Rule2021-24471
Fair Credit Reporting; Name-Only Matching Procedures
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
November 10, 2021
Effective
November 10, 2021
Issuing agencies
Consumer Financial Protection Bureau
Abstract
The Bureau of Consumer Financial Protection (Bureau) is issuing this advisory opinion to highlight that a consumer reporting agency that uses inadequate matching procedures to match information to consumers, including name-only matching (i.e., matching information to the particular consumer who is the subject of a consumer report based solely on whether the consumer's first and last names are identical or similar to the names associated with the information), in preparing consumer reports is not using reasonable procedures to assure maximum possible accuracy under section 607(b) of the Fair Credit Reporting Act (FCRA).
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<title>Federal Register, Volume 86 Issue 215 (Wednesday, November 10, 2021)</title>
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[Federal Register Volume 86, Number 215 (Wednesday, November 10, 2021)]
[Rules and Regulations]
[Pages 62468-62472]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-24471]
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BUREAU OF CONSUMER FINANCIAL PROTECTION
12 CFR Part 1022
Fair Credit Reporting; Name-Only Matching Procedures
AGENCY: Bureau of Consumer Financial Protection.
ACTION: Advisory opinion.
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SUMMARY: The Bureau of Consumer Financial Protection (Bureau) is
issuing this advisory opinion to highlight that a consumer reporting
agency that uses inadequate matching procedures to match information to
consumers, including name-only matching (i.e., matching information to
the particular consumer who is the subject of a consumer report based
solely on whether the consumer's first and last names are identical or
similar to the names associated with the information), in preparing
consumer reports is not using reasonable procedures to assure maximum
possible accuracy under section 607(b) of the Fair Credit Reporting Act
(FCRA).
DATES: This advisory opinion is effective on November 10, 2021.
FOR FURTHER INFORMATION CONTACT: Brandy Hood, Courtney Jean, Kristin
McPartland, Amanda Quester, or Pavneet Singh, Senior Counsels, Office
of Regulations, at (202) 435-7700 or <a href="https://reginquiries.consumerfinance.gov/">https://reginquiries.consumerfinance.gov/</a>. If you require this document in an
alternative electronic format, please contact
<a href="/cdn-cgi/l/email-protection#682b2e382a37290b0b0d1b1b010a0104011c11280b0e180a460f071e"><span class="__cf_email__" data-cfemail="33707563716c7250505640405a515a5f5a474a73505543511d545c45">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION: The Bureau is issuing this advisory opinion
through the procedures for its Advisory Opinions Policy.\1\ Refer to
those procedures for more information.
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\1\ 85 FR 77987 (Dec. 3, 2020).
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I. Advisory Opinion
A. Background
Accuracy in consumer reports is of vital importance to the consumer
reporting system, particularly as consumer reports play an increasingly
important role in the lives of American consumers. Consumer reporting
agencies assemble and evaluate credit, public record, and other
consumer information into consumer reports. The information in these
reports is used by many different types of businesses, from creditors
and insurers to landlords and employers, to make eligibility and other
decisions about consumers. Creditors, for example, use information in
consumer reports to determine whether, and on what terms, to extend
credit to a particular consumer. The majority of landlords and
employers use background screening reports to screen prospective
tenants and employees.\2\
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\2\ See Nat'l Consumer Law Ctr., Broken Records Redux: How
Errors by Criminal Background Check Companies Continue to Harm
Consumers Seeking Jobs and Housing 3 (Dec. 2019), <a href="https://www.nclc.org/images/pdf/criminal-justice/report-broken-records-redux.pdf">https://www.nclc.org/images/pdf/criminal-justice/report-broken-records-redux.pdf</a>; Bureau of Consumer Fin. Prot., Market Snapshot:
Background Screening Reports: Criminal background checks in
employment 3-4 (Oct. 2019), <a href="https://files.consumerfinance.gov/f/documents/201909_cfpb_market-snapshot-background-screening_report.pdf">https://files.consumerfinance.gov/f/documents/201909_cfpb_market-snapshot-background-screening_report.pdf</a> (CFPB Background Screening Report); Sharon
Dietrich, Preventing Background Screeners from Reporting Expunged
Criminal Cases, Sargent Shriver Nat'l Ctr. on Poverty L. (Apr.
2015).
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Inaccurate information in consumer reports can have significant
adverse impacts on consumers. These impacts are particularly concerning
for prospective renters and job seekers struggling to recover from the
impacts of the COVID-19 pandemic. Consumers with inaccurate information
in their consumer reports may, for example, be denied credit or housing
they would have otherwise received, or may be offered less attractive
terms than they would have been offered if their information had been
accurate. For example, an applicant whose tenant screening report shows
past litigation or a poor rental payment history may find it difficult
or more expensive to rent property.\3\ Job-seekers with inaccurate
information in their consumer reports may also be denied employment
opportunities.\4\ Inaccurate information in consumer reports can also
harm the businesses that use such reports by leading them to incorrect
decisions. Consumer report accuracy relies on the various parties to
the consumer reporting system: the three nationwide consumer reporting
agencies--Equifax, Experian, and TransUnion; other consumer reporting
agencies, such as background screening companies; entities such as
creditors who furnish information to consumer reporting agencies (i.e.,
furnishers); public record repositories; users of credit reports; and
consumers.
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\3\ See, e.g., Bureau of Consumer Fin. Prot., Complaint
Bulletin: COVID-19 issues described in consumer complaints 15 (July
2021), <a href="https://files.consumerfinance.gov/f/documents/cfpb_covid-19-issues-described-consumer-complaints_complaint-bulletin_2021-07.pdf">https://files.consumerfinance.gov/f/documents/cfpb_covid-19-issues-described-consumer-complaints_complaint-bulletin_2021-07.pdf</a>
(CFPB Complaint Bulletin) (noting that, in their complaints to the
Bureau, some consumers have reported being denied applications for
housing because information in their tenant screening reports was
inaccurate, and other consumers reported facing homelessness because
an eviction had negatively affected their credit, making it more
difficult to secure housing); Kaveh Waddell, How Tenant Screening
Reports Make It Hard for People to Bounce Back from Tough Times,
Consumer Reports (Mar. 11, 2021), <a href="https://www.consumerreports.org/algorithmic-bias/tenant-screening-reports-make-it-hard-to-bounce-back-from-tough-times/">https://www.consumerreports.org/algorithmic-bias/tenant-screening-reports-make-it-hard-to-bounce-back-from-tough-times/</a>; Lauren Kirchner & Matthew Goldstein, How
Automated Background Checks Freeze Out Renters, N.Y. Times (May 28,
2020), <a href="https://www.nytimes.com/2020/05/28/business/renters-background-checks.html">https://www.nytimes.com/2020/05/28/business/renters-background-checks.html</a>.
\4\ CFPB Background Screening Report, supra note 2, at 13-14.
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The FCRA, enacted in 1970, regulates consumer reporting. The
statute was designed to ensure that ``consumer reporting agencies adopt
reasonable procedures for meeting the needs of commerce for consumer
credit, personnel, insurance, and other information in a manner which
is fair and equitable to the consumer, with regard to the
confidentiality, accuracy, relevancy, and proper utilization of such
information.'' \5\ The FCRA was enacted ``to protect consumers from the
transmission of inaccurate information about them and to establish
credit reporting practices that utilize accurate, relevant, and current
information in a confidential and responsible manner.'' \6\ Because of
the importance of consumer report accuracy to businesses and consumers,
the structure of the FCRA creates interrelated legal standards and
requirements to support the policy goal of accurate credit reporting.
Among these is the requirement that, when preparing a consumer report,
consumer
[[Page 62469]]
reporting agencies ``shall follow reasonable procedures to assure
maximum possible accuracy of the information concerning the individual
about whom the report relates.'' \7\ This requirement remains as
important today as it was when the statute was enacted in 1970.
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\5\ 15 U.S.C. 1681(b).
\6\ Guimond v. Trans Union Credit Info., 45 F.3d 1329, 1333 (9th
Cir.1995) (citations omitted).
\7\ 15 U.S.C. 1681e(b).
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Concerns about the accuracy of information included in consumer
reports are long-standing. In 2003, Congress passed the Fair and
Accurate Credit Transactions (FACT) Act, which, in addition to
expanding the FCRA's substantive consumer protections, required the
Federal Trade Commission (FTC) to conduct an ongoing study of consumer
report accuracy and completeness.\8\ In 2012, the FTC published a
report summarizing results of that study, finding, among other things,
that one in five consumers who participated in the study had an error
on at least one of their three nationwide credit reports.\9\ More
recently, the Bureau and the FTC hosted a full-day public workshop to
discuss issues affecting the accuracy of both traditional credit
reports and employment and tenant background screening reports.\10\
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\8\ Fair and Accurate Credit Transactions Act of 2003, Public
Law 108-159, sec. 319, 117 Stat. 1952 (2003).
\9\ See Fed. Trade Comm'n, Report to Congress Under Section 319
of the Fair and Accurate Credit Transactions Act of 2003, at 64
(Dec. 2012), <a href="https://www.ftc.gov/sites/default/files/documents/reports/section-319-fair-and-accurate-credit-transactions-act-2003-fifth-interim-federal-trade-commission/130211factareport.pdf">https://www.ftc.gov/sites/default/files/documents/reports/section-319-fair-and-accurate-credit-transactions-act-2003-fifth-interim-federal-trade-commission/130211factareport.pdf</a>.
\10\ Fed. Trade Comm'n, Accuracy in Consumer Reporting Workshop
(Dec. 10, 2019), <a href="https://www.ftc.gov/news-events/events-calendar/accuracy-consumer-reporting-workshop">https://www.ftc.gov/news-events/events-calendar/accuracy-consumer-reporting-workshop</a>.
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The Bureau is especially concerned about the effects of these
accuracy problems in light of the economic and public health impacts of
COVID-19. Income shocks resulting from the pandemic, such as a job
loss, reduced work hours, or the death or illness of a family member,
have contributed to an increase in housing and financial insecurity for
many households.\11\ Low-income and minority renters have been
disproportionately affected by the economic effects of the COVID-19
pandemic, including job losses.\12\ The Bureau is concerned that the
risk that inaccurate data will be included in consumer reports may be
further heightened by increased volumes of negative information in the
consumer reporting system resulting from the pandemic. Inaccurate
information in consumer reports can have devastating impacts on
consumers, including impairing the ability of renters and job-seekers
negatively impacted by the pandemic to secure new rental housing, find
employment, and otherwise recover from the pandemic's economic effects.
An increase in housing instability and financial distress caused by
inaccurate consumer reporting information could undermine the nation's
efforts to recover from the pandemic.
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\11\ See Bureau of Consumer Fin. Prot., Housing Insecurity and
the COVID-19 Pandemic, at 5 (Mar. 1, 2021), <a href="https://files.consumerfinance.gov/f/documents/cfpb_Housing_insecurity_and_the_COVID-19_pandemic.pdf">https://files.consumerfinance.gov/f/documents/cfpb_Housing_insecurity_and_the_COVID-19_pandemic.pdf</a>.
\12\ See id. at 8, 18; see also Pew Research Ctr., Economic
Fallout From COVID-19 Continues To Hit Lower-Income Americans the
Hardest (Sept. 24, 2020), <a href="https://www.pewresearch.org/social-trends/2020/09/24/economic-fallout-from-covid-19-continues-to-hit-lower-income-americans-the-hardest/">https://www.pewresearch.org/social-trends/2020/09/24/economic-fallout-from-covid-19-continues-to-hit-lower-income-americans-the-hardest/</a>.
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Consumer complaints received by the Bureau reflect significant
consumer concern about inaccuracies in consumer reports. Complaints
about ``incorrect information on your report'' have represented the
largest percentage of consumer complaints received by the Bureau
regarding credit or consumer reporting each year for at least the last
five years.\13\ In 2020 alone, companies provided responses to more
than 191,000 such complaints, which represents approximately 68 percent
of credit or consumer reporting complaints responded to by companies
that year.\14\
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\13\ See Bureau of Consumer Fin. Prot., Consumer Response Annual
Report, at 22 (Mar. 2021), <a href="https://files.consumerfinance.gov/f/documents/cfpb_2020-consumer-response-annual-report_03-2021.pdf">https://files.consumerfinance.gov/f/documents/cfpb_2020-consumer-response-annual-report_03-2021.pdf</a>;
Bureau of Consumer Fin. Prot., Consumer Response Annual Report, at
19 (Mar. 2020), <a href="https://files.consumerfinance.gov/f/documents/cfpb_consumer-response-annual-report_2019.pdf">https://files.consumerfinance.gov/f/documents/cfpb_consumer-response-annual-report_2019.pdf</a>; Bureau of Consumer
Fin. Prot., Consumer Response Annual Report, at 19 (Mar. 2019),
<a href="https://files.consumerfinance.gov/f/documents/cfpb_consumer-response-annual-report_2018.pdf">https://files.consumerfinance.gov/f/documents/cfpb_consumer-response-annual-report_2018.pdf</a>; Bureau of Consumer Fin. Prot.,
Consumer Response Annual Report, at 13 (Mar. 2018), <a href="https://files.consumerfinance.gov/f/documents/cfpb_consumer-response-annual-report_2017.pdf">https://files.consumerfinance.gov/f/documents/cfpb_consumer-response-annual-report_2017.pdf</a>; Bureau of Consumer Fin. Prot., Consumer Response
Annual Report, at 18 (Mar. 2017), <a href="https://files.consumerfinance.gov/f/documents/201703_cfpb_Consumer-Response-Annual-Report-2016.PDF">https://files.consumerfinance.gov/f/documents/201703_cfpb_Consumer-Response-Annual-Report-2016.PDF</a>.
\14\ See Bureau of Consumer Fin. Prot., Consumer Response Annual
Report, at 22 (Mar. 2021), <a href="https://files.consumerfinance.gov/f/documents/cfpb_2020-consumer-response-annual-report_03-2021.pdf">https://files.consumerfinance.gov/f/documents/cfpb_2020-consumer-response-annual-report_03-2021.pdf</a> for
more in-depth analyses. Additionally, consumers with a problem with
a credit or consumer report may submit multiple complaints, for
example, complaints about data furnishers and complaints about
consumer reporting agencies. Id. at 21.
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Inaccuracies in consumer reports can in part be attributed to
errors introduced by consumer reporting agencies during the
``matching'' process. When preparing a consumer report, a consumer
reporting agency must assign or ``match'' information it obtains from a
public data source or receives from a furnisher to the specific
consumer who is the subject of the report. Each year, the Bureau
receives many complaints from consumers arising from errors that likely
occurred during the matching process. Some consumers who submit such
complaints include narrative descriptions noting, among other things,
their frustration at trying to get such errors corrected, as well as
the negative consequences of such errors, such as not being able to
complete planned purchases of homes or cars.\15\
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\15\ See generally Bureau of Consumer Fin. Prot., Consumer
Complaint Database, <a href="https://www.consumerfinance.gov/data-research/consumer-complaints/">https://www.consumerfinance.gov/data-research/consumer-complaints/</a> (last visited Oct. 21, 2021).
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One method of matching, ``name-only matching,'' is particularly
likely to lead to inaccuracies in consumer reports. Name-only matching
occurs when a consumer reporting agency uses only first and last name
to determine whether a particular item of information relates to a
particular consumer, without using other personally identifying
information such as address, date of birth, or Social Security number.
Matching errors are particularly common when using name-only matching
because many consumers have the same or similar names. For example, in
the United States, the 2010 census (the most recent to have last name
statistics available) found more than 2.4 million respondents with the
last name of Smith, 1.9 million respondents with the last name of
Johnson, 1.6 million respondents with the last name of Williams, and
more than 1 million respondents each with the last name of Brown,
Jones, Garcia, Miller, Davis, Rodriguez, Martinez, or Hernandez.\16\
Given the commonality of many first and last names, it is not unlikely
that thousands, or even tens of thousands, of consumers, might share a
particular first and last name combination.\17\
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\16\ U.S. Census Bureau, Frequently Occurring Surnames from the
2010 Census, <a href="https://www.census.gov/topics/population/genealogy/data/2010_surnames.html">https://www.census.gov/topics/population/genealogy/data/2010_surnames.html</a> (last revised Dec. 27, 2016).
\17\ For example, one study catalogued a number of first-and-
last name combinations such as James Smith that each corresponded to
over 30,000 individuals in the United States. See Lee Hartman,
Southern Illinois University, John Smith et al.: Some observations
on how the 20 most popular first names combine with the 20 most
popular surnames in the United States (n.d.), <a href="https://web.archive.org/web/20190225042148/http:/mypage.siu.edu/lhartman/johnsmith.html">https://web.archive.org/web/20190225042148/http:/mypage.siu.edu/lhartman/johnsmith.html</a>; see also Mona Chalabi & Andrew Flowers, Dear Mona,
What's The Most Common Name In America? (Nov. 20, 2014), <a href="https://fivethirtyeight.com/features/whats-the-most-common-name-in-america/">https://fivethirtyeight.com/features/whats-the-most-common-name-in-america/</a>
(cataloguing common first-and-last name combinations). Indeed, one
court, in evaluating an FCRA section 607(b) claim, noted that there
could be as many as 125,000 individuals named ``David Smith'' living
in the United States. Smith v. LexisNexis Screening Solutions, Inc.,
837 F.3d 604, 610 (6th Cir. 2016) (noting that ```David Smith' is an
exceedingly common first-and-last-name combination--to the tune of
over 125,000 individuals living in the United States'').
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The risk of mismatching from name-only matching is likely to be
greater for Hispanic, Asian, and Black individuals because there is
less last-name diversity in those populations than among the non-
Hispanic white population.\18\ For example, a study of 2010 census data
indicated that the percentage of non-Hispanic white respondents covered
by the top 10 most common last names is lower than the corresponding
percentages for Hispanic, Asian, and Black respondents.\19\ The study
found the highest level of last-name clustering among Hispanic
respondents, noting that just 26 last names cover a quarter of the
Hispanic population (as compared to 319 last names required to cover a
quarter of the population identified as non-Hispanic white alone) and
that 16.3 percent of Hispanic respondents reported one of the top 10
most common last names (as compared to 4.5 percent for non-Hispanic
white alone respondents).\20\ The study further noted that these
clustering patterns were similar for Asian and Black respondents.\21\
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\18\ Joshua Comenetz, Frequently Occurring Surnames in the 2010
Census 3-7 (Oct. 2016), <a href="https://www2.census.gov/topics/genealogy/2010surnames/surnames.pdf">https://www2.census.gov/topics/genealogy/2010surnames/surnames.pdf</a>; U.S. Census Bureau, Hispanic Surnames
Rise in Popularity (Aug. 9, 2017), <a href="https://www.census.gov/library/stories/2017/08/what-is-in-a-name.html">https://www.census.gov/library/stories/2017/08/what-is-in-a-name.html</a>; U.S. Census, What's in a
Name (Dec. 15, 2016), <a href="https://www.census.gov/newsroom/blogs/random-samplings/2016/12/what_s_in_a_name.html">https://www.census.gov/newsroom/blogs/random-samplings/2016/12/what_s_in_a_name.html</a>.
\19\ Frequently Occurring Surnames in the 2010 Census, supra
note 18, at 4, 6, 7 & table 4 (noting that 14 of the 15 most rapidly
increasing last names that were among the top 1,000 most common last
names in both 2000 and 2010 were predominantly Asian or Hispanic).
\20\ Id. at 7. Relatedly, one study estimated that four of the
top 13 most common first-and-last-name combinations in the United
States are names of Spanish origin. Specifically, the study
estimated that there are more than 25,000 individuals in the United
States each named Maria Garcia, Maria Rodriguez, Maria Hernandez, or
Maria Martinez. See John Smith et al., supra note 17.
\21\ Frequently Occurring Surnames in the 2010 Census, supra
note 18, at 7.
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The Bureau, the FTC, and State attorneys general have brought
enforcement actions in this area. In 2014, a background screening
company settled FTC allegations that it violated FCRA section 607(b) by
failing to use reasonable procedures to assure maximum possible
accuracy of consumer report information when it provided employers
background screening reports about job applicants that included, based
on name-only matching, information about whether the applicants were
registered in a National Sex Offender Registry.\22\ In 2019, the Bureau
settled allegations that a background screening company violated FCRA
section 607(b) by matching publicly sourced criminal records to job
applicants based only on limited personal identifiers, which could
include first and last name and either date of birth or address, a
practice that resulted in ``a heightened risk of false positives''
because commonly named individuals (e.g., John Smith) might share the
same first and last name and date of birth or address.\23\ Similarly,
in 2015, the Bureau took action against a background screening company
for violating FCRA section 607(b) by permitting, but not requiring,
employers to provide middle names for job applicants for purposes of
matching criminal record information to particular consumers. According
to the Bureau's complaint, the company's procedures resulted in the
reporting of mismatched criminal record information about
consumers.\24\
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\22\ Complaint at ]] 9-17, U.S. v. InfoTrack Info. Servs, Inc.,
No. 1:14-cv-02054 (N.D. Ill. Mar. 24, 2014), <a href="https://www.ftc.gov/enforcement/cases-proceedings/122-3092/infotrack-information-services-inc-et-al">https://www.ftc.gov/enforcement/cases-proceedings/122-3092/infotrack-information-services-inc-et-al</a>.
\23\ Complaint at ]] 5-11, Bureau of Consumer Fin. Prot. v.
Sterling Infosys., Inc., No. 1:19-cv-10824 (S.D.N.Y. Nov. 22, 2019),
<a href="https://www.consumerfinance.gov/enforcement/actions/sterling-infosystems-inc/">https://www.consumerfinance.gov/enforcement/actions/sterling-infosystems-inc/</a>.
\24\ Consent Order at ]] 4-13, In re Gen. Info. Servs., Inc.,
2015-CFPB-0028 (Oct. 29, 2015), <a href="https://files.consumerfinance.gov/f/201510_cfpb_consent-order_general-information-service-inc.pdf">https://files.consumerfinance.gov/f/201510_cfpb_consent-order_general-information-service-inc.pdf</a>; see
also, e.g., Complaint at ]] 8-21, Fed. Trade Comm'n v. RealPage,
Inc., No. 3:18-cv-02737-N (N.D. Tex. Oct. 16, 2018), <a href="https://www.ftc.gov/enforcement/cases-proceedings/152-3059/realpage-inc">https://www.ftc.gov/enforcement/cases-proceedings/152-3059/realpage-inc</a>
(alleging defendant violated FCRA section 607(b) by using matching
criteria that required ``an exact match on the applicant's last name
only,'' and ``a `soft', or non-exact, match for first name, middle
name, and date of birth,'' resulting in defendant providing tenant
screening reports with criminal record information for individuals
other than the applicant).
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In March 2015, the three nationwide consumer reporting agencies--
Equifax, Experian, and TransUnion--launched the National Consumer
Assistance Plan (NCAP), an initiative aimed at enhancing the accuracy
of credit reports and making it easier for consumers to correct errors
on their credit reports. The NCAP was the result of a settlement
between the nationwide consumer reporting agencies and over thirty
State Attorneys General that required the nationwide consumer reporting
agencies to, among other things, form a working group to establish
standards regarding the collection of public record data for consumer
credit reports.\25\ Pursuant to the NCAP, starting July 1, 2017, public
record data obtained by the nationwide consumer reporting agencies for
inclusion on credit reports must contain name, address, and Social
Security Number and/or date of birth and must be refreshed at least
every 90 days.\26\
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\25\ Assurance of Voluntary Compliance/Assurance of Voluntary
Discontinuance at ] IV.E.6, In re Equifax Info. Servs. LLC, Experian
Info. Solutions, Inc., and TransUnion LLC (May 20, 2015), <a href="https://www.ohioattorneygeneral.gov/Files/Briefing-Room/News-Releases/Consumer-Protection/2015-05-20-CRAs-AVC.aspx">https://www.ohioattorneygeneral.gov/Files/Briefing-Room/News-Releases/Consumer-Protection/2015-05-20-CRAs-AVC.aspx</a>.
\26\ Following the launch of the NCAP, the nationwide consumer
reporting agencies took steps to remove public records not meeting
the specified criteria and, beginning in April 2018, ceased
including civil judgments and tax liens in the consumer reports they
issued. Bankruptcies are the only type of public record that
continue to be reported by the nationwide consumer reporting
agencies. Other consumer reporting agencies, however, continue to
include civil judgments and tax liens on the consumer reports they
prepare. See Bureau of Consumer Fin. Prot., Quarterly Consumer
Credit Trends: Public records, credit scores, and credit performance
(Dec. 2019), <a href="https://files.consumerfinance.gov/f/documents/cfpb_quarterly-consumer-credit-trends_public-records-credit-scores-performance_2019-12.pdf">https://files.consumerfinance.gov/f/documents/cfpb_quarterly-consumer-credit-trends_public-records-credit-scores-performance_2019-12.pdf</a>; Bureau of Consumer Fin. Prot., Quarterly
Consumer Credit Trends: Public Records (Feb. 2018), <a href="https://files.consumerfinance.gov/f/documents/cfpb_consumer-credit-trends_public-records_022018.pdf">https://files.consumerfinance.gov/f/documents/cfpb_consumer-credit-trends_public-records_022018.pdf</a>.
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Courts have also spoken on this topic. For example, a decade ago,
the Third Circuit in Cortez v. Trans Union, LLC considered a case in
which the nationwide consumer reporting agency TransUnion had indicated
in a consumer report that the consumer's name matched a name on a list
maintained by the Office of Foreign Assets Control (OFAC), despite the
fact that TransUnion had information within its own files showing that
the OFAC alert was not about the correct consumer.\27\ The Third
Circuit upheld the district court's ruling that TransUnion's matching
protocols that compared only the consumer's name to the names on the
OFAC list did not satisfy the requirement of FCRA section 607(b).\28\
Nonetheless, TransUnion did not adequately update its matching
practices, and it was sued a second time for similar practices in
Ramirez v. TransUnion LLC. In a 2020 decision that was later overturned
on other grounds, the Ninth Circuit ruled that ``despite [Cortez],
TransUnion continued to use problematic matching technology. . . . In
doing so, it ran an unjustifiably high risk of error.'' \29\ The court
upheld a jury verdict deeming TransUnion liable for violating section
607(b) because it used ``rudimentary name-only matching software
without any additional checks to avoid false positives.'' \30\ The
Ninth Circuit held that the violation was willful because the correct
reading of the FCRA should have been clear to TransUnion after
Cortez.\31\
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\27\ 617 F.3d 688 (3d Cir. 2010).
\28\ Id.
\29\ Ramirez v. TransUnion, LLC, 951 F.3d 1008, 1032 (9th Cir.
2020), rev'd on standing grounds, 141 S. Ct. 2190 (June 25, 2021).
\30\ Id. at 1022.
\31\ Id. at 1031-33. Consumers have also brought other private
party claims under the FCRA relating to matching using limited
personal identifiers. See, e.g., Lopez v. Nat'l Credit Reporting,
Inc., 2013 WL 1999624 (N.D. Cal. May 13, 2013) (denying motion to
dismiss in case alleging violation of FCRA section 607(b) related to
mixed file due to match based only on name and similar area of
residence).
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[[Page 62471]]
Despite these enforcement actions, the steps taken by the
nationwide consumer reporting agencies pursuant to the NCAP, and these
court decisions, it appears that some consumer reporting agencies
continue to use matching practices that do not satisfy the standard of
``reasonable procedures to assure maximum possible accuracy of the
information concerning the individual about whom the report relates,''
as required by FCRA section 607(b). The NCLC stated in a 2019 report
that some background screening companies are still relying on name-only
matches.\32\ NCLC and other consumer and civil rights groups recently
requested that the Bureau provide guidance that name-only matching is a
practice that fails to comply with the FCRA.\33\
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\32\ Nat'l Consumer Law Ctr., Broken Records Redux, supra note
2, at 18, 38.
\33\ Letter from American Civil Liberties Union et al. to
Secretary Marcia L. Fudge, U.S. Dep't of Hous. & Urban Dev. et al.
(July 13, 2021), at 7-8 (addressing technology's role in housing
discrimination), <a href="https://www.aclu.org/letter/coalition-memo-re-addressing-technologys-role-housing-discrimination">https://www.aclu.org/letter/coalition-memo-re-addressing-technologys-role-housing-discrimination</a>.
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The Bureau is issuing this advisory opinion to remind consumer
reporting agencies that their matching practices must comply with their
FCRA obligation to ''follow reasonable procedures to assure maximum
possible accuracy'' under section 607(b), and that the practice of
name-only matching in particular is far from sufficient to meet that
standard. Indeed, as illustrated by the foregoing discussion, multiple
additional elements beyond names may often be required to meet the FCRA
standard of ``reasonable procedures to assure maximum possible
accuracy.''
B. Coverage
This advisory opinion applies to all consumer reporting agencies as
defined in FCRA section 603(f).\34\ As used in this advisory opinion,
``name-only matching'' refers to matching information to the particular
consumer who is the subject of a consumer report based solely on
whether the consumer's first and last names are identical or similar to
the first and last names associated with the information, without
verifying the match using additional identifying information for the
consumer. ``Matching procedures'' refers to the broader set of
practices and procedures consumer reporting agencies use to link
information to a consumer's consumer report.
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\34\ 15 U.S.C. 1681a(f).
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C. Legal Analysis
FCRA section 607(b) provides that ``[w]henever a consumer reporting
agency prepares a consumer report it shall follow reasonable procedures
to assure maximum possible accuracy of the information concerning the
individual about whom the report relates.'' \35\ The Bureau interprets
the requirement in section 607(b) to include as an integral component
that the information in fact pertains to the consumer who is the
subject of the report. Indeed, the text of section 607(b) refers
explicitly to ``the individual about whom the report relates.'' This
interpretation is consistent with the core purpose of the FCRA as
described in FCRA section 602--i.e., to require consumer reporting
agencies to adopt reasonable procedures for meeting the needs of
commerce for consumer credit, personnel, insurance, and other
information in a manner that is fair and equitable to the consumer with
regard to confidentiality, accuracy, and the proper use of such
information.\36\
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\35\ 15 U.S.C. 1681e(b).
\36\ 15 U.S.C. 1681(a); see also Guimond, 45 F.3d at 1333.
Inaccuracy based on mistaken identity was one of the reasons a first
version of the FCRA was introduced. As Senator William Proxmire
stated when introducing the legislation, ``There are many varieties
of inaccurate information . . . . One is the case of mistaken
identity, where two individuals with the same names are confused,
and the deserving individual is denied credit because of something
done by the other person.'' 114 Cong. Rec. 24,902, 24,903 (1968).
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Other provisions of the FCRA that directly relate to section 607(b)
also support this interpretation. For example, section 603(d) of the
FCRA defines ``consumer report'' to include certain communications
``bearing on a consumer's credit worthiness, credit standing, credit
capacity, character, general reputation, personal characteristics, or
mode of living'' that are ``used or expected to be used . . . for the
purpose of . . . establishing the consumer's eligibility'' for credit,
employment, insurance, and other purposes.\37\ Information in a
consumer report on a different consumer than the consumer report
purports to relate to would not have any utility in serving as a factor
in establishing the eligibility of the person the consumer report
purports to relate to. Additionally, section 604 of the FCRA generally
provides that a consumer reporting agency may not provide a consumer
report about a particular consumer unless there is a permissible
purpose, such as a legitimate business need related to a transaction
initiated by the consumer.\38\ The FCRA expressly ties many of these
permissible purposes to the specific consumer who is the subject of the
report, making it clear that Congress intended that information in the
consumer report would relate to that specific consumer. For instance,
in FCRA section 604(a)(3)(A), Congress allowed consumer reporting
agencies to release a consumer report to a person if they have reason
to believe the person ``intends to use the information in connection
with a credit transaction involving the consumer on whom the
information is to be furnished.'' \39\
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\37\ 15 U.S.C. 1681a(d).
\38\ 15 U.S.C. 1681b.
\39\ 15 U.S.C. 1681b(a)(3)(A).
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The steps that a consumer reporting agency takes in matching
information it obtains or receives to the correct consumer in preparing
consumer reports are critical in assessing whether a consumer reporting
agency is following ``reasonable procedures to assure maximum possible
accuracy of the information concerning the individual about whom the
report relates'' under FCRA section 607(b). As detailed in part I.A.
above, matching information to the consumer who is the subject of a
consumer report by name alone creates significant accuracy concerns
because most names are shared with other consumers and, in some cases,
with thousands of other consumers. In preparing consumer reports, it is
not a reasonable procedure to assure maximum possible accuracy to use
insufficient identifiers to match information to the consumer who is
the subject of the report. In particular, it has been the consistent
view of the Bureau that name-only matching is not a procedure that
assures maximum possible accuracy, and thus, consumer reporting
agencies that use name-only matching violate FCRA section 607(b).\40\
That continues to be the Bureau's position as outlined in this advisory
opinion. Moreover, nothing in this analysis creates a safe harbor for
the FCRA requirement of ``reasonable procedures to assure maximum
possible accuracy'' with respect to matching.
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\40\ See Consent Order at ]] 4-13, In re Gen. Info. Servs.,
Inc., 2015-CFPB-0028 (Oct. 29, 2015), <a href="https://files.consumerfinance.gov/f/201510_cfpb_consent-order_general-information-service-inc.pdf">https://files.consumerfinance.gov/f/201510_cfpb_consent-order_general-information-service-inc.pdf</a>; Complaint at ]] 5-11, Bureau of
Consumer Fin. Prot. v. Sterling Infosys., Inc., No. 1:19-cv-10824
(S.D.N.Y. Nov. 22, 2019), <a href="https://www.consumerfinance.gov/enforcement/actions/sterling-infosystems-inc/">https://www.consumerfinance.gov/enforcement/actions/sterling-infosystems-inc/</a>.
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Based on the high risk that name-only matching will result in the
inclusion of information that does not pertain to the consumer who is
the subject of the report and the relative lack of burden on a consumer
reporting agency associated
[[Page 62472]]
with utilizing additional identifiers or not including name-only
matched information in a consumer report, the Bureau continues to
conclude that it is not a reasonable procedure to use name-only
matching to match information to the consumer who is the subject of the
report in preparing a consumer report.
In some cases, in preparing consumer reports, consumer reporting
agencies may obtain information from a data broker, database, or other
source that does not have or use identifying information other than
consumers' names. It is not a reasonable procedure for the consumer
reporting agency to simply include information from such sources in a
consumer's report without taking additional steps to match the
information to the consumer who is the subject of the report, such as
consulting other databases or sources of information that contain
additional identifying information.
II. Regulatory Matters
This advisory opinion is an interpretive rule issued under the
Bureau's authority to interpret the FCRA, including under section
1022(b)(1) of the Dodd-Frank Wall Street Reform and Consumer Protection
Act,\41\ which authorizes guidance as may be necessary or appropriate
to enable the Bureau to administer and carry out the purposes and
objectives of Federal consumer financial laws.\42\
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\41\ Public Law 111-203, 124 Stat. 1376 (2010).
\42\ 12 U.S.C. 5512(b)(1).
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As an interpretive rule, this advisory opinion is exempt from the
notice-and-comment rulemaking requirements of the Administrative
Procedure Act.\43\ Because no notice of proposed rulemaking is
required, the Regulatory Flexibility Act does not require an initial or
final regulatory flexibility analysis.\44\ The Bureau has also
determined that this advisory opinion does not impose any new or revise
any existing recordkeeping, reporting, or disclosure requirements on
covered entities or members of the public that would be collections of
information requiring approval by the Office of Management and Budget
under the Paperwork Reduction Act.\45\
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\43\ 5 U.S.C. 553(b).
\44\ 5 U.S.C. 603(a), 604(a).
\45\ 44 U.S.C. 3501-3521.
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Pursuant to the Congressional Review Act,\46\ the Bureau will
submit a report containing this interpretive rule and other required
information to the United States Senate, the United States House of
Representatives, and the Comptroller General of the United States prior
to the rule's published effective date. The Office of Information and
Regulatory Affairs has designated this interpretive rule as not a
``major rule'' as defined by 5 U.S.C. 804(2).
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\46\ 5 U.S.C. 801 et seq.
Dated: November 3, 2021.
Rohit Chopra,
Director, Bureau of Consumer Financial Protection.
[FR Doc. 2021-24471 Filed 11-9-21; 8:45 am]
BILLING CODE 4810-AM-P
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This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.