Recent Migration to the United States from Central America: Frequently Asked Questions

Summary: Over the last decade, migration to the United States from Central America—in particular from El Salvador, Guatemala, and Honduras (known collectively as the Northern Triangle)—has increased considerably. Families migrating from this region, many seeking asylum, have made up an increasing share of the migrants seeking admission to the United States at the U.S.-Mexico border. In the past year, news reports of migrant "caravans" from the Northern Triangle traveling toward the United States have sparked intense interest and questions from Congress.

Summary: Many factors, both in their countries of origin and elsewhere, contribute to people's decisions to emigrate from the Northern Triangle. Weak institutions and corrupt government officials, chronic poverty, rising levels of crime, and demand for illicit drugs result in insecurity and citizens' low levels of confidence in government institutions. These "push" factors intersect with "pull" factors attracting migrants to the United States, including economic and educational opportunities and a desire to reunify with family members.

Summary: Addressing these factors is complex. Under the U.S. Strategy for Engagement in Central America, the United States is working with Central American governments to promote economic prosperity, improve security, and strengthen governance in the region. Since 2014, Mexico has helped the United States manage flows of Central American migrants, including a recent decision to allow certain U.S.-bound asylum seekers to remain in Mexico while awaiting U.S. immigration proceedings. The United Nations High Commissioner for Refugees (UNHCR)—in collaboration with local and federal governments and civil society—is providing immediate and longer-term support for Mexico's refugee agency and migrants in transit.

Summary: Central Americans who wish to request asylum in the United States may do so at a U.S. port of entry before a Customs and Border Protection (CBP) officer or upon apprehension by a CBP officer between U.S. ports of entry. Those requesting asylum at the border undergo screening to determine whether they can pursue an asylum claim. To receive asylum, a foreign national must establish, among other requirements, that he or she is unable or unwilling to return to his or her home country because of past persecution or a well-founded fear of future persecution based on one of five protected grounds (race, religion, nationality, membership in a particular social group, or political opinion). In 2018, President Trump, the Department of Homeland Security (DHS), and the Department of Justice (DOJ) took various actions to tighten the U.S. asylum system. These actions have been met with legal challenges. For example, on November 9, 2018, the President issued a presidential proclamation to suspend immediately the entry into the United States of aliens who cross the Southwest border between ports of entry. This proclamation and a related DHS-DOJ rule are being challenged in federal court.

Summary: Chapter 15, Title 10 of the U.S. Code provides general legislative authority for the Armed Forces to provide certain types of support to federal, state, and local law enforcement agencies. In October 2018, active-duty personnel were deployed to the Southwest border to provide assistance in air and ground transportation, logistics support, engineering capabilities and equipment, medical support, housing, and planning support. The Posse Comitatus Act constrains the manner in which military personnel may be used in a law enforcement capacity at the border. President Trump has contemplated proclaiming a national emergency pursuant to the National Emergencies Act (NEA) in order to fund a physical barrier at the southern border with Mexico using DOD funds.

Summary: Congress provided the President with significant discretion to reduce foreign assistance to Central America in FY2018, dependent on the governments of El Salvador, Guatemala, and Honduras addressing a variety of congressional concerns, including improving border security, combating corruption, and protecting human rights. The President's ability to modify assistance to the Northern Triangle for the remainder of FY2019 will depend on provisions Congress may include in future appropriations legislation.

Over the last decade, migration to the United States from Central America—in particular from El Salvador, Guatemala, and Honduras (known collectively as the Northern Triangle)—has increased considerably. From 2006 to 2016, the number of individuals living in the United States who were born in the Northern Triangle grew from 2.2 million to almost 3 million; this increase (37%) was more than twice the increase for the total foreign-born population (16%). During the same period, the foreign-born population from Mexico living in the United States held steady at 11.5 million (which is more than any other country-of-birth group). In 2016, the foreign-born population from the Northern Triangle comprised less than 1.0% of the U.S. population and 6.8% of the 43.7 million foreign-born residents of the United States, up from 5.8% in 2006.

Even though total apprehensions of illegal border crossers were at a 45-year low in FY2017, the number of families from the Northern Triangle apprehended at the U.S.-Mexico border has increased in recent years. While earlier migrants apprehended at the Southwest border were predominantly single, adult males from Mexico, currently the majority of apprehended migrants are families and unaccompanied children, and the majority of apprehended migrants come from the Northern Triangle. An increasing share of those arriving at the Southwest border are requesting asylum, some at official ports of entry and others after entering the United States "without inspection" (i.e., illegally) between U.S. ports of entry. This is adding to a large backlog of asylum cases in U.S. immigration courts.

In the past year, news reports of migrant "caravans" from the Northern Triangle traveling toward the U.S. border have sparked intense interest and many questions from Congress, including the following: What factors are contributing to the increase in migration from the Northern Triangle to the United States? Is the choice to migrate in large groups a new trend? How are the United States, Mexico, and Central American governments responding? How are U.S. policies at the border—including security screening, removal proceedings, military involvement, and asylum processing—being implemented? This report addresses these and other frequently asked questions.

How do current levels of Central American migrants apprehended at the Southwest border of the United States compare with earlier apprehension levels for Central Americans?7

The increase in the number of Central American migrants apprehended at the Southwest border is occurring within the context of historically low levels of total alien apprehensions (see Figure 1 ). Apprehensions of migrants of all nationalities increased consistently beginning in 1960, fluctuated between two peaks of 1.62 million in FY1986 and 1.64 million in FY2000, and then declined to a 45-year low of approximately 304,000 in FY2017. Apprehensions increased in FY2018 to 397,000, which was comparable to the annual Southwest border average (401,000) for the most recent 10-year period (FY2009-FY2018).

Two demographic shifts, illustrated in the apprehension data, characterize recent migrant flows. First, over the past two decades the national origins of apprehended aliens have changed. In FY2000, almost all Southwest border apprehensions (98%) were of Mexican nationals. Beginning in FY2012, however, the percentage of apprehended aliens from Honduras, Guatemala, and El Salvador started to increase as a share of total apprehensions. By FY2018, foreign nationals from those three countries made up 52% of all apprehensions. Second, the type of migrants apprehended has also shifted. In the past, single adult males made up over 90% of apprehended aliens. Currently, the majority of apprehended migrants are families and unaccompanied children. From FY2012 to FY2018, the predominant national origins of such families changed from Mexico to the Northern Triangle countries (see Figure 2 ). (For more information, see CRS Report R45266, The Trump Administration's "Zero Tolerance" Immigration Enforcement Policy .)

Why are people leaving the Northern Triangle countries of El Salvador, Guatemala, and Honduras?12

Many factors—including those in their countries of origin, destination countries (often the United States), and other countries—contribute to people's decisions to emigrate from the Northern Triangle.

Drivers of migration are interrelated, often reinforcing one another. Over time, weak institutions and corrupt government officials, economic growth that does not significantly reduce chronic poverty, rising levels of crime, and demand for illicit drugs result in insecurity and citizens' low levels of confidence in government institutions. These in turn contribute to an increased desire to leave a country.

The Northern Triangle countries have long histories of autocratic rule, weak institutions, and corruption. A lack of political will and capacity, rampant bribery and embezzlement of state funds, and some of the lowest tax collection rates in Latin America divert and diminish resources, leaving state institutions and programs underfunded. These problems also limit the governments' abilities to respond to crises such as natural disasters and food insecurity. All of these factors help perpetuate chronic poverty. While often cited as a leading cause of emigration from the Northern Triangle, poverty alone does not explain it.

Over the past decade, transnational criminal organizations have used the Central American corridor for a range of illicit activities, including trafficking approximately 90% of cocaine bound for the United States. As a result, Northern Triangle countries have experienced extremely elevated homicide rates and general crime committed by drug traffickers, gangs, and other criminal groups. For instance, clashes between street gangs and, in El Salvador, between gangs and security forces, have paralyzed cities and some rural areas. A recent study found that the probability that an individual intends to migrate is 10-15 percentage points higher for Salvadorans and Hondurans who have been victims of multiple crimes than for those who have not.

Finally, Central America has always been particularly subject to climate variability. According to the World Risk Index, Guatemala and El Salvador are among the 15 countries in the world most exposed to natural disasters, especially earthquakes and droughts. About one-fourth of those employed in the Northern Triangle work in the agriculture sector; widespread crop failures can have a devastating impact on people's livelihoods and ability to feed their families. According to the 2018 Global Hunger Index, Guatemala and Honduras ranked second and third in hunger levels in Central America and the Caribbean, behind Haiti. Research indicates that more intense and erratic weather patterns in recent years are strongly linked to food insecurity and migration.

(For more information, see CRS Report R44812, U.S. Strategy for Engagement in Central America: Policy Issues for Congress ; CRS Report RL34027, Honduras: Background and U.S. Relations ; CRS Report R43616, El Salvador: Background and U.S. Relations ; CRS Report R42580, Guatemala: Political and Socioeconomic Conditions and U.S. Relations ; and CRS Report RL34112, Gangs in Central America .)

What factors are attracting people from the Northern Triangle to the United States?23

The factors discussed above intersect with factors attracting migrants to the United States. Economic opportunity may motivate Northern Triangle families and unaccompanied children to migrate. Despite challenging labor market conditions for low-skilled minority youth in the United States, economic prospects for industrial sectors employing low-skilled workers have improved recently. Educational opportunities may also be a motivating factor in migration, as perceptions of free public education through high school may be widespread among young migrants.

Family reunification is a key motive, as many migrants have family members among the sizable Salvadoran, Guatemalan, and Honduran foreign-born populations residing in the United States. While the impacts of actual and perceived U.S. immigration policies have been widely debated, it remains unclear if, and how, specific immigration policies have motivated families and children to migrate to the United States. Some contend that the United States' asylum policy, which allows asylum seekers to remain in the United States while they await a decision on their cases, has encouraged recent family and unaccompanied child migration to the country. Currently, immigration courts face a backlog of over 700,000 asylum cases, resulting in wait times of months or years, and a substantial portion of asylum seekers fail to appear in court. Others have argued that the revised humanitarian relief policies for unaccompanied children included in the Trafficking Victims Protection Reauthorization Act (TVPRA) of 2008, which expanded immigration relief options for such children, fostered a similar result among this migrant population. (For more information, see archived CRS Report R43628, Unaccompanied Alien Children: Potential Factors Contributing to Recent Immigration .)

Why do some migrants choose to travel in large groups? Is this a new phenomenon?26

Migrants from the Northern Triangle traveling to the United States customarily have used various means to get to the Mexico-U.S. border, including walking, hitchhiking, riding on the top of trains through Mexico, and riding buses, all with or without the assistance of smugglers. Central American migrants have joined into groups to make the journey together as a way to share resources, avoid the cost of smugglers, and gain protection by the safety offered in numbers. "Caravans" have reportedly occurred for a least a decade, but they received little attention until last spring when a group of roughly 1,000 Central American migrants headed to the United States. About 400 migrants eventually made it to the U.S. border.

In past years, ad hoc processions have been loosely organized by nonprofit groups wanting to call attention to the plight of migrants in their home communities, particularly those of families with children fleeing unsafe environments, poverty, and lack of protection from gang violence and extortion. Mobile phone technology has facilitated navigation and affords communication with impromptu groups, resulting in migrations that can expand and contract along the way.

Actions by Governments and International Organizations

What is the United States doing to address the factors driving migration from the Northern Triangle?31

Under the U.S. Strategy for Engagement in Central America, the United States is working with Central American governments to promote economic prosperity, improve security, and strengthen governance in the region. The Obama Administration launched the strategy following a surge in apprehensions of unaccompanied alien children in 2014, and the Trump Administration largely has left the strategy in place. Congress appropriated an estimated $2.1 billion to support the strategy from FY2016-FY2018, roughly doubling annual aid levels for the region. The governments of El Salvador, Guatemala, and Honduras are carrying out complementary efforts under their Plan of the Alliance for Prosperity in the Northern Triangle. They collectively allocated an estimated $7.7 billion to the initiative from 2016-2018, though some analysts have questioned whether those funds have been targeted effectively.

On December 18, 2018, the Trump Administration committed to providing $5.8 billion in public and private investment to support institutional reforms and development in the Northern Triangle. Nearly all of the foreign assistance included in that figure was appropriated in prior years and the remainder consists of potential loans, loan guarantees, and private sector resources that the U.S. Overseas Private Investment Corporation could mobilize if it is able to identify commercially viable projects. (For more information, see CRS Report R44812, U.S. Strategy for Engagement in Central America: Policy Issues for Congress .)

What results have recent U.S. assistance efforts in the Northern Triangle produced?36

It is too early to assess the full impact of recent U.S. efforts because implementation did not begin until 2017 for many of the programs funded under the U.S. Strategy for Engagement in Central America. Nevertheless, the Northern Triangle countries, with U.S. support, have made some tentative progress. For example, they have implemented some policy changes that have contributed to economic stability. At the same time, living conditions have yet to improve for many residents because the Northern Triangle governments have not invested in effective poverty-reduction programs. Security conditions also have improved in some respects, as homicide rates have declined for three consecutive years. Still, many Northern Triangle residents continue to feel insecure, and the percentage of individuals reporting they were victims of crime increased in all three nations between 2014 and 2017. The countries' attorneys general—with the support of the U.N.-backed International Commission against Impunity in Guatemala and the Organization of American States-backed Mission to Support the Fight against Corruption and Impunity in Honduras—have made significant progress in the investigation and prosecution of high-level corruption cases. Those efforts could be undermined, however, as they have received considerable pushback from political and economic elites in the region. (For more information, see CRS Report R44812, U.S. Strategy for Engagement in Central America: Policy Issues for Congress .)

What is Mexico doing to address the flow of Central American migrants through its territory?42

Since a surge of unaccompanied child migrants from the Northern Triangle transited Mexico to the United States in 2014, Mexico has helped the United States manage flows of Central American migrants and has received more than $100 million in U.S. funding for those efforts. From 2015 through 2018, Mexico returned almost 524,000 migrants who entered it from the Northern Triangle countries. At the same time, Mexico has provided temporary visas for those who want to work in its southern border states, as well as humanitarian visas and access to asylum for those who do not raise criminal or terrorist concerns when their biometric information is run against U.S. databases. President Andrés Manuel López Obrador has thus far been willing to shelter some U.S.-bound Central American migrants, but he urged the U.S. government to invest in southern Mexico and Central America to prevent future unauthorized migration. On December 18, 2018, the two governments made a joint announcement in support of economic development in Mexico and the Northern Triangle.

The Mexican government has faced pressure from the United States to help contain and disperse recent caravans of Central American migrants transiting the country; humanitarian groups, by contrast, have urged it to assist the migrants. In fall 2018, Mexican citizens, aid groups, and local, state, and federal entities provided migrants with food, shelter, and emergency aid. As of early December 2018, the U.N. High Commissioner for Refugees (UNHCR) reported that 3,300 members of migrant caravans had applied for asylum in Mexico. At the same time, more than 3,000 people had accepted voluntary repatriation to their countries of origin. With U.S. ports of entry limiting the number of migrants accepted each day for asylum screening, border cities may have to shelter thousands of migrants for many months. Mexico's refugee agency, which has received support from UNHCR (discussed below), was overwhelmed processing record numbers of applications prior to the arrival of recent migrant caravans.

In late 2018, the U.S. and Mexican governments were negotiating an agreement—dubbed "Remain in Mexico"—that would have required U.S.-bound asylum seekers who could not demonstrate that they faced imminent danger in Mexico to remain there as their U.S. asylum claims were processed. Prior to the conclusion of a final bilateral agreement, the U.S. Department of Homeland Security (DHS) notified Mexico that it would implement a new policy under Section 235(b)(2)(C) of the Immigration and Nationality Act to return some non-Mexican asylum seekers (excluding unaccompanied minors) to Mexico to await their immigration court decisions. Mexico responded with a statement declaring that it has the right to admit or reject foreigners arriving in its territory, and that it would provide humanitarian visas and work permits to certain non-Mexicans awaiting U.S. immigration proceedings and offer some individuals the ability to apply for asylum in Mexico. Mexico reportedly began implementing this policy in mid-January, and the United States returned the first asylum seeker to Mexico under its new policy—dubbed the "Migrant Protection Protocols"—on January 29, 2019. Mexican officials have reportedly stated that they will not accept minors or individuals over age 60 awaiting asylum claims. Concerns over the costs to local governments of sheltering migrants and the safety of migrants could make this policy difficult to maintain. (For more information, see CRS In Focus IF10215, Mexico's Immigration Control Efforts .)

What is the role of the United Nations and other organizations in addressing the humanitarian needs of migrants from the Northern Triangle?55

A range of organizations provide humanitarian assistance to people traveling from the Northern Triangle toward the United States, including U.N. entities and other intergovernmental organizations, local and national non-governmental organizations, and the private sector. According to UNHCR —a key U.N. entity operating in the region— comprehensive assistance is needed at all phases of the journey, including food, medical care, shelter, protection, and, in many cases, legal support.

Experts characterize this flow of people from the Northern Triangle as mixed migration, defined as different groups—such as economic migrants, refugees, asylum-seekers, trafficked persons, and unaccompanied children—who travel the same routes and use the same modes of transportation. The distinctions between groups in mixed migration flows raise questions about their status and rights. While refugees are granted certain rights and protection under international refugee law, migrants are not protected by a comparable set of rules or treaties. Nevertheless, UN HCR asserts that transit and destination countries should provide all of these groups access to humanitarian assistance, protection , and due process to assess their asylum claims, even if they do not qualify as refugees. Those who flee are often unsafe not only in their home countries, but also during their journey north where they face recruitment into criminal gangs, sexual and gender-based violence, and murder. Many are vulnerable, including women, children, the elderly, and those with disabilities.

In Mexico, UNHCR provides immediate and longer-term support by working with local and federal governments and alongside civil society and other partners. In addition to shelter and cash-based humanitarian assistance, broader safety mechanisms include improved screening procedures and dissemination of information for those fleeing violence, increased ways to guard against smugglers and traffickers, and enhanced access to the Mexican asylum system. Even with additional support from UNHCR, Mexico's Commission for the Aid of Refugees (COMAR) lacks sufficient capacity to process claims. UNHCR and other organizations are also being mobilized along the caravan routes in places such as Chiapas, Oaxaca, and Tijuana.

International humanitarian efforts aim to align with the Comprehensive Regional Protection and Solutions Framework, an intergovernmental agreement that defends the rights of migrants and refugees who live in or cross the territories of Belize, Costa Rica, Guatemala, Honduras, Mexico, and Panama. In general, most Latin American and Caribbean countries are part of an ongoing forum to address issues driving displacement such as poverty, economic decline, inflation, violence, disease, and food insecurity. In the current situation, U.N. and other experts urge donors to provide timely and predictable international funding to support host governments and local communities that are assisting arriv als.

The Role of U.S. Government Agencies and the Military

What is the role of U.S. government agencies involved in processing migrants at the Southwest U.S. border?67

Several federal agencies are involved in immigration processing at land, air, and sea ports of entry and along U.S. borders shared with Mexico and Canada. The following descriptions are not exhaustive of all the duties carried out by each entity; they are a selection of duties relevant to immigration enforcement at the Southwest border at and between land ports of entry.

The Department of Homeland Security (DHS) includes several relevant components:

Customs and Border Protection (CBP) is responsible for facilitating lawful trade and travel while preventing unauthorized people and contraband from entering the country. Within CBP, U.S. Border Patrol is the law enforcement agency that secures U.S. borders at and between ports of entry; Border Patrol agents apprehend and hold foreign nationals who have no valid entry documents when they reach ports of entry or who attempt to cross between ports of entry. CBP's Office of Field Operations (OFO) operates U.S. ports of entry and conducts immigration inspections of arriving foreign nationals to determine their admissibility to the United States.

Immigration and Customs Enforcement (ICE) is responsible for protecting the country from cross-border crime and illegal immigration that threatens national security and public safety. ICE's Enforcement and Removal Operations (ERO) enforces immigration laws pertaining to the detention and removal of unauthorized aliens and oversees detention centers, including family detention centers. ICE also finds and removes deportable aliens located in the U.S. interior.

United States Citizenship and Immigration Services (USCIS) is responsible for adjudication of immigration and naturalization petitions, consideration of refugee and asylum claims and related humanitarian and international concerns, and other services, such as issuing employment authorizations and processing nonimmigrant change-of-status petitions. At the border, USCIS asylum officers interview foreign nationals who arrive without admissions documents at a port of entry or who encounter a Border Patrol agent and express a fear of return to their home countries based on persecution. If migrants are found to have "credible fear," they are referred to an immigration judge for a hearing.

The Department of Justice (DOJ) runs the Executive Office for Immigration Review (EOIR ), the federal government's immigration courts. Immigration judges determine whether an alien is removable or is eligible for some type of immigration relief during the removal process (e.g., asylum or withholding of removal). The standard removal process is a civil administrative proceeding involving a DHS attorney and an EOIR immigration judge to determine whether an alien should be removed. (For more information, see CRS Report R43892, Alien Removals and Returns: Overview and Trends .)

The Department of Health and Human Services' (HHS ' ) Office of Refugee Resettlement (ORR) is responsible for the care of unaccompanied alien children (UAC) and their subsequent placement in appropriate custody. ICE handles custody transfer or repatriation. (For more information, see archived CRS Report R43599, Unaccompanied Alien Children: An Overview .)

How does the United States process unlawful border crossers?68

Aliens apprehended for illegally entering the United States between U.S. ports of entry generally face civil penalties for illegal presence in the United States and may face criminal penalties for illegal entry. Aliens who have been removed face additional criminal penalties if they are apprehended for illegal reentry. Aliens apprehended for illegal entry and reentry are subject to prosecution in federal criminal courts by DOJ.

All apprehended aliens, including children, are placed into one of two types of immigration removal proceedings: standard proceedings that involve formal hearings in an immigration court run by DOJ's EOIR before an immigration judge, or streamlined "expedited removal" proceedings without such hearings. ICE is responsible for legally representing the government during removal proceedings. CBP may refer aliens to DOJ for criminal prosecution depending on whether they meet current criminal enforcement priorities. If CBP does not refer apprehended aliens to DOJ for criminal prosecution, CBP may either return them to their home countries using expedited removal or transfer them to ICE custody for immigration detention while they are in formal removal proceedings. (For more information, see CRS Report R45314, Expedited Removal of Aliens: Legal Framework .)

Aliens who wish to request asylum may do so at a U.S. port of entry before a CBP officer or upon apprehension by a CBP officer between U.S. ports of entry. Aliens requesting asylum at the border are entitled to an interview assessing the credibility of their asylum claims. (For more information, see " What is the process for seeking asylum in the United States? " below.)

During the brief period when the Trump Administration's "zero tolerance" policy was in effect (May and June 2018), DOJ sought the prosecution of all adults caught entering illegally, including asylum seekers and adults accompanied by children. On June 20, 2018, following considerable and largely negative public attention to family separations stemming from the zero tolerance policy, President Trump issued an executive order (EO) effectively ending the policy. While it was in effect, DHS classified all children accompanying criminally prosecuted adults as UAC and turned them over to HHS' ORR, where they were housed temporarily in its shelters. After the prosecuted adults served any applicable criminal sentence, they were transferred to ICE custody, placed in immigration detention, and eventually, in most cases, reunited with their children, either in family detention or upon release into the United States on bond, an order of supervision, or another condition of release. Other parents were deported before they were reunited with their children, and a small number of parents still in the United States remain separated from their children. (For more information, see CRS Report R45266, The Trump Administration's "Zero Tolerance" Immigration Enforcement Policy .)

What is the process for seeking asylum in the United States?69

The Immigration and Nationality Act (INA) provides, subject to certain exceptions and restrictions, that aliens who are in the United States or who arrive in the United States (whether or not at an official port of entry) may apply for asylum, regardless of their immigration status. Asylum may be granted by a USCIS asylum officer or a DOJ EOIR immigration judge. To receive asylum, an alien must establish, among other requirements, that he or she is unable or unwilling to return to his or her home country because of past persecution or a well-founded fear of future persecution based on one of five protected grounds (race, religion, nationality, membership in a particular social group, or political opinion). Certain aliens, such as those who are determined to pose a danger to U.S. security, are ineligible to receive asylum.

Special asylum provisions apply to aliens who are subject to a streamlined removal process known as expedited removal. In order for such an alien to be considered for asylum, a USCIS asylum officer first must determine that the alien has a credible fear of persecution. (For more information, see CRS Report R45314, Expedited Removal of Aliens: Legal Framework .)

What did former Attorney General Sessions decide about domestic violence and gang violence as grounds for asylum? What is the status of that decision?70

In June 2018, the Attorney General, whose decisions are binding on DHS officers and immigration judges, issued a decision regarding the adjudication of asylum claims based on "membership in a particular social group." In the decision, Attorney General Sessions stated that "[g]enerally, claims by aliens pertaining to domestic violence or gang violence perpetrated by non-governmental actors will not qualify for asylum" based on the "membership in a particular social group" ground. He further noted that because such claims would not generally qualify for asylum, they also would not generally meet the threshold for a finding of a credible fear of persecution. USCIS subsequently issued a policy memorandum to provide guidance to its asylum officers in light of the Attorney General's decision. The memorandum included guidance on determining whether an alien is eligible for asylum as well as whether an alien has a credible fear of persecution and thus can pursue an asylum claim.

The new policies regarding credible fear of persecution determinations were challenged in federal court. In December 2018, a federal district court judge permanently enjoined the U.S. government from continuing some of the new credible fear policies. Other components of the former Attorney General's decision and the USCIS memorandum, including standards for adjudicating asylum claims, remain in effect. (For more information, CRS Legal Sidebar LSB10207, Asylum and Related Protections for Aliens Who Fear Gang and Domestic Violence .)

How does the United States screen for security threats among those seeking entry at the Southwest border?74

TECS (not an acronym) is the main system that CBP officers employ at the border and elsewhere to screen arriving travelers and determine their admissibility. CBP also uses the Automated Targeting System (ATS), which is a decision support tool. As one of its functions, ATS "compares information about travelers and cargo arriving in, transiting through, or exiting the country, against law enforcement and intelligence databases," including information from the Terrorist Screening Databased (TSDB, commonly referred to as the terrorist watchlist). As its name suggests, Automated Targeting System-Passenger (ATS-P) is the portion of ATS focused on passengers, "for the identification of potential terrorists, transnational criminals, and, in some cases, other persons who pose a higher risk of violating U.S. law" and is used by CBP personnel at the border, ports of entry, and elsewhere, including screening the passenger manifests of all U.S. bound international flights. (For more information, see CRS Report R44678, The Terrorist Screening Database and Preventing Terrorist Travel .)

What types of missions do military personnel typically perform on the Southwest border?78

Active duty and National Guard personnel have performed a variety of missions on the Southwest border in the past, including ground and aerial surveillance, road and fencing construction, intelligence analysis, transportation, maintenance, and communications support. According to a DOD news release, the National Guard personnel who deployed to the border in April 2018 would provide "surveillance, engineering, administrative and mechanical support to border agents."

A subsequent DOD news release announcing the deployment of active duty personnel in October 2018 stated that CBP " requested aid in air and ground transportation, and logistics support, to move CBP personnel where needed. Officials also asked for engineering capabilities and equipment to secure legal crossings, and medical support units. CBP also asked for housing for deployed Border Protection personnel and extensive planning support."

The Trump Administration issued a memo on November 20, 2018, which authorized military personnel to perform

those military protective activities that the Secretary of Defense determines are reasonably necessary to ensure the protection of Federal personnel, including a show or use of force (including lethal force, where necessary), crowd control, temporary detention and cursory search. Department of Defense personnel shall not, without further direction from the President, conduct traditional civilian law enforcement activities, such as arrest, search, and seizure in connection with the enforcement of the laws.

During a discussion with reporters on November 21, 2018, Secretary of Defense James Mattis responded to questions about the potential use of military personnel in a law enforcement role:

The one point I want to make again is we are not doing law enforcement. We do not have arrest authority. Now the governors could give their troops arrest authority. I don't think they've done that, but there are—is no arrest authority under Posse Comitatus for the U.S. federal troops. You know, that can be done but it has to be done in accordance with the law, and that has not been done nor has it been anticipated.

On detention, we do not have arrest authority. Detention would—I would put it in terms of minutes. In other words, if someone's beating on a Border Patrolman and if we were in position to have to do something about it, we could stop them from beating on them and take him over and deliver him to a Border Patrolman, who would then arrest him for it…. There's no violation of Posse Comitatus, there's no violation here at all. We're not going to arrest or anything else. To stop someone from beating on someone and turn them over to someone else—this is minutes not even hours, okay?

According to a January 14 news release from DOD, Acting Secretary of Defense Patrick Shanahan approved continued DOD assistance to DHS through September 30, 2019. It also noted that "DOD is transitioning its support at the southwestern border from hardening ports of entry to mobile surveillance and detection, as well as concertina wire emplacement between ports of entry. DOD will continue to provide aviation support."

How does the Posse Comitatus Act limit the use of military personnel?85

The Posse Comitatus Act constrains how military personnel may be used in a law enforcement capacity at the border. The Posse Comitatus Act is a criminal prohibition that provides

Whoever, except in cases and under circumstances expressly authorized by the Constitution or Act of Congress, willfully uses any part of the Army or the Air Force as a posse comitatus or otherwise to execute the laws shall be fined under this title or imprisoned not more than two years, or both.

Consequently, there must be a constitutional or statutory authority to use federal troops in a law enforcement capacity to enforce immigration or customs laws directly by, for example, stopping aliens from entering the country unlawfully, apprehending gang members, or seizing contraband. As noted in a section below, federal law permits the Armed Forces to act in a supporting role for civil authorities by providing logistics or operating and maintaining equipment, among other things.

Case law suggests that the Posse Comitatus Act is violated when (1) civilian law enforcement officials make a direct active use of military personnel to execute the law; (2) the use of the military pervades the activities of the civilian officials; or (3) the military is used so as to subject persons to the exercise of military power which is regulatory, prescriptive, or compulsory in nature. The Posse Comitatus Act does not apply to the National Guard unless it is activated for federal service.

One possible statutory exception the President could potentially invoke for direct military enforcement is the Insurrection Act provision for sending troops whenever he determines that "unlawful obstructions, combinations, or assemblages, or rebellion against the authority of the United States, make it impracticable to enforce the laws of the United States … by the ordinary course of judicial proceedings." However, the Insurrection Act appears never to have been invoked to respond to unlawful migrant border crossings, and its application in such a situation has not been tested in court.

The executive branch has long asserted two constitutional exceptions to the Posse Comitatus Act "based upon the inherent legal right of the U.S. Government … to insure the preservation of public order and the carrying out of governmental operations within its territorial limits, by force if necessary." These exceptions include the emergency authority "to prevent loss of life or wanton destruction of property and to restore governmental functioning and public order when sudden and unexpected civil disturbances, disasters, or calamities seriously endanger life and property and disrupt normal governmental functions to such an extent that duly constituted local authorities are unable to control the situation"; and the authority to "protect Federal property and Federal governmental functions when the need for protection exists and duly constituted local authorities are unable or decline to provide adequate protection." (For more information, see CRS Report R42659, The Posse Comitatus Act and Related Matters: The Use of the Military to Execute Civilian Law .)

Can the Department of Defense build the border wall?90

President Trump has contemplated proclaiming a national emergency pursuant to the National Emergencies Act (NEA) in order to fund a physical barrier at the southern border with Mexico using DOD funds. Declaring a national emergency could permit the President to invoke two statutes that could potentially permit either the use of unobligated military construction funds or the reprogramming of Army Corps of Engineers civil works funds.

Military Construction Funds . Upon declaring a national emergency pursuant to the NEA, the President may invoke the emergency military construction authority in 10 U.S.C. §2808. Originally enacted in 1982, Section 2808 provides that upon the President's declaration of a national emergency "that requires use of the armed forces," the Secretary of Defense may "without regard to any other provision of law ... undertake military construction projects ... not otherwise authorized by law that are necessary to support such use of the armed forces." Section 2808 limits the funds available for emergency military construction to "the total amount of funds that have been appropriated for military construction" that have not been obligated. With certain limited exceptions, Presidents have generally invoked this authority in connection with construction at military bases in foreign countries.

The circumstances in which the Section 2808 authority could be used to deploy barriers along the border appears to be a question of first impression, and one that is likely to be vigorously litigated. It appears that three interpretive questions could impede such use. First , there may be dispute about whether conditions at the border provide a sufficient factual basis to invoke Section 2808. Before the Section 2808 authority may be used, the President must determine that the relevant construction project would address a problem qualifying as a national emergency "that requires use of the armed forces." Moreover, the construction project must be "necessary to support such use of the armed forces." Second , if the above criteria are met, then an assessment would be necessary to determine whether construction of a border wall qualifies as a "military construction project" within the meaning of Section 2808. Title 10 defines the term "military construction project" for purposes of Section 2808 to include "military construction work," and defines "military construction" as "includ[ing] any construction, development, conversion, or extension of any kind carried out with respect to a military installation ... or any acquisition of land or construction of a defense access road." Because there does not appear to be case law addressing the scope of this definition of "military construction," the question of whether Section 2808 extends to the construction of a border wall appears to be an issue of first impression. Third , if a court were to review the invocation of Section 2808 to construct a border wall, its analysis might be informed by the location of particular barriers. It is possible that a border wall will be "necessary to support such use of the armed forces" at some locations but not others. Likewise, the construction of a wall over certain areas of the border—specifically, areas that directly abut military bases—would appear to have a greater claim to qualifying as construction undertaken "with respect to a military installation" than construction at other locations along the border.

Army Corp s of Engineers Funds. Section 2293 of Title 33, U.S. Code, authorizes the Secretary of the Army to terminate or defer Army civil works projects that are "not essential to the national defense" upon a declaration of a national emergency under the NEA "that requires or may require the use of the Armed Forces." The Secretary of the Army can then use the funds otherwise allocated to those projects for "authorized civil works, military construction, and civil defense projects that are essential to the national defense." As with Section 2808, it is unsettled whether the construction of a border wall would qualify as an "authorized civil works, military construction, [or] civil defense project[]." This uncertainty is compounded by the difficulty of determining whether the qualifier "authorized" modifies all of the items enumerated in Section 2293 or only the term "civil works." If the term "authorized" modifies all of the items in the relevant sentence, then Section 2293 arguably would not allow the President to construct a border wall if that term is read to mean specifically authorized by Congress.

Courts have traditionally afforded significant deference to executive claims of military necessity, deference which may stand as a substantial obstacle to legal challenges to any factual findings supporting the invocation of either Section 2808 or Section 2293. (For more information, see CRS Legal Sidebar LSB10242, Can the Department of Defense Build the Border Wall? )

What authority does the President have to use military personnel to support border security operations?96

The President's authority to use military personnel to support border security operations depends on whether those personnel are active duty troops serving under Title 10, U.S. Code, or National Guard troops operating under Title 32, U.S. Code. Section 502 of Title 32, U.S. Code, provides the authority for the Secretary of the Army and the Secretary of the Air Force to call National Guard units to full-time duty under Title 32 status for training "or other duty in addition to" mandatory training. Section 502(f) "other duty" may include "homeland defense activities." Such activities are defined to mean activities:

undertaken for the military protection of the territory or domestic population of the United States, or of infrastructure or other assets of the United States determined by the Secretary of Defense as being critical to national security, from a threat or aggression against the United States.

Chapter 15 of Title 10, U.S. Code—Military Support for Civilian Law Enforcement Agencies—provides general legislative authority for the Armed Forces to provide certain types of support to federal, state, and local law enforcement agencies, particularly in counterdrug, counterterrorism, and counter-transnational crime efforts. Such authorities permit the military to provide certain types of support for border security and immigration control operations. These authorities permit DOD to share information collected during the normal course of military operations, loan equipment and facilities, provide expert advice and training, and maintain and operate equipment.

To assist federal law enforcement agencies, military personnel may maintain and operate equipment in conjunction with counterterrorism operations or the enforcement of counterdrug laws, immigration laws, and customs requirements. To assist federal law enforcement agencies in counter drug operations, military personnel may, among other things, engage in the "[c]onstruction of roads and fences and installation of lighting to block drug smuggling corridors across international boundaries of the United States." Chapter 15 support authority "does not include or permit direct participation by a member of the Army, Navy, Air Force, or Marine Corps in a search, seizure, arrest, or other similar activity unless participation in such activity by such member is otherwise authorized by law."

One other possible source of authority is Section 1059 of the National Defense Authorization Act of 2016. That provision authorized the Secretary of Defense, with the concurrence of the Secretary of Homeland Security, to spend up to $75 million of 2016 DOD funds to provide assistance to CBP "for purposes of increasing ongoing efforts to secure the southern land border of the United States." The types of assistance permitted include "deployment of members and units of the regular and reserve components of the Armed Forces to the southern land border of the United States" along with "manned aircraft, unmanned aerial surveillance systems, and ground-based surveillance systems to support continuous surveillance of the southern land border of the United States" and "[i]ntelligence analysis support." (For more information, see CRS Legal Sidebar LSB10121, The President's Authority to Use the National Guard or the Armed Forces to Secure the Border .)

What authority does the President have to cut off aid to the Northern Triangle countries?111

Congress provided the President with significant discretion to reduce foreign assistance to Central America in FY2018. In the Consolidated Appropriations Act, 2018 ( P.L. 115-141 ), Congress designated "up to" $615 million for the Central America strategy, effectively placing a ceiling on aid but no floor. The act also requires the State Department to withhold 75% of assistance for the central governments of El Salvador, Guatemala, and Honduras until the Secretary of State certifies that those governments are addressing a variety of congressional concerns, including improving border security, combating corruption, and protecting human rights. The act empowers the Secretary of State to suspend and reprogram aid if he determines the governments have made "insufficient progress" in addressing the legislative requirements. The President's ability to modify assistance to the Northern Triangle countries for FY2019 will depend on provisions Congress may include in future appropriations legislation.

What actions has the President taken to restrict eligibility for asylum?112

Citing constitutional and statutory authority, the President issued a presidential proclamation on November 9, 2018, to immediately suspend the entry into the United States of aliens who cross the Southwest border between ports of entry. The proclamation indicates that its entry suspension provisions will expire 90 days after its issuance date or on the date that the United States and Mexico reach a bilateral agreement that allows for the removal of asylum seekers to Mexico, whichever is earlier. Also on November 9, 2018, DHS and DOJ jointly issued an interim final rule to bar an alien who enters the United States in contravention of the proclamation from eligibility for asylum. Under the rule, an asylum officer is to make a negative credible fear determination in the case of such an alien. (For more information, see CRS Insight IN10993, Presidential Proclamation on Unlawful Border Crossers and Asylum .)

The proclamation and the rule are being challenged in federal court. As of the date of this report, the changes to the asylum process set forth in the rule are not in effect. (For more information, see CRS Legal Sidebar LSB10222, District Court Temporarily Blocks Implementation of Asylum Restrictions on Unlawful Entrants at the Southern Border .)

For more information on relevant topics and issues Congress may consider, see the following reports or contact the authors:

CRS Report R44812, U.S. Strategy for Engagement in Central America: Policy Issues for Congress , by Peter J. Meyer

CRS Report R45120, Latin America and the Caribbean: Issues in the 115th Congress , coordinated by Mark P. Sullivan (see "Migration Issues" section)

CRS In Focus IF10215, Mexico's Immigration Control Efforts , by Clare Ribando Seelke and Carla Y. Davis-Castro

CRS Report R43616, El Salvador: Background and U.S. Relations , by Clare Ribando Seelke

CRS Report RL34027, Honduras: Background and U.S. Relations , by Peter J. Meyer

CRS Report R42580, Guatemala: Political and Socioeconomic Conditions and U.S. Relations , by Maureen Taft-Morales

CRS Report R45266, The Trump Administration's "Zero Tolerance" Immigration Enforcement Policy , by William A. Kandel

CRS Insight IN10993, Presidential Proclamation on Unlawful Border Crossers and Asylum , by Andorra Bruno

CRS Report RS20844, Temporary Protected Status: Overview and Current Issues , by Jill H. Wilson

CRS Legal Sidebar LSB10150, An Overview of U.S. Immigration Laws Regulating the Admission and Exclusion of Aliens at the Border , by Hillel R. Smith

CRS Report R42138, Border Security: Immigration Enforcement Between Ports of Entry , coordinated by Audrey Singer

CRS Report R43356, Border Security: Immigration Inspections at Ports of Entry , by Audrey Singer

CRS Report R43599, Unaccompanied Alien Children: An Overview , by William A. Kandel

CRS Legal Sidebar LSB10121, The President's Authority to Use the National Guard or the Armed Forces to Secure the Border , by Jennifer K. Elsea


Consumer Credit Reporting, Credit Bureaus, Credit Scoring, and Related Policy Issues

Summary: The consumer data industry—generally referred to as credit reporting agencies or credit bureaus—collects and subsequently provides information to firms about the behavior of consumers when they participate in various financial transactions. Firms use consumer information to screen for the risk that consumers will engage in behaviors that are costly for businesses. For example, lenders rely upon credit reports and scores to determine the likelihood that prospective borrowers will repay their loans. Insured depository institutions (i.e., banks and credit unions) rely on consumer data service providers to determine whether to make available checking accounts or loans to individuals. Some insurance companies use consumer data to determine what insurance products to make available and to set policy premiums. Some payday lenders use data regarding the management of checking accounts and payment of telecommunications and utility bills to determine the likelihood of failure to repay small-dollar cash advances. Merchants rely on the consumer data industry to determine whether to approve payment by check or electronic payment card. Employers may use consumer data information to screen prospective employees to determine the likelihood of fraudulent behavior. In short, numerous firms rely upon consumer data to identify and evaluate potential risks a consumer may pose before entering into a financial relationship with that consumer.

Summary: Greater reliance by firms on consumer data significantly affects—and potentially limits—consumer access to financial products or opportunities. Specifically, negative or derogatory information, such as late payments, loan defaults, and multiple overdrafts, may stay on consumer reports for several years and lead firms to deny a consumer access to credit, a financial product, or a job opportunity. Having a nonexistent, insufficient, or a stale credit history may also prevent credit access.

Summary: Accordingly, various policy issues have been raised about the consumer data industry, most notably including the following:

Summary: How to address inaccurate or disputed consumer data provided in consumer data reports; How long negative or derogatory information should remain in consumer data reports; How to address differences in billing and collection practices that can adversely affect consumer data reports, an issue of particular concern with medical billing practices; How to ensure that consumers are aware of their rights and how to exercise them in the event of a consumer data dispute; Whether uses of consumer data reports outside of the financial services, such as for employment decisions, adversely affect consumers and should be limited; Whether the use of alternative consumer data or newer versions of credit scores may increase accuracy and credit access; and How to address data protection and security issues in consumer data reporting.

Summary: Congress has shown continuing interest in these and other policy questions surrounding the consumer data industry, particularly in its regulation and whether such regulation currently provides sufficient protection to consumers. In the 116th Congress, legislation has been introduced to address many of these concerns. The Comprehensive Credit Reporting Reform Act of 2019 (CCRRA) and the Protecting Innocent Consumers Affected by a Shutdown Act, both released as drafts by Chairwoman Maxine Waters, would amend the Fair Credit Reporting Act (FCRA) and create additional laws to address these concerns. Other relevant bills introduced in the 116th Congress address topics such as credit reporting and cybersecurity (H.R. 331 and H.R. 1282); credit information used for auto insurance (H.R. 1756); and federal employees affected by the shutdown (H.R. 935, H.R. 799, H.R. 1286, and S. 535).

The consumer data industry collects and subsequently provides information to firms about behavior when consumers conduct various financial transactions. Firms use this data to determine whether consumers have engaged i n behaviors that could be costly or beneficial to the firms. For example, lenders rely upon credit reports and scoring systems to determine the likelihood that prospective borrowers will repay their loans. The data may also be used to predict consumer behaviors that would financially benefit firms.

Although the general public is likely to be more familiar with the use of credit reporting and scoring to qualify for mortgage and other consumer loans, the scope of consumer data use is much broader. Insured depository institutions (i.e., banks and credit unions) rely on consumer data service providers to determine whether to make checking accounts or loans available to individuals. Insurance companies use consumer data to determine what insurance products to make available and to set policy premiums. Some payday lenders use data regarding the management of checking accounts and payment of telecommunications bills to determine the likelihood that a consumer will fail to repay small-dollar cash advances. Merchants rely on the consumer data industry to determine whether to approve payment by check or electronic payment card. Employers may use consumer data information to screen prospective employees to determine, for example, the likelihood of fraudulent behavior. In short, numerous firms rely upon consumer data to identify and evaluate the risks associated with entering into financial relationships or transactions with consumers.

Greater reliance by firms on consumer data significantly affects consumer access to financial products or opportunities. For example, negative or derogatory information, such as multiple overdrafts, involuntary account closures, loan defaults, and fraud incidents, may influence a lender to deny a consumer access to credit. Further, such information may stay on a consumer's reports for several years. The inclusion of negative information may be particularly limiting to consumers under circumstances in which such information is inaccurate or needs to be updated to reflect more current and possibly more favorable financial situations. Furthermore, consumers may find the process of making corrections to consumer data reports to be time-consuming, complex, and perhaps ineffective. The exclusion of more favorable information, such as the timely repayment of noncredit obligations, from standard credit reporting or scoring models may also limit credit access.

This report first provides background information on the consumer data industry and various specialty areas. The report examines one prominent specialty area—consumer scoring—and describes various factors used to calculate credit scores. Next, the report provides a general description of the current regulatory framework of the consumer data industry. Finally, the report discusses selected policy issues pertaining to consumer data reports. Specifically, the report addresses policy issues concerning inaccurate or disputed consumer data provided in consumer data reports; how long negative or derogatory information should remain in consumer data reports; differences in billing and collection practices that can adversely affect consumer data reports, an issue of particular concern with medical billing practices; consumer's rights; whether uses of credit bureau data outside of the financial services, such as for employment decisions, adversely affect consumers and should be limited; whether the use of alternative consumer data or newer versions of credit scores may increase accuracy and credit access; and how to address data protection and security issues in consumer data reporting. For each policy issue, the report addresses corresponding legislative and regulatory developments.

In the 116 th Congress, credit reporting and the consumer data industry is a topic of interest. On February 26, 2019, the House Financial Services Committee held a hearing on the consumer data industry, entitled, " Who ' s Keeping Score? Holding Credit Bureaus Accountable and Repairing a Broken System ." House Financial Services Committee Chairwoman Maxine Waters has also released two draft bills: the Comprehensive Credit Reporting Reform Act of 2019 (CCRRA) and the Protecting Innocent Consumers Affected by a Shutdown Act, which, if enacted, would address many of the policy issues discussed in this report. Where relevant, the report discusses the approach these bills would take to addressing the policy issues examined.

The Consumer Data Industry and Specialty Services

This section provides background information on the consumer data industry, which generally includes credit reporting agencies (CRAs), also referred to as credit bureaus (both terms are used interchangeably in this report). This section also provides background on credit scoring, a specialty service the industry provides, including a summary of the key factors known to affect credit scores.

According to the Fair Credit Reporting Act (FCRA), which generally regulates the business of credit reporting, CRAs are firms that prepare consumer reports based upon individuals' financial transactions history data. Such data may include historical information about credit repayment, tenant payment, employment, insurance claims, arrests, bankruptcies, and check writing and account management. Consumer files, however, do not contain information on consumer income or assets. Consumer reports generally may not include information on items such as race or ethnicity, religious or political preference, or medical history.

Equifax, Experian, and TransUnion are the three largest nationwide providers of credit reports. Other CRAs provide a variety of specialized consumer reporting services. Some specialty CRAs collect data regarding payment for phone, utilities (e.g., electric, gas, water), and telecommunication (e.g., cable) services. Utility and telecommunication service providers use the reports to verify the identity of customers and determine downpayment requirements for new customers. Property management companies and rent payment services may report to CRAs that specialize in collecting rent payment data for tenant and employment screening. Some CRAs specialize in consumer reporting for the underbanked, near prime, and subprime consumer segments, including consumers with minimal recorded data. Some CRAs specialize in debt collection (recovering past due funds) and fraud verification data.

Firms that use consumer reports may also report information to CRAs, thus serving as furnishers . A tradeline is an account attached to a particular consumer that is reported to a CRA by a furnisher. A tradeline serves as a record of the transaction (payment) activity associated with the account. Furnishing tradelines is voluntary, and furnishers are not required to submit tradelines to all CRAs. Furnishers also have different business models and policies, resulting in different reporting practices. Some furnishers may report all unpaid customer obligations that were deemed uncollectible and written off their balance sheets; some report when money balances owed surpass minimum threshold levels; some report only the principal balances owed minus the penalties and fees; and others may report all monies owed. Furnishers also have discretion over the types of obligations they wish to report.

Benefits to users of consumer data increase as more individual companies choose to participate as furnishers, but furnishers do incur costs to report data. To become furnishers, firms must be approved and comply with the policies of a CRA, such as fee registration requirements. The transfer of consumer data involves security risks, and many CRAs have adopted standardized reporting formats and requirements approved by the Consumer Data Industry Association (CDIA) for transferring data. Furnishers must be able to comply with industry data transfer requirements or some CRAs are unlikely to accept their data. Compliance may require investing in technology compatible with the computer systems of a CRA. Compliance costs may be more burdensome for smaller firms, causing some to choose not to be furnishers. In addition, entities that elect to become furnishers face legal obligations under the FCRA. The FCRA requires furnishers to report accurate and complete information as well as to investigate consumer disputes. Hence, reporting obligations could possibly, under some circumstances, result in legal costs, which may also influence a firm's decision to become a furnisher.

Business models and policies of CRAs are also different. Different CRAs may collect the same information on the same individuals but adopt different conventions for storing the information. One CRA may report a delinquent debt obligation separately from the penalties and fees whereas another CRA may choose to combine both items into one entry. Consequently, consumer reports obtained from different CRAs on the same consumer are likely to differ due to different policies adopted by furnishers, CRAs, or both.

A consumer score is a (numeric) metric that can be used to predict a variety of financial behaviors. Consumer credit scores are prepared for lenders to determine, for example, the likelihood of loan default. Other consumer scores can be prepared to predict the likelihood of filing an insurance claim, overdrawing a bank account, failing to pay a utility bill, committing fraud, or a host of other adverse financial behaviors. Consumer scores are typically computed using the information obtained from one or more consumer reports. Rather than maintaining a repository of credit records, some firms are primarily engaged in the production of consumer scores. Hence, consumer scoring can be considered a specialty service in the consumer data industry. For example, if a user of a consumer report subsequently wants a consumer score, it may be charged an additional fee.

Given the variety of different financial behaviors to predict, there are many consumer scores that can be calculated. Consumer scores for the same individual and behavior calculated by different scoring firms are also likely to differ. Consumer scoring firms may have purchased consumer information from different CRAs, which have their own policies for storing and reporting information. Each scoring firm has its own proprietary statistical model(s), meaning that each firm decides what consumer information should be included and excluded from calculations. Each firm can choose its own weighting algorithms. For example, included information can be equally weighted, or heavier weights can be placed on more recent information or on information otherwise deemed more pertinent. Sometimes the consumer scoring firm selects the appropriate weighting scheme, and sometimes the requestor of a consumer score may provide instructions to the preparer. Hence, consumers may not see the actual scores used until after the decisionmaking firms release them, particularly in cases when customized scores were requested and used in the decisionmaking process.

Existing Consumer Protections and Regulation of CRAs

This section provides a brief overview of existing consumer protections and regulation related to credit reporting.

As noted, the Fair Credit Reporting Act, enacted in 1970, is the main statute regulating the credit reporting industry. The FCRA requires "that consumer reporting agencies adopt reasonable procedures for meeting the needs of commerce for consumer credit, personnel, insurance, and other information in a manner which is fair and equitable to the consumer, with regard to the confidentiality, accuracy, relevancy, and proper utilization of such information." The FCRA establishes consumers' rights in relation to their credit reports, as well as permissible uses of credit reports. It also imposes certain responsibilities on those who collect, furnish, and use the information contained in consumers' credit reports.

The FCRA includes consumer protection provisions. Under the FCRA, consumers must be told when their information from a CRA has been used after an adverse action (generally a denial of credit) has occurred, and disclosure of that information must be made free of charge. Consumers have a right to one free credit report every year (from each of the three largest nationwide credit reporting providers) even in the absence of an adverse action (e.g., credit denial). Consumers also have the right to dispute inaccurate or incomplete information in their report. After a consumer alerts a CRA of such a discrepancy, the CRA must investigate and correct errors, usually within 30 days. The FCRA also limits the length of time negative information may remain on reports. Negative collection tradelines typically stay on credit reports for 7 years, even if the consumer pays in full the item in collection; a tradeline associated with a personal bankruptcy stays on a credit report for 10 years.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) established the Bureau of Consumer Financial Protection (CFPB), consolidating many federal consumer financial protection powers from other federal agencies. The CFPB has rulemaking and enforcement authorities over all CRAs for certain consumer protection laws; it has supervisory authority, or the authority to conduct examinations, over the larger CRAs. In July 2012, the CFPB announced that it would supervise CRAs with $7 million or more in annual receipts, which included 30 firms representing approximately 94% of the market.

The CFPB conducts examinations of the CRAs, reviewing procedures and operating systems regarding the management of consumer data and enforcing applicable laws. In 2017, the CFPB released a report of its supervisory work in the credit reporting system. The report discusses the CFPB's efforts to work with credit bureaus and financial firms to improve credit reporting in three specific areas: data accuracy, dispute handling and resolution, and furnisher reporting. As the report describes, credit bureaus and financial firms have developed data governance and quality control programs to monitor data accuracy through working with the CFPB. In addition, the CFPB has encouraged credit bureaus to improve their dispute and resolution processes, including making it easier and more informative for consumers.

Recently, Congress has also been interested in improving consumer protections in the credit reporting system, particularly in response to the 2017 Equifax data breach, which exposed personal information of millions of consumers. The Economic Growth, Regulatory Relief, and Consumer Protection Act ( P.L. 115-174 ), which was enacted in 2018, established new consumer protections relating to credit reporting, including the right to a free credit freeze. Credit freezes allow consumers to stop new credit from being opened in their name, to protect themselves from fraud and identity theft.

This section examines selected policy issues pertaining to the use of credit reports and scores in consumer lending decisions. For each policy issue, the report highlights recent legislative and regulatory developments and discusses selected legislative proposals from the 116 th Congress that would address the issue.

The accuracy of consumer information in consumer data reports has been an ongoing policy concern. Inaccurate information in a credit report may limit a consumer's access to credit in some cases or increase the costs to the consumer of obtaining credit in others. In 2012, the Federal Trade Commission (FTC) reported that 26% of participants in a survey of credit report accuracy were able to identify at least one potentially material error on at least one of approximately three different credit reports prepared using their consumer information. After the reports were corrected, 13% of participants in the FTC study saw one or more of their credit scores increase. For those who saw an increase, over 40% of their scores rose by more than 20 points, which could increase the likelihood that the consumer would be offered less expensive credit terms.

Credit reporting inaccuracies may occur for various reasons. Consumers may inadvertently provide inaccurate data when applying for financial services. Furnishers may inadvertently input inaccurate information into their databases. Matching information to the proper individual poses challenges, such as in cases when multiple individuals have similar names and spellings. In some cases, the information may be properly matched, but the individual could be a victim of fraud or identity theft.

The predictive power of consumer data, or the ability to accurately predict a consumer's likelihood to default on a loan, would be enhanced to the extent that consumer tradelines are regularly updated with correct and current information. As mentioned in the previous section, the CFPB has recently encouraged credit bureaus and financial firms to improve data accuracy in credit reporting. For example, since 2014, the CFPB has required the largest consumer reporting firms to provide standardized accuracy reports on a regular basis. The accuracy reports must specify the frequency that consumers dispute information, list furnishers and industries with the most disputes, and provide dispute resolution information. According to the CFPB, the top 100 furnishers provide 76% of tradeline information to the largest nationwide CRAs, and the furnishers regularly update the account status of reported tradelines. In addition, the larger CRAs have also made improvements to the communication tool they use to facilitate the dispute resolution process between consumers and furnishers. Further, effective July 1, 2017, the CRAs enhanced public record data standards for the collection and timely updating of civil judgements and tax liens. Public record data must contain minimum identifying information (i.e., name, address, and Social Security number or date of birth) and must be updated at least every 90 days; otherwise, the tax lien and civil judgment information will no longer be reported. The accuracy of credit reports, nonetheless, ultimately depends upon consumers to monitor and dispute any discrepancies.

If enacted, Chairwoman Waters' draft bill—the Comprehensive Credit Reporting Reform Act of 2019 (CCRRA)—would address some concerns relating to inaccurate or disputed data by establishing new consumer rights around the dispute process. These rights would include guaranteeing consumers more information about dispute investigations and granting consumers the right to appeal disputes to credit bureaus, thus formalizing the process. The CCRRA also would explicitly establish consumers' right to seek injunctive relief, a legal remedy where a court requires future behavior change (e.g., removing adverse information from a credit record). Lastly, the bill would provide credit restoration to consumers who are the victims of some predatory activities, such as deceptive lender acts or discrimination.

Length of Time to Retain Negative Information

Policymakers have also considered the appropriate length of time negative information should be allowed to remain on a credit report. Negative information generally refers to delinquencies or defaults, which typically remain on credit reports for seven years. Negative information in a credit report often results in a consumer appearing to pose a greater risk of default or other negative behavior. This may lead a consumer to either pay more for financial services or, in some cases, be denied access to credit entirely. Limiting a consumer's access to certain financial services, such as depository checking accounts or lower cost loans, may disproportionately affect the consumer's cost of engaging in financial transactions. Similarly, the use of consumer data reports by potential employers, discussed further below, may limit job opportunities that could arguably help applicants overcome financial challenges and thereby improve their credit histories.

Retaining negative information on credit reports for an extended period of time may pose benefits and detriments. On the one hand, under circumstances in which the underlying information in a consumer data report is inaccurate or out of date, consumers may improperly be considered to pose a greater risk to a firm. In that case, the consumer may be offered costlier credit options (or even face denials of credit) that do not accurately reflect the consumer's actual risk of default. In other cases, consumers also may unfairly be considered to pose a greater risk now due to circumstances in the past that they have since overcome. On the other hand, the longer information remains on the credit report arguably allows lenders to see long-term trends that may be helpful for distinguishing between a rare occurrence and a consistent pattern in a consumer's behavior. Shorter or insufficient periods of time in which negative tradelines appear on consumer reports may also compromise the ability to compute reliable scores. If lenders view credit reports and scores as unreliable due to premature removal of negative information, they could increase downpayment requirements across the board for all credit applicants or reduce loan amounts. In short, lenders who are uncertain about data reliability might adopt stricter underwriting and lending policies. In addition to restricting credit access generally, this could reduce competition by allowing lenders with an established relationship and more information on a consumer to provide more favorable terms to that consumer than other companies. In addition, the Association of Certified Fraud Examiners (ACFE) found that poor credit can signal criminal activity, and earlier removal of negative information may make it more difficult for an organization to detect fraud, which may be particularly costly for small businesses and nonprofit organizations.

Many preparers and users of credit scores have adopted weighting schemes that place less weight on older information in a consumer data report. Maintaining longer (rather than shorter) durations of negative tradelines on reports allows preparers to make greater use of variable-weighted algorithms to calculate scores, which may be useful when the importance of a weight needs to be modified over time. In addressing this policy issue, the CCRRA would shorten the time period that adverse information could remain on a person's credit report by three years (such that it remains on the report for a total of four years), among other things.

Inconsistent Billing and Reporting Practices: Medical Tradelines

Another policy issue that often arises in connection with credit reporting is that different holders of consumer debt bill differently and report to the CRAs differently. Inconsistent reporting practices result in variation of the timing with which unpaid debts appear on consumer reports. For example, medical providers may assign unpaid bills to debt collectors or sell outstanding debts to debt buyers. Some medical providers may assign or sell the debt after 60 days, but some may do so after 30 days (by comparison, most bank credit card delinquencies are assigned or sold after 180 days). Some firms may turn obligations over to collections as a tool to encourage consumers to settle unpaid balances, blurring the distinction between billing and collecting policies. Debt collectors or buyers subsequently furnish negative information to CRAs, causing tradeline accounts to appear on consumer reports.

The CFPB used a random sample of approximately 5 million consumers as of December 2012 to determine what types of tradeline accounts were reported most frequently and the amounts. The CFPB found that approximately 33% of credit reports surveyed had collection tradelines, and approximately 52% of those collection tradelines were related to medical collections. After medical obligations, the CFPB found that the remaining collection tradelines of significant relevance were associated with unclassified debts (17.3%), cable or cellular bills (8.2%), utilities (7.3%), and retail stores (7.2%). All other categories of collectible tradelines were approximately 2% or less of the survey. For 85% of the respondents, the amounts owed for medical debt were for less than $1,000. In short, more than half of collection tradelines were associated with medical debt, and they were for relatively small amounts. Specifically, the median amount owed for the medical collection tradelines was $207, and 75% of all medical collection tradelines were under $490.

One form of consumer debt—medical debt—is most often disputed by consumers and raises specific policy issues related to inconsistent billing and reporting practices. According to the CFPB study, consumers are unlikely to know when and how much various medical services cost in advance, particularly those associated with accidents and emergencies. People often have difficulty understanding co-pays and health insurance deductibles. Consequently, consumers may delay paying medical obligations as they either assume their insurance companies will pay or attempt to figure out why they have been billed, which often results in medical debt appearing unpaid on credit reports.

Regulators and industry have taken actions that may reduce medical tradelines and their associated negative effects on consumer credit data. On December 31, 2014, the Internal Revenue Service (IRS) announced a final rule requiring the separation of billing and collection policies of nonprofit hospitals. Under the rule, hospitals that have or are pursuing tax-exempt status are required to make reasonable efforts to determine whether their patients are eligible for financial assistance before engaging in "extraordinary collection actions," which may include turning a debt over to a collection agency (thus creating a medical tradeline) or garnishing wages. In short, tax-exempt hospitals must allow patients 120 days from the date of the first billing statement to pay the obligation before initiating collection procedures. The IRS rule only impacts nonprofit hospitals, but, on September 15, 2017, the three major credit reporting agencies—Experian, Equifax, and TransUnion—established a 180-day (6 month) waiting period before posting a medical collection of any type on a consumer credit report. In addition, P.L. 115-174 , Section 302, amends the FCRA to provide credit reporting protections for veterans as follows:

CRAs must exclude certain medical debt incurred by a veteran from his or her credit report if the hospital care or medical services relating to the debt predates the credit report by less than one year. CRAs must remove from the credit report a veteran's fully paid or settled medical debt previously characterized as delinquent, charged off, or in collection. CRAs must establish a dispute process and verification procedures for veterans' medical debt. Active duty military personnel receive free credit monitoring.

The CCRRA would impose restrictions on the appearance of medical collections on consumer credit reports, codifying the CRA's 2017 180-day rule. It would also require expedited removal of all fully repaid or settled debts, including medical collections.

Consumer Rights in the Credit Reporting System

Consumers sometimes find it difficult to advocate for themselves when credit reporting issues arise because they are not aware of their rights and how to exercise them. According to a CFPB report, some consumers are confused about what credit reports and scores are, find it challenging to obtain credit reports and scores, and struggle to understand the contents of their credit reports. The CFPB receives more credit reporting complaints than complaints in any other industry it regulates. Currently, the CFPB provides financial education resources on its website to help educate consumers about their rights regarding consumer reporting. The credit bureaus' websites also provide information about how to dispute inaccurate information, and consumers can contact them by phone or mail.

The CCRRA proposes that CRAs provide free credit scores and explanations of those scores to consumers in their annual free credit report. In addition, consumers would be entitled to these free credit reports at other times, for example, whenever they apply for a new mortgage, auto loan, or student loan, or if a consumer's identity is stolen. The report and score used to make underwriting decisions in connection with these events would be provided to the consumer. The CCRRA also would direct the credit bureaus to give consumers more information on dispute rights, and it would require hard inquires to be limited for a longer 120-day shopping window for certain consumer credit products (as described in the box "Some Factors Frequently Used to Calculate Credit Scores" above).

Appropriate Purposes for Using Credit Bureau Data: Employment Decisions

Policy questions exist regarding the appropriate uses of credit bureau data, particularly for uses outside of extending credit to consumers. For example, credit information can be used for employment decisions. According to the Society for Human Resource Management (a human resources professional society), in 2012, almost half of surveyed organizations in their membership used credit background checks on some of their job applications. Employers report that they use this information to reduce the likelihood of employee theft or embezzlement and to reduce legal liability for negligent hiring. To comply with the FCRA, employers must inform an applicant that his or her credit report is a part of a hiring decision, and acquire the applicant's written permission to obtain the report. If an applicant is denied a job, or if the employer takes another adverse action due to information on a credit report, then the applicant must be given a copy of the report and a summary of their FCRA rights.

Whether the use of credit information in employment decisions unnecessarily harms prospective job applicants is debatable. For some occupations, past financial difficulties may increase the likelihood, for example, that the employee could be bribed or compromised in some way; however, this information may not be essential for success in all occupations. Currently, many states limit employers' use of credit information for employment decisions. The CCRRA would ban the use of credit information for employment decisions, unless required by law or for a national security investigation.

Consumers with Limited Credit Histories and Use of Alternative Scoring Methods

The CFPB estimates that credit scores cannot be generated for approximately 20% of the U.S. population due to their limited credit histories. The CFPB distinguishes between different types of consumers with limited credit histories. One category of consumers, referred to as credit invisibles , have no credit record at the three largest credit bureaus and, thus, do not exist for the purposes of credit reporting. According to the CFPB, this group represents 11.0% of the U.S. adult population, or 26 million consumers. Another category of consumers do exist (have a credit record), but they still cannot be scored or are considered non scorable . Nonscorable consumers either have insufficient (short) histories or outdated (stale) histories. The insufficient and stale unscored groups, each containing more than 9 million individuals, collectively represent 8.3% of the U.S. adult population, or approximately 19 million consumers according to the CFPB. Younger adults may be part of the credit invisible or nonscorable population because they lack a sufficient credit history. As consumers get older, however, the problem of being credit invisible or belonging to the insufficient part of the nonscorable group typically declines, but may begin to reoccur after the age of 60. Older adults, who may have considerably reduced their credit usage, perhaps as they prepare to enter retirement years, may encounter the problem of having stale credit records. Because credit scoring models vary by firms, consumers that cannot be scored by some models might still have the ability to be scored by other models; thus, the state of being nonscorable may depend upon the credit reporting data records and scoring models used.

Borrowers with missing or impaired credit histories may be able to improve their ability to get reliable credit scores by using credit building loans, such as secured credit cards that require either security deposits as collateral for the amount of the line of credit or links to checking or savings accounts, thereby allowing lenders to recover funds if payments are missed. The security deposit is refunded if borrowers do not miss payments. Secured credit card lending can help borrowers build or repair their credit histories, assuming that the more favorable customer payment activity is reported to credit bureaus. In addition, the use of alternative credit scores may also help the credit invisibles because other types of consumer payment activity (discussed below) may be predictive in regard to how borrowers would manage credit. In short, options that increase the ability to calculate scores for the invisible or currently nonscoreable consumer groups could allow lenders to better determine the quantity and scope of financial relationships they can establish with such groups.

A lternative credit scoring models could potentially increase accuracy by including additional information beyond that which is traditionally included in a credit report. For example, some credit score models do not distinguish between unpaid and paid (resolved) tradelines. Most credit scores are calculated without utility and rent payments information. Arguably, including this information would benefit the credit scores for some individuals with limited or no credit histories, potentially increasing their access to—and lowering their costs of—credit. Conversely, information about medical debts has often been included in credit scores, but the unevenness in medical reporting, as previously discussed, and possibly the consumers' lack of choice in incurring medical debt raises questions about whether medical debt tradelines should be considered reliable predictors of creditworthiness or credit performance. For this reason, some newer versions of credit scoring apply less weight to medical debt. In short, developing credit scores with new information might allow lenders to find new creditworthy consumers.

Regulators and Congress have considered the potential for alternative credit scoring. In 2014, the Federal Housing Finance Agency (FHFA) directed Fannie Mae and Freddie Mac—the government-sponsored enterprises (GSEs) that purchase mortgages in the secondary market—to consider using more updated credit scoring models in their mortgage underwriting. Under P.L. 115-174 , FHFA is required to define, through rulemaking, the standards and criteria the GSEs will use for validating credit score models used when evaluating whether to purchase a residential mortgage. If enacted, the CCRRA would direct the CFPB to report to Congress on the impact of using nontraditional data on credit scoring.

Full implementation of newer versions of credit scoring models, however, may not occur quickly. In the mortgage market, upgrading automated underwriting systems is costly for the GSEs, FHA, and loan originators. Not all originators will choose to update their automated underwriting systems. Even if alternative credit scoring models were widely adopted, the credit score is not the only variable considered during the underwriting process. Just as several factors are included in the development of a credit score, a credit score is only one of several factors included in an automated underwriting model (also referred to as an underwriting scorecard). The debt-to-income ratio, for example, may still be an important variable for mortgage underwriting. Higher levels of medical and student loan debts may still affect mortgage underwriting decisions. Hence, the use of alternative credit scores may help some borrowers close to a threshold or borderline, yet still not translate into significant changes in credit access across the board.

Congressional interest in data protection and security in the consumer data industry has increased following the announcement, on September 7, 2017, of the Equifax cybersecurity breach that potentially revealed sensitive consumer data information for 143 million U.S. consumers. CRAs are subject to the data protection requirements of Section 501(b) of the Gramm-Leach-Bliley Act (GLBA). Section 501(b) requires the federal financial institution regulators to "establish appropriate standards for the financial institutions subject to their jurisdiction relating to administrative, technical, and physical safeguard—(1) to insure the security and confidentiality of consumer records and information; (2) to protect against any anticipated threats or hazards to the security or integrity of such records; and (3) to protect against unauthorized access or use of such records or information which could result in substantial harm or inconvenience to any customer."

The CFPB does not have the authority to prescribe regulations with regard to safeguarding the security and confidentiality of customer records. Instead, the FTC has the authority to enforce Section 501(b) as the federal functional regulator of nonbank financial institutions, including CRAs. The FTC has promulgated rules implementing the GLBA requirement. Because the FTC has little upfront supervisory or enforcement authority, the agency typically must rely upon its enforcement authority after an incident has occurred. In the 116 th Congress, bills such as H.R. 331 and H.R. 1282 would direct the FTC to ensure sufficient standards for safeguarding consumer information, including for the credit bureaus and data furnishers. In addition, in March 2019, a Government Accountability Office report became public that recommended actions for the FTC, the CFPB, and Congress to strengthen oversight of credit bureaus' data security.

Meanwhile, P.L. 115-174 , Section 301, requires credit bureaus to provide fraud alerts for consumer files for at least a year under certain circumstances. In addition, credit bureaus must provide consumers with one free freeze alert and one free unfreeze alert per year. The law also established further requirements to protect minors. Currently, many credit bureaus provide consumers services such as credit monitoring for identity theft victims. In general, credit bureaus charge fees for these services, paid for by either a consumer or private company after a data breach incident. The CCRRA would expand protections for identity theft victims, including the right to free credit monitoring and identity theft services. It would require the CFPB to create new regulations to define the parameters for these new consumer benefits, including how long they should be provided and what services should be included.