fair credit reporting act. serves the following principal purposes: to regulate the...
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Fair credit reporting Act
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Serves the following principal purposes: To regulate the
consumer-reporting industry.
To prohibit unfair actions from CRAs
To restrict the availability and use of consumer reports.
Applies to all types of credit
Purpose and Scope
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Consumer: An individual. Consumer Report
Any oral, written, or other communication of information by a CRA. Information about consumer’s creditworthiness, credit standing,
credit capacity, character, general reputation, personal characteristics, or mode of living.
Usedin establishing a consumer’s eligibility for any of the purposes permitted under the FCRA.
Consumer-Reporting Agency: Assembles consumer information for the purpose of furnishing consumer reports to third parties.
Definitions
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Determining a consumer’s eligibility for an account or a service
Court OrdersPrescreeningMember’s Permission
Permissible Purposes for Consumer Reports
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Required when the credit union denies or increases the cost of a member’s credit or deposit account based on third-party information.
May be combined with the ECOA notice
Adverse Action Notice
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If Information Was From a Credit Bureau Information: Credit bureau information was used The name, address and telephone of the credit bureau The credit bureau did not make the decision to take the adverse
action. Right to a free credit report Right to dispute credit report
Credit Score Information, if applicableIf Information Was From Other Outside Sources:
The nature of information or right to request it Source of the information (optional)
If the Information Was From the Credit Union’s Own Records: No obligation
Adverse Action Notice Contents
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You can report your own transactions and experiences to others.
Do not report information received from third parties to others.
Don’t Become a CRA!
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Provide when you report negative information about a debtor to a CRA.
Provide before or after reporting information.Use Model notices!Variety of delivery methods available.
Negative Report Notice
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Required if you use or obtain credit scores in connection with a mortgage loan.
Contents: The “Notice to Home Loan Applicants” The credit score(s) used in connection with the application Key factors that make up the credit score(s)
Provide as soon as “reasonably practical.” Required whether or not the loan is approved.Use the model notice!
Notice to Home Loan Applicants
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Required when:A credit report is usedA consumer’s loan terms are “materially less favorable”
Risk Based Pricing Notice
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Applies to consumer credit only.Use Model Forms!There are various methods to determine who gets a notice.Various Exceptions Apply.
Risk Based Pricing Notice
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Report correct informationCorrect and update informationEstablish policies and procedures to ensure accuracyInvestigate disputesReport voluntary account closuresReport correct delinquency datesRespond to ID Theft Notifications
Obligations of Furnishers of Data
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Fraud Alerts: Initial period of 90 days, or an extended period lasting seven years.
Active Duty Alerts: during the period of active duty.
Fraud and Active Duty Alerts
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Maintain procedures to form a “reasonable belief” of the true identity of a member.
Use telephone numbers if provided on the report.Follow procedures and document results before issuing new
credit or new access devices.
Responding to Alerts
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A policy and program is required
Applies to consumer accounts
Patterns, practices, or activities that indicate a possible risk of ID theft
ID Theft Red Flags
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Risk-basedBoard approvalBoard and/or senior management involvementTrainingService provider oversightProcedures
Program Requirements
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Validate change of address requests:Required when a change-of-address notice and a new card request are received close togetherIssuer must validate address before issuing a new card
Special rules for card issuers
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Credit unions must have procedures for responding to address discrepancy reports received from a CRA.
Credit unions must have procedures for providing updated addresses to a CRA.
Address Discrepancies
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Notice must accompany all prescreened offers: Long Notice Short Notice
Pre-screened Offers A credit union must make an offer of credit to all members who
pass the prescreening process. The offer can contain certain conditions
Record retention requirements apply
Prescreening Rules
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Certain rules and prohibitions apply to the acquisition and use of medical information contained in consumer reports
Medical Information
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Credit unions must procedures for disposing of information contained in consumer reports.
Follow Information Security Guidelines!
Disposal of Records