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History of the Federal Credit Reporting Act (FCRA)

The FCRA was passed to address a growing credit reporting industry in the United States that compiled "consumer credit reports" and "investigative consumer reports" on individuals. The FCRA was the first federal law to regulate the use of personal information by private businesses.

The first major credit reporting agency, Retail Credit Co, was started in 1899. Over the years, Retail Credit purchased smaller CRAs and expanded its business into selling reports to insurers and employers. By the 1960s, significant controversy surrounded the CRAs because their reports were sometimes used to deny services and opportunities, and individuals had no right to see what was in their file.

By the late 1960s, there was abuse in the industry, including requirements that investigators fill quotas of negative information on data subjects. To do this, some investigators fabricated negative information, others included incomplete information. Additionally, the investigators were collecting "lifestyle" information on data subjects, including their sexual orientation, marital status, drinking habits, and cleanliness. The CRAs were maintaining outdated information, and in some cases, providing the file to law enforcement and to unauthorized persons. Public exposure of the industry resulted in Congressional inquiry and federal regulation of CRAs.

Years of legislative leadership by Representative Leonor Sullivan and Senator William Proxmire resulted in the passage of the FCRA in 1970. After its passage, Senator Proxmire attempted to broaden the FCRA's protections over the next ten years. Shortly the FCRA took effect on April 25, 1971, CRAs were pursued for violations of numerous provisions of the Act. Most recently, in January 2000, the three CRAs paid $2.5 million in a case settlement brought by the FTC.

Comprehensive amendments to the FCRA were made in the Consumer Credit Reporting Reform Act of 1996 (P.L. 104-208). The Amendments contained a number of improvements to the FCRA, but it also included provisions that allow affiliate sharing of credit reports, "prescreening" of credit reports (unsolicited offers of credit made to certain consumers), and limited preemption of stronger state laws on credit.

The FCRA was re-visited by the 108th Congress in 2003, when the body enacted the "Fair and Accurate Credit Transactions Act of 2003" (FACTA). The Act preempts some state privacy protections, but includes a number of improvements to credit reporting law, including free credit reports annually.

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