The Expert Podcast

Episode Description
The Consumer Financial Protection Bureau (CFPB) has issued crucial clarifications on existing consumer reporting rules that could dramatically impact how businesses conduct background checks and credit reports. While technically not a "new rule," this advisory opinion functions as one and carries serious implications for investigators, business owners, landlords, and anyone involved in consumer reporting.

Key Topics Covered
  • CFPB Advisory Opinion Overview - Understanding the recent clarification posted to the federal register and its impact on consumer reporting agencies and users
  • False Representation Prohibition - Reinforcement that companies cannot fabricate reasons for obtaining sensitive consumer records
  • Identity Verification Requirements - New emphasis on ensuring consumer reports contain information only about the specific individual being investigated, not similar or same-named individuals
  • "Reason to Believe" Standard - Consumer reporting bureaus must have reasonable belief that all information pertains to the actual subject of the request
  • Disclaimer Limitations - Disclaimers cannot cure failures to take reasonable steps in verifying consumer identity
  • Multiple Match Prohibition - Credit reporting companies cannot provide reports on multiple individuals when permission exists for only one person
  • Criminal Liability Risks - Potential criminal consequences for providers and users who obtain or provide unauthorized background reports
  • Background Check Scope Variations - Different definitions and limitations of background checks across jurisdictions
  • State-Specific Restrictions - How some states prohibit background checks for job applications or housing rentals
  • Permissible Use Requirements - Understanding what constitutes legitimate use in your specific jurisdiction
  • Compliance Implications - Why this clarification could make previously legal practices now illegal if not properly addressed
Who Should Listen
  • Licensed private investigators
  • Business owners conducting employee screening
  • Landlords and property managers
  • Lenders and credit issuers
  • HR professionals
  • Consumer reporting agencies
  • Legal compliance teams
  • Anyone involved in consumer background checks or credit reporting
Action Items
  • Review current background check and credit reporting procedures
  • Ensure providers are following updated CFPB clarifications
  • Verify permissible use compliance in your jurisdiction
  • Update internal policies to reflect new identity verification standards
  • Consult with legal counsel regarding compliance requirements
Important Note
This advisory represents a clarification of existing law rather than new legislation, meaning previous monitoring systems for new CFPB rules may not have flagged this critical update. Businesses must proactively review their practices to ensure continued compliance. 

What is The Expert Podcast?

The Expert Podcast brings you firsthand narratives from experts across diverse industries, including private investigators, general contractors and builders, insurance agencies, vehicle specialists, lawyers, and many others.

If you are an investigator or a business owner involved with running background checks, credit checks, or any type of consumer research, be aware that the Consumer Financial Protection Bureau (CFPB) has issued clarification on existing rules. This isn't technically a new rule but a significant clarification that essentially functions as one. This advisory opinion was recently posted to the Federal Register and outlines certain obligations for consumer reporting agencies and their users.

Firstly, it emphasizes that you cannot falsely represent reasons for obtaining sensitive records. The big takeaway is that consumer reporting agencies must ensure they provide information only about the specific individual requested, avoiding mix-ups with similarly named individuals. Providing a consumer report without reasonable belief that it pertains to the requested individual is prohibited. Disclaimers cannot remedy this failure to ensure accurate reporting.

The CFPB stresses consumer privacy rights, explaining that credit reporting agencies must use procedures that accurately match names. This means reports should pertain solely to the person in question, not others who may share similar identifiers. Unauthorized access to information on unrelated parties, even if unintentional, is a violation.

Credit reporting companies are expressly prohibited from providing reports on multiple individuals when the requester is only authorized to access information on one. This rule underscores the importance of taking reasonable steps to verify information accuracy before reporting. Disclaimers stating potential mismatches do not absolve providers from this responsibility.

Both providers and users of consumer reports are affected by these regulations. Failure to comply can lead to serious consequences, including criminal liability for both providers and users. Covered entities must be vigilant in ensuring all uses of consumer reports are lawful and appropriate.

The scope of background checks varies widely, encompassing social media checks, employment history verification, credit history reviews, and criminal background checks. Legal restrictions on their use vary by jurisdiction, so it's crucial to understand permissible uses based on local laws.

Licensed investigators and businesses using consumer reports for any purpose must stay informed and ensure compliance with CFPB rules. While this advisory clarifies existing regulations rather than introducing new ones, failing to adhere to these guidelines can invalidate previous uses of consumer reports.