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FTC Withdraws FCRA Commentary

Recently, the FTC withdrew its Statement of General Policy or Interpretations under the Fair Credit Reporting Act ("FCRA"), including the FTC's Commentary on the FCRA (the "Commentary'), the day before the authority to enforce and administer the FCRA transferred to the new Consumer Financial Protection Bureau (“CFPB”).

The FTC also released a staff report entitled "Forty Years of Experience with the Fair Credit Reporting Act."  This report provides background on the FTC's role in enforcing the FCRA, and includes a section-by-section summary of the agency’s interpretations of the FCRA. 

In announcing the withdrawal of the Commentary and release of the staff report, the FTC stated that the Commentary "has become partially obsolete since it was issued 21 years ago."  The new staff report deletes several interpretations in the Commentary that have since been repealed, modified or otherwise amended, and adds updated interpretations to reflect changes in the law since the Commentary was released in 1990.  The FTC stated that, given the Commentary's staleness, it "does not believe it is appropriate to transfer the Commentary."

The staff report highlighted several sections where the report differed from the Commentary, including:

·         Departments of Motor Vehicles:  The report does not adopt the Commentary’s position that a DMV providing motor vehicle reports for insurance underwriting purposes can be a “consumer reporting agency” for purposes of the FCRA.

·         Commercial Transactions:  The report adopts the positions of staff opinion letters issued in 2000 and 2001 that (1) a report by a consumer reporting agency is a “consumer report” even if it used for commercial purposes, and (2) an application for business credit does not give rise to a permissible purposes unless the report is on an individual who will be personally liable for the debt.

·         Joint Users: The staff report recognizes that the term “joint user” does not appear in the FCRA and therefore removes that terminology.

·         Identified Information:  The staff report clarifies that, given the advances in technology and the availability of consumer data, information contained on “credit guides” may still constitute a “credit report” even if it does not identify the consumer by name if it could “otherwise be reasonably linked to the consumer.”

·         Address in Adverse Action Notices:  The staff report permits consumer reporting agencies to list a post office box designated to receive disputes from consumers.

Since much of the FTC’s authority to enforce the FCRA has now been transferred to the CFPB, it remains to be seen what impact this new staff report will have on how the CFPB chooses to interpret and enforce the FCRA.

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