Pheniks.net

The FCRA (Fair Credit Reporting Act) and FACTA (Fair & Accurate Credit Transactions Act) are US federal laws that are designed to protect consumers from the negligent practices of Consumer Reporting Agencies (CRA) or credit bureaus. However, some facets of the law have been left ambiguous, neutering the intended protection for consumers.The basic gist of the FCRA and FACTA is simply that each and every person has a right to an accurate and complete credit “file.” Additionally, the acts guarantee confidentiality, proper use of a consumer’s file, and institute protections for active duty military personnel and victims of identity theft. The FCRA and FACTA define in rather straightforward language how all of this is to be implemented. Actual execution of these laws has been a bit fuzzy.

The single most glaring issue with these laws is the utter lack of definition of the terms “accurate” or “complete.” This is grossly problematic. The several types of credit (installment, revolving, and balance monthly) each have certain basic information that are required for an account to be reported completely and accurately. For instance, revolving lines of credit (commonly credit cards) must at least report the following: credit limit, high balance, current balance, minimum payment, last payment amount, current status, and payment history. Some credit card issuers have been documented to willfully neglect to report the important information of the credit limit. The result of this triggers the statement in a FICO score summary of “Balance of bank or other revolving lines too high” and lowers said FICO score. One of the same issuers has even admitted to the federal government that this is their standard operating procedure because it allows them to increase interest rates on the very consumers they are reporting on.

Additional confusion enters the reporting equation when medical records are factored in. The FCRA defines medical information as “… information or data, whether oral or recorded, in any form or medium, created by or derived from a health care provider or consumer, that relates to: (A) the past, present, or future physical, mental, or behavioral health or condition of an individual; (B) the provision of health care to an individual; or (C) the payment for the provision of health care to an individual (15 USC Section 1681a 604 (i)(1))” Further in the act, there are a series of restrictions placed on CRA’s regarding this medical information without “affirmative consent” of the consumer. Despite the definitions and restrictions, medical information continues to be regularly and conspicuously reported and then furnished to those querying credit reports. Often, these ‘accounts’ are reported as collections with a note added that they are of a medical nature. Whether furnishers of medical information are slipping through a loophole or simply ignoring the law, it is clear that the spirit of the law is being bypassed. Except for extensions of credit through insurance, medical information has no place in a credit report even when it has to do with “the payment for the provision of health care to an individual.” This is defined as part of medical information by law. Collection agencies, CRA’s, and others continue to ignore this fact.

These issues are only two of many. I will be writing more on problems with the FCRA and FACTA as time goes by.