FCRA: Have Your Rights Been Violated?

Madeleine Jones
September 22, 2016

The Fair Credit Reporting Act (FCRA) is a federal law that regulates the way the information in the files of consumer reporting agencies is used. The law is designed to promote the privacy, fairness and accuracy of consumer credit information. Although the law was enacted in 1970 and has been amended in both the 1990s and in 2003, sometimes credit bureaus and other consumer reporting agencies continue to violate the rights of victims throughout the United States by misusing or misreporting sensitive information.

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infographic_FCRA the Fair Credit Reporting Act explained


What Happens When FCRA Provisions Are Violated?

When the provisions of the FCRA are violated, it can cause victims to suffer damages that affect multiple aspects of their lives. Credit scores may plummet, applications for credit can be denied, and victims can end up being charged higher interest rates on loans. Additionally, some consumers whose rights have been violated find themselves paying higher insurance premiums and even being turned down for jobs. It is essential for consumers to familiarize themselves with their rights under the FCRA so they can recognize when their rights may have been violated and seek legal remedies that may be available.

Consumer Rights Under the FCRA

Under the FCRA, consumer reporting agencies are required to:

  • Disclose information in the credit file to the consumer upon request. When an individual requests information in his or her file and provides adequate identification, consumer reporting agencies must provide a full file disclosure. In some cases, this information may be free. Consumers are entitled to a free file disclosure when adverse action has been taken due to information in the report, they have become victims of identity theft and a fraud alert has been placed in the file, inaccurate information is contained in the file due to fraud, they are on public assistance or are unemployed and expect to apply for a job within 60 days. Additionally, individuals are entitled to one free file disclosure from each nationwide specialty agency and credit bureau every 12 months. Consumers are also entitled to a credit score, but they may be charged a small fee.
  • Limit Access to File Information. Credit reporting agencies cannot release information to just anyone. Access is limited to persons or entities that have a permissible purpose, like creditors, insurance providers, landlords and utility companies. Employers are only allowed access with permission. And even those who are deemed to have a valid reason to access a credit report must do so for their permissible purpose and not for another reason.
  • Provide Accurate and Updated Information. All of the information in consumer files must be accurate and not outdated. If a dispute is filed, the agency must conduct an investigation and any non-verifiable information must be removed. Additionally, most negative information must be removed from the file after 7 years with the exception of bankruptcies, which can remain on file for up to 10 years.

Remedies for FCRA Rights Violations

When a victim’s rights have been violated under the FCRA, there are certain legal remedies available. Depending on the type of violation, victims may be entitled to compensation for actual damages incurred, punitive damages, and attorney fees.

Willful Violations

When the agency or entity willfully violated its obligations under the FCRA, victims may be entitled to recover the following.

  • Basic Damages: The victim can either seek to recover actual (provable) damages with no maximum limit, or he or she can seek statutory damages from $100 up to $1,000.
  • Punitive Damages: The amount and availability of punitive damages is at the discretion of the court.
  • Attorney Fees and Costs: Costs and fees associated with an FCRA attorney and the court.

When the violator is an individual, victims can recover either actual damages (no limit) or $1,000, whichever is greater.

Negligent Violations

When an agency or entity was negligent in complying with its FCRA obligations, victims may be able to recover the following damages.

  • Actual Damages: Damages that are provable.
  • Attorney Fees and Costs: Costs and fees associated with the FCRA attorney and the court.

Common FCRA Violations

Consumer reporting agencies aren’t the only ones who violate the rights of victims under the FCRA. Collection agencies, employers, lenders, and even individuals sometimes commit violations as well. Two of the most common violations that an FCRA attorney might see include the following.

Impermissible Purpose Violations

When a person or entity accesses consumer information without a permissible purpose, it is a violation of the FCRA. For example, if an employer access the information without permission or someone pulls a report to determine whether a non-credit or involuntary debt is collectible, these are impermissible purposes.

Inaccurate Information Violations

When a creditor reports information that it knows, or should know, is not accurate; like misreporting payment histories, misstating balances due, or reporting charge-offs when payment in full has been made, it is a violation of the FCRA.