NMLS Test FCRA Overview

Regulations for FCRA are known as

Reg V

Investigative consumer report

a consumer report containing information about a consumer's character, general reputation, personal characteristics, and mode of living that is obtained through personal interviews.

Adverse Action

this term is given the same meaning under FCRA as under ECOA, meaning a denial of credit or an extension of credit in a substantially smaller amount, or for terms substantially different, than that requested by the loan applicant. It also means any denial or unfavorable change in insurance coverage, or a denial of employment based on an investigative consumer report.

Obligators of users (a lender or mortgage broker that uses a consumer report in the process of making a mortgage loan is an example of a user of informed collected by a CRA)

-Certification of permissible purpose -Notification of adverse action -Notification of adverse action based on information from affiliates

Obligations of furnishers(loan servicers, lenders, and creditors that receive loan and credit line payments are examples of furnishers of information that CRAs place in consumers' files.)

-Notification to CRAs of corrections -Notice of dispute -Notice regarding delinquencies -Duties after receipt of notice of dispute

Any person who violates the provisions of FCRA is liable for civil and criminal penalties, depending on the violation, as follows:

Civil liability for willful noncompliance: any person who willfully fails to comply with consumer protection provisions of FCRA is liable to the injured consumer for actual damages or for damages of not less than $100 and not more than $1,000, plus punitive damages, costs of bringing the action, and attorney's fees (15 U.S.C. §1681n(a)(1)(A)). Civil liability for obtaining a consumer report under false pretenses: if a natural person obtains a consumer report under false pretenses or knowingly obtains one without a permissible purpose, he/she will be liable for actual damages or $1,000, whichever is greater (15 U.S.C. §1681n(a)(1)(B)). Civil liability for knowing noncompliance: any person who obtains a consumer report from a consumer reporting agency under false pretenses or knowingly obtains one without a permissible purpose is liable to the CRA for actual damages that the CRA incurs or $1,000, whichever is greater (15 U.S.C. §1681n(b)). Civil liability for negligent noncompliance: negligent failure to comply with the law may result in the payment of actual damages, costs, and attorney's fees to the injured consumer (15 U.S.C. §1681o). Criminal penalties for obtaining information under false pretenses: any person who obtains information about a consumer under false pretenses will be fined and/or imprisoned for not more than two years (15 U.S.C. §1681q). Criminal penalties for unauthorized disclosures by officers and employees: officers or employees of a CRA who knowingly and willfully provide information about a consumer to a person not authorized to receive the information will be fined and/or imprisoned for no more than two years (15 U.S.C. §1681r).

Fraud Alert

a statement in the file of a consumer that notifies all prospective users of a consumer report relating to the consumer that the consumer may be a victim of fraud, including identity theft, and that is presented in a manner that facilitates a clear and conspicuous view of that statement.

File

all the information about a consumer that is recorded and retained by a CRA.

Consumer reporting agency (CRA)

any person who regularly engages for fees or on a cooperative nonprofit basis in the practice of assembling or evaluating of consumer credit information in order to provide consumer reports to third parties. The Dodd-Frank Act authorizes the CFPB to supervise "larger participants" in the market for consumer products and services (12 US.C. §5514(a)(1)(B)).

Creditor

any person who regularly extends, renews, or continues credit; any person who regularly arranges for the extension, renewal, or continuation of credit; or any assignee of an original creditor who participates in the decision to extend, renew, or continue credit (15 U.S.C. §1681(r)(5)).

Congress enacted this in 1970 to

ensure the accuracy, fairness, and privacy of consumer's personal information that is assembled and used by consumer reporting agencies.

Consumer report

the communication of any information from a consumer reporting agency that relates to a consumer's credit worthiness, credit standing, credit capacity, character, personal characteristics, or mode of living which is used or expected to be used in order to determine the consumer's eligibility for credit or insurance to be used for personal, family, or household purposes or to evaluate a consumer for employment.

FCRA prohibits several practices including the following

FCRA prohibits a CRA from furnishing a consumer report for any reason other than a permissible purpose. Permissible purposes include providing a report pursuant to the written instructions of the consumer to whom the report relates and providing a report in connection with a credit transaction involving the extension of credit to the consumer (15 U.S.C. §1681b). FCRA prohibits those who furnish information to a CRA from knowingly providing inaccurate information (15 U.S.C. §1681s-2). No CRA can write a consumer report containing outdated negative financial information such as bankruptcies over ten years old and other negative information such as paid tax liens and civil judgments that are more than seven years old unless the consumer report relates to a credit transaction involving a principal amount of $150,000 or more (15 U.S.C. §1681c(a)). CRAs cannot release disputed information in a consumer report without indicating that the consumer disputes the accuracy and completeness of the information (15 U.S.C. §1681c(f)).