Legal Memorandum: Consumer Reports under the FCRA

Issue: Does inaccurate and incomplete disclosure of the contents of a consumer report to a third party violate the Fair Credit Reporting Act’s (FCRA) prohibition on using a consumer report without a permissible purpose?

The FCRA provides that a person may not use or obtain a consumer report for any purpose unless:

(1) the consumer report was obtained for a purpose for which it is authorized to be furnished pursuant to 15 U.S.C. § 1681b, and

(2) the purpose is certified in accordance with § 1681e of Title 15 by a prospective user of the report through a general or specific certification. 

15 U.S.C. § 1681b(f). 

First, with regard to subpart (1) of the statute above, § 1681b(a) lists the permissible purposes for which a consumer report may be furnished.  That subsection provides that a consumer reporting agency may permissibly furnish a consumer report to, among others:

(1) a person that the agency has reason to believe intends to use the information in connection with a credit transaction involving the consumer on whom the information is to be furnished, and involving the extension of credit to that consumer; or

(2) a person who otherwise has a legitimate business need for the information, in connection with a business transaction initiated by the consumer.

Id. § 1681b(A)(3)(A), (F)(1).*FN1

The second subpart of the statutory requirement is that the purpose for which the credit report is used or obtained must be certified in accordance with 15 U.S.C. § 1681e by a prospective user of the report, through a general or specific certification.  15 U.S.C. 1681b(f)(2).  Section 1681e provides that a consumer reporting agency must maintain reasonable […]