CFPB aims to curb false identity matching

Consumer reporting companies, such as tenant and employment screening companies, are violating the law if they engage in “shoddy” name-matching procedures, the CFPB said in an advisory opinion issued Thursday.

Regulators are concerned about the significant harms caused by false identity matching, where an applicant is disqualified from rental housing or a job based on having the same name as another individual with negative information in their credit history. Specifically, the CFPB affirmed that the practice of matching consumer records solely through the matching of names is illegal under the Fair Credit Reporting Act.

“For Black and Hispanic communities, who were disproportionately affected by the pandemic, the need for accuracy is even more acute,” the advisory opinion stated. “The risk of mistaken identities from name-only matching is likely to be greater among Hispanic, Black, and Asian communities because there is less surname diversity in those populations compared to the white population. With families across the country seeking affordable rental units and new employment, careless background screening practices can unnecessarily contribute to housing instability and unemployment.”

The CFPB intends to work closely with the FTC to root out illegal conduct in the background screening industry, and background screening companies that violate the Fair Credit Reporting Act can be liable for significant civil penalties, restitution for victims, damages and other relief the advisory opinion stated.

“Today’s advisory opinion underscores the obligations and requirements of background screeners and other consumer reporting agencies to use reasonable procedures to assure maximum possible accuracy and prevent consumer harm,” said Rohit Chopra, CFPB director, in a statement regarding the advisory opinion.

Complaints regarding credit or consumer reporting can be submitted on the CFPB’s website.

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