Consumer reporting companies must address inaccurate background check reports, the Consumer Financial Protection Bureau said Thursday.
Sloppy credit file sharing practices and inaccurate, old or false information can negatively impact consumers, CFPB officials said, and new guidance will help to ensure that what consumer reporting companies produce is reliable.
The first guidance, an advisory opinion on background check reports, said the reports must be complete, accurate and free of information that is outdated, expunged, sealed or otherwise legally restricted from public access. The second guidance said consumers are entitled to receive all of the information contained in their consumer file at the time that they request it, along with all of the sources the information came from, including both primary and intermediary or vendor sources.
“Background check and other consumer reporting companies do not get to create flawed reputational dossiers that are then hidden from consumer view,” CFPB Director Rohit Chopra said. “Background check reports, and all other consumer reports, must be accurate, up to date, and available to the people that the reports are about.”
In 2023, the CFPB and Federal Trade Commission (FTC) initiated a public inquiry into background checks, and asked consumers for their experiences with them when they were used to screen potential tenants for rental housing. The reports can cover a person’s credit history, rental history, employment, salary, professional licenses, criminal arrests and convictions, and driving records. However, CFPB research has shown that background checks often contain false or misleading information.
The inquiry received more than 600 comments, many from renters. Their experiences included the problems they encountered, including not receiving adverse action notices, as well as finding inaccuracies and errors that were difficult to correct and have impacted housing opportunities for decades. Many consumers described biases in criminal and credit systems impacting housing decisions.
The latest advisory opinions from the CFPB highlighted that consumer reporting companies, covered by the Fair Credit Reporting Act, must maintain procedures that would help them avoid producing reports containing false or misleading information.
Additionally, the advisory opinion reaffirms that consumers have a right to know and to dispute the information contained in that report and where it came from. Consumers only need to request the report and provide identification, and not through specific language or using industry jargon. Once requesting, reporting companies must provide consumers with the complete file, and present it in a way the average person could understand.