On July 7, 2022, the CFPB (Consumer Financial Protection Bureau) issued an advisory opinion on permissible purposes for obtaining and providing credit reports under section 604 of the FCRA (Fair Credit Reporting Act). The advisory opinion primarily focused on the information submitted to a credit reporting bureau by institutions requesting credit bureau information. The CFPB opinion made it clear that users and agencies have a responsibility to protect the privacy of consumer data.
Under the FCRA, users of consumer reports may request a consumer report only under the enumerated “permissible purposes” outlined within section 604 of the FCRA. That purpose is certified by section 607 of the FCRA through a general or specific purpose. Users of consumer reports submit certain information to the credit reporting bureau to ensure that the request pertains to the consumer of which the information is requested. The institution should ensure that the information identifiers being used contain sufficient information to conduct a search that would avoid obtaining a credit report on a different party or multiple parties. For example, if the institution obtains credit reports by inputting only the name of the party, the institution should develop stronger safeguards to ensure that the credit report belongs to the intended party. Some credit reporting agencies only use the name search options based on information placed in the request portal. The Bureau noted that such credit reports often contain a disclaimer indicating that the consumer report was obtained based on name only matching. The CFPB clarified that such disclaimers do not cure a permissible purpose issue.
Lastly, section 619 of the FCRA imposes criminal penalties on any person who knowingly and willfully obtains information from a consumer reporting agency under false pretenses.
For more information, please visit the following link: https://www.consumerfinance.gov/rules-policy/final-rules/fair-credit-reporting-permissible-purposes-for-furnishing-using-and-obtaining-consumer-reports/