The Fair Credit Reporting Act (FCRA) was enacted in 1970 and amended in 1996 for the purpose of ensuring accuracy and fairness in credit reporting, maintaining confidentiality, and ensuring the proper use and dissemination of certain types of consumer information. Specifically, FCRA requires credit reporting agencies to maintain accurate reports, to distribute the information for statutorily enumerated purposes and protect consumers from faulty reporting or misuse of their information. The 1996 FCRA amendments contained important preemption provisions related to prescreening activities, time periods for disputing the accuracy of reports, adverse action requirements, information contained in credit reports and furnisher obligations, to name a few. These preemptions were permanently reauthorizing by Congress in 2003 by the Fair and Accurate Credit Transactions Act (FACTA), which contained several new and important provisions that affect the way lenders do business including:
o mandatory issuance of credit scores;
o mandatory issuance of risk based pricing notices;
o restrictions on affiliate sharing;
o increased furnisher obligations;
o identity theft protections;
o one free credit report to each consumer per year; and
o enhanced disclosure of the means available to opt-out of prescreened lists.
MBA supported permanently reauthorizing the FCRA preemptions, as the maintenance of a national standard of consumer credit benefits consumers by lowering the cost of homeownership. It also benefits lenders through requiring compliance with one set of rules instead of a patchwork of state laws.