UNITED STATE OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580
September 15, 1999
Sylvia Sum, Esq.
Saalfeld, Griggs, Gorsuch,
Alexander & Emerick, P.C.
P.O. Box 470
Salem, OR 97308-0470
Re: Section 603(d) and (f) of the Fair Credit Reporting Act
Dear Ms. Sum:
This is in response to your letter, and our subsequent telephone
conversation, concerning the application of the Fair Credit Reporting
Act (FCRA) to a number of situations. Your questions are repeated
below in italics. We then provide our views on these issues.
1. Is a commercial service that reports only "public
record" information a consumer reporting agency (CRA)?
An entity that meets the definitional requirement for a "consumer
reporting agency" (CRA) in Section 603(f) of the FCRA is
covered by the law even if the only information it collects, maintains,
and disseminates is obtained from "public record" sources.
Section 603(f) defines a "consumer reporting agency"
as any person "which, for monetary fees, dues, or on a cooperative
nonprofit basis, regularly engages in whole or in part in the
practice of assembling or evaluating consumer credit information
or other information ... for the purpose of furnishing consumer
reports to third parties ...". In turn, Section 603(d) defines
a "consumer report" as the communication of "any
information" by a CRA that bears on a consumer's "credit
worthiness, credit standing, credit capacity, character, general
reputation, personal characteristics, or mode of living"
that is "used or expected to be used or collected in whole
or in part" for the purpose of serving as a factor in establishing
eligibility for credit or insurance to be used primarily for personal,
family, or household purposes, employment purposes, or any other
purpose authorized under Section 604.
If the commercial service you describe regularly provides information
for the purposes set forth in the definition of consumer report
in Section 603(d), the agency is a consumer reporting agency and
the information it collects from public record sources and maintains
in its computerized files is subject to the FCRA. The "public
record" status of any of this information is irrelevant.(1)
The application of the FCRA to services that collect "public
record" information is discussed in more detail in the enclosed
staff opinion letter (LeBlanc, June 9, 1998).
2. Is a law firm that researches the criminal records
of job applicants for its clients a "consumer reporting agency"
for FCRA purposes?
In the situation that you describe -- an attorney checks criminal
records of consumers who apply for jobs with a client -- the attorney's
activities appear to meet the definition of a CRA so long as records
checks are a "regular" course of action on the part
of the attorney and the attorney directly or indirectly charges
for this service. The information relates, at the very least,
to the "character" and "general reputation"
of applicants for employment, and thus qualifies as consumer report
information since it is provided for one of the purposes specified
in the definition of "consumer report" in Section 603(d)
of the FCRA. The fact that the information is "public record"
information makes no difference. By collecting this information
from public record sources the attorney is, at the very least,
"assembling" the information and therefore meets the
definitional requirements of a consumer reporting agency in Section
603(f) of the FCRA. In effect, the attorney is functioning as
an employment screening agency. Accordingly, the attorney should
ensure that his or her activities comply with the FCRA.(2)
3. If a commercial service provides a consumer report
containing information that is more than seven years old, may
the employer receiving the information take action based on the
Except for records of criminal convictions, which may now be
reported without any time limitation,(3)
Section 605 of the FCRA prohibits consumer reporting agencies
from providing adverse information that is more than seven years
old (ten years in the case of bankruptcies) for employment purposes
where the annual salary is less than $75,000. There are no restrictions
upon reporting adverse information for jobs involving salaries
of more than $75,000.
A consumer reporting agency which provides adverse information
that antedates the report by more than seven years for positions
covered by the Section 605 reporting prohibition may violate the
FCRA. In addition, the agency may be liable to the consumer for
damages if the release of the information is negligent or wilful.
There is, however, no FCRA prohibition upon the use of
information that is more than seven years old. Accordingly, an
employer may rely upon adverse information that is more than seven
years old.(4) Although the employer
may take adverse action based upon the information, we note that
the employer must comply with the provisions of the FCRA that
apply to the "use" of information from consumer reporting
agencies, such as Sections 604(b) and 615(a).
I hope that this information is useful. The views that are expressed
above are views of the Commission's staff and do not necessarily
reflect the views of the Commission or of any individual Commissioner.
Division of Financial Practices
1. The FCRA is concerned with, inter
alia, the accuracy of information being reported by consumer
reporting agencies. Public-record source information may be inaccurate,
or errors may occur in the transcription of the information by
a CRA. In either case, it is important for the consumer to know
that inaccurate information is being disseminating by a CRA so
that he or she may take steps to correct the information.
2. An attorney may, of course, assist
a client by accompanying the client's employees to the courthouse
and showing the employees how to research court records. In this
situation, the actual search is done by the client's employees
and, consequently, is exempt from coverage by the FCRA.
3. The recently enacted "Consumer
Reporting Employment Clarification Act of 1998," Pub. L.
No. 105-347, amended Section 605 of the FCRA to eliminate any
restrictions on the reporting of criminal convictions.
4. Comment 605-5 of the Commission's
Commentary on the FCRA, 16 C.F.R. § 600 App., 55 Fed. Reg.
18804, 18817 (May 4, 1990)