Credit Reporting Agencies

Be Careful When Reporting Delinquent Tenants

By Christopher A. LaVoy, Esq.
Tiffany & Bosco, P.C.

Sometimes the only solace to be had from an unpaid debt is reporting the debtor to the credit reporting agencies who will haunt the person with it. But, in doing so, you must be careful not to get yourself in trouble under the Fair Credit Reporting Act (the “FCRA”).

While the FCRA is aimed primarily at credit reporting agencies, it also applies to businesses that "furnish" information to them. Thus, if you report information about consumers to credit reporting agencies, you are subject to the FCRA and have certain duties. These duties are designed to ensure the accuracy, fairness and privacy of credit information. Even if you do not report delinquent tenants, it would be prudent to know the following basic rules.

Duty Of Accuracy. You have a duty not to report information that you know is inaccurate, or information that you “consciously avoid” learning the accuracy of. The FCRA does not penalize you for an honest mistake, but anything reckless or deliberate can get you in trouble. This duty is different if you “clearly and conspicuously” specify an address (e.g., by sign on the premises, or statement in the rental agreement) for consumers to notify you that reported information is inaccurate. If you do this, then you are only liable for an inaccuracy under the FCRA upon being notified of it by the consumer.   Specifying such an address is a good idea if you report such information regularly because it lessens the likelihood of liability for you.

Duty To Correct Mistakes. If you "regularly" furnish information to credit reporting agencies, then you have a duty to “promptly” correct any inaccurate or incomplete information, however you may learn of it, and to only report the accurate and complete information about the consumer in the future. If you do not “regularly" do this, then your duty to correct mistakes is more limited as described in the Duty To Investigate section below.

Duty To Provide Notice Of Dispute. If a consumer has given you notice that he or she disputes certain information, then you may not provide it to credit reporting agencies without also notifying them that the consumer disputes it.

Duty To Provide Date Of Delinquency. For delinquent accounts that your report as sent out to collection or written off, you must notify the credit reporting agencies of the "month and year" that the delinquency began. This allows the credit reporting agencies to calculate how long to keep the report in the consumer’s file.

Duty To Investigate. If a credit reporting agency notifies you that a consumer disputes information that you have provided, then you must investigate the dispute and report your findings to the credit reporting agency. If you discover the information you reported is inaccurate or incomplete, then you must correct it with all credit reporting agencies that received the information. You must normally do this within 30 days after receiving a notice of dispute from a credit reporting agency. If you fail to meet this deadline, the credit reporting agency is required to delete the information. Curiously, the FCRA only allows consumers to sue for breach of this duty, leaving enforcement of the other duties referenced above to state and federal authorities.

Last, you should be aware that you may be liable for reporting mistakes under other laws besides the FCRA, such as for defamation or consumer fraud. These other claims may impose liability for acts not actionable under the FCRA and expose you to a wider range of damages. Therefore, to protect yourself beyond the FCRA, you should always be careful to only report accurate and complete information and to correct mistakes as quickly as possible when you learn of them.

[This article deals with a law related subject at a general level and is not intended for you to rely on. You should consult a lawyer before making a final decision in a situation involving any legal issues.

Christopher A. LaVoy is partner in the law firm, Tiffany & Bosco, P.C., and serves as AZSA’s legal counsel.

Source: Behind Closed Doors, AZSA Newsletter Archives