Stressing the importance of data accuracy in background
check reports and ensuring consumers can access their report data, the Consumer
Financial Protection Bureau (CFPB) issued guidance highlighting two advisory
opinions for credit reporting companies to ensure both priorities are met.
“Background check and other consumer reporting companies do
not get to create flawed reputational dossiers that are then hidden from
consumer view,” CFPB Director Rohit Chopra said in a press release. “Background
check reports, and all other consumer reports, must be accurate, up to date,
and available to the people that the reports are about.”
One opinion details measures companies should take to ensure
background checks are complete, accurate, and free of information that is
duplicative, outdated, expunged, sealed or otherwise legally restricted from
public access.
To comply with the Fair Credit Reporting Act, the procedures
should:
·
Protect expunged, sealed or otherwise legally
restricted public record information from public access.
·
Ensure disposition information is reported for
arrests, criminal charges, eviction proceedings or other court filings included
in background check reports.
·
Prevent the reporting of duplicative
information.
The bureau detailed the potential consequences to consumers
in situations where information meant to be kept confidential is made available
to the public.
“When these types of information appear in background
screening reports, the consequences for consumers can be grave,” the CFPB
wrote. “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.
Consumers’ employment applications may be rejected, they may be passed over for
promotions or denied security clearances, and they may lose their jobs.”
The second opinion pertains to file disclosures, stating
that people have a right to receive all information contained in their consumer
files upon request, as well as source information concerning intermediaries and
vendors.
The opinion also includes details about what consumers are
required to receive when requesting file disclosures and stipulations placed on
such requests:
·
Consumers do not need to use specific language
or industry jargon to be provided their complete file.
·
Furnishers must provide consumers their complete
file with clear and accurate information presented in a way an average person
could understand.
·
Furnishers must provide the information in a
format conducive to helping consumers identify inaccuracies, exercise their
rights to dispute incomplete or inaccurate information and understand when
adverse information may impact their lives.
·
Furnishers also must provide information
sources, including the original source and any intermediary or vendor sources.
The second opinion offers insight into the type of harm
consumers may face when they are unable to access all information in their
files held by reporting companies or sources for that information.
“Without access to all information in their file, a consumer
often cannot even take the initial steps to dispute inaccurate information in
their consumer reports or take well-informed action to improve their credit
profile,” the opinion explains. “Disputing inaccurate information on a consumer
report and improving one’s credit profile, often challenging and time-consuming
processes for consumers, are made even more difficult when consumers do not
have access to all of the information in their file.”
As an example, the opinion notes that when a consumer
identifies erroneous information in their file but is only provided the
original source of the questionable information, they cannot identify the
source of the error and also may not be able to correct it.
In the release, the bureau pointed to a January 2023
report in which it noted improvements and continued challenges for the
nationwide consumer reporting companies. The CFPB highlighted its other efforts
to highlight consumer reporting problems, including issuing guidance
on permissible purposes for accessing consumer reports, identifying
and eliminating false and junk data, resolving consumer disputes and
issuing enforcement against consumer reporting companies for unlawful
activities.