What Your FCRA Compliance Manual Should Include

In the last issue of the CRA Advisor I explained “Why You Need an FCRA Compliance Manual”. In summary, liability under the Fair Credit Reporting Act, 15 U.S.C. §1681 (FCRA) often turns on whether the CRA has “reasonable procedures” for compliance. A CRA with a properly drafted and implemented FCRA Compliance Manual can prevail in an FCRA lawsuit by establishing that it has such reasonable procedures. In this issue I discuss the important provisions that should be included in your Manual.

Permissible Purpose Procedures

Your Compliance Manual should include procedures for complying with §1681e(a) to ensure your clients have one of the permissible purposes for your reports specified in § 1681b(a). These procedures should require new clients to identify themselves and certify their permissible purposes and that reports will be used for only those purposes. The Manual should include procedures for verifying the identity of new clients and their certifications.

Procedures for Assuring Maximum Possible Accuracy

Your Manual should contain procedures for complying with §1681e(b) to assure the maximum possible accuracy of the information in reports. This includes standards for matching records to consumers, properly classifying crimes, and procedures for situations where records are unclear or conflicting.

Report Content Procedures

Your Manual should specify procedures for complying with §1681e(a) to ensure reports do not contain information prohibited from being reported under § 1681c, such as arrest records, eviction records and other adverse items other than records of convictions of crimes which predate reports by more than 7 years and bankruptcies which predate reports by more than 10 years.

Consumer Dispute and Reinvestigation Procedures

Your Manual should contain procedures for fielding consumer disputes and standards for conducting reinvestigations of disputed items in reports under §1681i(a). These should include procedures for treatment of inaccurate or unverifiable information and procedures for timely reporting reinvestigation results to consumers. You should also include procedures for responding to frivolous or irrelevant disputes, procedures for continued disputes and procedures for preventing the reappearance of deleted information.

Employment Use Certifications

If you issue reports for employment purposes your Manual should include procedures for obtaining the certifications required by clients under §1681b(b). These include a certification that before obtaining the report your client provided the consumer who is the subject of the report with a “clear and conspicuous” written disclosure “in a document that consists solely of the disclosure” that a report may be obtained for employment purposes and that the consumer authorized the obtaining of the report in writing. They also include a certification that before taking any adverse action based on the report your client will provide the consumer with a copy of the report and a written description of their rights under the FCRA. They also include a certification that your client will not use your report in violation of any applicable Federal or State equal employment opportunity law or regulation.

"Strict Procedures" for Employment Reports

If you issue reports for employment purposes your Manual should include your "strict procedures" to ensure that public record information likely to have an adverse effect on a consumer’s employment is complete and up to date as required under §1681k(a)(2), unless pursuant to §1681k(a)(1) you opt to notify the consumer at the time you issue the report of your client’s name and address and that you are reporting public record information.

Investigative Consumer Report Procedures

If you issue investigative consumer reports your Manual should include procedures for complying with §1681d (a) and (b) regarding consumer disclosures and disclosures upon a consumer’s request of the "nature and scope of the investigation". You should also include procedures for complying with §1681d(d)(4) so if the person interviewed is not the best possible source of information you can demonstrate that you have reasonable procedures for obtaining confirmation of the information from an additional source that has independent and direct knowledge of the information.

Reseller Procedures

If you resell reports or information issued by other CRAs (such as TransUnion, Equifax or Experian) your Manual should include procedures for complying with §1681e(e)(2)(A)&(B). These include procedures for ensuring that (a) reports are resold to only those with permissible purpose; (b) those to whom reports are resold (i) identify end users, (ii) certify purposes, and (iii) certify reports will be used for no other purpose; and (c) your procedures for making reasonable efforts to verify these identifications and certifications.

Other Recommended Procedures

Other recommend Compliance Manual procedures include procedures for (a) responding to requests for reports and files; (b) complying with state-specific credit and criminal reporting laws; (c) complying with municipal credit and criminal reporting laws; (d) employee training; and (e) conducing compliance audits.

Conclusion

A proper FCRA Compliance Manual can help you efficiently comply with the FCRA and insulate you from liability if mistakes occur. Feel free to contact me at (312) 334-3440 or jmesser@messerstrickler.com if you would like assistance with the preparation and implementation of a Compliance Manual.

The CRA Advisor is our periodic publication on legal issues facing Credit Reporting Agencies. If you would like to discuss topics or add someone to our distribution list contact Joseph Messer. at jmesser@messerstrickler.com