Federal law sets ground rules for the companies that keep credit reports and the companies that collect debts. This lesson summarizes the main ones so they are easier to recognize. It is general education, not legal advice. Each statement points to the agency guidance or the statute it comes from, and state laws can add protections not covered here.
The Fair Credit Reporting Act (FCRA)
The FCRA governs consumer reporting agencies, often called credit bureaus, and the businesses that use and supply their information. Four of its rules come up most often:
- Access. Section 609 (15 U.S.C. §1681g) requires a bureau, on request, to disclose the information in a consumer's file, its sources and who has requested a report. The Federal Trade Commission notes that the three nationwide bureaus offer free weekly reports through AnnualCreditReport.com, the only site authorized to fill orders for the free reports required by law.
- Limits on who can see a report. Section 604 (15 U.S.C. §1681b) allows reports to be furnished only for permissible purposes listed in the law, such as a credit application, insurance underwriting or, with the consumer's written permission, employment.
- Disputes. Section 611 (15 U.S.C. §1681i) requires a bureau that receives a dispute to conduct a reasonable reinvestigation, generally within 30 days. The period can be extended by up to 15 days if the consumer sends relevant information during those 30 days, and the results must be sent in writing within five business days of finishing.
- Time limits. Section 605 (15 U.S.C. §1681c) generally stops most negative items, such as collection accounts, from being reported after seven years, and bankruptcies after ten.
The Fair Debt Collection Practices Act (FDCPA)
The FDCPA applies to debt collectors, defined in 15 U.S.C. §1692a as businesses that collect debts owed to someone else, such as collection agencies. Generally it does not cover an original lender collecting its own debt. Its main rules include:
- Timing of contact. Unless the collector knows otherwise, it must assume the convenient time to contact a consumer is after 8 a.m. and before 9 p.m. local time (15 U.S.C. §1692c(a)). The FTC puts it simply: collectors can't contact you before 8 a.m. or after 9 p.m. unless you agree.
- Validation information. Within five days after first contacting a consumer, a collector must send a written notice with the amount of the debt, the name of the creditor and an explanation of the right to dispute (15 U.S.C. §1692g(a)).
- The 30-day dispute window. If the consumer disputes the debt in writing within 30 days of receiving that notice, the collector must stop collecting until it mails verification (15 U.S.C. §1692g(b)).
- Stopping contact. If a consumer tells a collector in writing to stop contacting them, the collector generally must stop, apart from a few limited notices, such as saying collection efforts are ending or that a specific step like a lawsuit may be taken (15 U.S.C. §1692c(c)). Stopping contact doesn't erase a debt that is owed.
- No harassment or false statements. According to the FTC, collectors can't threaten harm, can't claim a different amount than is actually owed, and can't pretend to be an attorney or a government official.
Identity theft tools open to everyone
The FTC describes two tools that work differently:
- Credit freeze. A freeze restricts access to a credit report, which makes it harder for someone to open new accounts in another person's name. Placing and lifting a freeze is free, it doesn't affect a credit score, and it has to be placed separately with each of the three nationwide bureaus: Equifax, Experian and TransUnion.
- Fraud alert. An alert asks businesses to verify identity before extending credit. Contacting one bureau is enough, because that bureau must notify the other two. An initial alert lasts one year and can be renewed; an extended alert for identity theft victims lasts seven years.
For reporting identity theft and getting a recovery plan, the FTC runs IdentityTheft.gov.
Where questions and complaints go
The FTC lists three places to report problems with a debt collector: the state attorney general's office, the Federal Trade Commission and the Consumer Financial Protection Bureau. The CFPB also accepts complaints about credit reporting and many other consumer financial products through its complaint portal, and the FTC takes fraud reports at ReportFraud.ftc.gov.
Reading the law yourself
Every section mentioned in this lesson can be read free of charge. The links below go to the U.S. Code on Cornell Law School's Legal Information Institute. Section numbers in the Act (such as §611) and in the U.S. Code (such as §1681i) refer to the same rule, which is why both are given here.
Sources
- Federal Trade Commission, Debt collection FAQs
- Federal Trade Commission, What to know about credit freezes and fraud alerts
- Federal Trade Commission, Free credit reports
- FCRA: 15 U.S.C. §1681b, §1681c, §1681g, §1681i
- FDCPA: 15 U.S.C. §1692a, §1692c, §1692g