The Unfair Credit Reporting Act

This is a guest post by Goodman Law Center Law Clerk John K. Ellis, who researched this area in depth for a recent matter.


Have you ever noticed that the names chosen by the Congress for their various federal enactments oftentimes are the diametric opposite of the effect that these self-same enactments produce in the real world? One such obvious example is the so-called Fair Credit Reporting Act (FCRA), which more appropriately should be denominated as the “Unfair” Credit Reporting Act (UCRA). Congress originally enacted the FCRA in 1970 “to ensure fair and accurate credit reporting, promote efficiency in the banking system, and protect consumer privacy.” However, in practice, the FCRA has produced exactly the opposite effect upon consumers. Although the FCRA started out as an improvement in credit reporting, the FCRA has been co-opted by the credit-reporting industry over the years. As a result, consumers now are unable to rely upon the FCRA to protect their credit interests and reputations. The underlying source of the problem is that the FCRA generally has been interpreted to preempt state law. This federal preemption then effectively prevents state legislatures from protecting their own state consumers and compels consumers to rely solely upon the FCRA to protect their credit interests and reputations. Unfortunately, the FCRA itself does not adequately protect consumers against the credit-reporting industry. In our humble opinion, this is a grossly inequitable result for consumers, and the FCRA very much appears to be in need of reform by the Congress.

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