The Fair Credit Reporting Act (FCRA) is the primary federal law governing how consumer information can be used in the United States. Understanding when FCRA applies to skip tracing—and when it doesn't—is essential for compliance.
What Is the FCRA?
The Fair Credit Reporting Act, enacted in 1970 and amended multiple times since, regulates:
- Consumer reporting agencies (CRAs)
- Furnishers of consumer information
- Users of consumer reports
The Consumer Financial Protection Bureau (CFPB) and Federal Trade Commission (FTC) jointly enforce FCRA provisions.
When FCRA Applies to Skip Tracing
Consumer Reports Defined
Under 15 U.S.C. § 1681a(d), a "consumer report" is:
Any communication of information by a CRA bearing on a consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used for the purpose of establishing eligibility for credit, insurance, employment, or other permissible purposes.
Skip Tracing That Triggers FCRA
FCRA applies when skip tracing is used for:
- Credit decisions - Determining creditworthiness
- Employment screening - Hiring, promotion, retention decisions
- Insurance underwriting - Policy eligibility and pricing
- Tenant screening - Rental housing eligibility
- Other transactions - Where credit or character is a factor
Skip Tracing That Doesn't Trigger FCRA
Simple location information is generally not covered when used for:
- Debt collection - Locating debtors for existing debts
- Legal process - Service of legal documents
- Asset recovery - Finding assets for judgment enforcement
- Personal reconnection - Finding lost family/friends
- General business - Verifying contact information
Permissible Purposes Under FCRA
The CFPB's Regulation V outlines permissible purposes:
Credit Transactions
- Consumer-initiated credit applications
- Account review for existing customers
- Firm offers of credit (prescreened)
Employment Purposes
- Pre-employment screening (with consent)
- Promotion decisions (with consent)
- Retention/termination decisions (with consent)
Insurance Underwriting
- Policy eligibility determination
- Premium rate setting
- Claims investigation
Legitimate Business Needs
- Account review
- Collection of existing debts
- Business transactions initiated by consumer
Consumer Rights Under FCRA
Disclosure Rights
Consumers have the right to:
- Know when adverse action is based on consumer report
- Obtain a copy of the report used
- Know who has accessed their report
- Dispute inaccurate information
Consent Requirements
For employment purposes specifically:
- Written consent required before obtaining report
- Clear disclosure that report will be obtained
- Pre-adverse action notice with report copy
- Adverse action notice if decision is negative
Compliance Best Practices for Skip Tracing
Document Permissible Purpose
Always document:
- Why the information is needed
- What permissible purpose applies
- How the information will be used
- Who authorized the search
Use Appropriate Data Sources
For FCRA-Regulated Purposes Use consumer reporting agencies that:
- Are FCRA-compliant
- Verify permissible purpose
- Provide required disclosures
- Maintain dispute procedures
For Non-FCRA Purposes Skip tracing services like SkipTrace Pro are appropriate for:
- Debt collection
- Legal process service
- Asset location
- General business verification
Implement Proper Procedures
Pre-Search Verification
- Identify the purpose of the search
- Determine if FCRA applies
- Obtain necessary consents
- Document authorization
Post-Search Compliance
- Use information only for stated purpose
- Maintain records of usage
- Dispose of information properly
- Handle disputes appropriately
Penalties for FCRA Violations
Civil Liability
According to the FTC, FCRA violations can result in:
Negligent Violations
- Actual damages
- Attorney's fees and costs
Willful Violations
- Actual damages or statutory damages ($100-$1,000 per violation)
- Punitive damages
- Attorney's fees and costs
Criminal Liability
Criminal penalties apply for:
- Obtaining consumer reports under false pretenses
- Unauthorized disclosure of consumer report information
Penalties include fines and imprisonment up to two years.
Enforcement Actions
Recent CFPB enforcement actions have resulted in:
- Multi-million dollar fines
- Injunctive relief
- Compliance monitoring
- Consumer restitution
FCRA and Specific Industries
Debt Collection
The Consumer Financial Protection Bureau clarifies that:
- Locating debtors for collection is generally permissible
- Using credit reports for skip tracing requires permissible purpose
- Location information alone is not a consumer report
Real Estate
For real estate professionals:
- Tenant screening requires FCRA compliance
- Property owner lookup for marketing is generally not covered
- Skip tracing for real estate investment is typically permissible
Legal Profession
For attorneys and legal services:
- Process server location is permissible
- Witness location is permissible
- Background checks for employment require FCRA compliance
State Law Considerations
California Consumer Privacy Act (CCPA)
CCPA provides additional rights:
- Right to know what information is collected
- Right to deletion
- Right to opt-out of sales
- Non-discrimination rights
Other State Laws
Many states have additional requirements:
- State-specific background check laws
- Financial privacy regulations
- Data breach notification requirements
The IAPP (International Association of Privacy Professionals) maintains resources on state privacy laws.
Compliance Checklist
Before Skip Tracing
- Identify purpose of search
- Determine if FCRA applies
- Obtain necessary consents (if required)
- Document permissible purpose
- Use appropriate data source
During Skip Tracing
- Search only for needed information
- Record search parameters
- Note data sources used
- Document results obtained
After Skip Tracing
- Use information only for stated purpose
- Store information securely
- Dispose when no longer needed
- Handle any disputes appropriately
Working with Skip Tracing Providers
Choosing a Provider
Look for providers that:
- Clearly explain when FCRA applies
- Don't require FCRA certification for non-covered uses
- Provide documentation of data sources
- Maintain security protocols
- Publish current written pricing and define what counts as a chargeable result
Provider Representations
Quality skip tracing providers should:
- Not claim to be CRAs if they're not
- Not provide credit information
- Clearly state intended uses
- Maintain data accuracy standards
Conclusion
FCRA compliance in skip tracing depends on the purpose of the search. Understanding when FCRA applies—and when it doesn't—protects both your organization and consumer rights.
Key takeaways:
- Know your purpose - Document why you need the information
- Choose appropriate sources - Use FCRA-compliant CRAs when required
- Maintain documentation - Record permissible purpose and authorization
- Respect consumer rights - Follow required procedures when FCRA applies
- Stay current - Laws and interpretations evolve
For a purpose that may not trigger FCRA, the source, purpose, jurisdiction, and use still matter. Review provider documentation and current plan terms with qualified compliance advice; no provider can promise a compliant result for every use.
When in doubt about FCRA applicability, consult with legal counsel familiar with consumer protection law in your jurisdiction.
Ready to Start Skip Tracing?
Looking for current SkipTrace Pro options? Review the current pricing: Starter is $9.99 for 150 credits, Growth is $25 for 500, and Pro is $189 for 15,000; Pro overage is $0.03 per credit. Plan terms and permitted uses apply. Want to see it in action first? Request a personalized skip tracing demo to evaluate the workflow.
Return to SkipTrace Pro's skip tracing services to get started. Returned data is not authorization to contact anyone; follow applicable privacy, consent, calling, and opt-out requirements.