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Federal Trade Commission Issues Staff Report on the Fair Credit Reporting Act and Withdraws Its 1990 Commentary


David N. Anthony

John C. Lynch

Alan D. Wingfield

Ethan G. Ostroff

On July 20, 2011, the Federal Trade Commission (“FTC”) issued a new Staff Report on the Fair Credit Reporting Act (“FCRA”), as well as the rescission of 16 CFR 600.1, 600.2, and the Appendix to Part 600 – Commentary on the Fair Credit Reporting Act. 

The Staff Report is a comprehensive restatement of the FTC’s interpretive documents regarding the FCRA, including a section-by-section summary of the agency’s interpretations of the FCRA. The Staff Report deletes and modifies several prior FTC interpretations of the FCRA, while also adding interpretations intended to reflect “changes that Congress has made to the FCRA over the years, rules issued by the FTC and other agencies under the FACT Act, statements in numerous staff opinion letters, and the staff’s experience from significant enforcement actions.”

Additionally, the Staff Report reflects an effort to clarify various FCRA requirements, such as those applicable to car dealers’ use of consumer reports and the legal standards for notices given when consumer reports are used for “firm offer of credit” purposes.

Simultaneously, the FTC also announced the withdrawal of its 1990 Statement of General Policy or Interpretations under the FCRA, which included a comprehensive Commentary on the FCRA (“1990 Commentary”). The 1990 Commentary provided broad guidance on the FTC’s interpretation of the FCRA. Although the Consumer Financial Protection Act of 2010 (“CFPA”) allows for the transfer of existing regulations and guidelines to the Consumer Financial Protection Bureau (“CFPB”), which is now vested with the authority to issue interpretive guidance under the FCRA, the FTC determined that the 1990 Commentary is “obsolete,” “stale” and “in conflict” with the FRCA as amended by the Consumer Credit Reporting Reform Act of 1996 and the Fair and Accurate Credit Transactions Act of 2003. As a result, the FTC officially rescinded the 1990 Commentary to “ensure that this obsolete document does not transfer to the CFPB.”

At least until the CFPB begins exercising its interpretative authority over the FCRA, the Staff Report will be a fundamental resource for compliance efforts and a statement of agency interpretation for courts. Persons interested in FCRA compliance need to add the Staff Report to their bookshelf.  

A copy of the FTC news release is here. A copy of the FCTA Staff Report is available here. The text of the Federal Register Notice, 16 CFR 600, is available here.

Troutman Sanders is an accomplished and experienced leader in providing litigation and regulatory advice to a broad spectrum of financial services institutions. Troutman Sanders’ CFPB Team monitors the development and activities of the CFPB on its blog and also advises clients on CFPB and Dodd-Frank issues. Additionally, Troutman Sanders’ Financial Services Litigation Group has successfully litigated a wide individual and class action litigation involving the FCRA and other federal and state consumer protection laws.

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