“The Fair Credit Reporting Act (FCRA) is designed to protect the privacy of credit report information and to guarantee that information supplied by consumer reporting agencies (CRAs) is as accurate as possible. … If you report information about consumers to a CRA, you are considered a "furnisher" of information under the FCRA. … The responsibilities of information providers” include:

• Providing accurate information
• Correcting and updating information
• Taking the appropriate steps after receiving a notice of a consumer dispute from a consumer
• Taking the appropriate steps after receiving notice of a consumer dispute from a CRA
• Reporting voluntary account closings
• Properly reporting delinquencies [1]

Penalties for non-compliance: The civil penalties for noncompliance include paying up to $1,000 in damages to the consumer. If the consumer incurred actual damages as a result of non-compliance, the non-compliant party is liable for the amount of the actual damages. The non-compliant party is also liable for any punitive damages and attorney fees as determined by the court. If the FTC takes civil action, the fine is a maximum of $2,500 per violation.

As for the potential of jail time, “Any person who knowingly and willfully obtains information on a consumer from a consumer reporting agency under false pretenses [or] any officer or employee of a consumer reporting agency who knowingly and willfully provides information concerning an individual from the agency's files to a person not authorized to receive that information shall be fined under title 18, United States Code, imprisoned for not more than 2 years, or both.”[2]

Helpful link(s)/Source(s):
1. http://www.ftc.gov/bcp/edu/pubs/business/credit/bus33.shtm
2. http://www.ftc.gov/os/statutes/fcradoc.pdf

Please note: This is not legal advice and dealers should always seek the assistance of qualified legal counsel.

From "19 Laws, Rules and Regulations That Can Cost You More Than Money" in the September 2010 issue of Auto Dealer Monthly.