On January 11, 2024, the Consumer Financial Protection Bureau (CFPB) issued two new advisory opinions: Fair Credit Reporting; Background Screening and Fair Credit Reporting; File Disclosure. The advisory opinions are part of the CFPB’s ongoing efforts to clean up what the CFPB describes in its press release as allegedly “sloppy” credit reporting practices and ensure credit report accuracy and transparency to consumers. As a reminder, advisory opinions are interpretive rules that provide guidance on the CFPB’s interpretation of a particular law or regulation.

The Biden Administration kicked off 2023 by issuing the “Blueprint for a Renter Bill of Rights” and directing the CFPB and Federal Trade Commission (FTC) to take actions in furtherance of those principles. In February, the CFPB and FTC issued a request for information on background screening in connection with rental housing. In July, the FTC issued a blog post reminding landlords, property managers, and other housing providers of their obligation under the Fair Credit Reporting Act to provide notice of adverse action when information in a consumer report leads them to deny housing to an applicant or require the applicant to pay a deposit that other applicants would not be required to pay. In November, the CFPB released two reports concerning tenant background checks. “Consumer Snapshot: Tenant Background Checks” discusses consumer complaints received by the CFPB that relate to tenant screening by landlords and “Tenant Background Checks Market” looks at the practices of the tenant screening industry. The CFPB has previously addressed the issues of accurate credit reporting and investigating credit report disputes in its supervisory highlights.

Background Checks

In the first advisory opinion, the CFPB addresses the provision of background check reports. Background checks are used by landlords and employers to make rental and employment determinations, respectively. Background check reports prepared by employment and tenant screening companies often contain information compiled from several sources about a consumer’s credit history, rental history, employment, salary, professional licenses, criminal arrests and convictions, and driving records. The CFPB advisory says prior research has determined that background check reports often contain false or misleading information that may adversely affect an individual’s housing or employment. In 2021, the CFPB issued an advisory opinion that it was unreasonable for consumer reporting agencies (CRAs) to use name-only matching (matching records to a consumer by first and last name without any other identifying information).

The current advisory opinion highlights that CRAs, covered by the Fair Credit Reporting Act (FCRA), must “follow reasonable procedures to assure maximum possible accuracy” under Section 607(b). Specifically, the CRA’s procedures should:

1. Prevent the reporting of public record information that has been expunged, sealed, or otherwise legally restricted from public access;
2. Ensure disposition information is reported for any arrests, criminal charges, eviction proceedings, or other court filings that are included in background check reports; and
3. Prevent the reporting of duplicative information.

The advisory opinion further reminds consumer reporting companies that they may not report outdated negative information, such as a criminal charge that does not result in a conviction, for periods longer than permitted under FCRA section 605(a). While no time limit applies to reporting disposition information on criminal convictions, an arrest with no conviction ends seven years after the arrest date and subsequent events do not restart the reporting period applicable to the arrest. The CFPB further highlighted its settlement with TransUnion related to furnishing tenant screening reports without including available disposition information for the eviction proceedings.

CRA Disclosure of Credit Files

In the second advisory opinion, the CFPB addresses the consumer reporting agencies’ disclosure obligations to deliver complete files to consumers upon request. In the advisory opinion, the CFPB clarifies the consumer reporting agencies’ obligation, pursuant to Section 609(a) of FCRA, upon the consumer’s request, to “clearly and accurately” disclose “all information in the consumer’s file at the time of the request.” Relying on a Third Circuit holding in Kelly v. RealPage, Inc., 47 F.4th 202, 221 (3rd Cir. Aug. 24, 2022), the CFPB further emphasizes that consumers do not need to use specific language (such as “complete file” or “file”) in their request to trigger a consumer reporting agency’s file disclosure requirement under Section 609(a).

Specifically, the consumer reporting agency must provide consumers the following:

1. At least one free file disclosure annually and in connection with adverse action notices and fraud alerts;
2. Consumer’s complete file with clear and accurate information that is presented in (i) a way an average person could understand and (ii) a format that will assist consumers in identifying inaccuracies, exercising their rights to dispute any incomplete or inaccurate information, and understanding when they are being impacted by adverse information; and
3. All sources for the information contained in consumers’ files, including both the originating sources and any intermediary or vendor sources, so consumers can identify the source and correct any misinformation (noting that only providing summarized information would not be compliant).

However, Section 609(a) does not require disclosure of any credit score, risk score or predictor.

This new file disclosure guidance aligns with the CFPB’s other efforts to ensure consumers have access to their data in Personal Financial Data Rights rulemaking and the Section 1034(c) advisory opinion.

As we previously blogged, the CFPB also has launched an FCRA rulemaking. We will continue to monitor any CFPB developments related to FCRA.

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