The CCRRA, Establishing a New Standard for Credit Reporting

The Consumer Credit Reporting Reform Act of 1996 or CCRRA for short is a federal law passed by the U.S. Congress in 1996 for the purposes of amending the Fair Credit Reporting Act or FCRA that had been passed 26 years prior in 1970. While the FCRA was a landmark piece of legislation that completely changed the ways in which American citizens utilized credit and other financial tools, the CCRRA further enhanced the rights of consumers as it pertains to their interactions with credit agencies. While the CCRRA was ultimately amended by the Fair and Accurate Credit Transactions Act of 2003 or the FACTA, the CCRRA nevertheless provided American consumers with a number of protections that are still applicable to the financial market of our current time.

What are the provisions of the Consumer Credit Reporting Reform Act of 1996?

The CCRRA was passed for the purpose of providing “opportunities for financial companies to create greater synergies among their affiliates by sharing customer information and to take full advantage of technological advancements in seamlessly offering financial products to their customers, including banking, securities, and insurance products”. To this point, some of the provisions set forth by the law include:

• Placing responsibility on the Federal Reserve in relation to issuing interpretations of how the CCRRA would apply to credit unions, banks, savings associations, and other financial institutions. Under the Fair Credit Reporting Act, this was the responsibility of the Federal Trade Commission or FTC.
• Enabling affiliates of credit unions, banks, and other financial institutions to share information from consumer reports with other such affiliates, permitting certain compliance procedures to be adopted and adhered to.
• Enabling credit unions to disclose the contents of a credit report to a consumer in instances where adverse actions have been taken due to information contained within the said credit report.
• Expanding requirements and disclosures related to adverse actions that are taken in response to the information contained within consumer credit reports.
• Creating new requirements for furnishers of information credit reporting agencies and other financial institutions. These requirements were not required under the Fair Credit Reporting Act.
• Clarifying rules related to the process of pre-screening from consumer reporting agencies.
• Implementing new rules for users of credit reports. Under the Fair Credit Reporting Act, American consumers only had the right to see the “nature and substance” of their credit reports. However, under the CCRRA, American consumers were provided with the right to view all information that was contained within their credit reports
• Introducing new criminal and civil liabilities for any individual who violates the provisions of the law.

What personal privacy principles were established by the Consumer Credit Reporting Reform Act of 1996?

In addition to the provisions stated above, the CCRRA also established various principles for the purposes of “protecting the legitimate privacy interests of financial consumers”. Some of these principles include:

• Recognition of a customer’s expectation of privacy- Financial institutions are responsible for recognizing and respecting the privacy expectations of their respective customers, as well as explaining the principles of financial privacy to said customers in an appropriate fashion.
• Use collection, collection, and retention of customer information- “Financial institutions should collect, retain and use information about individual customers only where the institution reasonably believes it would be useful (and allowed by law) to administering that organization’s business and to provide products, services and other opportunities to its customers”.
• Maintenance of accurate information- Financial institutions are responsible for establishing procedures to ensure that the financial information of their customers is complete, accurate, and current, as well as in accordance with
  “reasonable commercial standards”. Financial institutions are also responsible for responding to customers’ requests to correct their information in a timely manner.
• Maintaining customer privacy in business relationships- “If personally identifiable customer information is provided to a third party, the financial institutions should insist that the third party adhere to similar privacy principles that provide for keeping such information confidential”.
• Disclosure of privacy principles to customers- “Financial institutions should devise methods of providing a customer with an understanding of their privacy policies. In addition, each financial institution should make its privacy policy available to customers”.

What are the penalties for violating the Consumer Credit Reporting Reform Act of 1996?

Under the Fair Credit Reporting Act, employees of credit unions and other financial institutions who violated the rights of American consumers were subject to statutory damages of $100-$1,000 per violation. Under the CCRRA, American consumers are also entitled to “punitive damages and the greater of $1,000 or actual damages, whichever is greater”, as well as attorney fees. What’s more, the CCRRA also imposes criminal penalties, as well as civil penalties of up to $2,500 per violation. Moreover, the CCRRA also permits state officials to bring forth changes in federal court for damages and injunctive relief.

Through the passing of the Consumer Credit Reporting Reform Act of 1996, American citizens were granted more rights with respect to their relationship with crest unions and other financial institutions. To this end, the Fair Credit Reporting Act, the Consumer Credit Reporting Reform Act of 1996, and the Fair and Accurate Credit Transactions Act of 2003 all form the legislative framework that governs credit reporting and other associated financial services within the U.S. Without these laws, many American consumers would struggle to obtain information pertaining to their credit reports, as well as notifications in instances where the contents of said credit reports led to adverse consequences.