How the FCRA Protects Consumers

Similar to the FDCPA, the Fair Credit Reporting Act (FCRA) was designed to protect consumers from lenders and credit reporting bureaus that do not accurately report on customer accounts. Accurate credit reporting is essential to make sure everyone gets a fair shot at obtaining credit and even one mistake made by a creditor can be devastating for a consumer’s financial future.

What Makes Up an FCRA Violation

There are a couple of dozen specific violations that cover businesses, individuals and credit reporting bureaus. Some of the more common violations include:

  • Reporting information more than seven years old (10 years for some court judgments)
  • Misrepresentation of how much you owe
  • Reporting a paid debt as a charge off
  • Making you appear liable for identity theft
  • Mixing information based on name, address, SSN, suffixes, etc.
  • Creditors not telling you when they report you to credit reporting bureaus
  • Creditors not giving you required notice regarding a credit score, telling you where they obtained credit information, letting you know why you got declined for credit or that you have the chance to dispute negative credit information

In addition, the way disputes are handled by credit reporting bureaus are governed by FCRA rules. These dispute-specific violations include:

  • Not removing unverifiable information 30-45 days after a dispute has been filed
  • Failing to investigate a dispute
  • Failing to notify the creditor or credit reporting bureau a dispute has been filed
  • Furnishing information a creditor knows is false

There are nearly 20 more violations spelled out in regards to information and disputes, but most of them do not usually come into play if an FCRA violation is suspected.

Credit reporting bureaus are only allowed to give your information to a select group of people. Businesses that may loan you money and your employer, assuming you give them permission, can pull your credit report, as can service providers such as a utility company, landlord or insurance broker.

Even so, creditors cannot pull your credit report if they are just trying to see if you are collectible or not, either before or after a bankruptcy. Your employer cannot pull your credit report without you expressly giving them permission either.

FCRA Awards

Most FCRA violations happen negligently, especially when a large creditor is involved. In these cases, if you suffer real damage because of your inability to get credit, you can be awarded up to the actual dollar amount you lost. If you did not suffer provable damages, but a violation still occurred, you can still be awarded up to $1,000 based on the degree your credit was affected.

If a non-business entity pulled your report without just cause, the above penalties still apply, except the “up to” $1,000 just becomes $1,000, per violation. At the same time, a judge or arbitrator can award a punitive award if the intent was especially malicious.

Legal fees will also be the responsibility of the creditor or other individual, which can reach far past any damage or per-violation charges. This often drives creditors to the negotiating table.

FCRA Statute of Limitations

The FCRA provides a longer statute of limitations than the FDCPA, giving you two years from the date you discovered the violation or five years from the date it happened.

Filing an FCRA Lawsuit

If you believe you have an FCRA case, most consumer attorneys will gladly listen to your situation and review the evidence you give them. When they determine you do have enough to press a claim, they are almost always willing to work either for a small piece of your award or for free, since they can recover separate legal fees from the creditor.

For creditors you owe that have an arbitration clause in their contracts, you can start an arbitration case with any vendor listed (JAMS is usually the consumer’s best bet). In arbitration, you can plead your case in a way that is less formal than a courtroom, or you can consult with your lawyer to decide the best way going forward.

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