Descripción de la financiación del proyecto.

Generally, the FCRA prohibits CRAs from including outdated information in credit reports. This restriction applies only to adverse information. Favorable information is an advantage for consumers and neutral information does not harm the consumers.551Yet, even though the interest of consumers is protected under the FCRA, the societal interest is greater. Therefore, criminal convictions, because of their seriousness, never become obsolete.552The

544

Pintos v. Pac. Creditors Ass'n, 565 F.3d 1106, 1114 (9th Cir. 2009) (The court held, a subscriber's

certification cannot absolve the reporting agency of its independent obligation to verify the certification and determine that no reasonable grounds exist for suspecting impermissible use.); FTC Official Staff Commentary 16 C.F.R. § 607 (2)(C).

545

FTC Official Staff Commentary 16 C.F.R. § 607 (2)(C). 546

FTC Official Staff Commentary 16 C.F.R. § 607 (2)(G). 547

Centuori v. Experian Info. Solutions Inc., 431 F. Supp. 2d 1002, 1006 (D. Ariz. 2006) (The court held, that a

jury may find the CRA fails to maintain a reasonable procedure to limit furnishing credit reports for impermissible purpose when it employs only two employees to review more than 200 Internet access applications per day without training them in the permissible purposes under the FCRA.).

548

CIL Implementing Regulation, section 28. 549

CIL Implementing Regulation, section 29 and 39. 550

CIL Implementing Regulation, section 25/3. 551

FTC Official Staff Commentary 16 C.F.R. § 605(2); Serrano v. Sterling Testing Sys. Inc., 557 F. Supp. 2d 688, 692 (E.D. Pa. 2008) (It is worth mentioning that the court relied on FTC Official Commentary that “a credit reporting agency cannot even suggest the existence of obsolete information”).

552

15 U.S.C. § 1681c(a)(5) (Provides, “no consumer reporting agency may make any consumer report containing any of the following items of information … Any other adverse item of information, other than

records of convictions of crimes which antedates the report by more than seven years.” [Emphasize added].);

time of obsolescence should run from the time of the delinquency not from the time of reporting it to CRAs.553 There are different time limits after which credit reports may not contain such information, as in the following sections.

4.2.2.1 Outdated Bankruptcy

Bankruptcies, under any chapter of the United States Bankruptcy Code, older than ten years, should not be included in a credit report.554In bankruptcy, the period runs from the date of filing the bankruptcy petition.555A CRA is prohibited from including bankruptcy information in a credit report if that information antedates the report by more than 10 years.556

A Comparative Assessment

The CIL, similarly, requires bankruptcy information to be removed from a credit report if it antedates the report by more than 10 years.557 The CIL does not provide when the time runs in bankruptcy information. However, when we analogize it to other items that have specific times, one can say that the bankruptcy filing date triggers the starting time.558A CRA violates the FCRA and the CIL when it includes bankruptcy information in a credit report if that information antedates the report by more than 10 years.

I believe that removing bankruptcy information because of the passage of time is not a good solution. Lenders have the right to know about their consumers’ past and take their action accordingly. Equating consumers who never bankrupted with those who bankrupted is not fair to the lenders or the never bankrupted consumers.

4.2.2.2 Outdated Civil Cases

Under the FCRA, civil judgments or suits may not be reported after the passage of seven years from the date of entry or until the statute of limitation expires, whichever is longer.559 The FTC staff Commentary differentiates between paid and unpaid judgments. In the case of a paid judgment, it cannot be reported after seven years, even if the statute of limitations is

treated as civil suits, therefore, it cannot be reported after seven years starting from the date of arrest or until the governing statute of limitation expires. The issue is that no statute of limitation exists for records of arrest. Other kinds of criminal records are treated as “other adverse information”, which are governed by the seven years limit).

553

FTC Official Staff Commentary 16 C.F.R. § 605 (7); NATIONAL CONSUMER LAW CENTER, supra note 17, at 196 (Therefore, for example, when a debt is reported after five years of its occurrence, the remaining period to include it in the credit report is only two years. One commentator notes a difference in practice of CRAs. Some of them use date of the last activities, which is different from the date of delinquency. Some of them use the date of removing information from the account, which is unknown to people other than that particular CRA. Finally, some of them use an old version of Metro Format, which has no field for date of delinquency. This difference will certainly lead to errors because it will introduce obsolete information.).

554

15 U.S.C. §1681c(a)(1). 555

FTC Official Staff Commentary 16 C.F.R. § 605(a)(1)(3). 556

15 U.S.C. §1681c(a)(2) . 557

CIL Implementing Regulation, article 19. 558

CIL Implementing Regulation, article 19 (Provides that time in civil cases runs from the time of court decision, which is the event that triggers the time.).

559

FTC Official Staff Commentary 16 C.F.R. § 605(a)(2)(1) (The date of entry is the date of initiating the suit. In judgment, the date of entry is the date that judgment rendered.); Beaver v. TRW Corp., CIV-87-1214E, 1988 WL 123636 (W.D.N.Y. Nov. 17, 1988) (The court held, that it is appropriate to include judgment that is less than five years old.).

longer, because payment eliminates any governing statute of limitation.560 In the case of an unpaid judgment, the time runs after the statute of limitation expires.

A Comparative Assessment

Under the CIL, no civil suits may be reported after the passage of five years. The time runs from the date of the final decision or settlement.561 A CRA violates the FCRA and the CIL by providing outdated civil cases that antedate the report by more than seven and five years respectively.

In my opinion, removing information related to a paid judgment is acceptable. However, unpaid judgments should stay indefinitely in the consumers’ reports.

4.2.2.3 Outdated Tax Liens

Under the FCRA, a paid tax lien cannot be reported after seven years of payment.562 Therefore, an unpaid tax lien can be reported indefinitely because section 1681c(a)(3) mentions a paid tax lien only.563

A Comparative Assessment

Under the CIL, tax lien is not mentioned but rather late tax payment, which should not be reported after ten years.564 A CRA violates the FCRA and the CIL if it includes information related to a tax lien after passage of seven and ten years respectively.

In my opinion, information related to a tax lien should stay indefinitely in the consumers’ report until it is paid. Tax is a source of public funding and everyone in the community has an interest in collecting late taxes. Passage of time is not sufficient to remove unpaid tax unless the consumer is unable.

4.2.2.4 Outdated Accounts for Collection or Charged Off

Accounts placed for collection or charged off to profit and loss cannot be included in credit reports if they antedate the report by more than seven years.565 However, the period runs 180 days after the date of the first delinquency.566The effect of such a rule is that even with future delinquencies, sale of the debt, or partial payment, no new date can be added. Thus, no re-aging of information is allowed.567 A CRA violates the FCRA if it includes in a

560

FTC Official Staff Commentary 16 C.F.R. § 605(a)(2)(2). 561

CIL Implementing Regulation, article 19. 562

15 U.S.C. §1681c(a)(3). 563

FTC Official Staff Commentary 16 C.F.R. § 605(a)(3)(1). 564_{CIL Implementing Regulation, article 19.}

565

15 U.S.C. §1681c(a)(4); NATIONAL CONSUMER LAW CENTER, supra note 17, at 197-98 (Charge-off occurs when a creditor moves a debt from profit to loss on its balance sheet. An account is placed for collection when notice or collection efforts begin.).

566

NATIONAL CONSUMER LAW CENTER, supra note 17, at 197 (For instance, if a consumer’s first delinquency is on July 2010, then the creditor charges the account to profit and loss or places it for collection, the time runs after 180 days, which is January 2011. The time ends on January 2018. Therefore, a CRA cannot include this account after January 2018 in a credit report.

567

Gillespie v. Equifax Info. Services, L.L.C., 484 F.3d 938, 941,943 (7th Cir. 2007) (The court held, “The

recording of multiple dates in the “Date of Last Activity” can cause significant confusion and uncertainty for the consumer … use of the Date of Last Activity could effectively allow Equifax the opportunity to keep delinquent accounts in the credit file past the seven and one-half year limitation”.

credit report accounts charged or placed for collection after the passage of seven years and 180 days from the date of first delinquency.568

A Comparative Assessment

Under the CIL, adverse information related to accounts placed for collection or charged off to profit or loss is to be in the credit report indefinitely until the dispute between the creditor and the debtor is resolved. If a consumer’s bankruptcy or insolvency is declared judicially, then adverse information related to the accounts placed for collection or charged off to profit or loss will be in the credit report for ten years.569

I think the CIL approach is better than the FCRA for two reasons. First, it closes the gate against intentional or semi-intentional defaults. If consumers know that debts stay in their credit reports forever unless they pay or declare bankruptcy, it incentivizes them to pay. Second, it takes into consideration the interest of bankrupt consumers by specifying a time limit for removal of their credit reports, and it takes into consideration the interest of creditors to keep the information on consumers who are arguably able but unwilling to pay. Inability to pay can be proven by a judgment of insolvency or bankruptcy, not through mere assertion of inability or passage of time.

4.2.2.5 Outdated Adverse Information in an Investigative Report

The FCRA adds one more requirement to investigative reports because of their effect on consumers. A CRA must review public records information that is intended to be included in the investigative report thirty days before the date of the report to verify accuracy of the information.570 A CRA violates the FCRA when it reports information that is a matter of public record in an investigative report without verifying the accuracy of the information within 30 days preceding the release of report.

A Comparative Assessment

The CIL does not recognize investigative reports. Therefore, inclusion of outdated information is treated as a regular credit report, thus sections of regular credit report apply.

4.2.2.6 Exemption from Prohibition of Reporting Obsolete Information

Prohibition of reporting obsolete information as above does not apply if a transaction is for credit,571 an underwriting of life insurance of $150,000 or more572, or employment of an individual at an annual salary equal to or exceeding $75,000.573 This exemption is consistent with my opinion that some obsolete information should be kept indefinitely. Although the

568_{Rosenberg v. Cavalry Investments, LLC, 3:03CV1087(RNC), 2005 WL 2490353 at * 5 (D. Conn. Sept. 30,} 2005) (The court held, in the facts of the case, a charged off debt date was in 1976. When a buyer purchased the debt in 2001, he reported the last activities of the debt as 1997. This shows the grave error that may be committed through re-aging charged off account delinquency date.).

569

CIL Implementing Regulation, article 19. 570

15 U.S.C. §1681d(d)(3) (Provides, “consumer reporting agency shall not furnish an investigative consumer report that includes information that is a matter of public record and that relates to an arrest, indictment, conviction, civil judicial action, tax lien, or outstanding judgment, unless the agency has verified the accuracy of the information during the 30-day period ending on the date on which the report is furnished.”).

571 15 U.S.C. §1681c(b)(1). 572 15 U.S.C. §1681c(b)(2). 573 15 U.S.C. §1681c(b)(3).

FCRA sets a threshold amount to apply the exemption, it shows the importance of some of obsolete information to lenders.

4.2.3 Failure to Follow Reasonable Procedure to Avoid Inclusion of Outdated