The Fair Credit Reporting Act:
What You Need To Know As A Business Owner

The Fair Credit Reporting Act affects every business. It is the means by which the FTC requires businesses to report only accurate information regarding the debts owed to the company by a debtor. Every business owner handling in house collections needs to fully understand the Fair Credit Reporting Act.

Businesses that fail to adhere to these required laws may be risking costly fines and in some cases discharge of the debt owed to them. Debt collection is not an easy process but it is critical for any business understanding debt collections methods to fully understand this law.

Understanding The Fair Credit Reporting Act

A business needs to understand the Fair Credit Reporting Act, or FCRA. This act states that consumers have the right to verify the information on their credit report. It also states that businesses must ensure that the information on these reports is accurate to the best of their ability. It is essential the business understand this part of debt collection.

Should your business receive a complaint from one of the three credit bureaus (TransUnion, Equifax or Experian), you have a period of 30 days to show proof of the debt owed or it will be removed from the individual's credit report, per the FCRA, which will make it harder to use debt collection.

In debt collection, the FCRA is critical to understand. If you file a claim that is inaccurate, you could face legal ramifications if you did so intentionally. More so, the FTC, or Federal Trade Commission can work against your ability to file such claims in the future.

The Fair Credit Reporting Act does work on behalf of your business though. As long as the debt collection is accurate, it should be utilized by the business to ensure that other businesses know that this individual failed to make payment. Any business will want to know what to expect from a potential debtor before working with them.

For any businesses or associates handling debt collection, there is much to know about The Fair Credit Reporting Act. Businesses that supply information to the consumer reporting agencies are responsible for submitting only accurate information. The law was updated to expand the rights of the consumer.

Consumers are able to learn what is on their credit report by filing a request with the credit reporting agencies. And, during that process, if there is any information deemed inaccurate, including missing account information, debt collection activity, or inaccurate history, the business must show proof of the accuracy of the debt or it is removed from the report. The Fair Credit Reporting Act puts the burden of proof on the business claiming the debt is owed.

Negative information on these consumer reports can remain for up to seven years. Bankruptcies are an exception, in that they will remain for ten years. Criminal convictions, information reported in response to an application for a job with a salary that is higher than $75,000 or any information in regards to an application of more than $150,000 can remain for the lifetime on the report. Understanding the requirements of the business to file only accurate information due to the Fair Credit Reporting Act is critical for any business owner, noting debt collection or other requirements.