15 U.S.C. 1681a: What It Means for You

The US’s legal codes provide many different protections for consumers like you. Some are more important and relevant than others, such as 15 U.S.C. 1681a. In fact, 15 U.S.C. 1681a is one of the most important legal codes and term breakdowns that affect consumer report cases, like credit report errors, instances of credit fraud, and more.

Not sure what exactly 15 U.S.C. 1681a is or how it affects you? Let’s take a deep dive into 15 U.S.C. 1681a, what it means, and what it does for the legal system.

What is 15 U.S.C. 1681a?

15 U.S.C. 1681a, “Definitions; rules of construction,” is a set of legal definitions intended to resolve issues of clarification or confusion around terms like, “consumer reporting agency.” For example, say that you get your credit report not from one of the three big credit bureaus but from a smaller, lesser-known organization. Does that organization count as a consumer reporting agency? That’s what 15 U.S.C. 1681a is partially intended to handle.

Furthermore, 15 U.S.C. 1681a outlines various restrictions on the sharing of medical information and defines terms related to other things like adverse action, consumers, excluded communications, and much more. Think of 15 U.S.C. 1681a as a set of term guidelines that can help you determine the specifics of a legal case.

Perhaps most importantly, 15 U.S.C. 1681a may help you determine whether a consumer reporting agency or other organization has violated your rights.

Key Elements of 15 U.S.C. 1681a

Let’s take a closer look at 15 U.S.C. 1681a and examine what it says and defines for legal cases.

Basic Definitions

Key definitions are of the most important information contained in 15 U.S.C. 1681a. For example, 15 U.S.C. 1681a defines:

• Consumer to mean any individual 
• Consumer report to mean a written, oral, or other communication of information from a consumer reporting agency (CRA) that has any bearing on a consumer's creditworthiness or other credit attributes. 15 U.S.C. 1681a also outlines what consumer report does not include
• Consumer reporting agency, which means any person or organization for which money, dues, or nonprofit partnership reasons engages partially or in whole in assembling or evaluating consumer credit information and related information
• And so on

Thanks to these definitions, consumers, lawyers, and other interested parties always know what constitutes a consumer, a CRA, and more.

What Counts as a Consumer Report?

A consumer report is, put simply, any information that is compiled by a consumer reporting agency for the purposes of evaluating a consumer’s:

• Creditworthiness
• Credit capacity
• Personal characteristics
• Credit standing
• Mode of living

In short, if the credit information is intended to evaluate a consumer for the purposes of establishing credit, employment prospects, etc., it's a consumer report. Consumer reports can be written, oral, or any other type of communication, like email or digital files.

The key defining factor of a consumer report is the contents, not the type of file or report. However, note that a consumer report has to be created by a designated consumer reporting agency to qualify. If, for instance, your employer were to (illegally, most likely) collect and organize your credit information, that information would not necessarily constitute a consumer report.

You could still have grounds for a lawsuit in some cases, but not be able to use that information for other purposes.

Medical Information Sharing Restrictions

In addition to outlining important terms like those above, 15 U.S.C. 1681a describes key restrictions on the sharing of medical information to prevent consumers’ medical details from being shared unnecessarily. 

Put more simply, organizations can’t share a consumer’s medical information, a list or description of payment transactions for medical products or services, or any other aggregate list of consumer payments for medical products or services for inappropriate purposes without express written permission.

So while credit information can be shared relatively freely – provided that the interested parties have legitimate purposes for acquiring the credit information – medical information is much more restricted. That’s because medical information can be used to determine more things about an individual’s private life and needs and has a high potential for abuse.

Adverse Actions – What’s Included?

Adverse actions are highly important for the consumer reporting process, especially for consumers who suspect that inaccurate information might be included in their credit report. 15 U.S.C. 1681a describes an adverse action as:

• The denial, cancellation of, reduction, increase in charge for, or any other unfavorable change that applies to insurance, denial of employment, or licenses or other benefits

Let’s break down the legalese. If an organization, like an employer, lender, banker, or other institution makes a negative choice for a consumer after that consumer applies for some benefit from that organization, they take an adverse action.

For example, if you apply to a job but your credit report has one or more red flags, and your employer decides not to hire you because of those signs, they must provide you with an adverse action report. Being denied employment is considered to be an adverse action, as is being denied a loan, line of credit, or other financial opportunity.

Subsequent Disclosures for Adverse Actions

Furthermore, 15 U.S.C. 1681a outlines rules and responsibilities for consumer reporting agencies, lenders, employers, and other organizations regarding disclosures for adverse actions.

Simply put, if an employer or other organization decides to take an adverse action against a consumer, they must notify the consumer via an adverse action letter. The adverse action letter should include:

• A summary of the nature and substance of the communication on which the organization bases the adverse action. For instance, if a person is denied a job opportunity, the adverse action letter from the employer should break down what – like a credit report or background check report – caused them to make that decision

In essence, an organization using a consumer report must inform the subject of the report if their information was used for an adverse action against them. Why?

It's to allow consumers the chance to look over consumer reports and identify inaccurate or out-of-date information. The FCRA or Fair Credit Reporting Act states that all consumers have the right to ensure that fair, up-to-date, and accurate credit or background information is being used for all employment and financial purposes.

If that information is inaccurate to any extent, consumers then have the right to request the information be corrected ASAP. Thus, adverse action letters are important to give you a chance to identify inaccurate information at the earliest opportunity.

How Does 15 U.S.C. 1681a Affect You?

15 U.S.C. 1681a affects consumers like you in a few key ways:

• Firstly, it establishes key legal definitions so there’s no confusion regarding what constitutes a consumer reporting agency, a consumer report or credit report, and so on. This makes communication between you and other organizations easier
• Secondly, it establishes a few protection rights regarding medical information, preventing organizations from sharing personal medical info without appropriate reasons or as easily as other credit info
• Thirdly, it ensures that you have the right to receive an adverse action letter when an agency or organization considers taking or does take an adverse action against you. If an organization takes an adverse action against you and doesn't provide you with an adverse action letter, it's technically violating your consumer rights, and you could have grounds for a lawsuit

In this way, 15 U.S.C. 1681a contributes meaningfully to your overall consumer rights and could establish legal precedent for certain options or damages pursuits later on.

Say that you are denied employment on the basis of your background check or credit report. However, your prospective employer doesn’t tell you that, so you don’t get the chance to examine your credit report for inaccurate information.

When you speak to knowledgeable consumer rights attorneys, they discover that you have grounds for a lawsuit against the employer for violating your rights. Under some circumstances, you could recover damages to compensate you for lost income or other lost opportunities.

For lawyers and legal experts, 15 U.S.C. 1681a is an important range of rules because it eliminates definition fuzziness surrounding these issues. That’s highly important given the range of different organizations and companies that may use consumer information for one or another purpose, as well as the different types of consumer reporting agencies aside from the big three.

Wrap Up

15 U.S.C. 1681a is, at its core, a breakdown of definitions, situations, and responsibilities of consumer reporting agencies. Thanks to 15 U.S.C. 1681a, consumers know exactly what their rights are, and there’s no intended confusion surrounding what constitutes a “credit report,” a “consumer reporting agency,” and so on.

But even with this outline, you might not know whether you have grounds to file a lawsuit against a consumer reporting agency, background check agency, or similar organization that caused you harm. That’s where Fair Credit can help. Our experienced attorneys can take a close look at the details of your situation and provide you with sound legal counsel. Contact us today for more information.