Fair and Accurate Credit Transactions Act of 2003 (FACTA) amends the Fair Credit Reporting Act (FCRA)
Date: 7/23/10
Title: Fair and Accurate Credit Transactions Act of 2003 (FACTA) amends the Fair Credit Reporting Act (FCRA)
The amendment requires federal agencies to implement new rules designed to increase the accuracy¹ and integrity² of information that "furnishers" provide to consumer reporting agencies. On July 1, 2009 the FTC and other federal agencies issued a joint final rule, effective July 1, 2010, imposing requirements on businesses that provide consumer information to consumer reporting agencies. "Furnishers" are typically bank and credit card companies; however, other employers may also be covered. The FTC recently determined that a reference-checking provider was a consumer reporting agency under the FCRA. As a result, employers who provide payroll and other employee-related information to consumer reporting agencies in connection with outsources services, e.g. reference checking or unemployment processing, are considered "furnishers". Additionally, employers that outsource these functions to consumer reporting agencies must comply with the new rule, which requires an employer to:
- Implement an maintain policies and procedures designed to ensure accuracy and integrity of information provided to these agencies.
- Investigate a "direct dispute" from a current or former employee regarding the accuracy or completeness of information that was provided by the employer to the consumer reporting agency. The final rule expands FCRA and allows an employee to directly challenge the information provided by contacting the employer directly. The employer is then required to conduct a reasonable investigation to determine the validity of the employee's dispute.
The final rule requires the investigation of any dispute as it relates to "any other information contained in a consumer report regarding an account or other relationship with the furnisher that bears on the consumer's creditworthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living." Information about the employee's work or work history, e.g. job title, compensation, dates of employment, and reason the employment relationship ended, falls within the perimeters of the final rule. Therefore, if a current or former employee disputes any of this information, the employer must conduct an investigation and report bck to the employee within 30 days of receiving the notice of the dispute. If the employer determines that it provided inaccurate or incomplete information,it must notify each consumer reporting agency and provide corrections to make the information accurate. The employer is only required to conduct an investigation if the employee provides sufficient information to allow the employer to investigate.
Employee Implications:
Assess when and how your organization is exchanging employment data and history with any consumer reporting agency. Review your policies and procedures to ensure that you have outlined the process to be used to report information about employees, along with your procedures fr investigating disputes, and the manner in which records will be maintained. Don't forget to evaluate your data integrity, oversights, training, and internal controls for complying with this final rule.
¹ Accuracy - information that is facturally correct.
² Integrity - informaton that can be substantiated by business records and is presented to the consumer reporting agency in a form and manner that is designed to minimize the likelihood that the information may be incorrectly reflected in any report prepared by the consumer reporting agency.
The foregoing has been prepared for the general informaion of clients and friends of Workplace Dynamics LLC. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel.