Fair Credit Reporting Act (FCRA)

When does the seven year time period begin for adverse information and charge offs?

At the end of 180 days following the beginning of the delinquency event that led to the charge-off.

What are the three nationwide consumer reporting agencies?

Equifax, Experian, and TransUnion

True/False: The FCRA requires all entities to use a consumer report when making its decisions.

False. However, many entities have come to depend on this info when making a decision that is dependent on creditworthiness, credit capacity, character, and general reputation of consumers.

What does the FCRA govern?

How information is collected and how it is used. Properly used, the information serves the needs of both consumers and users.

What is the credit score proxy method?

The creditor determines a "cutoff score" where the material terms of the credit are set at a particular credit score. In this method, 40% of consumers have a higher credit score and 60% lower credit score than this cutoff, and a risk-based pricing notice would be provided to the 60% of consumers with a lower credit score.

Can a consumer request a copy of their credit file following the placement of an alert in their file?

Yes. Consumers filing an extended alert must be informed of their right to request two free copies of their file during the 12 month period following the placement of the alert in their file.

Who are the enforcement agencies for the FCRA?

The FTC for consumer reporting agencies and non-banking businesses The primary federal regulators for banks and thrifts The National Credit Union Administration (NCUA)

Who is the enforcement agency for the consumer reporting agencies and many other businesses?

The Federal Trade Commission (FTC)

What must a FI do regarding any disputes concerning information it furnished to a consumer reporting agency?

1. Conduct an investigation on the disputed information. 2. Review all relevant information provided by the credit bureau. 3. Report the results of the investigation to the consumer reporting agency.

What happens when a consumer disputes the accuracy or completeness of an item of information provided by the furnisher to the consumer reporting agency?

1. Consumer sends dispute to Credit Reporting Agency. 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.

What is a national specialty credit reporting agency?

A consumer reporting agency that maintains files on a nationwide basis relating to medical records, residential history, check writing history, employment history and/or insurance claims

What are resellers?

Agencies that do not maintain a database, but assemble and merge information from one or more nationwide consumer reporting agencies. Resellers furnish such information (in the form of credit reports) to third parties.

What are the additional penalties?

Criminal penalties are also possible for obtaining information under false pretenses or allowing unauthorized disclosure of the contents of a consumer report. Both carry a fine of up to $5k and not more than tow years in prison, or both. Supervisory actions (penalties from regulatory agencies ) can be assessed against FI's 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.

How long must an initial fraud alert stay in a consumer's credit report?

One year, unless the consumer requests it be removed before then. The consumer can also request a free copy of her report when the alert is added to her file.

Are credit bureaus allowed to retain outdated information?

Yes. Credit bureaus may retain information older than seven or 10 years in its files. However, it must have procedures in place to prevent the release of outdate adverse information beyond the time limits set by law, unless the report satisfies an exception provision.

Can affiliates share information with other affiliates, for purposes other than marketing?

Yes. They can share information with other affiliates based on the affiliate's own transactions or experiences with a consumer. This includes a consumer's record of repayment of the affiliate's own loans; or the transactions or experiences or any one of the affiliates with a consumer.

What are the timing requirements for legal actions involving FCRA-related violations?

Legal actions to enforce liability may be brought no later than two years after the plaintiff discovers the violation or 5 years after the date that the violation occurred, whichever is earlier.

After a FI provides negative information to a consumer reporting agency, when must notice be provided to the consumer?

No later than 30 days after providing the negative information

How long must active duty alerts stay in the consumer's file?

12 months after the request, unless the consumer requests it be removed before then. The servicemembers name may not be included in any consumer list to third parties contemplating offering credit or insurance not initiated by the consumer (a preapproval) during the two year period following placement of the alert unless a request for such service was initiated by the consumer

How long with deposit accounts placed for collection or charged to profit and loss report to the Nationwide Specialty Consumer Reporting Agency?

5 years.

What are the civil penalties for violations involving negligent non-compliance?

Actual damages sustained by consumer Court costs and attorney's fees

What are the civil penalties for violations involving willful non-compliance?

Actual damages sustained by consumer Punitive damages Court costs and attorneys fees

What are nationwide specialty consumer reporting agencies?

Any consumer reporting agencies that compile and maintain files on a nationwide basis relating to a consumer's Medical records payments Residential or tenant history Check writing history Insurance claims

What are the three different types of alerts for consumer reports (as introduced by the FACT Act)?

Initial fraud alert Extended alert Active duty alert

How long can an extended alert stay on the consumer credit report?

Seven years. A consumer, or someone working on her behalf, can request its removal before the seven years are up as long as she provides proof of her identity when she request the removal.

After 7 years what must not appear in a consumer's file?

Suits and judgments from the date of entry Paid tax liens from date of payment Accounts placed for collection or charged to profit and loss Records of arrest, indictment, or conviction or crime Any other adverse information

What is the tiered pricing method?

The creditor sets up specific credit score tiers that are used to establish the pricing and terms of a loan. In this case, a notice would be sent to each consumer who did not fall into the top tier or tiers.

When must the consumer be notified if a FI receives a request for an investigative consumer report?

Three days after the date on which the report was first requested. The disclosure must inform the consumer that he or she is entitled to request a complete and accurate description of the nature and scope of the investigation. Upon written request by the consumer, the consumer must receive a response to his or her request within five days.

What are regulator expectations?

1. Maintaining a system reasonably capable of receiving info regarding disputes from CRA. 2. Conducting an investigation of the disputed information including reviewing all relevant information forwarded by the CRA and furnisher's own info with respect to the dispute. 3. Reporting the results of the investigation to the CRA that sent the dispute. 4. Proving corrected info to every nationwide CRA that received the info if the info is inaccurate or incomplete. 5. Modifying or deleting the disputed information or permanently blocking the reporting of the information if the information is incomplete or inaccurate, or cannot be verified.

In what instances must nationwide consumer reporting agencies provide free credit reports to consumers at the consumers request?

1. Once during any 12-month period 2. 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. 3. When the fraud alert (initial or extended) is place in the file.

After what period of time must a bankruptcy filing be removed from a consumer report?

10 years

What is a consumer reporting agency?

Any person or organization that 1. Regularly engages in the practice of gathering or evaluating credit or other information on consumers. 2. Provides this information to third parties. 3. Receives fees, dues, or other compensation for providing such reports, or 4. Provides reports and uses any means of interstate commerce for the purpose of preparing or furnishing consumer reports.

What must creditors, including FI's, notify the consumer reporting agency of?

If a dispute arises, in the case of a closed account, and regarding the date of delinquency commenced that eventually led to a collection or charge off.

When are creditors not required to provide a Risk-Based Pricing Notice?

If they provide a Credit Score Disclosure Exception Notice to borrowers.

What is considered a "permissible purpose" for furnishing a credit report?

In response to a court order of subpoena from a Federal grand jury In response to written instructions from the consumer to whom it relates To enable consideration of a request for credit or to review an existing credit To assist in the collection of an outstanding obligation For employment purposes In connection with the underwriting of insurance To determine eligibility for licensing For any legitimate business purpose of the user (i.e. opening deposit accounts)

Where can consumers access their free credit report?

Visiting annualcreditreport.com or they can call 1.877.322.8228.

What is the timing requirement for records of arrest, indictment, or conviction of crime?

The seven years runs from the date of disposition of the case, release, or parole.

What are timeline exceptions for credit reporting?

The time limits do not apply if the consumer is: Applying for credit with a principal amount of $150k or more Requesting life insurance with a face amount of $150k or more Applying for employment where the annual salary is expected to equal $75k or more.

What procedures must be in place if a FI is notified by a consumer reporting agency that information it furnished to the agency is the result of identity theft?

To respond quickly to these notifications and to prevent refurnishing the information in the future.

True/False: A risk based pricing notice must be provided when credit is provided on less-favorable terms than it offers to a "substantial proportion" of consumers due to information in the consumer's credit report.

True.