FAIR CREDIT REPORTING ACT
PURPOSE AND SCOPE 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
DEFINITIONS 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.
PERMISSIBLE PURPOSES FOR CONSUMER REPORTS Determining a consumer s eligibility for an account or a service Court Orders Prescreening Member s Permission
ADVERSE ACTION NOTICE 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 CONTENTS 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 applicable If 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
DON T BECOME A CRA! You can report your own transactions and experiences to others. Do not report information received from third parties to others.
NEGATIVE REPORT NOTICE 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.
NOTICE TO HOME LOAN APPLICANTS 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!
RISK BASED PRICING NOTICE Required when: A credit report is used A 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.
OBLIGATIONS OF FURNISHERS OF DATA Report correct information Correct and update information Establish policies and procedures to ensure accuracy Investigate disputes Report voluntary account closures Report correct delinquency dates Respond to ID Theft Notifications
FRAUD AND ACTIVE DUTY ALERTS Fraud Alerts: Initial period of 90 days, or an extended period lasting seven years. Active Duty Alerts: during the period of active duty.
RESPONDING TO 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.
ID THEFT RED FLAGS A policy and program is required Applies to consumer accounts Patterns, practices, or activities that indicate a possible risk of ID theft
PROGRAM REQUIREMENTS Risk-based Board approval Board and/or senior management involvement Training Service provider oversight Procedures
SPECIAL RULES FOR CARD ISSUERS Validate change of address requests: Required when a change-of-address notice and a new card request are received close together Issuer must validate address before issuing a new card
ADDRESS DISCREPANCIES 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.
PRESCREENING RULES 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
MEDICAL INFORMATION Certain rules and prohibitions apply to the acquisition and use of medical information contained in consumer reports
DISPOSAL OF RECORDS Credit unions must procedures for disposing of information contained in consumer reports. Follow Information Security Guidelines!