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Monday, October 12, 2009

Part one of explanation of 15 U.S.C. 1681d

Today I finally get back to disecting and explaining each section of the Fair Credit Reporting Act.  I completed my explanation of 15 U.S.C. 1681c-2 a while back, so I will move on to 15 U.S.C. 1681d, which deals with investigative consumer reports.

"1681d.  Disclosure of investigative consumer reports.

(a)  Disclosure of fact of preparation.  A person may not procure or cause to be prepared an investigative consumer report on any consumer unless

(1)  it is clearly and accurately disclosed to the consumer that an investigative consumer report including information as to his character, general reputation, personal characteristics and mode of living, whichever are applicable, may be made, and such disclosure

(A)  is made in a writing mailed, or otherwise delivered, to the consumer, not later than three days after the date on which the report was first requested, and

(B)  includes a statement informing the consumer of his right to request the additional disclsoures provided for under subsection (b) of this section and the written summary of the rights of the consumer prepared pursuant to section 609(c) [1681g]; and

(2)  the person certifies or has certified to the consumer reporting agency that

(A)  the person has made the disclosures to the consumer required by paragraph (1); and

(B)  the person will comply with subsection (b)."

[First, this section only applies to investigative consumer reports, not regular ol' generic credit reports.  Subsection (a) requires a user of a investigative consumer report (i.e. the person requesting that the investigative consumer report be prepared by the CRA - this could be anyone with a permissible purpose to obtain an investigative consumer report, such as a potential employer) to disclose in writing to the consumer within 3 days of the request for the investigative report the fact that an investigative consumer report may be made about the consumer and also inform the consumer of his rights under 1681d(b), which I will get to in a moment, and provide the written summary of rights required by 1681g, which at my current pace I won't get to in a long while.

Subsection (a)(2) requires to user to certify to the CRA preparing the investigative report that the user has made the (a)(1) disclosures to the consumer and will comply with 1681d(b).  Speaking of (b), here it is.]

"(b)  Disclosure on request of nature and scope of investigation.  Any person who procures or causes to be prepared an investigative consumer report on any consumer shall, upon written request made by the consumer within a reasonable period of time after the receipt by him of the disclosure required by subsection (a)(1) of this section, make a complete and accurate disclosure of the nature and scope of the investigation requested.  This disclosure shall be made in a writing mailed, or otherwise delivered, to the consumer not later than five days after the date on which the request for such disclosure was received from the consumer or such report was first requested, whichever is the later."

[This provision gives the consumer the right to request information about the nature and scope of the investigation being requested by the user.  The consumer must request this information within a reasonable period of time after receiving the 1681d(a)(1) notice that the investigative consumer report has been requested.  The section does not define what a "reasonable period of time" is.  Upon receipt of the request, which must be in writing, the user has until the longer of 5 days from when it first requested the investigative report or 5 days from when it received the request from the consumer requesting the nature and scope of the investigation to provide the "complete and accurate" dislcosure of the nature and scope of the investigation to the consumer.]

"(c)  Limitation on liability upon showing of reasonable procedures for compliance with provisions.  No person may be held liable for any violation of subsection (a) or (b) of this section if he shows by a preponderance of the evidence that at the time of the violation he maintained reasonable procedures to assure compliance with subsection (a) or (b) of this section."

[This is a pretty crappy portion of 1681d.  It should be labeled "what one hand giveth, the other taketh away".  Read literally, a user can completely avoid doing what it is required by 1681d(a) and 1681(b) as long as it "maintains" reasonable procedures to comply with these subsections.  This contrasts with at least one other section of the FCRA, which requires that reasonable procedures be "followed", not just maintained.  So, if a court strictly applies this "limitation on liability", all the user must do to avoid its duties is to "maintain", but not actually follow or use, reasonable procedures to comply with 1681(a) and (b).  Crazy.  Hopefully, no court is that naive.]

I will conclude my explanation of 1681d in the near future.

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