FCRA Permissible Purpose & End-User Requirements 1 — Questions and Answers
Question 1: Under FCRA Section 604, which of the following constitutes a permissible purpose for obtaining a consumer report?
- Personal curiosity about a neighbor's finances
- A creditor reviewing an account for credit extension (Correct answer)
- An employer checking on a friend's personal finances
- A landlord investigating a tenant's political views
Correct answer: A creditor reviewing an account for credit extension
Section 604(a)(3)(A) explicitly permits creditors to obtain consumer reports when reviewing or collecting on accounts for credit purposes.
Question 2: Which party bears primary responsibility for certifying permissible purpose before accessing a consumer report from a CRA?
- The consumer whose report is being requested
- The consumer reporting agency furnishing the report
- The end user requesting the report (Correct answer)
- The Federal Trade Commission
Correct answer: The end user requesting the report
Under the FCRA, end users must certify to the CRA that they have a permissible purpose before the CRA may furnish the consumer report.
Question 3: A landlord seeking a consumer report on a prospective tenant would rely on which permissible purpose under Section 604?
- Employment screening purposes
- Insurance underwriting purposes
- Legitimate business need in connection with a transaction initiated by the consumer (Correct answer)
- Government licensing determination
Correct answer: Legitimate business need in connection with a transaction initiated by the consumer
Section 604(a)(3)(F) allows access for a legitimate business need in connection with a business transaction initiated by the consumer, which covers residential rental applications.
Question 4: Under the FCRA, obtaining a consumer report under false pretenses exposes the violator to:
- Only an FTC warning letter
- Civil liability and potential criminal prosecution (Correct answer)
- Administrative sanctions only
- No liability if the report is never actually used
Correct answer: Civil liability and potential criminal prosecution
Section 619 provides criminal penalties for obtaining reports under false pretenses, and Section 616 provides civil liability, making both exposures applicable.
Question 5: Which permissible purpose specifically requires written authorization from the consumer before a report may be procured?
- Credit account review by an existing creditor
- Employment purposes (Correct answer)
- Insurance underwriting
- Court-ordered access pursuant to a subpoena
Correct answer: Employment purposes
FCRA Section 604(b) requires employers to obtain written authorization from the consumer before procuring a consumer report for employment purposes.
Question 6: A company that assembles and merges consumer report information from multiple CRAs and resells it to end users is classified under the FCRA as a:
- Data furnisher
- Consumer reporting agency acting as a reseller (Correct answer)
- Credit grantor
- Background screening intermediary
Correct answer: Consumer reporting agency acting as a reseller
The FCRA defines a reseller as a consumer reporting agency that assembles information from other CRAs and resells it; resellers bear their own FCRA obligations.
Question 7: Which FCRA provision authorizes a government agency to obtain a consumer report for determining eligibility for a government-granted license?
- General law enforcement authority under Section 604(a)(1)
- Section 604(a)(3)(D) — government licensing and benefit eligibility (Correct answer)
- Section 604(a)(3)(A) — credit transactions
- No specific authority; government agencies are exempt
Correct answer: Section 604(a)(3)(D) — government licensing and benefit eligibility
Section 604(a)(3)(D) specifically permits government agencies to obtain consumer reports when determining eligibility for a license or other benefit granted by a governmental instrumentality.
FCRA Permissible Purpose & End-User Requirements 1
Under FCRA Section 604, which of the following constitutes a permissible purpose for obtaining a consumer report?