Jan 18, 2024
The Consumer Financial Protection Bureau (CFPB) has issued new guidance for consumer reporting agencies. This guidance addressed inaccurate background checks and careless sharing of credit files. According to the CFPB, the advisory opinions intend to ensure that all consumer reporting companies compile accurate and reliable information. Furthermore, they stressed how the companies must ensure they do not prevent individuals from accessing their own information.
The CFPB’s first advisory opinion concerning background check reports stressed the requirement for accurate and complete reports. Additionally, it warned that the reports must not include duplicate, expunged, sealed, or dated information. They also cannot allow public access to legally restricted information.
The second advisory opinion regarding file disclosure emphasizes people’s right to access any information in their consumer report when requested. The opinion also mentioned the importance of allowing access to the source or sources of the report’s data. According to the CFPB, this includes the original sources and any vendor or intermediary sources.
Credit File Disclosure
Everyone should know what is in their credit file and where the information comes from. This knowledge allows individuals to correct any inaccuracies in their reports. As such, consumer reporting agencies must provide a copy of the report when a consumer with proper identification requests it.
The agencies should supply the complete file presented in a way an average person could understand. It should also be in a format that helps individuals find and recognize misinformation that could negatively impact them. As such, it should prove easy for consumers to find inaccurate or incomplete information, dispute it, and understand how the adverse information affects them.
Employers and landlords frequently use background checks in making employment and rental decisions. These reports typically contain information about criminal arrests and convictions, credit history, employment, rental history, and other data. Unfortunately, these background check reports frequently have incorrect, old, or misleading information.
As such, the CFPB’s advisory opinion issued a reminder for consumer reporting agencies. According to the CFPB, agencies covered by the Fair Credit Reporting Act (FCRA) must have reasonable procedures to “avoid producing reports with false or misleading information.” To do this, consumer reporting agencies should:
- “Prevent the reporting of public record information that has been expunged, sealed, or otherwise legally restricted from public access.
- Ensure disposition information is reported for any arrests, criminal charges, eviction proceedings, or other court filings that are included in background check reports.
- Prevent the reporting of duplicative information.”
The new advisory opinions by the CFPB serve as reminders to businesses and consumer reporting agencies. They must understand the importance of complying with the FCRA.