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Many of the questions that arise under the Fair Credit Reporting Act (FCRA) are basic matters of coverage. Understanding the definitions used is critical to determining coverage. For example, if an employer contacts another employer for a reference check, there is no consumer reporting agency involved, and FCRA does not apply. Similarly, contacting a law enforcement agency to check a criminal history does not fall under FCRA.
The following was adapted from the Federal Trade Commission report titled, 40 Years of Experience with the Fair Credit Reporting Act: An FTC Staff Report with Summary of Interpretations (July, 2011) available at www.ftc.gov/os/2011/07/110720fcrareport.pdf.
General definitions
The FCRA defines “person” to include not only individuals, but also universities, creditors, collection agencies, insurance companies, private investigators, and employers.
A “consumer report” is defined to mean any written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living (the seven characteristics) which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer’s eligibility for (A) credit or insurance to be used primarily for personal, family, or household purposes; (B) employment purposes; or (C) any other purpose authorized.
To be a “consumer report,” the information must be furnished by a “consumer reporting agency” (CRA) which means a person that regularly engages in assembling or evaluating information on consumers for the purpose of furnishing “consumer reports” to third parties. The terms “consumer reporting agency” and “consumer report” are mutually dependent. Information is not a “consumer report” if the person furnishing the information is not a “consumer reporting agency.” For example, a communication to an employer about a job applicant from a source that is not a CRA (such as a prior employer) does not constitute a “consumer report.”
Definition of “consumer report”
There are two basic elements of the definition. First, the information in the report must have a “bearing on” one or more specified consumer characteristics. Second, the report must be “used or expected to be used … for the purpose of … establishing the consumer’s eligibility” for credit, employment, insurance, or other permissible purposes. Both elements must be satisfied; thus, information that is not “used or expected to be used” to determine eligibility for a permissible purpose is not a consumer report, even if the information bears on one of the seven specified consumer characteristics.
Some communications are excluded from the definition of “consumer report” even if they otherwise contain the elements. For example, a state agency that provides information such as criminal records checks to further law enforcement or other state functions mandated by the state legislature is not a CRA. Also, a state agency that provides publicly available data to third parties, as part of its normal operations, is also not a CRA. However, if information from a consumer report is added to a report that is not otherwise a consumer report, that report becomes a consumer report.
[Editor’s Note: see also opinion letter Goeke (06-09-98): In our view, a state agency that is providing information that is generally available to the public should not be considered a “consumer reporting agency” (CRA) under the FCRA, and the communication of that data by such an agency to an employer or other party should not be considered a “consumer report.”]
Must concern a “consumer”
Reports about corporations, associations, and other collective entities are not reports about a consumer, and thus are not consumer reports subject to the FCRA.
A report that concerns the consumer’s business history (as opposed to personal credit or employment history) that is collected and provided by a commercial reporting service solely for use in business transactions is not a “consumer report.”
A report limited to identifying information such as a consumer’s name, address, former addresses, or phone numbers, does not constitute a “consumer report” if it does not bear on any of the seven factors and is not used to determine eligibility.
A communication consisting solely of public record information is not a “consumer report” unless that information is provided by a CRA, is used or expected to be used for the purpose of establishing eligibility for credit, employment, insurance, or other permissible purposes, and bears on at least one of the seven characteristics. Public record information relating to records of arrest, bankruptcies, or the institution or disposition of civil or criminal proceedings, will bear on one or more of these characteristics.
Information provided to employers
A “consumer report” includes more than just consumer credit information. When a CRA provides information to employers regarding consumers’ driving records, employment records, criminal histories, education, and licenses held by job applicants or current employees, it is providing “consumer reports” because the data involves the individual consumer’s “character, general reputation, personal characteristics, or mode of living.” For example, an employment screening service that provides education verifications, employment verifications, and reference checks for employers is a CRA providing “consumer reports” because that information bears upon an individual’s “character, general reputation, personal characteristics, or mode of living” and is used for employment purposes. A CRA’s provision of information regarding the prior work experience of job applicants to prospective employers is a “consumer report,” even where the information is communicated by telephone.
Where an entity reports information regarding individuals and companies, both for covered purposes under the FCRA (e.g., employment checks, credit checks) and non-covered purposes (e.g., businesses or commercial purposes), the report is a “consumer report.”
Establishing eligibility for employment purposes
The term “employment purposes” is defined to include “promotion, reassignment or retention,” as well as to evaluate a job applicant.
However, reports limited to transactions or experiences between the consumer and the entity making the report are not consumer reports. Similarly, an opinion that is based only on transactions or experiences between the consumer and the reporting entity is also within the exception. For example, a creditor’s description of an account as “slow pay” would not be a consumer report if the description was based on the creditor’s own experience with the account and did not come from a CRA. Similarly, a communication by an employer that describes an employee’s job performance is not a“consumer report.”
Drug test results provided by a lab directly to an employer are not “consumer reports” because they constitute reports based on the experience of the laboratory with the consumer.
Reports of information that go beyond an entity’s own transactions or experiences with the consumer are not within the exclusion, and thus may be consumer reports. For example, a creditor’s or an insurance company’s report to a third party of the reasons it canceled credit or insurance, if based on information from an outside source (e.g., a consumer report), may be a consumer report.