CFPB Issues Advisory Opinion Regarding Individual’s Privacy Rights and Consumer Reports

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The Consumer Financial Protection Bureau (CFPB) has issued a new advisory opinion regarding the permissible uses of consumer reports, including credit reports and background checks under the Fair Credit Reporting Act (FCRA). This new opinion clarifies the obligations to protect the public’s data.

One particular issue the CFPB addressed was the permissible purposes for requesting the data. The FCRA requires companies to have a legally permissible purpose in requesting a consumer report, such as making employment decisions or deciding whether to offer a line of credit. The advisory opinion further clarifies how the CFPB holds those requesting consumer reports accountable without a permissible purpose.

The advisory opinion reminds furnishers–which provides consumer reports–that insufficient matching procedures can violate consumers’ privacy rights. Under the FCRA, furnishers must maintain policies and procedures to ensure maximum accuracy. For example, failing to ensure the information is related to the intended individual can lead to acquiring knowledge about someone they do not have permission to report. Similarly, the advisory opinion warns that including multiple individuals as potential matches on a requested consumer report for a specific individual is unlawful. These issues may result from practices such as name-only matching and other inadequate procedures that are insufficient to ensure accuracy under the FCRA.

In addition, the CFPB outlines several criminal liabilities that providers and users of consumer reports may face for violations of the FCRA. These liabilities include entities acquiring consumer reports under false pretenses or providing these reports to those without a permissible purpose. Furthermore, Section 620 of the FCRA makes it a criminal offense for anyone associated with a consumer reporting agency to provide files to an unauthorized individual intentionally. A violation of this section may be punishable by criminal penalties and imprisonment.

This advisory opinion highlights the CFPB’s focus on protecting consumers from inaccurate and misused consumer reports, including background checks for employment. In addition, the update highlights the importance for employers to partner with high-quality furnishers. Knowing which providers offer quality background checks helps avoid the liability caused by unreliable consumer reporting practices.

Stay updated on new ordinances like this by reading up on fair chance hiring practices. Learn more by downloading our free resource on Adverse Action Notice Protocols in Compliance With FCRA.