The Fair Credit Reporting Act

With the increasing importance of credit in the United States economy, a specialized group of agencies has developed to supply businesses with personal information on consumers. These reporting agencies come in two basic forms. Credit bureaus deal with purely economic data and use a file system to develop their reports. Investigative consumer reporting agencies issue a more comprehensive report which is generally the result of a field investigation. Because of subjective judgments, errors of identification, or use of untrustworthy sources, consumer reports often are inaccurate. The direct result of most inaccuracy is harm to the report's subject, the consumer. An erroneous piece of information may deprive him of credit, insurance, or employment. Despite the fact that in the past few years reports of individuals whose lives have been ruined or severely damaged by consumer reports have increased, the majority of American jurisdictions have held, in effect, that in defamation actions against reporting agencies, society's interest in the free flow of commercial information outweighs the interests of individuals who might be harmed by agency reports. This sheltering of the reporting industry from strict liability in defamation has been accomplished largely through the doctrine of conditional privilege. While state legislation has attempted to meet the need to regulate the practices of consumer reporting agencies, only a few states have dealt with the problem in a meaningful way. In response to the excesses of the consumer reporting industry, Congress has enacted the Fair Credit Reporting Act (FCRA). Its purpose is to require that consumer reporting agencies meet the obvious need for their services with a fair and equitable regard for the interests of consumers. While the legislation is deficient in some respects, it is significant in the progression of congressional consumer protection. The Act, technically an amendment to the Consumer Credit Protection Act, is applicable to all consumer reporting agencies which use the facilities of interstate commerce to prepare or send out their reports. Regulation of mercantile or business reporting agencies is omitted. The central concern of the FCRA is to insure accuracy in the reporting system. It also regulates the uses of consumer information and provides federal remedies in certain situations.