I am sure you are as appalled about human and sex trafficking as most people are, however, as a background-checking firm, what do you really know about it? In a recent PBSA webinar Kym Kurey, Strategic Account Manager, Vital4 defined human trafficking as “modern-day slavery; the recruitment, harboring, transportation, provision, or obtaining of a person for the purposes of a commercial sex act (or forced labor), in which the commercial sex act is induced by force, fraud, or coercion, or if the person induced to such an act has not attained 18 years of age.” 12 -14 years old is the average age of entry into sex trafficking. Shamefully, the United States ranks in the top three countries where human and sex trafficking occur according to the World Population Review’s Child Trafficking by Country 2022 map.
Are you aware that firms that conduct background checks are now required by federal law to block requested derogatory information from a consumer report (background check report) that is requested by a victim of human trafficking? The law is based on substantial research that has shown that many of the roadblocks to employment are caused by information contained in a victim of human trafficking’s credit report. Rohit Chopra, Director of, Consumer Financial Protection Bureau (CFPB) said, “Too many survivors of human trafficking find their financial lives in tatters with few places to turn to for help. The new rule will help clear credit reporting roadblocks that survivors face as they rebuild their lives.”1
WHAT IS THE NEW REGULATION?
In December 2021, President Biden signed the National Defense Authorization Act into law, which included the Debt Bondage Repair Act. This new law created a process for survivors of trafficking to request that a CRA block certain damaging information on their credit reports that were a result of their being victimized and prohibits the CRA from providing these negative items of information to requestors.
After the law was passed, the CFPB had the job of designing a process to make it for consumer reporting agencies to allow survivors of trafficking to block the information they want to block. This process went into effect on July 25, 2022.
The FCRA and Regulation V Human Trafficking Final Rule update the Fair Credit Reporting Act’s implementing regulation to ensure it meets the Debt Bondage Repair Act’s credit reporting requirements and that survivors’ credit information is reported fairly.
It also establishes a method for victims of trafficking to submit trafficking documentation to consumer reporting agencies, procedures for consumer reporting agencies to review that documentation and make a determination, as well as consumer notification requirements.
WHAT MUST A CRA DO TO COMPLY WITH THE RULE?
The Rule requires every consumer reporting agency to develop reasonable requirements for submissions of “appropriate proof of identity” similar to those in section 1022.123, which discusses proof of identity requirements for identity theft victims. The Rule requires consumer reporting agencies to tailor these requirements to the needs of victims of trafficking.
Each consumer reporting agency is allowed to set its own requirements for proof of identity. Examples that are likely to satisfy the requirements may include: a copy of a driver’s license or another government-issued identification card; a copy of a utility bill, bank statement, or insurance statement or confirmation questions a victim of trafficking could easily answer to prove their identity.
A consumer is required to identify adverse items of information that should be blocked. This may consist of a statement by the consumer or a designated representative. A consumer may self-attest with the verification by a government entity or representative. For example, the consumer may submit this statement: I attest that I am a victim of trafficking for purposes of section 605C of the Fair Credit Reporting Act. The signature of (name) employee of (organization) certifies this statement. The law requires trafficking survivors to submit documentation that shows that a government entity (i.e. a law enforcement agency or a government-led human trafficking task force) or authorized non-governmental service provider has determined that they are a victim of trafficking.
Tip: Be forewarned that given the newness of this law many of the impacted government agencies that can attest to the validity of the request have not yet put in place their own process for authorizing these types of requests. This means you will need to exercise some patience when verifying the consumer’s request.
The Rule establishes that for all required communications with the consumer a CRA must only use the consumer’s preferred contact method. A consumer must submit a preferred method for a consumer reporting agency to contact the consumer electronically or in writing.
All consumer reporting agencies are required to provide consumers with two mailing addresses to submit trafficking documentation and appropriate proof of identity:
- At a mailing address established specifically for consumer submissions of trafficking documentation and appropriate proof of identity. At the same mailing address used for disputes under section 611 of the FCRA.
- Consumer reporting agencies may also establish a website address specifically for consumer submissions of trafficking documentation and appropriate proof of identity.
- If a consumer reporting agency accepts disputes under section 611 of the FCRA at a website address, it must also accept consumer submissions of trafficking documentation and appropriate proof of identity at that same website address.
Additionally, all consumer reporting agencies are required to add information on their websites stating how consumers can submit trafficking documentation and appropriate proof of identity. Nationwide consumer reporting agencies must maintain a toll-free telephone number to respond to consumer inquiries regarding trafficking documentation submissions.
A CRA must take the following steps after receiving documentation from a survivor of human trafficking:
- Temporarily block adverse information within four business days of receiving a consumer’s submission.
- notify the consumer within five business days of receiving a consumer’s submission if additional information is necessary to complete the submission or if any of the required documentation is missing.
Consumer reporting agency requests for additional or missing information from submitters of documentation are limited to situations where:
- the consumer reporting agency cannot reasonably confirm the consumer’s (or consumer representative’s) appropriate proof of identity.
- the consumer did not provide a victim determination.
- the CRA cannot properly identify the adverse items of information. A consumer reporting agency does not have the discretion to challenge a consumer’s determination that an adverse item of information resulted from a severe form of trafficking in persons or sex trafficking under the Rule.
- the CRA must make a final determination on the consumer’s request within 25 business days of receiving a consumer’s submission. A final determination under the Rule is either to initiate or maintain the block of adverse information initially placed or decline and rescind a block.
- A CRA may only decline and rescind a block after notifying the consumer or the consumer’s representative using the method of contact specified by the consumer and attempting to resolve any deficiencies in the consumer’s submission. A consumer reporting agency may only decline and rescind a block where:
- the consumer reporting agency cannot reasonably confirm the consumer’s (or consumer representative’s) appropriate proof of identity;
- the consumer did not provide a victim determination; or
- the CRA cannot properly identify the adverse items of information.
- a CRA may not make a determination based on the validity of the facts or circumstances in the consumer’s trafficking documentation submission.
A consumer reporting agency must notify the consumer in writing within five business days after making a final determination.
The notice to the consumer must include all of the following:
- A statement that the review is complete.
- A statement explaining the outcome.
- A new consumer report is provided at no cost to the consumer (if applicable).
- A description of the procedures used to make the determination.
- An appealing method.
- A link to the CFPB’s consumer complaint portal.
A consumer reporting agency is required to maintain records of the outcome of consumer submissions and compliance with the Final Rule for a period of seven years after a consumer’s submission is received.
The CFPB’s final rule helps human trafficking survivors reclaim control of their financial, credit and employment situations.
The final rules provide guidance:
- to survivors on the “trafficking documentation,” they need to provide to credit reporting companies.
- to survivors on how to access the report status of their submission to a CRA.
- to CRAs regarding how they must respond to survivors submitting ‘trafficking documentation.
- to CRAs on the requirement for them to block adverse information in credit reports.
In short, the regulation prevents consumers who are survivors of human trafficking from experiencing negative credit reporting due to crimes committed against them.“If this new rule is new to you it is important to note that the process can work, and work well. For example, the consumer reporting agency Innovis has a simple digital upload process in place within the first week that the law was enacted. It allows the submission of all the required documentation and processes request in 24 hours and sends an updated credit report.”2
Finally, as is the case with the implementation of any process to comply with any law it is important to engage competent legal counsel that can provide advice and counsel for your implementation.
Need help? Kym Kurey, KymKurey@Vital4.net or Polaris operates the U.S. National Human Trafficking Hotline, call 1-888-373-7888. They are a 501(c)3 nonprofit organization not a law firm.
Note: The content of this article is substantially based on the following two government resources:
Consumer Financial Protection Bureau (CFPB), Fast Facts: FCRA and Regulation V Human Trafficking Rule, https://files.consumerfinance.gov/f/documents/cfpb_fcra-trafficking_fast-facts.pdf
Read the final rule, Prohibition on Inclusion of Adverse Information in Consumer Reporting in Cases of Human Trafficking (Regulation V); https://www.federalregister.gov/documents/2022/06/24/2022-13671/prohibition-on-inclusion-of-adverse-information-in-consumer-reporting-in-cases-of-human-trafficking
- CFPB Helps Survivors Mitigate the Financial Consequences of Human Trafficking, https://www.consumerfinance.gov/about-us/newsroom/cfpb-helps-survivors-mitigate-the-financial-consequences-of-human-trafficking/.
- Credit Reporting Agencies are Failing Human Trafficking Survivors, https://polarisproject.org/blog/2022/09/credit-reporting-agencies-are-failing-human-trafficking-survivors/; September 29, 2022,