National Credit Reporting Agencies and Free Reports: Credit Reports Most People Have Never Heard Of: Comments to the Federal Trade Commission

Advocacy Comments

April 16, 2004

Federal Trade Commission
FACTA Free Reports
Post Office Box 1031
Merrified, VA 22116-1031
Electronic Filing:


RE: FACTA Free File Disclosures Proposed Rule, Matter No. R411005


To the Commission:


The Privacy Rights Clearinghouse (PRC) is pleased to join USPIRG and other consumer and privacy advocates (EREG - 666) in commenting on free reports for consumers as mandated by FACTA. The PRC wholeheartedly supports the joint comments. In addition, we provide separate comments about the Commission's proposal as it relates to "substantially nationwide consumer reporting agencies."


Such consumer reporting agencies (CRAs) may include entities that compile and report on consumers' medical records (MIB), residential and tenant history (such as U.D. Registry), insurance claims (CLUE), and employment history (such as Choicepoint) on a national basis.


The Commission's proposal states that "nationwide consumer reporting agencies should not, at this time, be required to provide annual file disclosures, and it is therefore not proposing a rule that would require any such agency to provide such disclosure." (Proposal p 37) Understandably the characteristics and role of entities that provide such reports are not as easily identified as those of consumer reporting agencies that provide strictly credit reporting. The Commission states in its proposal that it "may, at a later time, determine that [nationwide consumer reporting agencies] should provide annual file disclosures." (Proposal p 37)


We urge the Commission to study national consumer reporting agencies sooner rather than later and to issue regulations giving consumers' access to free reports. In our 12-year history we have received many complaints from individuals who have been harmed or otherwise disadvantaged because of erroneous or inappropriate information in such consumer reports. Here are just a few examples from our files:

  • The jobseeker who is repeatedly turned down for employment because, unbeknownst to her, she has a wrongful criminal record because of the actions of an identity thief who has used her name when arrested.
  • The individual who is not able to rent an apartment because a tenant registry lists the eviction record of the wrong John Smith.The home insurance policy that is increased substantially because inappropriate information is provided to the CRA by the insurance agent.
  • The individual who is turned down for health insurance because of a medical condition that is no longer a problem and that is reported after the 7-year limit on the MIB report.

We are particularly concerned about the area of employment background checks. The free report for consumer credit records allows consumers to monitor accounts for instances of financial identity fraud. However, as financial identity theft grows, so does the criminal identity theft, that is a thief uses a victim's name when a crime is committed. This form of fraud can follow a victim for years and prevent the victim from being employed without ever knowing why.


The employment background check and the public records gathered to issue an employment report are the most likely source a worker will have for detecting criminal identity theft. A recent survey found that 80% of employers are now conducting criminal background checks. An employer who decides not to hire an applicant based on information in the background check report is required by the FCRA to give an adverse action notice, along with a copy of the employment report. However, there is no guarantee that the employer will follow this procedure. An employer, if questioned, may simply say that one candidate was better qualified than another. Thus, the applicant is not entitled to the free employment report from the employer. We have heard from numerous jobseekers who have experienced just such a scenario.


A job applicant may obtain, for a fee, a copy of the "file" from the consumer reporting agency that compiled the employment report. However, here again, the applicant or employee is at a disadvantage. The FCRA requires an employer to give the consumer notice and get permission before an employment check is conducted. However, there is nothing in this "up-front" disclosure that requires an employer to name the employment screening company or give advice about how to obtain a copy of the employee's "file."


As more and more workers are looking for jobs and more employers are conducting criminal background checks, it is crucial that the Commission address the issue of criminal identity theft and the benefit to workers allowed to monitor public records information gathered for an employment background check.


For the above reasons, we urge the Commission to undertake a separate study and rulemaking initiative on the issue of national consumer reporting agencies such as the MIB report (Medical Information Bureau), CLUE (Comprehensive Loss Underwriting Exchange, a service of Choicepoint), tenant registries, and particularly those agencies that provide employment screening reports. We fully realize that the situation of employment screening and of tenant registries, where there are numerous CRAs, will present a challenge in terms of determining the best way to enable individuals to obtain reports. But that is just what a well-designed study can examine.


As we explained above, we at the Privacy Rights Clearinghouse have received many complaints over our 12-year history from individuals who have been harmed in one way or another by the weak disclosure requirements for these non-credit-related national CRAs. Tens of millions of individuals are affected each year by the information that is included in such reports. Critical decisions are being made that affect the well-being of countless individuals - whether they can rent an apartment, obtain insurance, or get a job. Given the many weaknesses in reporting requirements and the number of individuals affected, we strongly recommend that you study this matter soon.


Please see the bibliography below for a list of PRC publications that discuss the issues we've raised in our Comments.


Thank you for your consideration.



Beth Givens, Director
Privacy Rights Clearinghouse