Fair Credit Reporting Act (FCRA)
What happens when a consumer disputes the accuracy or completeness of an item of information provided by the furnisher to the CRA? 1. Consumer sends dispute to CRA 2. CRA notifies and provides furnisher all relevant details 3. Furnisher conducts an investigation and reviews all relevant information 4. Furnisher provides investigation results to CRA. If error is found, it must be corrected 5. CRA reports outcome to the consumer and deletes or modifies information as necessary
1,2,3,4,5
Nationwide specialty consumer reporting agencies are consumer reporting agencies that compile and maintain special consumer files. What types of information do these agencies compile and maintain? Check all that apply. A. Medical records or payments B. Residential or tenant history C. Employment history D. Military service records
A, B, and C
Which of the following are permissible uses of credit reports? A. To help a bank decide whether to grant a loan B. To determine if an applicant is responsible and eligible for licensing C. To open a deposit account D. To join a community organization
A, B, and C
Penalties that can be assessed for violation of FCRA include (check all that apply) A. Civil penalties B. Fines up to $5,000 C. Prison sentences no more than 2 years D. Public apology to all affected
A, B, and C. Public apology is not one of the penalties
The FCRA prohibits financial institutions from printing the expiration date of a debit or credit card, or more than the last ___ digits of the account number on an electronic receipt. A. 5 B. 7 C. 4 D.3
A. 5 digits
For _____ years following the consumer's request for the extended alert, the consumer must be excluded from any list provided to any third-party contemplating offering credit or insurance where a request for such services was not initiated by the consumer (a preapproval offer) unless the consumer or the representative asks that such exclusion be rescinded. A. 5 B. 3 C. 2 D. 10
A. 5 years
A ___________ is triggered by a request from a consumer who asserts a good faith suspicion that he or she has been or his about to become the victim of identity theft A. Initial alert B. Active-duty alert C. Extended alert D. All-purpose alert
A. Initial alert
Tamara Harrison lost her wallet during her evening commute. As soon as she gets home, Tamara cancels her debit and credit cards. The customer service representative recommends that she contact a CRA to request an alert be placed in her file. What type of alert will be placed in Tamara's file? A. Initial fraud alert B. Extended alert C. Active duty alert D. All of the above
A. Initial fraud alert
How many days shall a CRA notify the consumer of a determination to terminate reinvestigation if deemed frivolous or irrelevant? A. No later than 5 business days after termination B. No later than 5 calendar days after termination C. No later than 10 business days after termination D. No later than 10 calendar days after termination
A. No later than 5 business days after termination
What must be included in the risk-based pricing notice? A. That the credit score was used in making the credit decision B. The range of possible credit scores under the model to generate the credit score C. Up to 4 key factors that adversely affected the credit score; if the number of inquiries is also a key factor, but not in the top four, then it should be listed as number five D. The date the credit score was created E. The name of the CRA or other entity that provided the credit score F. A statement that the credit score is: A number that takes into account information in a consumer report That the consumer's credit score was used to set the terms of credit offered That a credit score can change over time to reflect changes in the consumer's credit history
All of the above
Geoffrey Wiley submits an application with a bank for a teller position. On the application, he left the section permitting a background check blank. Can the bank still run a credit report on him? A. Yes, he applied, so as a potential employer the bank has the right B. No, even though he applied, without written permission the bank cannot pull his credit report C. No, even with written consent, potential employers are prohibited from pulling someone's credit report D. Maybe, it depends on whether he checked the "Yes" box on having committed a felony. If checked, the bank can pull the credit report. If not, the bank cannot pull the credit report
B.
The FCRA requires lenders that report negative information to a CRA to notify those consumers prior to, or not later than ____ days after providing the negative information to the CRA A. 20 B. 30 C. 90
B. 30
How long does an extended fraud alert stay in a consumer's credit report file? A. 3 years B. 7 years C. 5 years D. 10 years
B. 7 years
Nicole Chung receives a call from a local department store informing her that hackers have stolen her personal information. Following the advice of the department store representative, Nicole completes an identity theft report and submits it to the major credit reporting agencies. What type of alert will be placed in Nicole's file? A. Initial fraud alert B. Extended alert C. Active Duty alert D. All of the above
B. Extended alert
What is the name of the report which is typically used for employment purposes and contains information on the consumer's character, reputation, mode of living obtained from law enforcement, private investigators, and neighbors? A. Consumer Credit Report B. Investigative Credit Report C. FICO Credit Report
B. Investigative Credit Report
Which of the following is an example of an adverse action as defined by the FCRA? A. Michelle is offered a management position after her consumer report is reviewed B. Ace Insurance requires that the Block family pay a larger premium for their homeowner's insurance due to their credit history C. Sam's lender renews her Home Equity Line of Credit based on information on her and her husband's consumer report
B. Paying a higher premium due to credit history is an example of adverse action
Which of the following is not a nationwide CRA? A. Equifax B. TransReport C. Experian D. TransUnion
B. TransReport
A nationwide consumer reporting agency that compiles and maintains information on medical records and payments is known as: A. A medical reporting agency B. A payment and selling reporting agency C. A nationwide specialty consumer reporting agency
C.
Daphne Latoya filed a dispute with a CRA regarding information the bank disclosed. Per FCRA, the bank conducts an investigation and reviews all pertinent records from the bank as well as the information provided by the CRA. They discover no error was made; Daphne is filing her dispute in error. What next? A. Nothing, bank did their due diligence and conducted an investigation B. Bank should contact Daphne personally via phone or e-mail to tell her she is wrong and should verify her facts in the future C. Provide the results of the investigation to the CRA including any pertinent documentation D. Modify the information listed in the dispute because "the customer is always right"
C.
How long does an initial fraud alert stay in a consumer's credit report file? A. 2 years B. 3 years C. 1 year D. 5 years
C. 1 year. It lets anyone who views the report know that the consumer may be a victim of identity theft.
How long must an active duty alert stay in a consumer's file after requested? A. 10 months B. 5 months C. 12 months D. 24 months
C. 12 months
How long does an extended fraud alert remain in a consumer's file? A. 90 days B. 5 years C. 7 years D. 10 years
C. An extended fraud alert is designed to address more serious cases of identity theft, and may remain on the report for 7 years
When adverse action is taken against a consumer as a result of information sharing among affiliates, what additional steps beyond providing the notice must be taken? A. The institution must notify the consumer of his or her right to request the nature of the information leading to the adverse action, and that he or she has 60 days to exercise this right B. If the consumer does request the nature of the information, the affiliate must respond by disclosing the nature of the information within 30 days after receiving the request. C. Both A and B D. Neither A nor B
C. Both A and B
Which of the following is not an FCRA-compliant use of a credit report? A. Checking for judgments, liens, or bankruptcies B. Determining whether the consumer is employed C. Checking father-in-law's salary D. Verifying the accuracy of the consumer's address
C. Checking father-in-law's salary
The Federal Trade Commission enforces FCRA for: A. Banks B. Credit Unions C. Consumer reporting agencies D. All of the above
C. Consumer reporting agencies
At the end of ____ years, a credit bureau must not reveal any sort of bankruptcy filing or related information: A. 3 B. 5 C. 7 D. 10
D. 10 years
Any financial institution that regularly furnishes information to a nationwide consumer reporting agency must provide notice to a consumer, in writing, prior to providing any negative information regarding the consumer, or within ____ days after providing the information. A. 20 B. 45 C. 60 D. 30
D. 30 days
A credit bureau may provide a report to a financial institution for the following purposes (check all that apply): A. For consideration of a loan request B. For employment purpose C. For verifying information before opening a deposit account D. All of the above
D. All of the above
Nationwide CRAs must provide free credit report to consumers upon the consumer's request in the following instances: A. Once during any 12-month period B. If the request is made within 60 days following the consumer's receipt of an adverse action notice, where the agency is listed as the source of the information that led to the adverse action decision C. When the fraud alert (initial or extended) is placed in the file. A consumer may access an additional credit report once during any 12-month period D. All of the above
D. All of the above
Prescreened consumer reports may only contain the following: A. The name and address of the consumer B. An identifier that is not unique to the consumer and that the person uses solely for the purpose of verifying the identity of the consumer C. Other information pertaining to a consumer that does not identify the relationship or experience of the consumer with respect to a particular creditor or other entity D. All of the above
D. All of the above
What are some exceptions to the risk-based pricing notice requirement? A. When a consumer has applied for and receives specific material terms of credit B. Where the application is denied C. When creditors provide a credit score disclosure exception notice to borrowers D. All of the above
D. All of the above
What must the adverse action notice contain? A. A statement that the CRA did not make the adverse decision and is unable to provide specific reasons for the adverse action B. Notice of the consumer's right to obtain a free copy of the consumer report from the agency listed by requesting a copy within 60 days of receipt of the adverse action notice C. Notice of the consumer's right to dispute the accuracy or completeness of any information furnished by the agency listed D. All of the above
D. All of the above
Which of the following are examples of adverse action as defined by FCRA? A. Jerry is denied a management position due to information on his consumer report B. Adelle's lender refuses to renew he Home Equity Line of Credit based on information on her and her husband's consumer report C. Ace Insurance requires that the Morgan family pay a larger premium for their homeowner's insurance due to their credit history D. All of the above
D. All of the above
The purpose of FCRA is to ensure consumer reporting agencies adopt procedures to confirm the information they collect and dissemination is which of the following? A. Fair and equitable to the consumer B. Confidential C. Accurate and relevant D. Properly used E. All of the above
E. All of the above
Which of the following information can be obtained from a consumer's credit report? A. His or her employer B. Prior bankruptcies C. Debts and payments D. Previous names used E. All of the above
E. All of the above
After 7 years, the following must not appear in a consumer's file: A. Suits and judgments from the date of entry B. Paid tax liens from the date of payment C. Accounts placed for collection or charged to profit and loss D. Records of arrest, indictment, or conviction of a crime E. Any other adverse information F. All of the above
F. All of the above
T or F: The FCRA requires any entity to use a consumer report when making decisions on creditworthiness, credit capacity, character, or general reputation of consumers
FALSE
T or F: A credit report CANNOT be obtained to assist in the collection of an outstanding obligation
FALSE. It can
T or F: The FCRA requires all entities to use a consumer report when making financial decisions
FALSE. The FCRA does NOT require any entity to use a consumer report when making financial decisions.
T or F: The FCRA requires that all financial institutions obtain information from a credit bureau when considering any loan application
FALSE. The FCRA governs how the obtained information is used but does not require any business to use the services of a credit bureau.
T or F: Bankruptcy is one type of information that stays on a consumer's report permanently
FALSE. There is a time limit for release of bankruptcy information. After 10 years, a CRA is not permitted to reveal bankruptcy information
T or F: Until passage of the Fair Credit Reporting Act in 1970, federal laws regulating consumer privacy fell under mortgage fair lending laws
FALSE. There were no laws regulating consumer privacy before passage of the FCRA in 1970.
This type of consumer report includes information about a consumer's character, reputation, mode of living, etc. They also may contain information from sources other than creditors, such as law enforcement and private investigators
Investigative consumer reports
T or F: Can anyone pull a credit report as long as he or she has someone's social security number?
NO
Background Assure, a data-sharing company, markets itself to prospective employers and landlords. When customers buy its services, the company provides individual's addresses, birth certificate, arrest history, and marriage and divorce records. They do NOT, however, provide credit scores. Is this a credit reporting agency?
NO. While Background Assure does collect information on consumers, this information is not related to consumers' credit
Any consumer reporting agencies that compile and maintain files on a nationwide basis relating to a consumer's medical records or payments, residential or tenant history, check writing history, employment history, and insurance claims
Nationwide Specialty Consumer Reporting Agencies
The FCRA governs when a consumer reporting agency (credit bureau) may furnish reports to users of those reports. These are called?
Permissable purposes
This occurs when a financial institution obtains a list from a CRA of consumers who meet certain predetermined creditworthiness criteria and who have not elected to be excluded from such lists
Prescreening
Agencies that do not maintain a database, but assemble and merge information from one or more nationwide consumer reporting agencies.
Resellers
This notice is required to be provided if material terms of the credit offered (including the loan's APR) are worse than that offered to consumer with better credit profiles
Risk Based Pricing
Examples where financial institutions normally use credit reports to assist in their decision-making: John applies for a new credit card account Mary wants to increase the credit limit on her credit card account Lori Smith is applying for a loan officer position at a bank
TRUE
Some institutions are related by common ownership or affiliated by common corporate control. In these situations, an affiliate may share information with other affiliates, for purposes other than marketing, based on: 1. The affiliate's own transactions or experiences with a consumer. This includes a consumer's record of repayment of the affiliate's own loans 2. The transactions or experiences of any one of the affiliates with a consumer
TRUE
T or F: A financial institution that reports to a CRA is considered a furnisher, and therefore must follow the FCRA
TRUE
T or F: Any financial institution that regularly furnishes information to a nationwide consumer reporting agency must provide a notice to a consumer in writing prior to or no later than 30 days after furnishing negative information to such an agency.
TRUE
T or F: Consumer reporting agencies and credit bureaus perform a vital role in providing information on consumers to lenders and companies throughout the country, which depend on accurate, up-to-date information on everyday transactions, from issuing a credit card to approving the purchase of a car.
TRUE
T or F: Credits may NOT consider medical information in determining eligibility for new credit or continuation of existing credit.
TRUE
T or F: Each opt-out notice must indicate the length of time the consumer's opt-out will be in effect - at least 5 years. Each renewal must provide similar options - again, for at least 5 years
TRUE
T or F: For adverse information and charge-offs, the seven-year period begins at the end of 180 days following the beginning of the delinquency event that led to the charge-off
TRUE
T or F: For records of arrest, indictment, or conviction of crime, the seven years run from the date of the disposition of the case, release, or parole
TRUE
T or F: If an investigative consumer report is requested, the consumer must be notified in writing no later than 3 days after the report is first requested. The consumer must receive a response to his or her request within 5 days. The written disclosure must also inform the consumer that he or she is entitled to request a complete and accurate description of the nature and scope of the investigation
TRUE
T or F: In order to obtain and use prescreened consumer reports lists, financial institutions must make a "firm offer of credit or insurance" based on predetermined criteria.
TRUE
T or F: In the same way that a consumer is entitled to a copy of a credit report if a financial institution takes adverse action against him, he is entitled to a copy of the report if an employer intends to take adverse action against him (declining to hire him) due to information in the report
TRUE
T or F: Regulators expect each furnisher to comply with the FCRA
TRUE
T or F: Resellers are agencies that obtain and merge information from other agencies and provide that information to users
TRUE
T or F: Resellers furnish such information (in the form of credit reports) to third parties
TRUE
T or F: Supervisory actions (penalties from the regulatory agencies can be assessed against financial institutions that do NOT develop and maintain, as part of their information security program, appropriate internal controls to ensure that they properly dispose of all consumer information derived from a consumer credit report
TRUE
T or F: The FCRA governs how the credit bureau information is collected and used. Properly used, this information serves both consumers and users
TRUE
T or F: The FCRA limits the time period that certain information may be provided by a credit bureau in a consumer report
TRUE
T or F: If an institution determines that information it has furnished to a CRA is incorrect, it must promptly notify the agency. Additionally, it must follow up with correct information.
TRUE. Disputes and inaccurate information must be investigated promptly and corrected if found to be inaccurate
Nadine accessed her consumer report for free 2 years ago. Because she's thinking about buying a house, she'd like to obtain her consumer report again. Should Nadine be able to access her free credit report now?
YES. Nationwide CRAs must provide free credit reports to consumers once during any 12-month period
Permissible purposes for a credit bureau to furnish a report: A. In response to a court order or a subpoena from a federal grand jury B. In response to written instructions from the consumer to whom it relates C. To enable consideration of a request for credit or to review an existing credit D. To assist in the collection of an outstanding obligation E. For employment purposes F. In connection with the underwriting of insurance G. To determine eligibility for licensing H. For any legitimate business purpose of the user (such as opening deposit accounts)
all of the above
