Fair & Accurate Credit Transactions Act of 2003

The Fair and Accurate Credit Transactions Act of 2003 (FCRA) added additional requirements to the Fair Credit Reporting Act and provides more federal protection for American consumers. The act does prevent states from making their own stricter laws to protect consumers but strengthens the ability of the states to prosecute violators of the law more easily than they could before the law was passed.

Credit Reports

The act provides several provisions that help prevent identity theft and assist victims of the crime. Consumers can receive one free credit report each year from each national credit bureau. This provision helps consumers monitor their reports and identify inaccurate information. Consumers also can have their credit report account flagged in the event of fraudulent activity. This flag forces credit providers to require proof of identity when an account is opened in your name. The initial flag remains for 90 days and can be extended for up to seven years if you provide the bureau with a police report verifying that your identity was stolen.

Limits Information

After the act went into effect, credit card companies could no longer include the full credit card number or expiration date on computer-generated statements or receipts. If the receipt is handwritten, the full number and expiration date can be written. Consumers can request that credit bureaus not include the first five numbers of their Social Security number on their credit report when the bureau is sending a copy of the report. These sections of the act help make it more difficult for identity thieves to steal your information.

Inaccurate Information

The FCRA provides consumers with the right to dispute inaccurate information in their credit report. A 2004 report from the United States Public Interest Research Group found that up to 25 percent of credit reports had mistakes that could cause a credit provider to deny credit to a consumer and over half of the reports had personal information that was incorrect. Credit bureaus now must investigate reports of errors and correct the information if they find it to be wrong.

Red Flags

Because of the FCRA, creditors must now develop a plan to detect identity theft, attempt to prevent it and lessen the damages it can cause. Signals that can provide a reason for closer inspection of an individual requesting credit can include suspicious documents, if the consumer provides an address that does not exist or goes to a mail drop, and invalid phone numbers.

Privacy Rights

The FCRA requires that businesses or organizations that request private information on individuals must properly dispose of the information when they no longer need it. Lenders, employers and debt collectors are some examples of the types of individuals and companies who must follow this rule.