I represent a lot of consumers in litigation using different federal laws designed to protect consumers, such as the Fair Credit Reporting Act, the Fair Debt Collection Practices Act and the Telephone Consumer Protection Act. Because of my experience representing consumers, I have learned what rights consumers have and, as often as not, do not know they have. So I decided to do a series of posts about various rights of consumers under these particular laws. I hope you enjoy and learn about your rights as a consumer.
This first post in the series will focus on when a consumer is entitled to a free credit report.
So when is a consumer entitled to a free credit report? First bombshell - no consumer is ever entitled to a free credit report. Why? Because, in the eyes of the law, there is no such thing as a credit report. Instead, there are "consumer reports" and "consumer disclosures". Consumer reports are basically what most people think of as a credit report. The Fair Credit Reporting Act ("FCRA" for short) calls them "consumer reports" because consumer reports can deal with much more than just credit. Background checks are consumer reports. Compilations of insurance claims can be consumer reports. So can a lot of other types of "compilations of data".
15 U.S.C. 1681a(d) defines a consumer report as "any written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer’s eligibility for:
(A) credit or insurance to be used primarily for personal, family, or household purposes;
(B) employment purposes; or
(C) any other purpose authorized under section 604 [§ 1681b]."
15 U.S.C. 1681a(f) defines a consumer reporting agency as "any person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties, and which uses any means or facility of interstate commerce for the purpose of preparing or furnishing consumer reports." And the term "person" includes corporations or other businesses.
So what does all that mean? Basically, if a company or person compiles information about a consumer not for their own use but to provide it to a third party (usually in exchange for money), then that compilation of information is a consumer report. When a consumer applies for a loan or a credit card, and the potential lender gets the consumer's "credit report", what they are actually getting is a consumer report. Also, when a consumer applies for insurance or, in some instances, even a job, the insurance company or prospective employer often obtains a consumer report on the consumer before agreeing to insure or hire the consumer.
So when does a consumer have the right to get a free copy of his or her consumer report? Again the answer is never. This is true because consumer reports, by definition, only go to third parties (i.e. the credit card company or mortgage company).
A consumer disclosure, on the other hand, is basically the same thing as a consumer report (at least its supposed to be) but the recipient of a consumer disclosure is the consumer rather than a third party. For the most part, the content of both a consumer report and a consumer disclosure is supposed to be the same, with the exception that the consumer disclosure has both hard and soft inquiries (i.e. records of access of the consumer's credit history).
Why the distinction between consumer reports and consumer disclosures? Because a credit bureau can not be sued for the contents of a consumer disclosure but can be sued, under the right circumstances, for the contents of a consumer report. The concept is similar to the tort of defamation. You can not sue me for telling you something untrue about you but you can sue me if I tell a third person a lie about you. Congress wanted the credit bureaus to feel free to truthfully disclose the contents of a person's credit history to the person himself so they made it where the credit bureaus can not be sued for the contents of the consumer disclosure. But they can still be sued for the contents of the consumer report, assuming they violated the FCRA in some way.
So, when is a consumer entitled to a free copy of his or her consumer disclosure?
First and foremost, the big three credit bureaus Experian, Trans Union and Equifax are required to provide every consumer with one free consumer disclosure a year. But this is not an automatic process. Instead, each consumer must request a copy of his or her consumer disclosure. There are three different ways to request your free annual consumer disclosure. First, you can visit www.annualcreditreport.com which, despite the name, gets you your free consumer disclosures. This website allows you to choose which of your free consumer disclosures you want and then the site re-directs you to each of the credit bureaus' websites for the disclosures you want.
Second, you can use the form found at this location - https://www.consumer.ftc.gov/articles/pdf-0093-annual-report-request-form.pdf - to request your free consumer disclosure(s) by mail. Takes longer than accessing them online but at least you know you are not agreeing to anything you do not want to agree to by using the credit bureaus' websites.
Lastly, you can call 877-322-8228 to request your free consumer disclosures by phone.
Consumers are also entitled to a free consumer disclosure from any credit bureau whose consumer report is used in an adverse credit decision. If you are turned down for a credit card, a loan, insurance or a job based upon the contents of your consumer report, the "user" of the consumer report that turned you down is required to send you a letter that states that you were turned down and gives you the name of the consumer reporting agency (aka credit bureau) whose information they used as part of the basis for their decision to turn you down. This adverse action letter is also supposed to either give you the reasons why you were turned down (i.e. too much derogatory credit) or tell you that, within 60 days, you can request the reasons for the turn down in writing. In my opinion, you should always request the reasons why you were turned down because you might just learn something like that bad credit is wrongfully being reported on your consumer report and because you should make any user too lazy to include the reasons in the original adverse action letter have to take the extra step of having to write you a whole new letter to tell what they should have already told you.
You can also get a free copy of your consumer disclosure if you are a victim of fraud, including identity theft.
To sum up - free credit report? No such thing. Free consumer report? Not going to happen. Free consumer disclosure? Once a year from each of Experian, Trans Union and Equifax and also any time you suffer a credit denial or other adverse action or are the victim of fraud.
Last but not least. If you find an error on your consumer disclosure, you should dispute it to the credit bureaus in writing using their addresses found on this page of our website - www.kittell-law.com/practiceareas/consumerprotection/faircreditreportingact.
And, if the credit bureaus fail to correct the error, you should contact the Kittell Law Firm to seek possible representation in a Fair Credit Reporting Act lawsuit.