October 12, 1999
Phil Landever, Assistant Vice President
Dah Chong Hong (USA)
362 Fifth Avenue
New York, NY 10001
Dear Mr. Landever:
This is in response to your letter posing several questions about the acceptability under the Fair Credit Reporting Act (FCRA) of various forms of electronic transmission of consumer authorization for furnishing a consumer report. According to your letter, the background for your inquiry is that a group of auto dealerships, who are establishing a website, wish to facilitate consumers' "buying experience" while conforming to the provisions of the FCRA. Specifically, you state that the website "includes an invitation to the consumer to expedite the purchase process by giving [the dealer] approval to do a credit check," and you indicate that this may be before the consumer initiates a purchase. The consumer may be at the website "merely to make a general inquiry."
As your inquiry recognizes, in the circumstances outlined, a dealer generally has a permissible purpose to obtain a consumer report only if (i) the consumer has initiated a purchase transaction and the dealer has a legitimate business need for the information (seeCoffey, 2/11/98), or (ii) the consumer gives "written instructions" authorizing the furnishing of a consumer report. (See Shibley, 6/8/99). Section 604(a)(2) of the FCRA provides that "any consumer reporting agency may furnish a consumer report ... (i)n accordance with the written instructions of the consumer to whom it relates." The term "written instructions" is not defined in the FCRA. You ask -
(1) Can the consumer give such authorization by fax?
We are of the opinion that a consumer authorization conveyed by facsimile transmission, properly executed by the consumer, constitutes "written instructions" within the meaning of Section 604(a)(2) of the FCRA. We believe that an authorization communicated by facsimile transmission is not intrinsically more susceptible of fraud or other misuse than other forms of conveying "written instructions" (such as by mail), and therefore, for purposes of FCRA compliance, facsimile authorization is not legally distinguishable from "written instructions" transmitted in other forms. Of course, any consumer report user employing facsimile authorization, and any consumer reporting agency relying on that form of written instruction, would be wise to employ prudence in assessing the validity and reliability of the authorization. Indeed, consumer reporting agencies are required by Section 607(a) of the Act to maintain reasonable procedures to assure that consumer reports are supplied only for permissible purposes (including the permissible purpose created by the "written instructions" of the consumer).
This opinion expresses the current FCRA enforcement position of Commission staff, and is not an assessment of state or other applicable law that may bear on the legal status of facsimile documents. Any party that relies on a facsimile authorization under Section 604(a)(2) of the FCRA may be well advised to ascertain whether law in the jurisdictions relevant to the transaction might affect the status of an authorization conveyed by facsimile transmission.
2. Can a consumer give authorization for a consumer report by merely clicking "yes" to a question asking whether they authorize the dealer to do a credit check and providing personal information by e-mail?
In our view, a mouse click is far removed from "written instructions" and thus does not provide a permissible purpose pursuant to Section 604(a)(2) of the Act. The FCRA specifically allows this type of consumer consent in Section 604(b)(2)(B)(ii), which provides that certain job applicants may authorize a consumer report for employment purposes "electronically" as well as orally or in writing. Similarly, both Section 610(b) (file disclosure by consumer reporting agency) and Section 615(a) (adverse action notice by consumer report user) of the FCRA allow communications to be made in writing, electronically, or in other fashion. In other words, Congress knows how to provide for electronic communications in this statute, but has limited the permissible purpose provided by Section 604(a)(2) to "written instructions" by the consumer.
3. Can a consumer give authorization by clicking "yes" and then completing a specific credit application form on the website and e-mailing the completed form. Would the response be any different if the consumer supplied some of the required application information by e-mail and some by telephone?
The submission by the consumer of an application for credit gives rise to a permissible purpose to obtain a consumer report under Section 604(a)(3)(A) of the FCRA. Our answer to this inquiry is not dependent upon the method by which the consumer applies for credit. So long as the application is in connection with a bona fide credit transaction, the requirement for a permissible purpose under Section 604(a)(3)(A) is met. The "yes-click" specific authorization, which is insufficient to meet the "written instructions" requirement of Section 604(a)(2), is unnecessary in terms of FCRA compliance because submission by the consumer of an application for credit supplies the permissible purpose under Section 604(a)(3)(A).
I hope that this information is helpful to you. The views expressed herein are the views of the Commission staff and are advisory in nature. They do not necessarily reflect the views of the Commission or of any particular Commissioner.
Very truly yours,
Christopher W. Keller