The Expert Podcast

If you are an investigator or a business owner involved with running background checks, credit checks, or any type of consumer research, be aware that the Consumer Financial Protection Bureau (CFPB) has issued clarification on existing rules. This isn't technically a new rule but a significant clarification that essentially functions as one. This advisory opinion was recently posted to the Federal Register and outlines certain obligations for consumer reporting agencies and their users.

Firstly, it emphasizes that you cannot falsely represent reasons for obtaining sensitive records. The big takeaway is that consumer reporting agencies must ensure they provide information only about the specific individual requested, avoiding mix-ups with similarly named individuals. Providing a consumer report without reasonable belief that it pertains to the requested individual is prohibited. Disclaimers cannot remedy this failure to ensure accurate reporting.

The CFPB stresses consumer privacy rights, explaining that credit reporting agencies must use procedures that accurately match names. This means reports should pertain solely to the person in question, not others who may share similar identifiers. Unauthorized access to information on unrelated parties, even if unintentional, is a violation.

Credit reporting companies are expressly prohibited from providing reports on multiple individuals when the requester is only authorized to access information on one. This rule underscores the importance of taking reasonable steps to verify information accuracy before reporting. Disclaimers stating potential mismatches do not absolve providers from this responsibility.

Both providers and users of consumer reports are affected by these regulations. Failure to comply can lead to serious consequences, including criminal liability for both providers and users. Covered entities must be vigilant in ensuring all uses of consumer reports are lawful and appropriate.

The scope of background checks varies widely, encompassing social media checks, employment history verification, credit history reviews, and criminal background checks. Legal restrictions on their use vary by jurisdiction, so it's crucial to understand permissible uses based on local laws.

Licensed investigators and businesses using consumer reports for any purpose must stay informed and ensure compliance with CFPB rules. While this advisory clarifies existing regulations rather than introducing new ones, failing to adhere to these guidelines can invalidate previous uses of consumer reports.