Fair Credit Reporting; Name-Only Matching Procedures, 62468-62472 [2021-24471]

Download as PDF 62468 Federal Register / Vol. 86, No. 215 / Wednesday, November 10, 2021 / Rules and Regulations E-Government Act Compliance The Animal and Plant Health Inspection Service is committed to compliance with the E-Government Act to promote the use of the internet and other information technologies, to provide increased opportunities for citizen access to Government information and services, and for other purposes. For information pertinent to E-Government Act compliance related to this action, please contact Mr. Joseph Moxey, APHIS’ Paperwork Reduction Act Specialist, at (301) 851–2483. Congressional Review Act Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), the Office of Information and Regulatory Affairs designated this rule as not a major rule, as defined by 5 U.S.C. 804(2). Authority: 7 U.S.C. 1633, 7701–7772, and 7781–7786; 21 U.S.C. 136 and 136a; 7 CFR 2.22, 2.80, and 371.3. Done in Washington, DC, this 4th day of November 2021. Mark Davidson, Acting Administrator, Animal and Plant Health Inspection Service. [FR Doc. 2021–24490 Filed 11–9–21; 8:45 am] BILLING CODE 3410–34–P BUREAU OF CONSUMER FINANCIAL PROTECTION 12 CFR Part 1022 Fair Credit Reporting; Name-Only Matching Procedures Bureau of Consumer Financial Protection. ACTION: Advisory opinion. AGENCY: The Bureau of Consumer Financial Protection (Bureau) is issuing this advisory opinion to highlight that a consumer reporting agency that uses inadequate matching procedures to match information to consumers, including name-only matching (i.e., matching information to the particular consumer who is the subject of a consumer report based solely on whether the consumer’s first and last names are identical or similar to the names associated with the information), in preparing consumer reports is not using reasonable procedures to assure maximum possible accuracy under section 607(b) of the Fair Credit Reporting Act (FCRA). DATES: This advisory opinion is effective on November 10, 2021. FOR FURTHER INFORMATION CONTACT: Brandy Hood, Courtney Jean, Kristin McPartland, Amanda Quester, or khammond on DSKJM1Z7X2PROD with RULES SUMMARY: VerDate Sep<11>2014 15:55 Nov 09, 2021 Jkt 256001 Pavneet Singh, Senior Counsels, Office of Regulations, at (202) 435–7700 or https://reginquiries.consumer finance.gov/. If you require this document in an alternative electronic format, please contact CFPB_ Accessibility@cfpb.gov. SUPPLEMENTARY INFORMATION: The Bureau is issuing this advisory opinion through the procedures for its Advisory Opinions Policy.1 Refer to those procedures for more information. I. Advisory Opinion A. Background Accuracy in consumer reports is of vital importance to the consumer reporting system, particularly as consumer reports play an increasingly important role in the lives of American consumers. Consumer reporting agencies assemble and evaluate credit, public record, and other consumer information into consumer reports. The information in these reports is used by many different types of businesses, from creditors and insurers to landlords and employers, to make eligibility and other decisions about consumers. Creditors, for example, use information in consumer reports to determine whether, and on what terms, to extend credit to a particular consumer. The majority of landlords and employers use background screening reports to screen prospective tenants and employees.2 Inaccurate information in consumer reports can have significant adverse impacts on consumers. These impacts are particularly concerning for prospective renters and job seekers struggling to recover from the impacts of the COVID–19 pandemic. Consumers with inaccurate information in their consumer reports may, for example, be denied credit or housing they would have otherwise received, or may be offered less attractive terms than they would have been offered if their information had been accurate. For example, an applicant whose tenant screening report shows past litigation or a poor rental payment history may find it difficult or more expensive to rent 1 85 FR 77987 (Dec. 3, 2020). Nat’l Consumer Law Ctr., Broken Records Redux: How Errors by Criminal Background Check Companies Continue to Harm Consumers Seeking Jobs and Housing 3 (Dec. 2019), https:// www.nclc.org/images/pdf/criminal-justice/reportbroken-records-redux.pdf; Bureau of Consumer Fin. Prot., Market Snapshot: Background Screening Reports: Criminal background checks in employment 3–4 (Oct. 2019), https://files.consumer finance.gov/f/documents/201909_cfpb_marketsnapshot-background-screening_report.pdf (CFPB Background Screening Report); Sharon Dietrich, Preventing Background Screeners from Reporting Expunged Criminal Cases, Sargent Shriver Nat’l Ctr. on Poverty L. (Apr. 2015). 2 See PO 00000 Frm 00004 Fmt 4700 Sfmt 4700 property.3 Job-seekers with inaccurate information in their consumer reports may also be denied employment opportunities.4 Inaccurate information in consumer reports can also harm the businesses that use such reports by leading them to incorrect decisions. Consumer report accuracy relies on the various parties to the consumer reporting system: the three nationwide consumer reporting agencies—Equifax, Experian, and TransUnion; other consumer reporting agencies, such as background screening companies; entities such as creditors who furnish information to consumer reporting agencies (i.e., furnishers); public record repositories; users of credit reports; and consumers. The FCRA, enacted in 1970, regulates consumer reporting. The statute was designed to ensure that ‘‘consumer reporting agencies adopt reasonable procedures for meeting the needs of commerce for consumer credit, personnel, insurance, and other information in a manner which is fair and equitable to the consumer, with regard to the confidentiality, accuracy, relevancy, and proper utilization of such information.’’ 5 The FCRA was enacted ‘‘to protect consumers from the transmission of inaccurate information about them and to establish credit reporting practices that utilize accurate, relevant, and current information in a confidential and responsible manner.’’ 6 Because of the importance of consumer report accuracy to businesses and consumers, the structure of the FCRA creates interrelated legal standards and requirements to support the policy goal of accurate credit reporting. Among these is the requirement that, when preparing a consumer report, consumer 3 See, e.g., Bureau of Consumer Fin. Prot., Complaint Bulletin: COVID–19 issues described in consumer complaints 15 (July 2021), https:// files.consumerfinance.gov/f/documents/cfpb_covid19-issues-described-consumer-complaints_ complaint-bulletin_2021-07.pdf (CFPB Complaint Bulletin) (noting that, in their complaints to the Bureau, some consumers have reported being denied applications for housing because information in their tenant screening reports was inaccurate, and other consumers reported facing homelessness because an eviction had negatively affected their credit, making it more difficult to secure housing); Kaveh Waddell, How Tenant Screening Reports Make It Hard for People to Bounce Back from Tough Times, Consumer Reports (Mar. 11, 2021), https://www.consumerreports.org/ algorithmic-bias/tenant-screening-reports-make-ithard-to-bounce-back-from-tough-times/; Lauren Kirchner & Matthew Goldstein, How Automated Background Checks Freeze Out Renters, N.Y. Times (May 28, 2020), https://www.nytimes.com/2020/05/ 28/business/renters-background-checks.html. 4 CFPB Background Screening Report, supra note 2, at 13–14. 5 15 U.S.C. 1681(b). 6 Guimond v. Trans Union Credit Info., 45 F.3d 1329, 1333 (9th Cir.1995) (citations omitted). E:\FR\FM\10NOR1.SGM 10NOR1 Federal Register / Vol. 86, No. 215 / Wednesday, November 10, 2021 / Rules and Regulations reporting agencies ‘‘shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates.’’ 7 This requirement remains as important today as it was when the statute was enacted in 1970. Concerns about the accuracy of information included in consumer reports are long-standing. In 2003, Congress passed the Fair and Accurate Credit Transactions (FACT) Act, which, in addition to expanding the FCRA’s substantive consumer protections, required the Federal Trade Commission (FTC) to conduct an ongoing study of consumer report accuracy and completeness.8 In 2012, the FTC published a report summarizing results of that study, finding, among other things, that one in five consumers who participated in the study had an error on at least one of their three nationwide credit reports.9 More recently, the Bureau and the FTC hosted a full-day public workshop to discuss issues affecting the accuracy of both traditional credit reports and employment and tenant background screening reports.10 The Bureau is especially concerned about the effects of these accuracy problems in light of the economic and public health impacts of COVID–19. Income shocks resulting from the pandemic, such as a job loss, reduced work hours, or the death or illness of a family member, have contributed to an increase in housing and financial insecurity for many households.11 Lowincome and minority renters have been disproportionately affected by the economic effects of the COVID–19 pandemic, including job losses.12 The Bureau is concerned that the risk that khammond on DSKJM1Z7X2PROD with RULES 7 15 U.S.C. 1681e(b). 8 Fair and Accurate Credit Transactions Act of 2003, Public Law 108–159, sec. 319, 117 Stat. 1952 (2003). 9 See Fed. Trade Comm’n, Report to Congress Under Section 319 of the Fair and Accurate Credit Transactions Act of 2003, at 64 (Dec. 2012), https:// www.ftc.gov/sites/default/files/documents/reports/ section-319-fair-and-accurate-credit-transactionsact-2003-fifth-interim-federal-trade-commission/ 130211factareport.pdf. 10 Fed. Trade Comm’n, Accuracy in Consumer Reporting Workshop (Dec. 10, 2019), https:// www.ftc.gov/news-events/events-calendar/ accuracy-consumer-reporting-workshop. 11 See Bureau of Consumer Fin. Prot., Housing Insecurity and the COVID–19 Pandemic, at 5 (Mar. 1, 2021), https://files.consumerfinance.gov/f/ documents/cfpb_Housing_insecurity_and_the_ COVID-19_pandemic.pdf. 12 See id. at 8, 18; see also Pew Research Ctr., Economic Fallout From COVID–19 Continues To Hit Lower-Income Americans the Hardest (Sept. 24, 2020), https://www.pewresearch.org/social-trends/ 2020/09/24/economic-fallout-from-covid-19continues-to-hit-lower-income-americans-thehardest/. VerDate Sep<11>2014 15:55 Nov 09, 2021 Jkt 256001 inaccurate data will be included in consumer reports may be further heightened by increased volumes of negative information in the consumer reporting system resulting from the pandemic. Inaccurate information in consumer reports can have devastating impacts on consumers, including impairing the ability of renters and jobseekers negatively impacted by the pandemic to secure new rental housing, find employment, and otherwise recover from the pandemic’s economic effects. An increase in housing instability and financial distress caused by inaccurate consumer reporting information could undermine the nation’s efforts to recover from the pandemic. Consumer complaints received by the Bureau reflect significant consumer concern about inaccuracies in consumer reports. Complaints about ‘‘incorrect information on your report’’ have represented the largest percentage of consumer complaints received by the Bureau regarding credit or consumer reporting each year for at least the last five years.13 In 2020 alone, companies provided responses to more than 191,000 such complaints, which represents approximately 68 percent of credit or consumer reporting complaints responded to by companies that year.14 Inaccuracies in consumer reports can in part be attributed to errors introduced by consumer reporting agencies during the ‘‘matching’’ process. When preparing a consumer report, a consumer reporting agency must assign or ‘‘match’’ information it obtains from a public data source or receives from a furnisher to the specific consumer who is the subject of the report. Each year, the Bureau receives many complaints 13 See Bureau of Consumer Fin. Prot., Consumer Response Annual Report, at 22 (Mar. 2021), https:// files.consumerfinance.gov/f/documents/cfpb_2020consumer-response-annual-report_03-2021.pdf; Bureau of Consumer Fin. Prot., Consumer Response Annual Report, at 19 (Mar. 2020), https:// files.consumerfinance.gov/f/documents/cfpb_ consumer-response-annual-report_2019.pdf; Bureau of Consumer Fin. Prot., Consumer Response Annual Report, at 19 (Mar. 2019), https://files.consumer finance.gov/f/documents/cfpb_consumer-responseannual-report_2018.pdf; Bureau of Consumer Fin. Prot., Consumer Response Annual Report, at 13 (Mar. 2018), https://files.consumerfinance.gov/f/ documents/cfpb_consumer-response-annualreport_2017.pdf; Bureau of Consumer Fin. Prot., Consumer Response Annual Report, at 18 (Mar. 2017), https://files.consumerfinance.gov/f/ documents/201703_cfpb_Consumer-ResponseAnnual-Report-2016.PDF. 14 See Bureau of Consumer Fin. Prot., Consumer Response Annual Report, at 22 (Mar. 2021), https:// files.consumerfinance.gov/f/documents/cfpb_2020consumer-response-annual-report_03-2021.pdf for more in-depth analyses. Additionally, consumers with a problem with a credit or consumer report may submit multiple complaints, for example, complaints about data furnishers and complaints about consumer reporting agencies. Id. at 21. PO 00000 Frm 00005 Fmt 4700 Sfmt 4700 62469 from consumers arising from errors that likely occurred during the matching process. Some consumers who submit such complaints include narrative descriptions noting, among other things, their frustration at trying to get such errors corrected, as well as the negative consequences of such errors, such as not being able to complete planned purchases of homes or cars.15 One method of matching, ‘‘name-only matching,’’ is particularly likely to lead to inaccuracies in consumer reports. Name-only matching occurs when a consumer reporting agency uses only first and last name to determine whether a particular item of information relates to a particular consumer, without using other personally identifying information such as address, date of birth, or Social Security number. Matching errors are particularly common when using nameonly matching because many consumers have the same or similar names. For example, in the United States, the 2010 census (the most recent to have last name statistics available) found more than 2.4 million respondents with the last name of Smith, 1.9 million respondents with the last name of Johnson, 1.6 million respondents with the last name of Williams, and more than 1 million respondents each with the last name of Brown, Jones, Garcia, Miller, Davis, Rodriguez, Martinez, or Hernandez.16 Given the commonality of many first and last names, it is not unlikely that thousands, or even tens of thousands, of consumers, might share a particular first and last name combination.17 15 See generally Bureau of Consumer Fin. Prot., Consumer Complaint Database, https:// www.consumerfinance.gov/data-research/ consumer-complaints/ (last visited Oct. 21, 2021). 16 U.S. Census Bureau, Frequently Occurring Surnames from the 2010 Census, https:// www.census.gov/topics/population/genealogy/data/ 2010_surnames.html (last revised Dec. 27, 2016). 17 For example, one study catalogued a number of first-and-last name combinations such as James Smith that each corresponded to over 30,000 individuals in the United States. See Lee Hartman, Southern Illinois University, John Smith et al.: Some observations on how the 20 most popular first names combine with the 20 most popular surnames in the United States (n.d.), https://web.archive.org/ web/20190225042148/http:/mypage.siu.edu/ lhartman/johnsmith.html; see also Mona Chalabi & Andrew Flowers, Dear Mona, What’s The Most Common Name In America? (Nov. 20, 2014), https://fivethirtyeight.com/features/whats-the-mostcommon-name-in-america/ (cataloguing common first-and-last name combinations). Indeed, one court, in evaluating an FCRA section 607(b) claim, noted that there could be as many as 125,000 individuals named ‘‘David Smith’’ living in the United States. Smith v. LexisNexis Screening Solutions, Inc., 837 F.3d 604, 610 (6th Cir. 2016) (noting that ‘‘‘David Smith’ is an exceedingly common first-and-last-name combination—to the tune of over 125,000 individuals living in the United States’’). E:\FR\FM\10NOR1.SGM 10NOR1 62470 Federal Register / Vol. 86, No. 215 / Wednesday, November 10, 2021 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES The risk of mismatching from nameonly matching is likely to be greater for Hispanic, Asian, and Black individuals because there is less last-name diversity in those populations than among the non-Hispanic white population.18 For example, a study of 2010 census data indicated that the percentage of nonHispanic white respondents covered by the top 10 most common last names is lower than the corresponding percentages for Hispanic, Asian, and Black respondents.19 The study found the highest level of last-name clustering among Hispanic respondents, noting that just 26 last names cover a quarter of the Hispanic population (as compared to 319 last names required to cover a quarter of the population identified as non-Hispanic white alone) and that 16.3 percent of Hispanic respondents reported one of the top 10 most common last names (as compared to 4.5 percent for non-Hispanic white alone respondents).20 The study further noted that these clustering patterns were similar for Asian and Black respondents.21 The Bureau, the FTC, and State attorneys general have brought enforcement actions in this area. In 2014, a background screening company settled FTC allegations that it violated FCRA section 607(b) by failing to use reasonable procedures to assure maximum possible accuracy of consumer report information when it provided employers background screening reports about job applicants that included, based on name-only matching, information about whether the applicants were registered in a National Sex Offender Registry.22 In 18 Joshua Comenetz, Frequently Occurring Surnames in the 2010 Census 3–7 (Oct. 2016), https://www2.census.gov/topics/genealogy/ 2010surnames/surnames.pdf; U.S. Census Bureau, Hispanic Surnames Rise in Popularity (Aug. 9, 2017), https://www.census.gov/library/stories/2017/ 08/what-is-in-a-name.html; U.S. Census, What’s in a Name (Dec. 15, 2016), https://www.census.gov/ newsroom/blogs/random-samplings/2016/12/what_ s_in_a_name.html. 19 Frequently Occurring Surnames in the 2010 Census, supra note 18, at 4, 6, 7 & table 4 (noting that 14 of the 15 most rapidly increasing last names that were among the top 1,000 most common last names in both 2000 and 2010 were predominantly Asian or Hispanic). 20 Id. at 7. Relatedly, one study estimated that four of the top 13 most common first-and-last-name combinations in the United States are names of Spanish origin. Specifically, the study estimated that there are more than 25,000 individuals in the United States each named Maria Garcia, Maria Rodriguez, Maria Hernandez, or Maria Martinez. See John Smith et al., supra note 17. 21 Frequently Occurring Surnames in the 2010 Census, supra note 18, at 7. 22 Complaint at ¶¶ 9–17, U.S. v. InfoTrack Info. Servs, Inc., No. 1:14–cv–02054 (N.D. Ill. Mar. 24, 2014), https://www.ftc.gov/enforcement/casesproceedings/122-3092/infotrack-informationservices-inc-et-al. VerDate Sep<11>2014 15:55 Nov 09, 2021 Jkt 256001 2019, the Bureau settled allegations that a background screening company violated FCRA section 607(b) by matching publicly sourced criminal records to job applicants based only on limited personal identifiers, which could include first and last name and either date of birth or address, a practice that resulted in ‘‘a heightened risk of false positives’’ because commonly named individuals (e.g., John Smith) might share the same first and last name and date of birth or address.23 Similarly, in 2015, the Bureau took action against a background screening company for violating FCRA section 607(b) by permitting, but not requiring, employers to provide middle names for job applicants for purposes of matching criminal record information to particular consumers. According to the Bureau’s complaint, the company’s procedures resulted in the reporting of mismatched criminal record information about consumers.24 In March 2015, the three nationwide consumer reporting agencies—Equifax, Experian, and TransUnion—launched the National Consumer Assistance Plan (NCAP), an initiative aimed at enhancing the accuracy of credit reports and making it easier for consumers to correct errors on their credit reports. The NCAP was the result of a settlement between the nationwide consumer reporting agencies and over thirty State Attorneys General that required the nationwide consumer reporting agencies to, among other things, form a working group to establish standards regarding the collection of public record data for consumer credit reports.25 Pursuant to the NCAP, starting July 1, 2017, public record data obtained by the nationwide consumer reporting agencies for 23 Complaint at ¶¶ 5–11, Bureau of Consumer Fin. Prot. v. Sterling Infosys., Inc., No. 1:19–cv–10824 (S.D.N.Y. Nov. 22, 2019), https://www.consumer finance.gov/enforcement/actions/sterlinginfosystems-inc/. 24 Consent Order at ¶¶ 4–13, In re Gen. Info. Servs., Inc., 2015–CFPB–0028 (Oct. 29, 2015), https://files.consumerfinance.gov/f/201510_cfpb_ consent-order_general-information-service-inc.pdf; see also, e.g., Complaint at ¶¶ 8–21, Fed. Trade Comm’n v. RealPage, Inc., No. 3:18–cv–02737–N (N.D. Tex. Oct. 16, 2018), https://www.ftc.gov/ enforcement/cases-proceedings/152-3059/realpageinc (alleging defendant violated FCRA section 607(b) by using matching criteria that required ‘‘an exact match on the applicant’s last name only,’’ and ‘‘a ‘soft’, or non-exact, match for first name, middle name, and date of birth,’’ resulting in defendant providing tenant screening reports with criminal record information for individuals other than the applicant). 25 Assurance of Voluntary Compliance/Assurance of Voluntary Discontinuance at ¶ IV.E.6, In re Equifax Info. Servs. LLC, Experian Info. Solutions, Inc., and TransUnion LLC (May 20, 2015), https:// www.ohioattorneygeneral.gov/Files/Briefing-Room/ News-Releases/Consumer-Protection/2015-05-20CRAs-AVC.aspx. PO 00000 Frm 00006 Fmt 4700 Sfmt 4700 inclusion on credit reports must contain name, address, and Social Security Number and/or date of birth and must be refreshed at least every 90 days.26 Courts have also spoken on this topic. For example, a decade ago, the Third Circuit in Cortez v. Trans Union, LLC considered a case in which the nationwide consumer reporting agency TransUnion had indicated in a consumer report that the consumer’s name matched a name on a list maintained by the Office of Foreign Assets Control (OFAC), despite the fact that TransUnion had information within its own files showing that the OFAC alert was not about the correct consumer.27 The Third Circuit upheld the district court’s ruling that TransUnion’s matching protocols that compared only the consumer’s name to the names on the OFAC list did not satisfy the requirement of FCRA section 607(b).28 Nonetheless, TransUnion did not adequately update its matching practices, and it was sued a second time for similar practices in Ramirez v. TransUnion LLC. In a 2020 decision that was later overturned on other grounds, the Ninth Circuit ruled that ‘‘despite [Cortez], TransUnion continued to use problematic matching technology. . . . In doing so, it ran an unjustifiably high risk of error.’’ 29 The court upheld a jury verdict deeming TransUnion liable for violating section 607(b) because it used ‘‘rudimentary name-only matching software without any additional checks to avoid false positives.’’ 30 The Ninth Circuit held that the violation was willful because the correct reading of the FCRA should have been clear to TransUnion after Cortez.31 26 Following the launch of the NCAP, the nationwide consumer reporting agencies took steps to remove public records not meeting the specified criteria and, beginning in April 2018, ceased including civil judgments and tax liens in the consumer reports they issued. Bankruptcies are the only type of public record that continue to be reported by the nationwide consumer reporting agencies. Other consumer reporting agencies, however, continue to include civil judgments and tax liens on the consumer reports they prepare. See Bureau of Consumer Fin. Prot., Quarterly Consumer Credit Trends: Public records, credit scores, and credit performance (Dec. 2019), https:// files.consumerfinance.gov/f/documents/cfpb_ quarterly-consumer-credit-trends_public-recordscredit-scores-performance_2019-12.pdf; Bureau of Consumer Fin. Prot., Quarterly Consumer Credit Trends: Public Records (Feb. 2018), https:// files.consumerfinance.gov/f/documents/cfpb_ consumer-credit-trends_public-records_022018.pdf. 27 617 F.3d 688 (3d Cir. 2010). 28 Id. 29 Ramirez v. TransUnion, LLC, 951 F.3d 1008, 1032 (9th Cir. 2020), rev’d on standing grounds, 141 S. Ct. 2190 (June 25, 2021). 30 Id. at 1022. 31 Id. at 1031–33. Consumers have also brought other private party claims under the FCRA relating to matching using limited personal identifiers. See, E:\FR\FM\10NOR1.SGM 10NOR1 Federal Register / Vol. 86, No. 215 / Wednesday, November 10, 2021 / Rules and Regulations Despite these enforcement actions, the steps taken by the nationwide consumer reporting agencies pursuant to the NCAP, and these court decisions, it appears that some consumer reporting agencies continue to use matching practices that do not satisfy the standard of ‘‘reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates,’’ as required by FCRA section 607(b). The NCLC stated in a 2019 report that some background screening companies are still relying on name-only matches.32 NCLC and other consumer and civil rights groups recently requested that the Bureau provide guidance that nameonly matching is a practice that fails to comply with the FCRA.33 The Bureau is issuing this advisory opinion to remind consumer reporting agencies that their matching practices must comply with their FCRA obligation to ’’follow reasonable procedures to assure maximum possible accuracy’’ under section 607(b), and that the practice of name-only matching in particular is far from sufficient to meet that standard. Indeed, as illustrated by the foregoing discussion, multiple additional elements beyond names may often be required to meet the FCRA standard of ‘‘reasonable procedures to assure maximum possible accuracy.’’ B. Coverage khammond on DSKJM1Z7X2PROD with RULES This advisory opinion applies to all consumer reporting agencies as defined in FCRA section 603(f).34 As used in this advisory opinion, ‘‘name-only matching’’ refers to matching information to the particular consumer who is the subject of a consumer report based solely on whether the consumer’s first and last names are identical or similar to the first and last names associated with the information, without verifying the match using additional identifying information for the consumer. ‘‘Matching procedures’’ refers to the broader set of practices and procedures consumer reporting agencies e.g., Lopez v. Nat’l Credit Reporting, Inc., 2013 WL 1999624 (N.D. Cal. May 13, 2013) (denying motion to dismiss in case alleging violation of FCRA section 607(b) related to mixed file due to match based only on name and similar area of residence). 32 Nat’l Consumer Law Ctr., Broken Records Redux, supra note 2, at 18, 38. 33 Letter from American Civil Liberties Union et al. to Secretary Marcia L. Fudge, U.S. Dep’t of Hous. & Urban Dev. et al. (July 13, 2021), at 7–8 (addressing technology’s role in housing discrimination), https://www.aclu.org/letter/ coalition-memo-re-addressing-technologys-rolehousing-discrimination. 34 15 U.S.C. 1681a(f). VerDate Sep<11>2014 15:55 Nov 09, 2021 Jkt 256001 use to link information to a consumer’s consumer report. C. Legal Analysis FCRA section 607(b) provides that ‘‘[w]henever a consumer reporting agency prepares a consumer report it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates.’’ 35 The Bureau interprets the requirement in section 607(b) to include as an integral component that the information in fact pertains to the consumer who is the subject of the report. Indeed, the text of section 607(b) refers explicitly to ‘‘the individual about whom the report relates.’’ This interpretation is consistent with the core purpose of the FCRA as described in FCRA section 602—i.e., to require consumer reporting agencies to adopt reasonable procedures for meeting the needs of commerce for consumer credit, personnel, insurance, and other information in a manner that is fair and equitable to the consumer with regard to confidentiality, accuracy, and the proper use of such information.36 Other provisions of the FCRA that directly relate to section 607(b) also support this interpretation. For example, section 603(d) of the FCRA defines ‘‘consumer report’’ to include certain communications ‘‘bearing on a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living’’ that are ‘‘used or expected to be used . . . for the purpose of . . . establishing the consumer’s eligibility’’ for credit, employment, insurance, and other purposes.37 Information in a consumer report on a different consumer than the consumer report purports to relate to would not have any utility in serving as a factor in establishing the eligibility of the person the consumer report purports to relate to. Additionally, section 604 of the FCRA generally provides that a consumer reporting agency may not provide a consumer report about a particular consumer unless there is a permissible purpose, such as a legitimate business need related to a 35 15 U.S.C. 1681e(b). U.S.C. 1681(a); see also Guimond, 45 F.3d at 1333. Inaccuracy based on mistaken identity was one of the reasons a first version of the FCRA was introduced. As Senator William Proxmire stated when introducing the legislation, ‘‘There are many varieties of inaccurate information . . . . One is the case of mistaken identity, where two individuals with the same names are confused, and the deserving individual is denied credit because of something done by the other person.’’ 114 Cong. Rec. 24,902, 24,903 (1968). 37 15 U.S.C. 1681a(d). 62471 transaction initiated by the consumer.38 The FCRA expressly ties many of these permissible purposes to the specific consumer who is the subject of the report, making it clear that Congress intended that information in the consumer report would relate to that specific consumer. For instance, in FCRA section 604(a)(3)(A), Congress allowed consumer reporting agencies to release a consumer report to a person if they have reason to believe the person ‘‘intends to use the information in connection with a credit transaction involving the consumer on whom the information is to be furnished.’’ 39 The steps that a consumer reporting agency takes in matching information it obtains or receives to the correct consumer in preparing consumer reports are critical in assessing whether a consumer reporting agency is following ‘‘reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates’’ under FCRA section 607(b). As detailed in part I.A. above, matching information to the consumer who is the subject of a consumer report by name alone creates significant accuracy concerns because most names are shared with other consumers and, in some cases, with thousands of other consumers. In preparing consumer reports, it is not a reasonable procedure to assure maximum possible accuracy to use insufficient identifiers to match information to the consumer who is the subject of the report. In particular, it has been the consistent view of the Bureau that name-only matching is not a procedure that assures maximum possible accuracy, and thus, consumer reporting agencies that use name-only matching violate FCRA section 607(b).40 That continues to be the Bureau’s position as outlined in this advisory opinion. Moreover, nothing in this analysis creates a safe harbor for the FCRA requirement of ‘‘reasonable procedures to assure maximum possible accuracy’’ with respect to matching. Based on the high risk that name-only matching will result in the inclusion of information that does not pertain to the consumer who is the subject of the report and the relative lack of burden on a consumer reporting agency associated 36 15 PO 00000 Frm 00007 Fmt 4700 Sfmt 4700 38 15 U.S.C. 1681b. U.S.C. 1681b(a)(3)(A). 40 See Consent Order at ¶¶ 4–13, In re Gen. Info. Servs., Inc., 2015–CFPB–0028 (Oct. 29, 2015), https://files.consumerfinance.gov/f/201510_cfpb_ consent-order_general-information-service-inc.pdf; Complaint at ¶¶ 5–11, Bureau of Consumer Fin. Prot. v. Sterling Infosys., Inc., No. 1:19–cv–10824 (S.D.N.Y. Nov. 22, 2019), https://www.consumer finance.gov/enforcement/actions/sterlinginfosystems-inc/. 39 15 E:\FR\FM\10NOR1.SGM 10NOR1 62472 Federal Register / Vol. 86, No. 215 / Wednesday, November 10, 2021 / Rules and Regulations with utilizing additional identifiers or not including name-only matched information in a consumer report, the Bureau continues to conclude that it is not a reasonable procedure to use nameonly matching to match information to the consumer who is the subject of the report in preparing a consumer report. In some cases, in preparing consumer reports, consumer reporting agencies may obtain information from a data broker, database, or other source that does not have or use identifying information other than consumers’ names. It is not a reasonable procedure for the consumer reporting agency to simply include information from such sources in a consumer’s report without taking additional steps to match the information to the consumer who is the subject of the report, such as consulting other databases or sources of information that contain additional identifying information. khammond on DSKJM1Z7X2PROD with RULES II. Regulatory Matters This advisory opinion is an interpretive rule issued under the Bureau’s authority to interpret the FCRA, including under section 1022(b)(1) of the Dodd-Frank Wall Street Reform and Consumer Protection Act,41 which authorizes guidance as may be necessary or appropriate to enable the Bureau to administer and carry out the purposes and objectives of Federal consumer financial laws.42 As an interpretive rule, this advisory opinion is exempt from the notice-andcomment rulemaking requirements of the Administrative Procedure Act.43 Because no notice of proposed rulemaking is required, the Regulatory Flexibility Act does not require an initial or final regulatory flexibility analysis.44 The Bureau has also determined that this advisory opinion does not impose any new or revise any existing recordkeeping, reporting, or disclosure requirements on covered entities or members of the public that would be collections of information requiring approval by the Office of Management and Budget under the Paperwork Reduction Act.45 Pursuant to the Congressional Review Act,46 the Bureau will submit a report containing this interpretive rule and other required information to the United States Senate, the United States House of Representatives, and the Comptroller General of the United States prior to the 41 Public Law 111–203, 124 Stat. 1376 (2010). U.S.C. 5512(b)(1). 43 5 U.S.C. 553(b). 44 5 U.S.C. 603(a), 604(a). 45 44 U.S.C. 3501–3521. 46 5 U.S.C. 801 et seq. 42 12 VerDate Sep<11>2014 15:55 Nov 09, 2021 Jkt 256001 rule’s published effective date. The Office of Information and Regulatory Affairs has designated this interpretive rule as not a ‘‘major rule’’ as defined by 5 U.S.C. 804(2). Dated: November 3, 2021. Rohit Chopra, Director, Bureau of Consumer Financial Protection. [FR Doc. 2021–24471 Filed 11–9–21; 8:45 am] BILLING CODE 4810–AM–P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 107 [Docket No. FAA–2018–1087; Amdt. No. 107–9] Good Cause for Adoption Without Prior Notice RIN 2120–AK85 Operation of Small Unmanned Aircraft Systems Over People; Technical Amendments Federal Aviation Administration (FAA), U.S. Department of Transportation (DOT). ACTION: Technical amendments. AGENCY: The Federal Aviation Administration is making technical amendments to the ‘‘Operation of Small Unmanned Aircraft Systems over People’’ final rule, which was published on January 15, 2021. The final rule document inadvertently misnumbered regulatory text and used inconsistent language to refer to a process. DATES: Effective November 10, 2021. FOR FURTHER INFORMATION CONTACT: Michael Machnik, General Aviation and Commercial Division, Flight Standards Service, Federal Aviation Administration, 800 Independence Avenue SW, 8th Floor, Washington, DC 20591; telephone 1–844–FLY–MYUA; email: UASHelp@faa.gov. SUPPLEMENTARY INFORMATION: SUMMARY: Electronic Access and Filing A copy of the notice of proposed rulemaking (NPRM) (84 FR 3856, February 13, 2019), all comments received, the final rule, and all background material may be viewed online at https://www.regulations.gov using the docket number listed above. A copy of these technical amendments will be placed in the docket. Electronic retrieval help and guidelines are available on the website. It is available 24 hours each day, 365 days each year. An electronic copy of this document may also be downloaded from the Office of the Federal Register’s website at PO 00000 Frm 00008 Fmt 4700 https://www.federalregister.gov and the Government Publishing Office’s website at https://www.govinfo.gov. A copy may also be found at the FAA’s Regulations and Policies website at https:// www.faa.gov/regulations_policies. Copies may also be obtained by sending a request to the Federal Aviation Administration, Office of Rulemaking, ARM–1, 800 Independence Avenue SW, Washington, DC 20591, or by calling (202) 267–9677. Commenters must identify the docket or notice number of this rulemaking. All documents the FAA considered in developing these technical amendments, including economic analyses and technical reports, may be accessed in the electronic docket for this rulemaking. Sfmt 4700 Section 553(b)(3)(B) of the Administrative Procedure Act (APA) (5 U.S.C. 551 et seq.) authorizes agencies to dispense with notice and comment procedures for rules when the agency for ‘‘good cause’’ finds that those procedures are ‘‘impracticable, unnecessary, or contrary to the public interest.’’ Section 553(d)(3) of the APA requires that agencies publish a rule not less than 30 days before its effective date, except as otherwise provided by the agency for good cause found and published with the rule. Because this action merely makes technical amendments to a published final rule, the FAA finds that notice and public comment under 5 U.S.C. 553(b) is unnecessary. For the same reason, the FAA finds that good cause exists under 5 U.S.C. 553(d) for making this rule effective in less than 30 days. Background On January 15, 2021, the ‘‘Operation of Small Unmanned Aircraft Systems Over People’’ final rule (RIN 2120– AK85) published in the Federal Register at 86 FR 4314. After the rule was published, the FAA discovered three minor drafting errors that require correction. This document corrects drafting errors in § 107.110(b) and (c) and in § 107.125(a)(2). In § 107.110, two paragraphs were designated improper paragraph levels. Section 107.110(b) should change to § 107.110 (a)(2) and § 107.110(c) should change to § 107.110(b). The final drafting errors that occur in § 107.125(a)(2) should read as ‘‘FAA-accepted declaration of compliance,’’ instead of ‘‘current’’ declaration of compliance, to match the language in § 107.115(a)(2). E:\FR\FM\10NOR1.SGM 10NOR1

Agencies

[Federal Register Volume 86, Number 215 (Wednesday, November 10, 2021)]
[Rules and Regulations]
[Pages 62468-62472]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-24471]


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BUREAU OF CONSUMER FINANCIAL PROTECTION

12 CFR Part 1022


Fair Credit Reporting; Name-Only Matching Procedures

AGENCY: Bureau of Consumer Financial Protection.

ACTION: Advisory opinion.

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SUMMARY: The Bureau of Consumer Financial Protection (Bureau) is 
issuing this advisory opinion to highlight that a consumer reporting 
agency that uses inadequate matching procedures to match information to 
consumers, including name-only matching (i.e., matching information to 
the particular consumer who is the subject of a consumer report based 
solely on whether the consumer's first and last names are identical or 
similar to the names associated with the information), in preparing 
consumer reports is not using reasonable procedures to assure maximum 
possible accuracy under section 607(b) of the Fair Credit Reporting Act 
(FCRA).

DATES: This advisory opinion is effective on November 10, 2021.

FOR FURTHER INFORMATION CONTACT: Brandy Hood, Courtney Jean, Kristin 
McPartland, Amanda Quester, or Pavneet Singh, Senior Counsels, Office 
of Regulations, at (202) 435-7700 or https://reginquiries.consumerfinance.gov/. If you require this document in an 
alternative electronic format, please contact 
[email protected].

SUPPLEMENTARY INFORMATION: The Bureau is issuing this advisory opinion 
through the procedures for its Advisory Opinions Policy.\1\ Refer to 
those procedures for more information.
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    \1\ 85 FR 77987 (Dec. 3, 2020).
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I. Advisory Opinion

A. Background

    Accuracy in consumer reports is of vital importance to the consumer 
reporting system, particularly as consumer reports play an increasingly 
important role in the lives of American consumers. Consumer reporting 
agencies assemble and evaluate credit, public record, and other 
consumer information into consumer reports. The information in these 
reports is used by many different types of businesses, from creditors 
and insurers to landlords and employers, to make eligibility and other 
decisions about consumers. Creditors, for example, use information in 
consumer reports to determine whether, and on what terms, to extend 
credit to a particular consumer. The majority of landlords and 
employers use background screening reports to screen prospective 
tenants and employees.\2\
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    \2\ See Nat'l Consumer Law Ctr., Broken Records Redux: How 
Errors by Criminal Background Check Companies Continue to Harm 
Consumers Seeking Jobs and Housing 3 (Dec. 2019), https://www.nclc.org/images/pdf/criminal-justice/report-broken-records-redux.pdf; Bureau of Consumer Fin. Prot., Market Snapshot: 
Background Screening Reports: Criminal background checks in 
employment 3-4 (Oct. 2019), https://files.consumerfinance.gov/f/documents/201909_cfpb_market-snapshot-background-screening_report.pdf (CFPB Background Screening Report); Sharon 
Dietrich, Preventing Background Screeners from Reporting Expunged 
Criminal Cases, Sargent Shriver Nat'l Ctr. on Poverty L. (Apr. 
2015).
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    Inaccurate information in consumer reports can have significant 
adverse impacts on consumers. These impacts are particularly concerning 
for prospective renters and job seekers struggling to recover from the 
impacts of the COVID-19 pandemic. Consumers with inaccurate information 
in their consumer reports may, for example, be denied credit or housing 
they would have otherwise received, or may be offered less attractive 
terms than they would have been offered if their information had been 
accurate. For example, an applicant whose tenant screening report shows 
past litigation or a poor rental payment history may find it difficult 
or more expensive to rent property.\3\ Job-seekers with inaccurate 
information in their consumer reports may also be denied employment 
opportunities.\4\ Inaccurate information in consumer reports can also 
harm the businesses that use such reports by leading them to incorrect 
decisions. Consumer report accuracy relies on the various parties to 
the consumer reporting system: the three nationwide consumer reporting 
agencies--Equifax, Experian, and TransUnion; other consumer reporting 
agencies, such as background screening companies; entities such as 
creditors who furnish information to consumer reporting agencies (i.e., 
furnishers); public record repositories; users of credit reports; and 
consumers.
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    \3\ See, e.g., Bureau of Consumer Fin. Prot., Complaint 
Bulletin: COVID-19 issues described in consumer complaints 15 (July 
2021), https://files.consumerfinance.gov/f/documents/cfpb_covid-19-issues-described-consumer-complaints_complaint-bulletin_2021-07.pdf 
(CFPB Complaint Bulletin) (noting that, in their complaints to the 
Bureau, some consumers have reported being denied applications for 
housing because information in their tenant screening reports was 
inaccurate, and other consumers reported facing homelessness because 
an eviction had negatively affected their credit, making it more 
difficult to secure housing); Kaveh Waddell, How Tenant Screening 
Reports Make It Hard for People to Bounce Back from Tough Times, 
Consumer Reports (Mar. 11, 2021), https://www.consumerreports.org/algorithmic-bias/tenant-screening-reports-make-it-hard-to-bounce-back-from-tough-times/; Lauren Kirchner & Matthew Goldstein, How 
Automated Background Checks Freeze Out Renters, N.Y. Times (May 28, 
2020), https://www.nytimes.com/2020/05/28/business/renters-background-checks.html.
    \4\ CFPB Background Screening Report, supra note 2, at 13-14.
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    The FCRA, enacted in 1970, regulates consumer reporting. The 
statute was designed to ensure that ``consumer reporting agencies adopt 
reasonable procedures for meeting the needs of commerce for consumer 
credit, personnel, insurance, and other information in a manner which 
is fair and equitable to the consumer, with regard to the 
confidentiality, accuracy, relevancy, and proper utilization of such 
information.'' \5\ The FCRA was enacted ``to protect consumers from the 
transmission of inaccurate information about them and to establish 
credit reporting practices that utilize accurate, relevant, and current 
information in a confidential and responsible manner.'' \6\ Because of 
the importance of consumer report accuracy to businesses and consumers, 
the structure of the FCRA creates interrelated legal standards and 
requirements to support the policy goal of accurate credit reporting. 
Among these is the requirement that, when preparing a consumer report, 
consumer

[[Page 62469]]

reporting agencies ``shall follow reasonable procedures to assure 
maximum possible accuracy of the information concerning the individual 
about whom the report relates.'' \7\ This requirement remains as 
important today as it was when the statute was enacted in 1970.
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    \5\ 15 U.S.C. 1681(b).
    \6\ Guimond v. Trans Union Credit Info., 45 F.3d 1329, 1333 (9th 
Cir.1995) (citations omitted).
    \7\ 15 U.S.C. 1681e(b).
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    Concerns about the accuracy of information included in consumer 
reports are long-standing. In 2003, Congress passed the Fair and 
Accurate Credit Transactions (FACT) Act, which, in addition to 
expanding the FCRA's substantive consumer protections, required the 
Federal Trade Commission (FTC) to conduct an ongoing study of consumer 
report accuracy and completeness.\8\ In 2012, the FTC published a 
report summarizing results of that study, finding, among other things, 
that one in five consumers who participated in the study had an error 
on at least one of their three nationwide credit reports.\9\ More 
recently, the Bureau and the FTC hosted a full-day public workshop to 
discuss issues affecting the accuracy of both traditional credit 
reports and employment and tenant background screening reports.\10\
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    \8\ Fair and Accurate Credit Transactions Act of 2003, Public 
Law 108-159, sec. 319, 117 Stat. 1952 (2003).
    \9\ See Fed. Trade Comm'n, Report to Congress Under Section 319 
of the Fair and Accurate Credit Transactions Act of 2003, at 64 
(Dec. 2012), https://www.ftc.gov/sites/default/files/documents/reports/section-319-fair-and-accurate-credit-transactions-act-2003-fifth-interim-federal-trade-commission/130211factareport.pdf.
    \10\ Fed. Trade Comm'n, Accuracy in Consumer Reporting Workshop 
(Dec. 10, 2019), https://www.ftc.gov/news-events/events-calendar/accuracy-consumer-reporting-workshop.
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    The Bureau is especially concerned about the effects of these 
accuracy problems in light of the economic and public health impacts of 
COVID-19. Income shocks resulting from the pandemic, such as a job 
loss, reduced work hours, or the death or illness of a family member, 
have contributed to an increase in housing and financial insecurity for 
many households.\11\ Low-income and minority renters have been 
disproportionately affected by the economic effects of the COVID-19 
pandemic, including job losses.\12\ The Bureau is concerned that the 
risk that inaccurate data will be included in consumer reports may be 
further heightened by increased volumes of negative information in the 
consumer reporting system resulting from the pandemic. Inaccurate 
information in consumer reports can have devastating impacts on 
consumers, including impairing the ability of renters and job-seekers 
negatively impacted by the pandemic to secure new rental housing, find 
employment, and otherwise recover from the pandemic's economic effects. 
An increase in housing instability and financial distress caused by 
inaccurate consumer reporting information could undermine the nation's 
efforts to recover from the pandemic.
---------------------------------------------------------------------------

    \11\ See Bureau of Consumer Fin. Prot., Housing Insecurity and 
the COVID-19 Pandemic, at 5 (Mar. 1, 2021), https://files.consumerfinance.gov/f/documents/cfpb_Housing_insecurity_and_the_COVID-19_pandemic.pdf.
    \12\ See id. at 8, 18; see also Pew Research Ctr., Economic 
Fallout From COVID-19 Continues To Hit Lower-Income Americans the 
Hardest (Sept. 24, 2020), https://www.pewresearch.org/social-trends/2020/09/24/economic-fallout-from-covid-19-continues-to-hit-lower-income-americans-the-hardest/.
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    Consumer complaints received by the Bureau reflect significant 
consumer concern about inaccuracies in consumer reports. Complaints 
about ``incorrect information on your report'' have represented the 
largest percentage of consumer complaints received by the Bureau 
regarding credit or consumer reporting each year for at least the last 
five years.\13\ In 2020 alone, companies provided responses to more 
than 191,000 such complaints, which represents approximately 68 percent 
of credit or consumer reporting complaints responded to by companies 
that year.\14\
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    \13\ See Bureau of Consumer Fin. Prot., Consumer Response Annual 
Report, at 22 (Mar. 2021), https://files.consumerfinance.gov/f/documents/cfpb_2020-consumer-response-annual-report_03-2021.pdf; 
Bureau of Consumer Fin. Prot., Consumer Response Annual Report, at 
19 (Mar. 2020), https://files.consumerfinance.gov/f/documents/cfpb_consumer-response-annual-report_2019.pdf; Bureau of Consumer 
Fin. Prot., Consumer Response Annual Report, at 19 (Mar. 2019), 
https://files.consumerfinance.gov/f/documents/cfpb_consumer-response-annual-report_2018.pdf; Bureau of Consumer Fin. Prot., 
Consumer Response Annual Report, at 13 (Mar. 2018), https://files.consumerfinance.gov/f/documents/cfpb_consumer-response-annual-report_2017.pdf; Bureau of Consumer Fin. Prot., Consumer Response 
Annual Report, at 18 (Mar. 2017), https://files.consumerfinance.gov/f/documents/201703_cfpb_Consumer-Response-Annual-Report-2016.PDF.
    \14\ See Bureau of Consumer Fin. Prot., Consumer Response Annual 
Report, at 22 (Mar. 2021), https://files.consumerfinance.gov/f/documents/cfpb_2020-consumer-response-annual-report_03-2021.pdf for 
more in-depth analyses. Additionally, consumers with a problem with 
a credit or consumer report may submit multiple complaints, for 
example, complaints about data furnishers and complaints about 
consumer reporting agencies. Id. at 21.
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    Inaccuracies in consumer reports can in part be attributed to 
errors introduced by consumer reporting agencies during the 
``matching'' process. When preparing a consumer report, a consumer 
reporting agency must assign or ``match'' information it obtains from a 
public data source or receives from a furnisher to the specific 
consumer who is the subject of the report. Each year, the Bureau 
receives many complaints from consumers arising from errors that likely 
occurred during the matching process. Some consumers who submit such 
complaints include narrative descriptions noting, among other things, 
their frustration at trying to get such errors corrected, as well as 
the negative consequences of such errors, such as not being able to 
complete planned purchases of homes or cars.\15\
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    \15\ See generally Bureau of Consumer Fin. Prot., Consumer 
Complaint Database, https://www.consumerfinance.gov/data-research/consumer-complaints/ (last visited Oct. 21, 2021).
---------------------------------------------------------------------------

    One method of matching, ``name-only matching,'' is particularly 
likely to lead to inaccuracies in consumer reports. Name-only matching 
occurs when a consumer reporting agency uses only first and last name 
to determine whether a particular item of information relates to a 
particular consumer, without using other personally identifying 
information such as address, date of birth, or Social Security number. 
Matching errors are particularly common when using name-only matching 
because many consumers have the same or similar names. For example, in 
the United States, the 2010 census (the most recent to have last name 
statistics available) found more than 2.4 million respondents with the 
last name of Smith, 1.9 million respondents with the last name of 
Johnson, 1.6 million respondents with the last name of Williams, and 
more than 1 million respondents each with the last name of Brown, 
Jones, Garcia, Miller, Davis, Rodriguez, Martinez, or Hernandez.\16\ 
Given the commonality of many first and last names, it is not unlikely 
that thousands, or even tens of thousands, of consumers, might share a 
particular first and last name combination.\17\
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    \16\ U.S. Census Bureau, Frequently Occurring Surnames from the 
2010 Census, https://www.census.gov/topics/population/genealogy/data/2010_surnames.html (last revised Dec. 27, 2016).
    \17\ For example, one study catalogued a number of first-and-
last name combinations such as James Smith that each corresponded to 
over 30,000 individuals in the United States. See Lee Hartman, 
Southern Illinois University, John Smith et al.: Some observations 
on how the 20 most popular first names combine with the 20 most 
popular surnames in the United States (n.d.), https://web.archive.org/web/20190225042148/http:/mypage.siu.edu/lhartman/johnsmith.html; see also Mona Chalabi & Andrew Flowers, Dear Mona, 
What's The Most Common Name In America? (Nov. 20, 2014), https://fivethirtyeight.com/features/whats-the-most-common-name-in-america/ 
(cataloguing common first-and-last name combinations). Indeed, one 
court, in evaluating an FCRA section 607(b) claim, noted that there 
could be as many as 125,000 individuals named ``David Smith'' living 
in the United States. Smith v. LexisNexis Screening Solutions, Inc., 
837 F.3d 604, 610 (6th Cir. 2016) (noting that ```David Smith' is an 
exceedingly common first-and-last-name combination--to the tune of 
over 125,000 individuals living in the United States'').

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[[Page 62470]]

    The risk of mismatching from name-only matching is likely to be 
greater for Hispanic, Asian, and Black individuals because there is 
less last-name diversity in those populations than among the non-
Hispanic white population.\18\ For example, a study of 2010 census data 
indicated that the percentage of non-Hispanic white respondents covered 
by the top 10 most common last names is lower than the corresponding 
percentages for Hispanic, Asian, and Black respondents.\19\ The study 
found the highest level of last-name clustering among Hispanic 
respondents, noting that just 26 last names cover a quarter of the 
Hispanic population (as compared to 319 last names required to cover a 
quarter of the population identified as non-Hispanic white alone) and 
that 16.3 percent of Hispanic respondents reported one of the top 10 
most common last names (as compared to 4.5 percent for non-Hispanic 
white alone respondents).\20\ The study further noted that these 
clustering patterns were similar for Asian and Black respondents.\21\
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    \18\ Joshua Comenetz, Frequently Occurring Surnames in the 2010 
Census 3-7 (Oct. 2016), https://www2.census.gov/topics/genealogy/2010surnames/surnames.pdf; U.S. Census Bureau, Hispanic Surnames 
Rise in Popularity (Aug. 9, 2017), https://www.census.gov/library/stories/2017/08/what-is-in-a-name.html; U.S. Census, What's in a 
Name (Dec. 15, 2016), https://www.census.gov/newsroom/blogs/random-samplings/2016/12/what_s_in_a_name.html.
    \19\ Frequently Occurring Surnames in the 2010 Census, supra 
note 18, at 4, 6, 7 & table 4 (noting that 14 of the 15 most rapidly 
increasing last names that were among the top 1,000 most common last 
names in both 2000 and 2010 were predominantly Asian or Hispanic).
    \20\ Id. at 7. Relatedly, one study estimated that four of the 
top 13 most common first-and-last-name combinations in the United 
States are names of Spanish origin. Specifically, the study 
estimated that there are more than 25,000 individuals in the United 
States each named Maria Garcia, Maria Rodriguez, Maria Hernandez, or 
Maria Martinez. See John Smith et al., supra note 17.
    \21\ Frequently Occurring Surnames in the 2010 Census, supra 
note 18, at 7.
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    The Bureau, the FTC, and State attorneys general have brought 
enforcement actions in this area. In 2014, a background screening 
company settled FTC allegations that it violated FCRA section 607(b) by 
failing to use reasonable procedures to assure maximum possible 
accuracy of consumer report information when it provided employers 
background screening reports about job applicants that included, based 
on name-only matching, information about whether the applicants were 
registered in a National Sex Offender Registry.\22\ In 2019, the Bureau 
settled allegations that a background screening company violated FCRA 
section 607(b) by matching publicly sourced criminal records to job 
applicants based only on limited personal identifiers, which could 
include first and last name and either date of birth or address, a 
practice that resulted in ``a heightened risk of false positives'' 
because commonly named individuals (e.g., John Smith) might share the 
same first and last name and date of birth or address.\23\ Similarly, 
in 2015, the Bureau took action against a background screening company 
for violating FCRA section 607(b) by permitting, but not requiring, 
employers to provide middle names for job applicants for purposes of 
matching criminal record information to particular consumers. According 
to the Bureau's complaint, the company's procedures resulted in the 
reporting of mismatched criminal record information about 
consumers.\24\
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    \22\ Complaint at ]] 9-17, U.S. v. InfoTrack Info. Servs, Inc., 
No. 1:14-cv-02054 (N.D. Ill. Mar. 24, 2014), https://www.ftc.gov/enforcement/cases-proceedings/122-3092/infotrack-information-services-inc-et-al.
    \23\ Complaint at ]] 5-11, Bureau of Consumer Fin. Prot. v. 
Sterling Infosys., Inc., No. 1:19-cv-10824 (S.D.N.Y. Nov. 22, 2019), 
https://www.consumerfinance.gov/enforcement/actions/sterling-infosystems-inc/.
    \24\ Consent Order at ]] 4-13, In re Gen. Info. Servs., Inc., 
2015-CFPB-0028 (Oct. 29, 2015), https://files.consumerfinance.gov/f/201510_cfpb_consent-order_general-information-service-inc.pdf; see 
also, e.g., Complaint at ]] 8-21, Fed. Trade Comm'n v. RealPage, 
Inc., No. 3:18-cv-02737-N (N.D. Tex. Oct. 16, 2018), https://www.ftc.gov/enforcement/cases-proceedings/152-3059/realpage-inc 
(alleging defendant violated FCRA section 607(b) by using matching 
criteria that required ``an exact match on the applicant's last name 
only,'' and ``a `soft', or non-exact, match for first name, middle 
name, and date of birth,'' resulting in defendant providing tenant 
screening reports with criminal record information for individuals 
other than the applicant).
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    In March 2015, the three nationwide consumer reporting agencies--
Equifax, Experian, and TransUnion--launched the National Consumer 
Assistance Plan (NCAP), an initiative aimed at enhancing the accuracy 
of credit reports and making it easier for consumers to correct errors 
on their credit reports. The NCAP was the result of a settlement 
between the nationwide consumer reporting agencies and over thirty 
State Attorneys General that required the nationwide consumer reporting 
agencies to, among other things, form a working group to establish 
standards regarding the collection of public record data for consumer 
credit reports.\25\ Pursuant to the NCAP, starting July 1, 2017, public 
record data obtained by the nationwide consumer reporting agencies for 
inclusion on credit reports must contain name, address, and Social 
Security Number and/or date of birth and must be refreshed at least 
every 90 days.\26\
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    \25\ Assurance of Voluntary Compliance/Assurance of Voluntary 
Discontinuance at ] IV.E.6, In re Equifax Info. Servs. LLC, Experian 
Info. Solutions, Inc., and TransUnion LLC (May 20, 2015), https://www.ohioattorneygeneral.gov/Files/Briefing-Room/News-Releases/Consumer-Protection/2015-05-20-CRAs-AVC.aspx.
    \26\ Following the launch of the NCAP, the nationwide consumer 
reporting agencies took steps to remove public records not meeting 
the specified criteria and, beginning in April 2018, ceased 
including civil judgments and tax liens in the consumer reports they 
issued. Bankruptcies are the only type of public record that 
continue to be reported by the nationwide consumer reporting 
agencies. Other consumer reporting agencies, however, continue to 
include civil judgments and tax liens on the consumer reports they 
prepare. See Bureau of Consumer Fin. Prot., Quarterly Consumer 
Credit Trends: Public records, credit scores, and credit performance 
(Dec. 2019), https://files.consumerfinance.gov/f/documents/cfpb_quarterly-consumer-credit-trends_public-records-credit-scores-performance_2019-12.pdf; Bureau of Consumer Fin. Prot., Quarterly 
Consumer Credit Trends: Public Records (Feb. 2018), https://files.consumerfinance.gov/f/documents/cfpb_consumer-credit-trends_public-records_022018.pdf.
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    Courts have also spoken on this topic. For example, a decade ago, 
the Third Circuit in Cortez v. Trans Union, LLC considered a case in 
which the nationwide consumer reporting agency TransUnion had indicated 
in a consumer report that the consumer's name matched a name on a list 
maintained by the Office of Foreign Assets Control (OFAC), despite the 
fact that TransUnion had information within its own files showing that 
the OFAC alert was not about the correct consumer.\27\ The Third 
Circuit upheld the district court's ruling that TransUnion's matching 
protocols that compared only the consumer's name to the names on the 
OFAC list did not satisfy the requirement of FCRA section 607(b).\28\ 
Nonetheless, TransUnion did not adequately update its matching 
practices, and it was sued a second time for similar practices in 
Ramirez v. TransUnion LLC. In a 2020 decision that was later overturned 
on other grounds, the Ninth Circuit ruled that ``despite [Cortez], 
TransUnion continued to use problematic matching technology. . . . In 
doing so, it ran an unjustifiably high risk of error.'' \29\ The court 
upheld a jury verdict deeming TransUnion liable for violating section 
607(b) because it used ``rudimentary name-only matching software 
without any additional checks to avoid false positives.'' \30\ The 
Ninth Circuit held that the violation was willful because the correct 
reading of the FCRA should have been clear to TransUnion after 
Cortez.\31\
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    \27\ 617 F.3d 688 (3d Cir. 2010).
    \28\ Id.
    \29\ Ramirez v. TransUnion, LLC, 951 F.3d 1008, 1032 (9th Cir. 
2020), rev'd on standing grounds, 141 S. Ct. 2190 (June 25, 2021).
    \30\ Id. at 1022.
    \31\ Id. at 1031-33. Consumers have also brought other private 
party claims under the FCRA relating to matching using limited 
personal identifiers. See, e.g., Lopez v. Nat'l Credit Reporting, 
Inc., 2013 WL 1999624 (N.D. Cal. May 13, 2013) (denying motion to 
dismiss in case alleging violation of FCRA section 607(b) related to 
mixed file due to match based only on name and similar area of 
residence).

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[[Page 62471]]

    Despite these enforcement actions, the steps taken by the 
nationwide consumer reporting agencies pursuant to the NCAP, and these 
court decisions, it appears that some consumer reporting agencies 
continue to use matching practices that do not satisfy the standard of 
``reasonable procedures to assure maximum possible accuracy of the 
information concerning the individual about whom the report relates,'' 
as required by FCRA section 607(b). The NCLC stated in a 2019 report 
that some background screening companies are still relying on name-only 
matches.\32\ NCLC and other consumer and civil rights groups recently 
requested that the Bureau provide guidance that name-only matching is a 
practice that fails to comply with the FCRA.\33\
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    \32\ Nat'l Consumer Law Ctr., Broken Records Redux, supra note 
2, at 18, 38.
    \33\ Letter from American Civil Liberties Union et al. to 
Secretary Marcia L. Fudge, U.S. Dep't of Hous. & Urban Dev. et al. 
(July 13, 2021), at 7-8 (addressing technology's role in housing 
discrimination), https://www.aclu.org/letter/coalition-memo-re-addressing-technologys-role-housing-discrimination.
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    The Bureau is issuing this advisory opinion to remind consumer 
reporting agencies that their matching practices must comply with their 
FCRA obligation to ''follow reasonable procedures to assure maximum 
possible accuracy'' under section 607(b), and that the practice of 
name-only matching in particular is far from sufficient to meet that 
standard. Indeed, as illustrated by the foregoing discussion, multiple 
additional elements beyond names may often be required to meet the FCRA 
standard of ``reasonable procedures to assure maximum possible 
accuracy.''

B. Coverage

    This advisory opinion applies to all consumer reporting agencies as 
defined in FCRA section 603(f).\34\ As used in this advisory opinion, 
``name-only matching'' refers to matching information to the particular 
consumer who is the subject of a consumer report based solely on 
whether the consumer's first and last names are identical or similar to 
the first and last names associated with the information, without 
verifying the match using additional identifying information for the 
consumer. ``Matching procedures'' refers to the broader set of 
practices and procedures consumer reporting agencies use to link 
information to a consumer's consumer report.
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    \34\ 15 U.S.C. 1681a(f).
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C. Legal Analysis

    FCRA section 607(b) provides that ``[w]henever a consumer reporting 
agency prepares a consumer report it shall follow reasonable procedures 
to assure maximum possible accuracy of the information concerning the 
individual about whom the report relates.'' \35\ The Bureau interprets 
the requirement in section 607(b) to include as an integral component 
that the information in fact pertains to the consumer who is the 
subject of the report. Indeed, the text of section 607(b) refers 
explicitly to ``the individual about whom the report relates.'' This 
interpretation is consistent with the core purpose of the FCRA as 
described in FCRA section 602--i.e., to require consumer reporting 
agencies to adopt reasonable procedures for meeting the needs of 
commerce for consumer credit, personnel, insurance, and other 
information in a manner that is fair and equitable to the consumer with 
regard to confidentiality, accuracy, and the proper use of such 
information.\36\
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    \35\ 15 U.S.C. 1681e(b).
    \36\ 15 U.S.C. 1681(a); see also Guimond, 45 F.3d at 1333. 
Inaccuracy based on mistaken identity was one of the reasons a first 
version of the FCRA was introduced. As Senator William Proxmire 
stated when introducing the legislation, ``There are many varieties 
of inaccurate information . . . . One is the case of mistaken 
identity, where two individuals with the same names are confused, 
and the deserving individual is denied credit because of something 
done by the other person.'' 114 Cong. Rec. 24,902, 24,903 (1968).
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    Other provisions of the FCRA that directly relate to section 607(b) 
also support this interpretation. For example, section 603(d) of the 
FCRA defines ``consumer report'' to include certain communications 
``bearing on a consumer's credit worthiness, credit standing, credit 
capacity, character, general reputation, personal characteristics, or 
mode of living'' that are ``used or expected to be used . . . for the 
purpose of . . . establishing the consumer's eligibility'' for credit, 
employment, insurance, and other purposes.\37\ Information in a 
consumer report on a different consumer than the consumer report 
purports to relate to would not have any utility in serving as a factor 
in establishing the eligibility of the person the consumer report 
purports to relate to. Additionally, section 604 of the FCRA generally 
provides that a consumer reporting agency may not provide a consumer 
report about a particular consumer unless there is a permissible 
purpose, such as a legitimate business need related to a transaction 
initiated by the consumer.\38\ The FCRA expressly ties many of these 
permissible purposes to the specific consumer who is the subject of the 
report, making it clear that Congress intended that information in the 
consumer report would relate to that specific consumer. For instance, 
in FCRA section 604(a)(3)(A), Congress allowed consumer reporting 
agencies to release a consumer report to a person if they have reason 
to believe the person ``intends to use the information in connection 
with a credit transaction involving the consumer on whom the 
information is to be furnished.'' \39\
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    \37\ 15 U.S.C. 1681a(d).
    \38\ 15 U.S.C. 1681b.
    \39\ 15 U.S.C. 1681b(a)(3)(A).
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    The steps that a consumer reporting agency takes in matching 
information it obtains or receives to the correct consumer in preparing 
consumer reports are critical in assessing whether a consumer reporting 
agency is following ``reasonable procedures to assure maximum possible 
accuracy of the information concerning the individual about whom the 
report relates'' under FCRA section 607(b). As detailed in part I.A. 
above, matching information to the consumer who is the subject of a 
consumer report by name alone creates significant accuracy concerns 
because most names are shared with other consumers and, in some cases, 
with thousands of other consumers. In preparing consumer reports, it is 
not a reasonable procedure to assure maximum possible accuracy to use 
insufficient identifiers to match information to the consumer who is 
the subject of the report. In particular, it has been the consistent 
view of the Bureau that name-only matching is not a procedure that 
assures maximum possible accuracy, and thus, consumer reporting 
agencies that use name-only matching violate FCRA section 607(b).\40\ 
That continues to be the Bureau's position as outlined in this advisory 
opinion. Moreover, nothing in this analysis creates a safe harbor for 
the FCRA requirement of ``reasonable procedures to assure maximum 
possible accuracy'' with respect to matching.
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    \40\ See Consent Order at ]] 4-13, In re Gen. Info. Servs., 
Inc., 2015-CFPB-0028 (Oct. 29, 2015), https://files.consumerfinance.gov/f/201510_cfpb_consent-order_general-information-service-inc.pdf; Complaint at ]] 5-11, Bureau of 
Consumer Fin. Prot. v. Sterling Infosys., Inc., No. 1:19-cv-10824 
(S.D.N.Y. Nov. 22, 2019), https://www.consumerfinance.gov/enforcement/actions/sterling-infosystems-inc/.
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    Based on the high risk that name-only matching will result in the 
inclusion of information that does not pertain to the consumer who is 
the subject of the report and the relative lack of burden on a consumer 
reporting agency associated

[[Page 62472]]

with utilizing additional identifiers or not including name-only 
matched information in a consumer report, the Bureau continues to 
conclude that it is not a reasonable procedure to use name-only 
matching to match information to the consumer who is the subject of the 
report in preparing a consumer report.
    In some cases, in preparing consumer reports, consumer reporting 
agencies may obtain information from a data broker, database, or other 
source that does not have or use identifying information other than 
consumers' names. It is not a reasonable procedure for the consumer 
reporting agency to simply include information from such sources in a 
consumer's report without taking additional steps to match the 
information to the consumer who is the subject of the report, such as 
consulting other databases or sources of information that contain 
additional identifying information.

II. Regulatory Matters

    This advisory opinion is an interpretive rule issued under the 
Bureau's authority to interpret the FCRA, including under section 
1022(b)(1) of the Dodd-Frank Wall Street Reform and Consumer Protection 
Act,\41\ which authorizes guidance as may be necessary or appropriate 
to enable the Bureau to administer and carry out the purposes and 
objectives of Federal consumer financial laws.\42\
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    \41\ Public Law 111-203, 124 Stat. 1376 (2010).
    \42\ 12 U.S.C. 5512(b)(1).
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    As an interpretive rule, this advisory opinion is exempt from the 
notice-and-comment rulemaking requirements of the Administrative 
Procedure Act.\43\ Because no notice of proposed rulemaking is 
required, the Regulatory Flexibility Act does not require an initial or 
final regulatory flexibility analysis.\44\ The Bureau has also 
determined that this advisory opinion does not impose any new or revise 
any existing recordkeeping, reporting, or disclosure requirements on 
covered entities or members of the public that would be collections of 
information requiring approval by the Office of Management and Budget 
under the Paperwork Reduction Act.\45\
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    \43\ 5 U.S.C. 553(b).
    \44\ 5 U.S.C. 603(a), 604(a).
    \45\ 44 U.S.C. 3501-3521.
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    Pursuant to the Congressional Review Act,\46\ the Bureau will 
submit a report containing this interpretive rule and other required 
information to the United States Senate, the United States House of 
Representatives, and the Comptroller General of the United States prior 
to the rule's published effective date. The Office of Information and 
Regulatory Affairs has designated this interpretive rule as not a 
``major rule'' as defined by 5 U.S.C. 804(2).
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    \46\ 5 U.S.C. 801 et seq.

    Dated: November 3, 2021.
Rohit Chopra,
Director, Bureau of Consumer Financial Protection.
[FR Doc. 2021-24471 Filed 11-9-21; 8:45 am]
BILLING CODE 4810-AM-P
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