definition of consumer report

consumer report

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A consumer report is background information collected by consumer reporting agencies and used by employers and creditors in determining whether to hire or loan to an individual. A consumer report can contain a wide variety of information including credit history, past bankruptcy, judicial records, employment records, and even online activity. This information can only be accessed with approval from the individual and is highly regulated by the Fair Credit Reporting Act (FCRA) . Some states add restrictions to what can be collected by employers such as credit history. 

[Last updated in June of 2021 by the Wex Definitions Team ]

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Consumer Reports: What They are, How They Work

James Chen, CMT is an expert trader, investment adviser, and global market strategist.

What Is Consumer Reports?

Consumer Reports is a publication and independent, nonprofit member organization that has evaluated more than 9,000 consumer products and services since 1936. The publication is printed monthly and its buying guides, tests, evaluations, and comparisons are all based on the magazine's own in-house testing. The organization maintains an office in Washington, D.C. to lobby the federal government on consumer issues .

Key Takeaways

• Consumer Reports is a publication and independent, nonprofit member organization that has evaluated more than 9,000 consumer products and services since 1936.
• The magazine allows no outside advertising, has a strict no-commercial-use policy, and prides itself on being objective.
• The publication charges $10 a month for digital access or $59 a year for access to both digital and print versions of the magazine.
• Its long history, including consumer advocacy for safe products, was instrumental in lobbying for the addition of seat belts and safety items in vehicles, for example.
• Today, many product ratings and reviews now proliferate on the Internet, giving fierce competition to older players like the experts and testers at Consumer Reports, who have waned in popularity.

Understanding Consumer Reports

Consumer Reports tests everything from tech products and automobiles, to food, financial, and health services. The magazine allows no outside advertising, has a strict no-commercial-use policy, and prides itself on being objective. It charges $10 a month for digital access or $59 a year for access to both digital and print versions of the magazine.

Consumer Reports has a long history dating back to 1936 when it was called Consumer's Union Reports. Its first issue had reported on milk, cereal, soap, and stockings. The magazine gave recommendations on which products to buy, and which were not acceptable. The group, for example, was instrumental in pushing to remove strontium-90 from dairy products in the 1950s that came about from nuclear testing. It also lobbied for the addition of seat belts and other safety items in vehicles. 

Product Reviews in the Internet Age

The organization enjoyed growing influence as its circulation and subscription revenue rose for decades until the Internet arrived in the late 1990s. The organization was slow to adapt to the new technology and a period of retrenchment followed. It wasn't until well into the 2000s when Consumer Reports (CR) added robust web offerings, though behind a paywall.

Today, many of the product ratings and reviews that had been CR's mainstay have moved to the Internet, and much of it is user-generated. The online landscape is littered with a hodgepodge of sites that let users review everything from restaurants to products to financial services. In the interim, facts and verifiable observations from experts like the product testers at CR have waned.

"Consumer Reports is an independent, nonprofit membership organization that works side by side with consumers for truth, transparency, and fairness in the marketplace," the organization notes on its website. "We use our rigorous research, consumer insights, journalism, and policy expertise to inform purchase decisions, improve the products and services that businesses deliver, and drive regulatory and fair competitive practices."

"In today’s rapidly evolving world, what we do at Consumer Reports must be as transformative and groundbreaking as the new technologies, products, and services entering people's lives every day. We are passionate about our work because we know how much is at stake for you. We succeed in our mission every time your family gets a little bit safer, your finances get more secure, new technologies get more trustworthy, and the future gets that much brighter. Together we are creating a fairer, safer, and healthier world."

Consumer Reports. " Become A Member ." Accessed May 15, 2021.

Consumer Reports. " What We Do ." Accessed May 15, 2021.

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• What is a Consumer Report?

In order to make the most of the information you are offered under the terms of the Fair Credit Reporting Act, it’s a good idea for you to familiarize yourself with the consumer report and its content. Provided by a consumer reporting agency, the report provides both personal and financial information that can help you better understand your applicant’s qualifications and point out red flags that you may want to take into consideration when making a decision.

Table of Contents

[.blog-disclaimer-text]Disclaimer: This article is not legal advice. Legal information is not the same as legal advice, where an attorney applies the law to your specific circumstances. Consult an attorney for advice on your interpretation of this information or its accuracy. You may not rely on this article as legal advice, nor as an endorsement of any particular legal understanding.[.blog-disclaimer-text]

There are three requirements, including a creator, content, and a purpose requirement that must be met before a report can be considered a consumer report.

• Consumer reports must be done by a Consumer Reporting Agency.  
• A consumer report is any written, oral or other communication of any information by a Consumer Reporting Agency bearing on a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living.  
• A consumer report is a report expected to be used or collected in whole or part for the purpose of serving as a factor used in establishing the consumers eligibility for credit or insurance used primarily for personal, family, household, or employment purposes.

Examples of consumer reporting agencies include Equifax, TransUnion, and Experian (known as the National Credit Reporting Agencies), background screeners, and tenant/background screeners. Information must pertain to a consumer/individual and not entities, corporations, or partnerships.  Information also applies to both private and public data.  Consumer reporting agencies do not have direct transactions or experiences with applicants and information is not on a firsthand basis.  CRAs get their information from third-parties and thus are not the originating source of information.

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Reports including personal knowledge or firsthand interaction, reports made among persons under common control, and reports other than credit (including skip tracing, law enforcement, dating, and laboratory reports) are not consumer reports.   Information collected from internet providers, which collect “header data” consisting purely of identifying information from sources like public records, mailing lists, surveys, public social media profiles, etc., are also not considered consumer reports.

Information excluded from consumer reports further include:

• Arrest records more than 7 years old.
• Items of adverse information, except criminal convictions older than 7 years.
• Negative credit data, civil judgments, paid tax liens, and/or collections accounts older than 7 years. Time limits apply only to “negative” information about consumers as favorable information never goes stale.  Time limits apply only to CRAs.
• End-users can use “stale data” (older than 7 years) if information is obtained from a source other than a CRA.

 Continue to A summary of consumer rights under FCRA , or jump to a different article.

• Fundamentals of The Fair Credit Reporting Act (FCRA)
• Industry Players Under FCRA
• Accuracy and Reasonable Procedures
• FCRA Permissible Purpose
• Adverse Action Notification
• Reinvestigation, Disclosures, Disposal of Consumer Information
• A summary of consumer rights under FCRA
• FCRA Litigation

State Versions of FCRA and FCRA California

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Consumer Report Definition

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Definition of Consumer Reports from the Oxford Advanced Learner's Dictionary

• Consumer Reports

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§ 1022.130 Definitions

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For purposes of this subpart, the following definitions apply:

(a) Annual file disclosure means a file disclosure that is provided to a consumer, upon consumer request and without charge, once in any twelve month period, in compliance with section 612(a) of the FCRA, 15 U.S.C. 1681j(a).

(b) Associated consumer reporting agency means a consumer reporting agency that owns or maintains consumer files housed within systems operated by one or more nationwide consumer reporting agencies.

(c) Consumer report has the meaning provided in section 603(d) of the FCRA, 15 U.S.C. 1681a(d).

(d) Consumer reporting agency has the meaning provided in section 603(f) of the FCRA, 15 U.S.C. 1681a(f).

(e) Extraordinary request volume occurs when the number of consumers requesting or attempting to request file disclosures during any twenty-four hour period is more than 175 percent of the rolling ninety-day daily average of consumers requesting or attempting to request file disclosures. For example, if over the previous ninety days an average of one hundred consumers per day requested or attempted to request file disclosures, then extraordinary request volume would be any volume greater than 175 percent of one hundred, i.e., 176 or more requests in a single twenty-four hour period.

(f) File disclosure means a disclosure by a consumer reporting agency pursuant to section 609 of the FCRA, 15 U.S.C. 1681g.

(g) High request volume occurs when the number of consumers requesting or attempting to request file disclosures during any twenty-four hour period is more than 125 percent of the rolling ninety-day daily average of consumers requesting or attempting to request file disclosures. For example, if over the previous ninety days an average of one hundred consumers per day requested or attempted to request file disclosures, then high request volume would be any volume greater than 125 percent of one hundred, i.e., 126 or more requests in a single twenty-four hour period.

(h) Nationwide consumer reporting agency means a consumer reporting agency that compiles and maintains files on consumers on a nationwide basis as defined in section 603(p) of the FCRA, 15 U.S.C. 1681a(p).

(i) Nationwide specialty consumer reporting agency has the meaning provided in section 603(w) of the FCRA, 15 U.S.C. 1681a(w).

(j) Request method means the method by which a consumer chooses to communicate a request for an annual file disclosure.

Municipal Technical Advisory Service (MTAS)

Consumer Reports

According to the act (15 U.S.C. § 1681(a), the definition of a consumer report includes:

“any written, oral, or other communication of any information by a consumer reporting agency 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 or collected in whole or in part for the purpose of serving as a factor in establishing the consumer’s eligibility for credit or insurance to be used primarily for personal, family,or household purposes, employment purposes, or any other purpose authorized under section 604 [§ 1681b].”

Consumer information is defined as any record about an individual that is a consumer report or is derived from a consumer report. However, according to the FACTA amendment, “a consumer report does not include communications made to an employer while investigating suspected employee misconduct relating to employment or employee compliance with applicable laws or with pre-existing written policies of the employer”. 15 U.S.C.§ 603(y)(1)(B)(i) and 15 U.S.C.§ 603(y)(1)(B)(ii).

Generally, a city that accesses a consumer report while conducting a background check on an applicant has eight (8) main obligations: “(1) show a permissible purpose. (15 U.S.C. 604(a)(3)(B) and 604(b)), (2) provide certification of compliance (15 U.S.C. 604(f)), (3) notify consumers when adverse actions are taken (15 U.S.C. 603(k)), (4) Limit on use of information when a fraud or active duty alerts are on file (15 U.S.C. §605A), (5) comply with regulations when notified of an address discrepancy (15 U.S.C. 605(h)(1)(A)) , (6) establish procedures to dispose of records (15 U.S.C. §628); (7) make a clear and conspicuous written disclosure to the consumer before the report is obtained, in a document that consists solely of the disclosure,that a consumer report may be obtained (15 U.S.C. 604(b)(2)(A)(i)), and (8) obtain from the consumer prior written authorization to access reports (U.S.C. 604(b)(2)(A)(ii)),

Before a consumer reporting agency may provide or prepare a consumer report for an applicant, the employer must certify to the agency that: (1) it has provided the required “clear and conspicuous disclosure” to the individual who is the subject of the report; (2) it has received written authorization to obtain the report. 15 U.S.C. § 604(b)(2)(A).

If an applicant applies for employment by mail, telephone, computer, or other similar means, at any time before a consumer report is procured or caused to be procured in connection with that application: (1) the person who procures the consumer report on the applicant for employment purposes shall provide to the applicant, by oral, written, or electronic means, notice that a consumer report may be obtained for employment purposes, and a summary of the consumer’s rights under section 615(a)(3); and (2) the applicant shall have consented, orally, in writing, or electronically to the procurement of the report by that person. 15 U.S.C. § 604(b)(2)(B).

Once the employer has the consumer report, it may decide to take an action based on the consumer report (or based in part on the consumer report). An adverse action includes a denial of employment or any other decision for employment purposes that adversely affects any current or prospective employee. 15 U.S.C. § 603(k)(B). Before taking any adverse employment action against someone based in whole or in part on the consumer report, the employer must provide the affected individual with an adverse action disclosure that includes a copy of the consumer report as well as a summary of that individual’s rights under the FCRA. 15 U.S.C. § 604(b)(3)(A). In other words, when the employer receives the consumer report, he/she must immediately send a copy of the report and the individual’s rights statement to the applicant.

Then, if the employer takes adverse action based upon the subject of the report, the employer must by oral, written or electronic means: (1) provide oral, written or electronic notice of the adverse action to the affected individual; (2) written or electronic disclosure of a numeric credit score used in taking any adverse action, the range of possible credit scores, all the key factors that adversely affected the credit score, the date on which the credit score was created and the name of the person or entity that provided the credit score or credit file; (3) provide orally, written or electronically the name, address, and telephone number of the consumer reporting agency that provided the report to the employer (the telephone number provided must be the toll-free number where the individual can reach the agency, if the agency maintains files on consumers on a nationwide basis) and a statement that the agency did not make the decision to take adverse action and thus cannot tell the applicant or employee the specific reason for the actions; (4) provide notice of the individual’s right to obtain a free copy of the report on which the adverse action was based within 60 days of notice of the action; and (5) provide notice of the individual’s right to dispute the accuracy or completeness of any information in the report with the consumer reporting agency. 15 U.S.C. § 615(a).

Similarly, an employer must provide an adverse action notice to an existing employee who is subject to an employment decision that adversely affects his or her employment, such as termination or discipline, based in whole or in part on a consumer report. U.S.C. § 603(k)(1)(B)(ii). An adverse action notice also is required in employment situations if credit information is used to deny employment. 15 U.S.C. 615(b)(2).

If an applicant applies for employment by mail, telephone, computer, or other similar means, and if a person who procured a consumer report on the consumer for employment purposes takes an adverse action on the employment application based in whole or in part on the report, then the person must provide the consumer within 3 business days of taking such action, an oral, written or electronic notification: (1) that adverse action has been taken based on a consumer report received from a consumer reporting agency; (2) the name, address and telephone number of the consumer reporting agency that furnished the report (including a toll free telephone number if the agency compiles and maintains files on consumers on a nationwide basis); (3) that the consumer reporting agency did not make the decision to take the adverse action and is unable to provide the consumer the specific reasons why the adverse action was taken; and (4) that the applicant may, upon providing proper identification, request a free copy of a report and may dispute with the consumer reporting agency the accuracy or completeness of any information in a report. 15 U.S.C. § 604(b)(3)(B).

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