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Monday, June 1, 2009

15 U.S.C. 1681b - Part 1

We finally get to move past 15 U.S.C. 1681a on to 15 U.S.C. 1681b, which explains the permissible purposes for obtaining a consumer report. If its not permissible according to 1681b, then its impermissible and a violation of the Fair Credit Reporting Act.

"Permissible purposes of consumer reports

(a) In general. Subject to subsection (c), any consumer reporting agency may furnish a consumer report under the following circumstances and no other:

(1) In response to the order of a court have jurisdiction to issue such an order, or a subpoena issued in connection with proceedings before a Federal grand jury."

[There is some dispute as to whether a federal or state court subpoena is good enough for this section. In most states, subpoenas can be issued by a clerk, not just a judge. In the federal system, any attorney able to practice in any federal court can issue a subpoena. Experian refuses to produce a consumer report in response to just a subpoena but instead requires an actual order signed by a judge. Equifax and Trans Union, on the other hand, only require an issued subpoena.]

"(2) In accordance with the written instructions of the consumer to whom it relates."

[In other words, if the consumer consents in writing to the disclosure of his or her credit report.]

"(3) To a person which it has reason to believe

(A) 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, or review or collection of an account of, the consumer; or"

[i.e. if the recipient of the consumer report is considering granting the consumer credit or is reviewing the consumer's existing account with the recipient or if the recipient of the consumer report is attempting to collect a debt from the consumer regarding whom the consumer report relates.]

"(B) intends to use the information for employment purposes; or"

[i.e. when a prospective employer uses a consumer report to make a decision described in 15 U.S.C 1681a(h) (i.e. employment, promotion, reassignment or retention)]

"(C) intends to use the information in connection with the underwriting of insurance involving the consumer; or"

[i.e. when an insurance company uses a consumer report to decide whether to insure a consumer or in setting a premium]

"(D) intends to use the information in connection with a determination of the consumer's eligibility for a license or other benefit granted by a governmental instrumentality required by law to consider an applicant's financial responsibility or status; or"

[I see this mostly with top secret type clearances where the government wants to make sure the consumer with the top secret clearance is not susceptible to bribes because of too much debt.]

"(E) intends to use the information, as a potential investor or servicer, or current insurer, in connection with a valuation of, or an assessment of the credit or prepayment risks associated with, an existing credit obligation; or"

[I am stumped by this one. If anyone can clue me in as to what this means, please do so.]

"(F) otherwise has a legitimate business need for the information

(i) in connection with a business transaction that is initiated by the consumer; or

(ii) to review an account to determine whether the consumer continues to meet the terms of the account."

[Pretty much just a catch all for anyone needing to review a consumer's credit report in connection with a transaction initiated by the consumer or to review an account the consumer already has.]

"(4) In response to a request by the head of a State or local child support enforcement agency (or a State or local government official authorized by the head of such an agency), if the person making the request certifies to the consumer reporting agency that

(A) the consumer report is needed for the purpose of establishing an individual's capacity to make child support payments or determining the appropriate level of such payments;

(B) the paternity of the consumer for the child to which the obligation relates has been established or acknowledged by the consumer in accordance with State laws under which the obligation arises (if required by those laws);

(C) the person has provided at least 10 days' prior notice to the consumer whose report is requested by certified or registered mail to the last known address of the consumer, that the report will be requested; and

(D) the consumer report will be kept confidential, will be used solely for a purpose described in subparagraph (A), and will not be used in connection with any other civil, administrative, or criminal proceeding, for any other purpose."

[The head of a child support enforcement agency can get a delinquent father's credit report but only if certain extra qualifications are met, including that paternity has been established, the consumer gets 10 days notice before the consumer report is pulled and the consumer report is kept confidential and not used for any purpose other than the collection of the past due child support.]

"(5) To an agency administering a State plan under Section 454 of the Social Security Act (42 U.S.C. 654) for use to set an initial or modified child support award."

[i.e. when a consumer report is used to determine how much child support should be awarded or modified to be.]

I'll continue in part 2 with subsection (b) of 15 U.S.C. 1681b.

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