WASHINGTON–The Consumer Financial Protection Bureau (CFPB) has issued guidance to consumer reporting companies to address what it said is inaccurate background check reports, as well as sloppy credit file sharing practices.
According to the Bureau, the two advisory opinions seek to ensure that the consumer reporting system “produces accurate and reliable information and does not keep people from accessing their personal data.”
The CFPB said its advisory opinion on background check reports “highlights that those reports must be complete, accurate, and free of information that is duplicative, outdated, expunged, sealed, or otherwise legally restricted from public access.”
Second, the CFPB said its advisory opinion on file disclosure highlights that people are “entitled to receive all information contained in their consumer file at the time they request it, along with the source or sources of the information contained within, including both the original and any intermediary or vendor source.”
Background Check Reports
Noting background checks are often critical factors when landlords and employers make rental and employment determinations, the Bureau said CFPB research on tenant screening found background check reports often contain false or misleading information about individuals.
“The CFPB and Federal Trade Commission (FTC) launched a public inquiry in early 2023, and asked for people’s experiences with background checks used to screen potential tenants for rental housing,” the Bureau said. “The CFPB and More than 600 Comments
FTC received more than 600 comments. Most of the comments came from renters. They told the agencies about many problems they encounter, including not receiving adverse action notices and finding inaccuracies and errors that are difficult to correct and that have a decades long impact on housing opportunities.
“Many described biases in criminal and credit systems transferring into housing decisions,” the CFPB added.
The CFPB said it issued its advisory opinion on background screening to highlight that consumer reporting companies, covered by the Fair Credit Reporting Act, must maintain reasonable procedures to avoid producing reports with false or misleading information.
Recommended Procedures
Specifically, the CFPB said procedures should:
- Prevent the reporting of public record information that has been expunged, sealed, or otherwise legally restricted from public access.
- Ensure disposition information is reported for any arrests, criminal charges, eviction proceedings, or other court filings that are included in background check reports.
- Prevent the reporting of duplicative information.
A Reminder
“In addition, (the) advisory opinion on background screening reminds consumer reporting companies that they may not report outdated negative information—and that each negative item of information is subject to its own reporting period, the timing of which depends on the date of the negative item itself. For example, a criminal charge that does not result in a conviction generally cannot be reported by a consumer reporting company beyond the seven-year period that starts at the time of the charge,” the CFPB said.
Credit File Disclosure
Noting that people have the right to know what information consumer reporting companies keep about them as well as where the information originates, as such disclosures are a critical component of a person’s right to dispute false or misleading information, the CFPB said its advisory opinion on file disclosure reminds that individuals requesting their files:
- Only need to make a request for their report and provide proper identification – they do not need to use specific language or industry jargon to be provided their complete file.
- Must be provided their complete file with clear and accurate information that is presented in a way an average person could understand.
- Must be provided the information in a format that will assist them in identifying inaccuracies, exercising their rights to dispute any incomplete or inaccurate information, and understanding when they are being impacted by adverse information.
- Must be provided with the sources of the information in their file, including both the original and any intermediary or vendor source or sources.
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