The Fair Credit Reporting Act (FCRA) is a federal law that regulates how consumer credit reporting agencies maintain credit information. Many businesses maintain contracts with credit reporting agencies, and provide information to those agencies about their customers' debts and payment histories.
It is important that information provided by credit reporting agencies be accurate, as their reports and credit scores may affect not only a consumer's ability to obtain credit, but could also affect their ability to rent housing or to get a job. It is thus also important that businesses fulfill their obligation to submit correct information and to promptly correct any errors they make when reporting information to credit reporting agencies.
When a business enters into a contract with a credit reporting agency, that business is required to do the following:
Make Accurate Reports: A creditor is expected to make accurate reports of credit information and to note any disputes with the debtor.
Follow the Credit Reporting Agency's Guidelines: Upon entering into a contract with a credit reporting agency, a creditor is expected to follow the agency's guidelines for reporting debts and delinquencies.
Respond to Inquiries: In the event that a credit reporting agency asks for verification of reported information, a creditor should be prepared to answer questions about the debt and whether it is delinquent.
Investigate Disputes: If a consumer disputes information reported to a credit reporting agency, the creditor that reported the information should investigate the information and report back to the credit reporting agency within thirty days.
The failure of a business to fulfill those duties can not only create issues with the credit reporting agency, it may result in the business being civilly liable to the customer who is the subject of a false or inaccurate report.
If a creditor violates the Fair Credit Reporting Act, the creditor may be sued by a consumer debtor in either state or federal court.
The consumer may seek an award of actual damages or $1,000 per violation, whichever amount is greater.
The consumer may potentially recover punitive damages for a willful violation of the FCRA.
A consumer who successfully prosecutes a claim for a FCRA violation may recover the costs of litigation and reasonable attorney fees.
A consumer may file a lawsuit within two years of the date the FCRA violation is discovered, up to a maximum of five years after the date that the violation occurred.