[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]


=======================================================================
-----------------------------------------------------------------------

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.

-----------------------------------------------------------------------

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.
---------------------------------------------------------------------------

    \1\ 85 FR 77987 (Dec. 3, 2020).
---------------------------------------------------------------------------

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\
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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/.
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \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\
---------------------------------------------------------------------------

    \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'').

---------------------------------------------------------------------------

[[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\
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \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).

---------------------------------------------------------------------------

[[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\
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \34\ 15 U.S.C. 1681a(f).
---------------------------------------------------------------------------

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\
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \37\ 15 U.S.C. 1681a(d).
    \38\ 15 U.S.C. 1681b.
    \39\ 15 U.S.C. 1681b(a)(3)(A).
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \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/.
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \41\ Public Law 111-203, 124 Stat. 1376 (2010).
    \42\ 12 U.S.C. 5512(b)(1).
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \43\ 5 U.S.C. 553(b).
    \44\ 5 U.S.C. 603(a), 604(a).
    \45\ 44 U.S.C. 3501-3521.
---------------------------------------------------------------------------

    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).
---------------------------------------------------------------------------

    \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