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

US legal codes are highly important for consumer rights, regulations, and procedures regarding inaccurate information. Among the most important legal codes is 15 U.S.C. 1681b: Permissible Purposes of Consumer Reports. This set of legal definitions and rules offers important benefits to consumers like you, while also establishing key guidelines for legal processes.

Today, let’s take a closer look at 15 U.S.C. 1681b, what it means for you, and what it truly says. 

Permissible Purpose Defined

“Permissible purpose” as a legal concept means that organizations have to have legitimate reasons to pull a consumer’s credit information or background info. They can’t do it “just because” or for illegitimate reasons.

For example, if you apply for a mortgage loan from a well-known lender, the lender may request your credit info from one or all of the big credit bureaus. The lender has a legitimate reason for knowing your credit score, as it will help the lender make a decision as to whether it should allow you to borrow money.

However, your current employer cannot randomly look up your credit score or pull your credit information. They don’t have a legitimate reason to do so if they have already hired you, even if they are now considering firing you. If they pull your credit information illegally, you could sue them for violating your rights under the Fair Credit Reporting Act.

Because of these examples and more, it’s crucial that organizations operate under the principles of permissible purpose at all times.

When Can a Consumer Reporting Agency Furnish a Consumer Report?

Because legal cases often rely on details and technically complex language, one of the goals of 15 U.S.C. 1681b is to define exactly what permissible purpose is. According to 15 U.S.C. 1681b, consumer reporting agencies can only furnish a consumer report under certain circumstances. These include:

• When it is in response to a court order, provided that the court has the jurisdiction necessary to furnish that kind of order
• When the subject consumer of the report (i.e., the report’s owner or the person to whom the credit information relates) asks for it in writing
• When the person requesting the consumer report has a permissible purpose or good reason to believe that they will need the information for an important decision. These decisions can include employment purposes or decisions, credit transactions, insurance underwriting, and so on
• Whenever there’s any other legitimate business need for the information. For instance, if the consumer initiates a business transaction, the other party can request their consumer report
• When a head of state or local child support enforcement agency requests it for a legitimate purpose

In all of these examples and more, the overall principle is clear: a consumer reporting agency, like Experian, can only provide a consumer’s credit information or consumer report under certain circumstances. If the consumer reporting agency doesn’t believe the information is being requested for a legitimate purpose, it has the right to refuse the request – and it should if it helps to avoid legal trouble in the future. 

When Can a Consumer Report Be Used for Employment Purposes?

A consumer reporting agency can only use consumer reports for employment purposes under certain circumstances according to 15 U.S.C. 1681b. Specifically:

• If the person obtaining the report has acquired written permission from the consumer to access their credit information. This is why, when you apply for a job, you may have to sign documents saying you give the employer permission to request your credit information
• If the person obtaining the report states that they do not intend to use the consumer report in any illegal or illegitimate way

Again, the purpose of these statements in 15 U.S.C. 1681b is to eliminate uncertainty and ensure that all the parties involved in a consumer report transaction or exchange understand their rights and responsibilities. This prevents consumers from having their credit info and other personal information taken advantage of or transmitted without their knowledge.

Under the FCRA and 15 U.S.C. 1681b, you can bet that anytime an agency or business has your credit info, it’s because you gave them permission to have your information.

Further Consumer Report Disclosure Rules

15 U.S.C. 1681b further outlines important consumer report disclosure rules, specifically that a person or organization can’t procure a consumer report unless:

• The organization getting the consumer report has made it clear and conspicuous in writing to the consumer that it intends to acquire that consumer’s credit information
• The consumer has authorized the credit report’s release in writing

Put more simply: both parties in a credit report exchange must agree to it for the report to be legitimately obtained.

Adverse Action Rules

15 U.S.C. 1681b also provides important information regarding adverse action rules. An adverse action is any decision or action that might be adverse to the interests of the consumer. Some examples include being denied employment, being denied a loan or other financial opportunity, etc.

Whenever an organization uses a consumer’s background or credit information to make an adverse decision, it is required to notify that consumer in writing. This is called an adverse action letter. The adverse action letter must further breakdown:

• What kind of information the organization used to make the adverse decision, such as a credit information report, background check report, etc.

Note that organizations don’t have to be very specific when they submit adverse action letters. They don’t have to state exactly what element of a consumer report caused them to deny the consumer the opportunity in question. But they do have to specify what kind of information led to the decision, such as credit info, criminal history, and so on.

Are There Exceptions to These Rules?

Absolutely. In general, many or all of the rules outlined in 15 U.S.C. 1681b have exceptions, normally regarding to issues of national security or government requirements.

For example, if the U.S. federal government suspects that you have committed criminal activities, they do not have to notify you (necessarily) that they are investigating your background or credit information, at least at first.

That all said, the majority of civilian enterprises and organizations must adhere to the rules outlined in 15 U.S.C. 1681b. Otherwise, they are in violation of consumers’ FCRA rights and could be held liable for lawsuits and other legal actions.

What Does 15 U.S.C. 1681b Mean for You?

In a nutshell, 15 U.S.C. 1681b means that many of your rights are ensured and enshrined in law, especially those regarding who gets access to your credit information. Thanks to 15 U.S.C. 1681b, not just anyone can acquire your credit report or other consumer information.

Instead, the person who wants your consumer report has to have a legitimate business or other purpose for it. Your landlord cannot legally ask you for your credit or background information unless they have a good reason to do so.

Furthermore, even if your landlord (or some other institution or organization) has a legitimate reason to want your credit or consumer report, they can’t get it without your written permission. With this in mind, 15 U.S.C. 1681b ensures that consumers have overall power over their consumer reports and personal info at all times.

Perhaps most important, because 15 U.S.C. 1681b establishes all of these precedents and rules in writing, any organization or individual that breaks these laws could be held liable for a lawsuit. For example, if your employer illegally accesses your credit information without getting your permission or notifying you, you could hold them liable for violating your consumer rights. You could take them to court and recover damages as a result.

Similarly, say that you apply for a loan and the loan officer does not send you an adverse action letter after locating some less-than-stellar information on your credit report. Since the loan officer is required to send you an adverse action letter and failed to do so, they violated your rights and could also be held liable for a lawsuit.

In any of these cases and more, you should contact knowledgeable consumer rights attorneys right away. The right legal team can help any legal case you wish to pursue in a variety of ways, such as by:

• Providing sound legal counsel
• Explaining your consumer rights and the rights are violated
• Gathering evidence for your future case
• Helping you file paperwork on time and correctly without any mistakes
• Provide you with peace of mind so you know you are always making the right decision
• And much more

Wrap Up

15 U.S.C. 1681b broadly breaks down the rules of permissible purpose for consumer reports and credit information. It prevents organizations and individuals from needlessly collecting and organizing consumer credit info for no good reason, limiting abuse and minimizing how often a consumer’s credit information is pulled.

If you think your consumer rights have been violated due to the rules outlined in 15 U.S.C. 1681b, it’s a good idea to speak to knowledgeable consumer rights attorneys right away. Fair Credit can provide you with sound legal counsel and a free consultation when you contact us today.