CFPB Reaffirms That Inaccurate Reporting Techniques Violate the FCRA

The Bureau of Consumer Financial Protection (Bureau) has released an advisory opinion that reaffirmed its position that when consumer reporting agencies (CRA) rely on name-only matching procedures, this is a violation of 15 U.S.C. § 1681e of the FCRA. This advisory opinion is considered an interpretive rule. It was effective as of November 10, 2021, when it was published in the Federal Register.

This is an issue that should be of concern to everyone considering how common background checks are, but especially for anyone who is planning on applying for a job or trying to rent an apartment. The Bureau of Consumer Financial Protection discussed in its option the problems that inaccurate reporting has caused consumers.

According to the opinion, with name-only matching, a consumer reporting agency uses a first and last name when deciding whether or not information they have found applies to a particular person. They do not use other personally-identifying information along with the name, such as a Social Security number, address, or date of birth. The Bureau of Consumer Financial Protection stressed the significant risk of matching information with the wrong person when using name-only matching, especially if the consumer reporting agency fails to cross-check information with a variety of sources and relies on the public record alone. This is particularly a problem for minority communities since there is less diversity in last names, thus causing an increased risk of error.

As of July 1, 2017, any public record data that nationwide CRAs intend to use as part of a credit report must include a name, an address, and either a birthdate or Social Security number. Many CRAs no longer conduct name-only background checks, but there are some CRAs that still do. This is why the Bureau issued the advisory opinion. The bureau wanted to make it clear that the FCRA requires that CRAs use reasonable methods that will ensure that the data used has the maximum possible accuracy. The bureau also stated that name-only matching in background checks is not accurate enough to satisfy the FCRA.

The bureau further attempted to help consumers by emphasizing that CRAs need to use reasonable procedures to make sure that consumers’ background checks are accurate for the intended person. The bureau also stated that data about a person other than the person the report is about that is included in the background check has no purpose and violates the FCRA since it would need to have a permissible purpose.

Fortunately, there are a number of high-quality background check providers you can choose to perform a background check. By having the background check performed on yourself, it is easy to check the data included in the report and ensure that it is accurate. Then you can share this report with employers or landlords without worry that the provider they regularly choose uses low-quality and inaccurate techniques such as name-only matching.

Your personal background check is required for literally everything in your life these days, from employers to rentals. Take control of yours.

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