Fair credit reporting Act

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

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

Determining a consumer’s eligibility for an account or a service

Court OrdersPrescreeningMember’s Permission

Permissible Purposes for Consumer Reports

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

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

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!

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

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

Required when:A credit report is usedA consumer’s loan terms are “materially less favorable”

Risk Based Pricing Notice

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

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

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

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

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

Risk-basedBoard approvalBoard and/or senior management involvementTrainingService provider oversightProcedures

Program Requirements

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

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

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

Certain rules and prohibitions apply to the acquisition and use of medical information contained in consumer reports

Medical Information

Credit unions must procedures for disposing of information contained in consumer reports.

Follow Information Security Guidelines!

Disposal of Records