What Is the FCRA and Why People Search Sites Can't Be Used for Screening

If you have used a people search service, you have probably seen a notice saying the service is not a consumer reporting agency and may not be used for decisions about employment, housing, credit or insurance. That notice is not boilerplate. It reflects a federal law, the Fair Credit Reporting Act, and the line it draws between personal research and formal eligibility screening.

This guide explains what the FCRA is, the key terms it defines, what counts as a permissible purpose and why using a people search report for screening decisions is off limits.

What the FCRA is

The Fair Credit Reporting Act is a federal law codified at 15 U.S.C. 1681 and following sections. It was enacted in 1970 and has been amended several times since. According to the Federal Trade Commission, the Act protects information collected by consumer reporting agencies such as credit bureaus, medical information companies and tenant screening services, and information in a consumer report cannot be provided to anyone who does not have a purpose specified in the Act.

The Consumer Financial Protection Bureau has most of the rulemaking authority under the FCRA, and the FTC retains enforcement authority.

Key terms: consumer report and consumer reporting agency

The FCRA's protections turn on two definitions in 15 U.S.C. 1681a.

A consumer report is, in summary, any communication by a consumer reporting agency about a person's creditworthiness, credit standing, credit capacity, character, general reputation, personal characteristics or mode of living that is used, expected to be used or collected to serve as a factor in deciding that person's eligibility for credit or insurance for personal, family or household purposes, for employment purposes or for another purpose authorized in the law.

A consumer reporting agency is a person or company that, for fees or on a cooperative nonprofit basis, regularly assembles or evaluates information on consumers for the purpose of furnishing consumer reports to third parties.

The CFPB notes that the best known consumer reporting agencies are the credit bureaus, but specialty consumer reporting companies may collect other personal information, including rental history and publicly available data.

What counts as a permissible purpose

Under 15 U.S.C. 1681b, a consumer reporting agency may furnish a consumer report only in specific circumstances "and no other." In simplified form, the main permissible purposes include:

• Responding to a court order or certain subpoenas
• Following the written instructions of the consumer the report is about
• Use in a credit transaction involving the consumer, or reviewing or collecting an account
• Employment purposes, subject to additional consent and notice rules
• Underwriting insurance involving the consumer
• Determining eligibility for certain government licenses or benefits
• A legitimate business need in connection with a business transaction the consumer initiated, or reviewing whether the consumer still meets the terms of an account

When a report is used for one of these purposes, the law adds obligations. The agency must follow reasonable procedures for accuracy, and anyone who takes adverse action against a person based on a consumer report must tell the person and identify the agency that supplied the information.

Your rights when a consumer report is used

The CFPB's Summary of Your Rights Under the FCRA lists the core protections. Among them:

• You must be told if information in your file has been used against you.
• You have the right to know what is in your file.
• You have the right to dispute incomplete or inaccurate information, and the agency must investigate unless the dispute is frivolous.
• Inaccurate, incomplete or unverifiable information must be corrected or removed, usually within 30 days.
• Access to your file is limited to people with a valid need, as the law defines it.

These protections exist because eligibility decisions have real consequences, so the law requires accuracy procedures, notice and a way to correct errors.

Why people search reports are different

People search services compile publicly available records and other data into reports for personal research. Many state clearly that they are not consumer reporting agencies, that their reports are not consumer reports and that they do not furnish information for any FCRA purpose. Their data is not assembled or verified to the standards the FCRA requires, and their terms of use prohibit customers from using reports for covered decisions.

In practical terms, that means a people search report may not be used to decide:

• Whether to hire, promote or retain someone
• Whether to rent a home or apartment to someone
• Whether to extend credit or a loan to someone
• Whether to issue insurance to someone
• Any other eligibility question covered by the FCRA

Anyone who needs a report for one of those decisions must use a consumer reporting agency that complies with the FCRA, along with the notices and permissions the law requires. The FTC has brought enforcement actions against companies that marketed consumer profiles for screening purposes without following FCRA rules, which is one reason reputable people search services now include prominent FCRA notices.

The consequences of misuse

The FCRA has teeth for individuals as well as companies. Under 15 U.S.C. 1681n, a person who willfully fails to comply with the law can be liable for actual damages or statutory damages, plus punitive damages and attorney's fees. A natural person who obtains a consumer report under false pretenses or knowingly without a permissible purpose can be liable for actual damages or $1,000, whichever is greater. Under 15 U.S.C. 1681q, knowingly and willfully obtaining information on a consumer from a consumer reporting agency under false pretenses is a crime punishable by a fine, up to two years in prison or both.

What people search is for

Within those limits, people search reports serve plenty of legitimate personal purposes: reconnecting with an old friend or relative, learning more about someone before a first date or a marketplace meetup, identifying an unknown caller or getting to know more about a new neighbor or business contact. A report may include contact details, address history, relatives, social profiles and court records, where available, which can help with all of these.

The rule of thumb is simple. If the question is "who is this person and how can I reach them," a people search report may help. If the question is "should this person be approved," the FCRA applies and a people search report is the wrong tool.

Checking your own records

The FCRA also gives you tools to see what consumer reporting agencies hold about you. The CFPB maintains a list of consumer reporting companies, and you can request your file and dispute errors. For information held by people search sites and data brokers, which are generally outside the FCRA, see our guide on protecting your information online.