Exam (elaborations)
Part 2 CRAs Questions and Answers 2024
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Exam of 5 pages for the course CRAS at CRAS (Part 2 CRAs)
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Part 2 CRAsFive Groups Affected by FCRA - answerConsumer Reporting Agencies, End Users,
Furnishers, Resellers, Consumers
Five Basic Duties of CRAs - answer1. Maintain "reasonable procedures to assure
maximum possible accuracy"
2. Provide consumer reports to only those with a "permissible purpose" and consisting
only of the information that can be reported under the law.
3. Conduct "re investigations" in the event of a consumer dispute.
4. Make "disclosures" to consumers.
5. Properly dispose of consumer information.
Duty 1 Maintain Reasonable Procedures - answer"Whenever a consumer reporting
agency prepares a consumer report it shall follow reasonable procedures to assure
maximum possible accuracy of the information concerning the individual about who the
report relates"
This is the most heavily litigated section of the FCRA with hundreds of cases filed each
year.
Cases can result in substantial damages. A jury in Oregon awarded a plaintiff to $18
million in punitive damages against Equifax.
Reasonable Procedures do not Require 100 % Accuracy - answer"If a CRA reports an
item of information that turns out to be inaccurate, it does not violate the FCRA if it has
established reasonable procedures in reporting the item.
A plaintiff must prove an inaccuracy, failure to follow reasonable procedures, an injury,
the injury was caused by the inaccuracy
Technical Accuracy may not be enough - answerSome courts hold that CRAs can be
liable for reporting technically accurate information if it is nevertheless "misleading" or
"incomplete"
This can include reporting an account as "litigation pending" without indicating that the
consumer had initiated the lawsuit.
Example includes reporting of "duplicate" convictions or criminal charge that lacks
disposition(Misleading)
, Example includes someone who had a conviction but the felony is later expunged or
dropped to a misdemeanor( incomplete)
Reasonable Procedures:Public Records Data for Employment Purposes - answer15
USC 1681k
In addition to maintaining reasonable procedures generally, CRAs that prepare
consumer reports for employment purposes that include public record data must either :
1. At the time such information is reported to the end user notify the consumer that the
information is being reported OR 2. Maintain "strict procedures" to insure that the public
record information is "complete and up to date"
Duty 2: Sell only to End Users with a "Permissible Purpose" - answerExamples: In
response to subpoena or court order.
In accordance with written instructions from a consumer who is the subject of the report.
A credit transaction with the consumer.
For employment purposes( with written authorization of the consumer.
For insurance underwriting purposes.
National Security investigations.
Examples of things that are not permissible Purposes. - answerCuriosity
Litigation; however, consumer reports can be sold to those engaged in debt collection,
without triggering the FCRA.
~this has been the subject of litigation. the debt collector may still only obtain a report in
connection with its attempts to collect debt
Marketing( subject to certain exceptions)
Compliance with the Permissible Purpose Requirement - answerCRAs must maintain
"reasonable procedures" to insure that only those with permissible purpose get
consumer reports
Examples of reasonable procedures: Conduct on site visits/inspection
Check end user's business license or incorporation documents.
Check end user's references.
Check publicly available information regarding the end user(telephone directory)
Examine application and supporting documentation for discrepancies.
Periodic Audits
Monitoring of use activities.
Compliance with the Permissible Purpose Requirement cont. - answerEnd users must ,
identify themselves, certify the purpose for obtaining the report and certify that the
information in the report will be used for no other purpose.
~FTC staff report indicated that a blanket certification may be acceptable(no need to
obtain a certification for each individual report, it may not always be regarded as
sufficient.
~Criminal sanctions, including 2 years imprisonment for employees of CRAs who
knowingly provide consumer reports to those who do not have permissible purpose.
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