understanding the fair credit reporting act (fcra)

The FCRA is a federal statute that provides protection for consumers' information that is collected by credit reporting agencies (CRAs) and other consumer data gathering companies.

Under the FCRA, companies that provide data to consumer reporting agencies have certain legal obligations, one of the most important of which is the obligation to properly investigate information that is disputed by consumers.

Any entity that uses consumer information governed by the Fair Credit Reporting Act for purposes like financing decisions, employment decisions or insurance decisions, must notify a consumer when an "adverse action" is taken against the consumer relying upon the information contained in data or reports that they obtain.

Consumers benefit from the Act in that their personal data is protected, in that it can only be disclosed to people or entities that have a specific purpose defined by the Act.

Consumers can address violations under the FCRA, by requesting an investigation of information that they feel is inaccurate or untimely. It is highly recommended that they do this in writing, not by phone or through a bureau's website.

It is significant to note that the Consumer Financial Protection Bureau, in a recent report, found that the three major credit bureaus-Experian, Transunion and Equifax-routinely failed to properly resolve consumers' complaints about improper or inaccurate information reported on their credit report.

The CFPB report stated that the credit bureaus provided relief to consumers in less than two percent (2%) of the instance where complaints made in 2021. This number is down significantly from what was reported in 2019, when relief was provided in twenty five (25) percent of consumer complaints.

If a consumer's rights are violated under the FCRA, they have the right to pursue a civil law remedy.

Under the Act, the consumer can recover:

a. Actual damages, or statutory damages of $1,000.00 (absent an "actual loss or damages.")

b. Their attorney's fees;

c. Court costs; and

d. Punitive damages, if they can successfully show that the violation of the act was willful or intentional.

The time within which an injured consumer must pursue his remedies (the "Statute of Limitations") under the FCRA is equal to five years from the date on which the violation of the Act occurs. There is also a "discovery" provision in the statute of limitations that allows a consumer to sue for up to two additional years (beyond the 5 year statute of limitations) from the date of the discovery of the violation.

Our company can refer you to a law firm that takes FCRA cases on a contingency basis, where you only pay if your case is successful. The law firms accept payment in that manner because the FCRA includes a "fee shifting" provision by which the defendant CRA or creditor is required to pay the attorney's fees of a successful plaintiff.

Do you have a question about whether your rights under the FCRA may have been violated by a creditor or their representative? Give us a call (314) 429-2040. Let’s talk.