of the charge. 
Consumer reporting agencies thus must ensure that they do not report 
adverse information beyond the reporting period in FCRA section 
605(a)(5) and must at all times have reasonable procedures in place to 
prevent reporting of information that is duplicative or legally 
restricted from public access and to ensure that any existing 
disposition information is included if court filings are reported.
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    \24\ As used in this advisory opinion, non-conviction 
disposition refers to a dismissal or a similar disposition of 
criminal charges such as dropped charges or an acquittal.
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B. Coverage

    This advisory opinion applies to all ``consumer reporting 
agencies,'' as that term is defined in FCRA section 603(f).

C. Legal Analysis

1. Reasonable Procedures To Assure Maximum Possible Accuracy When 
Preparing Background Screening Reports
    FCRA section 607(b) provides that ``[w]henever a consumer reporting 
agency prepares a consumer report it shall follow reasonable procedures 
to assure maximum possible accuracy of the information concerning the 
individual about whom the report relates.'' \25\ The Bureau has 
previously indicated that it is not a reasonable procedure to use name-
only matching to match information to the consumer who is the subject 
of the report when preparing a consumer report.\26\ This advisory 
opinion highlights the Bureau's interpretation of three other

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aspects of section 607(b)'s ``reasonable procedures to assure maximum 
possible accuracy'' requirement that relate to background screening 
information used in consumer reports: (1) preventing duplication of 
information; (2) including any existing disposition information if 
arrests, criminal charges, eviction proceedings, or other court filings 
are reported; and (3) ensuring that information that has been expunged, 
sealed, or otherwise legally restricted from public access in a manner 
that would prevent users from obtaining it directly from the government 
entity that maintains the records is not included in consumer reports.
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    \25\ 15 U.S.C. 1681e(b).
    \26\ See, e.g., Fair Credit Reporting: Name-Only Matching 
Procedures, 86 FR 62468 (Nov. 10, 2021); Consent Order at ]] 4-13, 
In re Gen. Info. Servs., Inc., 2015-CFPB-0028 (Oct. 29, 2015), 
https://files.consumerfinance.gov/f/201510_cfpb_consent-order_general-information-service-inc.pdf; Complaint at ]] 5-11, 13-
14, Bureau of Consumer Fin. Prot. v. Sterling Infosys., Inc., No. 
1:19-cv-10824 (S.D.N.Y. Nov. 22, 2019), https://files.consumerfinance.gov/f/documents/cfpb_sterling-infosystems-inc_complaint_2019-11.pdf.
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    To comply with section 607(b) of the FCRA, consumer reporting 
agencies must have reasonable procedures in place to prevent 
duplicative information from being reported on consumer reports in 
order to ensure that reports do not inaccurately suggest that a single 
event occurred more than once. For example, inclusion of multiple 
entries for the same criminal conviction or the same eviction can 
wrongly suggest that a consumer was convicted or evicted more than 
once. Consumer reporting agencies that obtain information from multiple 
sources, or from a single source that in turn collects information from 
multiple sources, must take particular care to identify information 
that is duplicative to ensure that information is accurately presented 
in consumer reports. Similarly, when a consumer reporting agency 
reports multiple stages of the same court proceeding, it must have 
procedures in place to ensure that information regarding the stages of 
these court proceedings (such as an arrest followed by a conviction) is 
presented in a way that makes clear the stages all relate to the same 
proceeding or case and does not inaccurately suggest that multiple 
proceedings or cases have occurred. For example, at a minimum, such 
procedures should require that all information about one court case 
should be collated and presented together in manner that makes it clear 
it is a single case.
    When arrests, criminal charges, eviction proceedings, or other 
court filings are reported, consumer reporting agencies must also have 
reasonable procedures in place to check for any available disposition 
information and to ensure that such information is included.\27\ For 
example, in situations where charges have been dismissed, it is 
misleading and inaccurate to report that an individual has been 
arrested for the charges without also reporting that the charges have 
been dismissed.\28\ Similarly, if a bankruptcy has been discharged, it 
would be misleading and inaccurate to report the bankruptcy filing 
without also reporting the result. Highlighting the importance of the 
accuracy requirements in the statute, the CFPB and FTC recently agreed 
to a stipulated order with TransUnion Rental Screening Solutions, Inc. 
(TURSS) that requires TURSS to follow written procedures reasonably 
designed to prevent reporting of court filings (in that case eviction 
proceeding records) without a final disposition after TURSS repeatedly 
provided tenant screening reports with eviction proceeding records that 
did not include available disposition information.\29\
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    \27\ See, e.g., Complaint at ] 22, United States v. AppFolio, 
Inc., No. 1:20-cv-03563 (D.D.C. Dec. 8, 2020), https://www.ftc.gov/system/files/documents/cases/ecf_1_-_us_v_appfolio_complaint.pdf 
(alleging that a tenant screening company failed to follow 
reasonable procedures to assure that the eviction and criminal 
record information included in tenant-screening reports accurately 
reflected the disposition). Even when disposition information is 
included, court filings can of course only be reported if doing so 
complies with the FCRA. As discussed below, consumer reporting 
agencies must, for example, have procedures in place to ensure that 
court filings are not reported if the information has been expunged, 
sealed, or otherwise legally restricted from public access in a 
manner that would prevent the user from obtaining it directly from 
the government entity that maintains the records.
    \28\ The Bureau notes that such disposition information appears 
to be available, in the majority of cases, within five years. For 
example, a 2018 survey of State criminal history information systems 
showed that in 48 States and the District of Columbia, an average of 
64 percent of arrests in State databases in the past five years had 
final case dispositions reported. Becki R. Goggins & Dennis A. 
DeBacco, SEARCH, The Nat'l Consortium for Justice Info. and 
Statistics, Survey of State Criminal History Information Systems, 
2018 (Nov. 5, 2020), https://www.ojp.gov/pdffiles1/bjs/grants/255651.pdf.
    \29\ CFPB, Press Release, CFPB and FTC Take Actions Against 
TransUnion for Illegal Rental Background Check and Credit Reporting 
Practices (Oct. 12, 2023), https://www.consumerfinance.gov/about-us/newsroom/cfpb-ftc-take-actions-against-transunion-illegal-rental-background-check-and-credit-reporting-practices/.
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    Similar considerations apply with respect to expunged records, 
sealed records, and public records that are otherwise legally 
restricted from public access. Background screening companies are 
responsible for maintaining procedures that ensure that any inclusion 
of charges or arrest records in a consumer report complies with the law 
in the relevant jurisdiction from which the record originates. To 
``expunge'' means to remove from a record or to erase or destroy.\30\ 
Expungement removes arrests, convictions, or other matters from a 
person's public record entirely, as if they had never occurred. Sealing 
removes items in public records from public view. Similarly, applicable 
law restricts public access to certain criminal records maintained by 
government entities that reflect a disposition other than conviction or 
that have reached a specified age without active prosecution when 
certain conditions are met.\31\ Once a conviction or other matter of 
public record has been sealed, expunged, or otherwise legally 
restricted from public access in a manner that would prevent the user 
from obtaining it directly from the government entity that maintains 
the records, it is misleading and inaccurate to include it as part of 
the individual's background in a consumer report because there is no 
longer any public record of the matter.
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    \30\ Black's Law Dictionary (11th ed. 2019).
    \31\ See, e.g., 28 CFR 20.21(b); 18 Pa. Cons. Stat. sec. 9121; 6 
Va. Admin. Code 20-120-50.A.1; see also SEARCH, The Nat'l Consortium 
for Justice Info. and Statistics, Report of the National Task Force 
on the Commercial Sale of Criminal Justice Record Information, at 41 
(2005), https://www.search.org/files/pdf/RNTFCSCJRI.pdf (``In most 
States, authorized noncriminal justice requestors receive less than 
the full record; most often they are provided conviction-only 
information.'').
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    Consumer reporting agencies that report public record information 
are not using reasonable procedures to assure maximum possible accuracy 
if they do not have reasonable procedures in place to prevent the 
inclusion in consumer reports of information that has been expunged, 
sealed, or otherwise legally restricted from public access in a manner 
that would prevent the user from obtaining it directly from the 
government entity that maintains the records. These procedures could 
include, for example, reporting only newly-gathered information or 
cross-checking existing data against updated sources so that matters 
that have been sealed or expunged can be identified and removed. In 
some instances, consumer reporting agencies may also be able to request 
lists of expunged matters from the original source and then remove 
those matters from their databases.\32\ In addition, under FCRA section 
611(a)(5)(C), consumer reporting agencies must maintain reasonable 
procedures to ensure that information that is deleted from a consumer's 
file under FCRA section 611(a)(5)(A) because it is inaccurate or 
incomplete or cannot be verified does not reappear, except in the 
limited circumstances

[[Page 4175]]

specified in FCRA section 611(a)(5)(B). This would include ensuring 
information does not reappear in situations in which a third-party 
vendor resupplies information that the consumer reporting agency has 
already removed.\33\
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    \32\ Nat'l Consumer Law Ctr., Broken Records Redux: How Errors 
by Criminal Background Check Companies Continue to Harm Consumers 
Seeking Jobs and Housing, at 35-36 (Dec. 2019), https://www.nclc.org/images/pdf/criminal-justice/report-broken-records-redux.pdf. The Administrative Office of Pennsylvania Courts 
regularly produces lists of expunged cases for entities that 
subscribe to its bulk distribution of criminal case data and 
contractually requires those entities to use the information to 
remove expunged cases. Id. at 23.
    \33\ 15 U.S.C. 1681i(a)(5)(C).
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    The CFPB and the Federal Trade Commission (FTC) have brought 
several cases illustrating the aspects of section 607(b) discussed in 
this advisory opinion.\34\ For example, the CFPB alleged in one action 
that an employment background screening company, General Information 
Services, violated FCRA section 607(b) by, among other things, failing 
to use reasonable procedures to prevent the inclusion of expunged 
criminal records in consumer reports.\35\ Similarly, the FTC alleged 
that another employment background screening company, HireRight 
Solutions, failed to take reasonable steps to ensure that the 
information in its consumer reports was current and reflected updates, 
such as the expungement of criminal records.\36\ Because of this, the 
FTC charged, employers sometimes received information that incorrectly 
listed criminal convictions on individuals' records. In addition, 
according to the FTC's complaint, HireRight Solutions failed to follow 
reasonable procedures to prevent the same criminal offense information 
from being included in a consumer report multiple times.\37\ In another 
action, the FTC alleged that a tenant screening company, AppFolio, 
failed to follow reasonable procedures to assure that the eviction and 
criminal record information included in tenant-screening reports 
accurately reflected the disposition, offense name, and offense type, 
and to prevent the inclusion of multiple entries for the same criminal 
or eviction action in the same report.\38\
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    \34\ The Bureau and the FTC have also previously issued guidance 
on these aspects of section 607(b). See, e.g., CFPB, Bulletin 2021-
03: Consumer Reporting of Rental Information (July 1, 2021), https://files.consumerfinance.gov/f/documents/cfpb_consumer-reporting-rental-information_bulletin-2021-03_2021-07.pdf; Fed. Trade Comm'n, 
What Tenant Background Screening Companies Need to Know About the 
Fair Credit Reporting Act (Oct. 2016), https://www.ftc.gov/business-guidance/resources/what-tenant-background-screening-companies-need-know-about-fair-credit-reporting-act.
    \35\ See Consent Order, In re Gen. Info. Servs., Inc., 2015-
CFPB-0028 (Oct. 29, 2015), https://files.consumerfinance.gov/f/201510_cfpb_consent-order_general-information-service-inc.pdf; CFPB, 
Press Release, CFPB Takes Action Against Two of the Largest 
Employment Background Screening Report Providers for Serious 
Inaccuracies (Oct. 29, 2015), https://www.consumerfinance.gov/about-us/newsroom/cfpb-takes-action-against-two-of-the-largest-employment-background-screening-report-providers-for-serious-inaccuracies/.
    \36\ Consent Order, United States v. HireRight Sols., Inc., 
1:12-cv-01313 (D.D.C. Aug. 8, 2012), https://www.ftc.gov/sites/default/files/documents/cases/2012/08/120808hirerightstip.pdf.
    \37\ Complaint at ]] 13-14, United States v. HireRight Sols., 
Inc., 1:12-cv-01313 (D.D.C. Aug. 8, 2012), https://www.ftc.gov/sites/default/files/documents/cases/2012/08/120808hirerightcmpt.pdf.
    \38\ Complaint at ] 22, United States v. AppFolio, Inc., No. 
1:20-cv-03563 (D.D.C. Dec. 8, 2020), https://www.ftc.gov/system/files/documents/cases/ecf_1_-_us_v_appfolio_complaint.pdf.
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    Additionally, the CFPB and the FTC alleged in a recent action that 
a rental screening company, TURSS, violated the FCRA by failing to 
follow reasonable procedures to assure maximum possible accuracy of 
information in background screening reports relied on by landlords and 
others.\39\ Specifically, the agencies alleged that TURSS knowingly and 
recklessly failed to follow reasonable procedures to: (1) prevent the 
inclusion of multiple entries for the same eviction case in eviction 
proceeding records, (2) accurately report the case disposition in 
eviction proceeding records, (3) accurately label data fields in 
eviction proceeding records, and (4) prevent the inclusion of sealed 
eviction proceeding records.\40\
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    \39\ Complaint at ] 3, FTC v. TransUnion Rental Screening 
Solutions, Inc., No. 1:23-cv-2659 (D. Colo. Oct. 12, 2023), https://files.consumerfinance.gov/f/documents/cfpb_transunion-rental-screening-solutions-inc-trans-union-llc_complaint_2023-10.pdf.
    \40\ Id. at ]] 24-53.
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2. Seven-Year Period for Reporting Adverse Information
    The FCRA restricts a consumer reporting agency from including 
obsolete information in a consumer report.\41\ FCRA section 605(a)(5) 
generally prohibits the reporting of ``[a]ny . . . adverse item of 
information . . . which antedates the report by more than seven 
years.'' \42\
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    \41\ 15 U.S.C. 1681c.
    \42\ 15 U.S.C. 1681c(a)(5). FCRA section 605(a)(5) excludes from 
this prohibition records of convictions of crimes. Id. In addition, 
FCRA section 605(b) provides that this prohibition is not applicable 
in the case of any consumer credit report to be used in connection 
with certain specified transactions. 15 U.S.C. 1681c(b).
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    As the plain language of section 605(a)(5) makes clear, each 
adverse item of information is subject to its own seven-year reporting 
period, the timing of which depends on the date of the ``adverse item'' 
itself.\43\ Thus, the reporting period applicable to one adverse item 
cannot be restarted or reopened by the occurrence of a subsequent 
event. Once the period applicable to a particular item expires, that 
item can no longer be reported. For example, an arrest is subject to a 
reporting period that ends seven years after the arrest's date of 
entry, and subsequent events do not restart or reopen the reporting 
period applicable to the arrest.\44\
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    \43\ Moran v. The Screening Pros, LLC, 943 F.3d 1175, 1184 (9th 
Cir. 2019) (``The statute's use of `antedates' connects the seven-
year window directly to the adverse event itself.'').
    \44\ While records of conviction of a crime are not subject to 
the time limits set forth in section 605(a)(5), an arrest underlying 
a conviction is subject to the reporting period that ends seven 
years after the arrest's date of entry.
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    Moreover, in the case of a non-conviction disposition of criminal 
charges, the disposition does not start its own seven-year reporting 
period.\45\ This interpretation follows from a longstanding principle 
in the application of section 605(a): a consumer reporting agency ``may 
not furnish a consumer report referencing the existence of adverse 
information that predates the times set forth'' in section 605(a).\46\ 
In other words, a consumer reporting agency generally cannot provide a 
consumer report containing information that reveals the existence of an 
adverse event that antedates the report by more than seven years. 
Otherwise the FCRA's clear limitations on the reporting of obsolete 
information would be vulnerable to easy evasion. Because it necessarily 
would reveal the existence of the charge, a dismissal of a criminal 
charge or similar disposition such as dropped charges or acquittal 
generally could not be reported after the seven-year period that begins 
when the charge occurred.\47\
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    \45\ Moran, 943 F.3d at 1184 (``A dismissal indicates that the 
consumer no longer faces an indictment, an overall positive--but at 
least neutral--development. A dismissal is only adverse insofar as 
it discloses the previous adverse event, i.e., the charge.'').
    \46\ Fed. Trade Comm'n, 40 Years of Experience With the Fair 
Credit Reporting Act: An FTC Staff Report With Summary of 
Interpretations, at 55 (2011); cf. Moran, 943 F.3d at 1184 (``Even 
though non-adverse information is typically not subject to reporting 
windows, a dismissal is different. A dismissal necessarily 
references the existence of the adverse event, to which the 
reporting window still applies.'').
    \47\ Moran, 943 F.3d at 1184 (``A related later event should not 
trigger or reopen the window, as the adverse event already occurred. 
To hold otherwise, thereby allowing this information to be reported 
through disclosure of a dismissal, would circumvent Congress's 
intent to confine adverse criminal information to a seven-year 
window.'').
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    This interpretation also follows from the structure of section 
605(a) and a 1998 amendment to that provision. The contrast between 
section 605(a)(5) and several other paragraphs of section 605(a), in 
which Congress prescribed a different rule for specific categories of 
information, is instructive. For paid tax liens, the reporting period 
ends seven years ``from date of payment''; \48\ for

[[Page 4176]]

bankruptcy cases, the reporting period ends 10 years ``from the date of 
entry of the order for relief or the date of adjudication.'' \49\ 
Unlike these provisions, section 605(a)(5) contains no indication that 
Congress intended to tie the end of the reporting period to something 
other than the occurrence of the adverse item. The pre-1998 version of 
section 605(a) explicitly made ``disposition'' of a ``record[ ] . . . 
of indictment'' the trigger for the seven-year reporting period; 
however, a 1998 amendment deleted that provision.\50\ This amendment 
``significantly altered [the] statute,'' indicating clearly that the 
end of the reporting period under section 605(a)(5) depends on the date 
of the adverse item itself--not on the date of disposition.\51\
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    \48\ 15 U.S.C. 1681c(a)(3).
    \49\ 15 U.S.C. 1681c(a)(1).
    \50\ In the original FCRA, ``[r]ecords of arrest, indictment, or 
conviction of crime'' were reportable for seven years, starting at 
the ``date of disposition, release, or parole.'' 15 U.S.C. 
1681c(a)(5) (1996). The 1998 amendment to the FCRA deleted this 
paragraph. Consumer Reporting Employment Clarification Act, Public 
Law 105-347, sec. 5(2), 112 Stat. 3211. The amendment moved 
``records of arrest'' to pre-existing paragraph (a)(2), which now 
requires the reporting of ``[c]ivil suits, civil judgment, and 
records of arrest'' to end seven years after ``date of entry,'' 15 
U.S.C. 1681c(a)(2). See Public Law 105-347, sec. 5(1), 112 Stat. 
3211. (Information of this type can be reported ``until the 
governing statute of limitations has expired,'' if that period is 
longer. 15 U.S.C. 1681c(a)(2).) The 1998 amendment also removed 
criminal convictions altogether from the restriction on reporting 
obsolete information. Id., sec. 5(3), codified at 15 U.S.C. 
1681c(a)(5) (prohibiting reporting, past seven years, of ``any other 
adverse item of information, other than records of convictions of 
crimes'').
    \51\ Moran, 943 F.3d at 1185.
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    In addition to provisions authorizing Federal and State 
enforcement,\52\ the FCRA contains two provisions relating to civil 
liability to consumers for noncompliance. Section 617 provides that 
``any person who is negligent in failing to comply with any requirement 
imposed under this title with respect to any consumer is liable to that 
consumer in an amount equal to'' the consumer's actual damages, and 
costs and reasonable attorney's fees.\53\ Section 616 provides that 
``any person who willfully fails to comply with any requirement imposed 
under this title with respect to any consumer is liable to that 
consumer in an amount equal to'' actual or statutory damages of up to 
$1,000 per violation, such punitive damages as the court allows, and 
costs and reasonable attorney's fees.\54\ A violation is willful when 
it is inconsistent with ``authoritative guidance'' from a relevant 
agency.\55\ As with any guidance issued by the CFPB on the FCRA, or 
predecessor agencies that were responsible for administering the FCRA 
prior to the CFPB's creation, consumer reporting agencies risk 
liability under section 616 if they violate the FCRA in a manner 
described in this advisory opinion, regardless of whether the consumer 
reporting agencies were previously liable for willful violations prior 
to its issuance.
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    \52\ 15 U.S.C. 1681s.
    \53\ 15 U.S.C. 1681o (emphasis added).
    \54\ 15 U.S.C. 1681n (emphasis added); Safeco Ins. Co. of Am. v. 
Burr, 551 U.S. 47, 57-58 (2007) (construing meaning of ``willful'').
    \55\ Safeco Ins., 551 U.S. at 70; Fuges v. Sw. Fin. Servs., 
Ltd., 707 F.3d 241, 253 (3d Cir. 2012).
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II. Regulatory Matters

    This advisory opinion is an interpretive rule issued under the 
Bureau's authority to interpret the FCRA, including under section 
1022(b)(1) of the Consumer Financial Protection Act of 2010,\56\ which 
authorizes guidance as may be necessary or appropriate to enable the 
Bureau to administer and carry out the purposes and objectives of 
Federal consumer financial laws.\57\
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    \56\ Public Law 111-203, 124 Stat. 1376 (2010).
    \57\ 12 U.S.C. 5512(b)(1).
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    The Bureau has determined that this advisory opinion does not 
impose any new or revise any existing recordkeeping, reporting, or 
disclosure requirements on covered entities or members of the public 
that would be collections of information requiring approval by the 
Office of Management and Budget under the Paperwork Reduction Act.\58\
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    \58\ 44 U.S.C. 3501-3521.
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    Pursuant to the Congressional Review Act,\59\ the Bureau will 
submit a report containing this interpretive rule and other required 
information to the United States Senate, the United States House of 
Representatives, and the Comptroller General of the United States prior 
to the rule's published effective date. The Office of Information and 
Regulatory Affairs has designated this interpretive rule as not a 
``major rule'' as defined by 5 U.S.C. 804(2).
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    \59\ 5 U.S.C. 801 et seq.

Rohit Chopra,
Director, Consumer Financial Protection Bureau.
[FR Doc. 2024-00788 Filed 1-22-24; 8:45 am]
BILLING CODE 4810-AM-P


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