Alternate name: FACTA
How the Fair and Accurate Transactions Act Works
FACTA provides rules for lenders, credit reporting agencies, businesses, and financial service providers to detect and protect consumers from fraud and identity theft.
Improved Consumer Access to Credit Information
One of the most important provisions of FACTA was giving consumers the right to a free credit report once a year from both the major credit reporting agencies and national specialty credit reporting agencies. National specialty credit reporting agencies maintain information on medical payments or records, tenant history, check-writing history, employment history, or insurance claims. Under the law, credit bureaus are required to give consumers credit score access for a reasonable fee. Along with their credit score, consumers should also receive:
The range of scores they may haveKey factors affecting their credit scoreThe date the score was createdThe business that provided the score
Protection From Fraud and Identity Theft
FACTA established fraud alerts to provide consumers with a way to warn businesses to take additional steps to verify a consumer’s identity before granting credit. A fraud alert lasts one year, while an extended fraud alert lasts seven years. Consumers have to notify only one credit bureau of the fraud alert. That bureau is responsible for notifying the other credit bureaus. In addition to establishing fraud alerts, FACTA gave consumers the right to block the reporting of information stemming from fraud and identity theft. Identity theft victims can receive a copy of any application used to get products or services in their name as long as the victim provides proof of identification. The act includes a “red-flag rule” that requires creditors and financial institutions to take measures to detect and prevent consumer fraud and identity theft. Lenders must take action on suspected identity theft even if the consumer isn’t aware of it.
Control Over Marketing Lists
Sometimes banks and insurance companies purchase prescreened lists of consumers from credit bureaus for marketing purposes. Consumers who do not want to receive unsolicited offers can opt out of prescreening. Any business that shares consumer information for affiliate sharing is required to let the consumers know and allow the consumer to opt out.
Usage of Sensitive Medical Information
FACTA prevents credit reporting agencies from sharing medical information for employment, credit, or insurance purposes unless the consumer gives permission. Lenders generally are not allowed to use medical information to qualify consumers for credit.
