by Jeff Sovern
On Wednesday I blogged about whether lenders who trolled for potential borrowers through a federal database containing the financial records of millions of student aid applicants might have violated the Fair Credit Reporting Act. The answer depends in part on whether a government agency qualifies as a consumer reporting agency within the meaning of the FCRA. Notwithstanding the statutory language which I referred to on Wednesday, some authority states that it does not. In Ollestad v. Kelley, 573 F.2d 1109, 1110 (9th Cir. 1978), the Court wrote:
The district court concluded that the FCRA does not apply to records held by federal agencies and granted defendants' motion for summary judgment. That conclusion was proper in light of the plain language of the statute, the absence of evidence of Congressional intent to include federal agencies within the statutory definition of “consumer reporting agency,” and the Federal Trade Commission's interpretation of the statute.
But the case is easily distinguishable and the statements appear to be overbroad dicta. The plaintiff in Ollestad had sought an injunction under the FCRA to obtain corrections in his FBI records. After quoting the definition of a consumer reporting agency, the court wrote: "It cannot be contended seriously that agencies such as the F.B.I. compile information on persons, particularly on former employees as is the appellant, for the purpose of furnishing consumer reports to third parties." In addition, in commenting on the legislative history, the Court explained that "Although the FCRA's legislative history is less than explicit, the tenor of remarks of members of Congress indicates that the statute is concerned with regulating practices in the credit reporting industry rather than with regulating the record-keeping functions of federal agencies." The student loan database, by contrast, has to do with the credit industry.
The case also refers to an FTC interpretation of the FCRA That interpretation was superseded by the 1990 FTC Commentary but the Commentary, which appears at 16 C.F.R. Pt. 600, App. and has not been updated despite the significant revisions to the FCRA in 1996 and 2003, provides at 603(f)-11 that:
The Office of Personnel Management collects and files data concerning current and potential employees of the Federal Government and transmits that information to other government agencies for employment purposes. Because Congress did not intend that the FCRA apply to the Office of Personnel Management and similar federal agencies (see 116 Cong. Rec. 36576 (1970) (remarks of Rep. Brown)), no such agency is a "consumer reporting agency."
Do the phrases "similar federal agencies" and "such agency" mean agencies like the Office of Personnel Management, or do they include all federal agencies? In my view, those phrases do not extend to an agency doing the type of data collection done here for the purpose of determining eligibility for student loans. I doubt the FTC had this situation in mind when it wrote those words in 1990. Accordingly, it seems likely that the FCRA applies to the student loan databases.
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