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May 30, 2009

15 U.S.C. 1681a - part 10

We are almost done with the explanation of 15 U.S.C. 1681a - the definition section of the Fair Credit Reporting Act. The next subsection I will explain is subsection (u) which defines the term "reseller".

"(u) The term 'reseller' means a consumer reporting agency that - -

(1) assembles and merges information contained in the database of another consumer reporting agency or multiple consumer reporting agencies concerning any consumer for purposes of furnishing such information to any third party, to the extent of such activities; and

(2) does not maintain a database of the assembled or merged information from which new consumer reports are produced."

[In other words, this means a company that buys the credit information from a consumer reporting agency and then resells it to a third party. You see this a lot with mortgage companies that buy "3 in 1" reports from resellers that take the information from all three national credit bureaus and combine them into one credit report that is easier for the loan officer at the mortgage company to use. Subsection (2) makes it clear that a consumer reporting agency could never be a reseller and vice versa.]

"(v) The term 'Commission' means the Federal Trade Commission."

[The Federal Trade Commission oversees the government's enforcement of the Fair Credit Reporting Act so anywhere you see the word "Commission" in the FCRA, its referring to the Federal Trade Commission.]

"(w) The term 'nationwide specialty consumer reporting agency' means a consumer reporting agency that compiles and maintains files on consumers on a nationwide basis relating to - -

(1) medical records or payments;

(2) residential or tenant history;

(3) check writing history;

(4) employment history; or

(5) insurance claims."

[This definition refers to many of the non-traditional consumer reporting agencies, such as those that deal exclusively with medical histories, tenant histories (used by landlords), check writing CRAs such as Telecheck, employment histories used by prospective employers, or companies that maintain records of your insurance claim history.]

"(x) Exclusion of Certain Communications for Employee Investigations

(1) A communication is described in this subsection if --

(A) but for subsection (d)(2)(D), the communication would be a consumer report;

(B) the communication is made to an employer in connection with an investigation of - -

(i) suspected misconduct relating to employment; or

(ii) compliance with Federal, State, or local laws and regulations, the rules of a self-regulatory organization, or any preexisting written policies of the employer;

(C) the communication is not made for the purpose of investigating a consumer's credit worthiness, credit standing, or credit capacity; and

(D) the communication is not provided to any person except - -

(i) to the employer or an agent of the employer;

(ii) to any Federal or State officer, agency, or department, or any officer, agency, or department of a unit of general local government;

(iii) to any self-regulatory organization with regulatory authority over the activities of the employer or employee;

(iv) as otherwise required by law; or

(v) pursuant to section 608."

[In other words, communications that are for investigations of suspected misconduct of employees or regarding compliance with a law, that also does not include the investigation of a consumer's credit history and is not just given out to a third party unless its the employer, a regulatory authority or a Federal or State officer, then its not a consumer report and is not covered by the Fair Credit Reporting Act.]

"(2) Subsequent disclosure. After taking any adverse action based in whole or in part on a communication described in paragraph (1), the employer shall disclose to the consumer a summary containing the nature and substance of the communication upon which the adverse action is based, except that the sources of information acquired solely for use in preparing what would be but for subsection (d)(2)(D) an investigative consumer report need not be disclosed."

[In other words, if a communication that is described in paragraph one is made and an adverse action (i.e. firing, demotion, decision not to hire), the employer must provide a summary of the communication to the consumer, much like a credit grantor must disclose such a summary after an adverse credit action (i.e. denial of credit application).]

"(3) For purposes of this subsection, the term 'self-regulatory organization' includes any self-regulatory organization (as defined in section 3(a)(26) of the Securities Exchange Act of 1934), any entity established under title I of the Sarbanes-Oxley Act of 2002, any board of trade designated by the Commodity Futures Trading Commission, and any futures association registered with such Commission."

This concludes (finally) my explanation of the definition section of the FCRA. Next is 15 U.S.C. 1681b which deals with the permissible reasons why someone can access your credit report.

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