Chapter 8: Federal Privacy Protection and Consumer Identification Laws & Regulations

FACT Act also allows consumers to place a ____ to prevent the information from showing on a credit report.

- Credit freeze - When applying for a loan, the consumer may then temporarily "thaw" the credit report by contacting the credit bureau that is "freezing" the report to obtain a temporary password, which allows a credit reporting agency to access the report. - The Act allows members of the military who are deploying overseas to place a credit freeze, thereby making fraudulent applications for credit more difficult.

Fair and Accurate Credit Transactions Act of 2003 [FACT Act/FACTA] amended the federal Fair Credit Reporting Act and is intended primarily to help consumers...

- Fight the growing crime of identity theft. The FACT Act was passed in 2003, a time in which identity theft was an ever-increasing problem for consumers and creditors. Thus, the law focused on accuracy, privacy, limits on information sharing, and new consumer rights to disclosure.

The Financial Privacy Rule governs the collection and disclosure of customers' personal financial information—known as nonpublic personal information—restricting

- When and under what circumstances such information may be disclosed to affiliates and to nonaffiliated third parties. -Information that many would consider private—including bank balances and account numbers—is regularly bought and sold by banks, credit card companies, and other financial institutions.

The primary focus of the Fair and Accurate Credit Transactions Act (FACT Act) is to ensure that consumers' credit information is accurately maintained and recorded. A. true B. false

A. true

A MLO hired a third-party independent processing company to perform processing functions on their loan files. Loan files for applicants who were not approved were disposed of in a dumpster at the back of the processing company's office. The processing company violated A. ECOA. B. FACTA. C. HMDA. D. RESPA.

B. FACTA.

According to Regulation V, a creditor is defined as A. the agency that maintains, gathers, and scores information for reports. B. someone who grants credit. C. someone who is obtaining credit. D. the title insurance agency.

B. Someone who grants credit.

To properly dispose of a consumer's loan file, the FACT Act requires that paper files be burned or shredded after the loan closes. A. true B. false

B. false

No can use the Wet Signatures

Can a party be forced to use E-Sign

According to FCRA, all of the following would have a business need for access to credit reports EXCEPT a(n) A. "buy here, pay here" automobile dealer. B. employer performing a background check for a potential employee. C. mortgage loan originator. D. person who wants to know their neighbor's credit score.

D. Person who wants to know their neighbor's credit score.

The Red Flags Rules are also known as A. advertising triggering terms. B. Chapter 8 of Regulation X. C. Section 32. D. Section 114.

D. Section 114.

For e-sign to be valid the consumer has to disclosure that he is allowing it.

E- Sign Require Consent

Applications that need information - Creditor, Insurer, Employer, Landlord, or business

FCRA Must Limit to -

Every 12 months from all three bureus.

Facta allows consumers to obtain Free credit report how many months?

Consumers are entitled to receive a free copy of their credit score from a consumer reporting agency each year, according to the Fair Credit Reporting Act. A. true B. false

False. Credit FILE. must pay for credit score - Although it is not free, consumers have the right to ask for a credit score from any consumer reporting agencies that create or distribute scores used in residential real property loans.

No time Limit

Is there a time limit on criminal Convictions

If a consumer has asked to be put on the company's internal Do Not Call list, the company may not call, even if there is an EBR. This prohibition is only against solicitation of ___ business.

NEW Calls may be made to consumers in reference to a current relationship, such as a creditor making a collection call.

Allows consumers to opt out of having any privacy notice shared.

OPT OUT

One of the major provisions of the FACT Act is to allow consumers easier access to their credit reports as a way to spot

Possible identity theft and to allow dispute of inaccurate information.

Pretexting Provisions This provision does what?

Protects consumers from individuals and companies that obtain their personal financial information under false, fictitious, or fraudulent pretenses.

Obtaining the name, phone number, and___ from a consumer provides written consent that does not expire until rescinded.

Signature

Any entity that uses a credit report or another type of consumer report to deny an application for credit, insurance, or employment—or to take another adverse action—must provide the consumer with

The name, address, and phone number of the agency that provided the information.

Regulation V

What Regulation is the Fair Credit Reporting Act

2003

What Year was FACTA created

Do Not Call List

What applies to any plan, program, or campaign to sell goods or service through interstate phone calls?

Accuracy, Privacy, Limits on information Sharing, New Consumer rights to disclosue

What are FACTA provisions?

Request Credit Score, Dispute Incomplete or Inaccurate Info, Limit Prescreened offers

What are other consumer rights under FCRA

Financial Institutions from disclosing consumer reporting agency - Access codes or account #'s to non affialated third party or direct marketers.

What are prohibited Practices of Gramm-leach billey act?

No advance Fees,

What are provisions of MARS?

Financial Privacy Rule Part of Title V, Safeguards, and Pretext,

What are the 3 principle parts of Gram-leach biliey act?

Alerts, Suspisious documents, Suspicious personal info, Unusual use of specific activity, notices to customers for possible theft to enforcement agencies.

What are types of red flags

Ensure Security and confidentiality of customer Records Protect against any anticipated threats and hazards to records Protect against unauthorized access or use of such records or information In ways that could be harmful

What are written safeguard policy?

$16,000

What is violation of do not call list amount?

$25,000 poer per instance

What is violation of safe act amount?

Equal Housing/Lending posters and Logos post in lobby

What logo is required for Fair Housing?

Prohibit Money laundering and financing terroists. Increase ability law enforcement agencies search telephone, email, records Eases restrictions on foreign intelligence, Expands Secretary treasury authority

What patriot act Create

Fair Housing Act

What prohibits discrimination in sale, lease, or loan terms for residential property, based on race, color, religion, sex, national origin, disability, or familiar status.

Regulation P

What regulation is the Gram-leach Bililey AcT?

Red Flags Rule

What section is 114?

1970

What year was BSA/Anti Laundering Act?

Adverse Action, Identity Theft, Inaccurate Info as result of Fraud, Public Assistance or unemployment

When must Creditor Give Free Credit Report

1968

When was Fair Credit Reporting Act Created

In October 2011

When was patriot act enacted?

FTC

Who controls MARS

The Fair Credit Reporting Act provides consumers with the following rights to:

• An adverse action notice. • A copy of consumer credit file. • Request their credit score. • Dispute incomplete or inaccurate information. • Limit prescreened offers.

Section 114 of the FACT Act: Establishment of Procedures for the Identification of Possible Instances of Identity Theft, known as the Red Flags Rules, requires:

• Financial institutions and creditors to implement a written identity theft prevention program. • Card issuers to assess the validity of change of address requests. • Users of consumer reports to reasonably verify the identity of the subject of a consumer report in the event of a notice of address discrepancy.

A covered institution must obtain from all customers opening a new account, at a minimum, the following:

• Name • Date of birth • Residential or work address for individuals, or physical location address for legal entities • For U.S. citizens or legal entities organized under state law: A tax identification number (TIN) • For lawful permanent residents or non-immigrants: A TIN, passport number and country of issuance, alien identification card number, or number and country of issuance of any other government-issued document evidencing nationality or residence and bearing a photo • For non-U.S. legal entities with no TIN: A government-issued certificate of existence or good standing

The Safeguards Rule requires all financial institutions to design, implement, and maintain___ to protect customer information while it is in the custody and control of the institution and its agents.

- Safeguards - This rule applies not only to financial institutions that collect information from their own customers, but also to any institution—such as a credit reporting agency or even an educational institution—that receives customer information from other financial institutions.

The FACT Act allows consumers to request and obtain a free copy of their credit report once every ___ months from each of these credit bureaus by contacting a centralized website, maintained in cooperation with the Federal Trade Commission

12 months - Prior to the passage of the FACT Act, consumers had to pay to get a copy of their report from each of the three national credit bureaus: Equifax, Experian, and TransUnion.

A consumer who receives a telemarketing call despite being on the registry is able to file a complaint with the FTC. Violators could be fined up to $___ per incident.

16,000

A telemarketer or seller may call a consumer with whom it has an established business relationship (EBR) for up to __ months after the consumer's last purchase, delivery, or payment, even if the consumer's number is on the National Do Not Call Registry.

18

What is the Fair Credit Reporting Act (FCRA) - Regulation V

A federal law dealing with the granting of credit, access to credit information, the rights of debtors, and the responsibilities of creditors

The FCRA mandates that a credit reporting bureau remove a consumer's Chapter 7 bankruptcy record after A. credit has been re-established for over five years. B. 7 years. C. 10 years. D. dismissal of the case by a Federal Bankruptcy Court.

C. 10 years.

For how many months after a loan closes may a mortgage loan originator call to solicit new business from a customer whose phone number is on the National Do Not Call Registry? A. 3 months B. 6 months C. 18 months D. No calls can be made to a number on the Registry.

C. 18 months

Which law includes Red Flags Rules that require financial institutions and creditors to implement procedures to protect customer identity? A. Fair and Accurate Credit Transaction Act B. Fair Credit Reporting Act C. Gramm-Leach-Bliley Act (The Financial Privacy Act) D. Homeowners Protection Act

C. Gramm-Leach-Bliley Act (The Financial Privacy Act)

Probits all racial discrimination, private or public in the sale and rental property. Allows someone to sue for unlawful discrimination

Civil Rights Act of 1866

Customer

Consumer with a continuing, significant relationship with a financial institution.

A provision of the federal Telemarketing Sales Rule, the National Do Not Call (DNC) Registry, is managed by the

Federal Trade Commission (FTC), the nation's consumer protection agency, and enforced by the FTC, the Federal Communications Commission (FCC), and state law enforcement officials.

Section 114 "Red flags rules" applies to

Federal and state-chartered banks and credit unions, non-bank lenders, mortgage brokers, any person who regularly participates in a credit decision—including setting the terms of credit, and any person who requests a consumer report.

For 2 years

How long must you keep records of MARS?

31 days

How many days prohibits calls to consumer when added to registry of do not call list?

for up to 3 months.

How many months can a broker call if consumer makes an inquiry or submits an application?

Up to 18 months (EBR) Established Business Relationship

How many months can be contacted after consumers last purchase, delivery of payment, even if consumers name is on do not call list?

No not even if there is an EBR

If consumer asks to be put on internal Do not call list can he be called?

Consumer Financial Protection Bureau (CFPB)

Independent agency within the Federal Reserve with rulemaking and enforcement authority over many consumer financial laws. Established under Title X of the Dodd-Frank Act.

Consumer

Individual who obtains, or has obtained, a financial product or service from a financial institution for personal, family, or household reasons.

customer Indentification programs

What Are CIP?

Maintain National and internal Lists customers and prospects and keep updated regulary. (National List 3 months and internal 30 days)

What does Do not call list require companies to keep?

Free Credit report upon adverse Action or identity Theft

What does FCRA entitle Consumers too?

Blockbusting, Redlining, settering in RE transactions

What does Fair Housing Prohbit?

Within 1 year of the alleged violation to HUD office

What does Fair housing act allow to file written complaint?

20 hours prelicensing, Background and Credit Checks, 75% pass on Test, 8 hours continuing ed yearly, Requires any independeant contractor underwriters or loan processors have a mlo license.

What does Safe ACt Require

Name, Date of Birth, Residential or Work Address, TIN numbers, Permanent residence cards, No TIN - Government issued certificate

What information Must CIP Include?

Electonic Signatures in Global and National Commerce Act - E Sign

What is E - Sign Act?

Various laws been passed protect consumer financial information including FCRA and FACTA

What is Gramm-leach-Bliley Act

Mortgage Assistance Relief Services

What is MARS

By banning providers of these services from collecting any fees until the customer is satisfied with the results, this rule will protect consumers from being victimized by these scams.

What is MARS?

is defined as any personally identifiable financial information that a financial institution collects an individual in connection with providing financial products.

What is Non-personal Information?

Housing and Economic act of 2008 (HERA)

What is Safe Act Title V part of?

Explains the lenders information collection and information sharing practices before company disclose information. Must receive notice annually for duration of financial period.

What is a consumer privacy notice and how many times must it be sent?

Reg G

What is regulation for Safe ACt?

Consumers have the right to dispute any incomplete or inaccurate information they find in their credit report. The consumer reporting agency must

correct or delete inaccurate, incomplete, or unverifiable information.

Requires all states to implement a SAFE mortgage requirement to meet certain standards NMLS

what does SAFE ACT Require?

CSBS and CFPB

who is issuing and enforcement agency for safe act?

Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act, amended the Fair Credit Reporting Act to require a creditor to provide a consumer with a

written or electronic disclosure of the numeric credit score used in taking any adverse action, including a risk-based pricing notice.

FACT Act requires businesses to take measures to responsibly secure and dispose of sensitive personal information found in a consumer's credit report. Reasonable methods for security and disposal include:

• Burning or shredding papers that contain consumer report information so that information cannot be reconstructed • Destroying or erasing electronic files or media so that information cannot be recovered or reconstructed • Placing all pending loan documents in locked desks, cabinets, or storage rooms at the end of the workday

The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (Pub.L. 107-56), more commonly known as the Patriot Act, was enacted in October 2001 in response to the September 11, 2001 terrorist attacks. The Act:

• Increases the ability of law enforcement agencies to search telephone, e-mail, medical, financial, and other records. • Eases restrictions on foreign intelligence gathering within the United States. • Expands the Secretary of the Treasury's authority to regulate financial transactions, particularly those involving foreign individuals and entities. • Enhances the discretion of law enforcement and immigration authorities in detaining and deporting immigrants suspected of terrorism-related acts.

The GLB Act gives authority to 8 federal agencies and the states to administer and enforce Title V - Privacy. - These regulations apply to financial institutions, which include not only banks, securities firms, and insurance companies, but also companies providing many other types of financial products and services to consumers, such as:

• Lending, brokering, or servicing any type of consumer loan. • Transferring or safeguarding money. • Preparing individual tax returns. • Providing financial advice or credit counseling. • Providing residential real estate settlement services. • Collecting consumer debts.

Written identity theft prevention program, Card Issuers to access validity of change of address receipts, Users of consumer reports verify identify of the subject consumer report.

What does red flag rules require?

Federal and state chartered banks, credit unions, Non-bank lenders, mortgage brokers, setting terms of credit, and any person request credit report

Who does FACTA apply to?

Federal & State Charted Banks and credit unions, non-bank lenders, mortgage brokers, any person that regularly participate in a credit decision.

Who does red flags rule apply to?

CFPB

Who is FACTA Enforced By

FTC, FCC and state law enforcement agency

Who regulates the National Do Not call List?

According to the GLB Act, a person who completes a single transaction with a creditor is known as a(n) A. applicant. B. creditor. C. consumer. D. customer.

C. Consumer.

7 Major Titles

How many titles are in FACTA

10 years

How many years must a credit agency not report negative credit information for BK?

7 years

How many years must a credit agency not report negative creditor information?

Truncation of Credit and Debit Card Numbers

What is Section 113 FACTA Allow?

1999 Financial Services Modernization

What is another name for Gram-Leach Bililey Act?

The Uniting and Strengthening America by providing appropriate tools required

What is another name for USA Patriot Act?

A written Safeguards Policy must include provisions that:

• Ensure the security and confidentiality of customer records. • Protect against any anticipated threats or hazards to the security of such records. • Protect against the unauthorized access or use of such records or information in ways that could result in substantial harm or inconvenience to customers.

Nonpublic personal information could include the following types of information:

• What a consumer or customer puts on an application • Data about the individual from another source, such as a credit bureau • Transactions between the individual and the company, such as an account balance, payment history, or credit/debit card purchase information • Whether or not an individual is a consumer or customer of a particular financial institution

The consumer reporting agency must correct or delete any data EXCEPT information that is A. disputed B. inaccurate. C. incomplete. D. unverifiable.

A. disputed

Not More than 5 digits. Excludes handwritten receipts

How many digits maxium can be printed for section 113?

The Fair Credit Reporting Act entitles consumers access to the same credit information that lenders use in making their credit decisions. A. true B. false

True

The National Do Not Call Registry regulations require companies to update their national customer lists every 30 days. A. true B. false

True

Keep Records of Cash Purchases of Negotiable Instruments, File Reports of cash transactions exceeding $10,000, Report Suspisous activity that might be money laundering (SARS) Suspious activity reports

What does BSA/Anti Laundering Act require -

Requires lenders and banks to create and maintain CIP to verify identify of customers going into formal relationship with

What does CIP do?

$11,000 per occurrence and $11,000 per day may be incurred for violations.

What is fine for MARS Violation?

Requires all instituions to design, implement, and maintain safeguards to protect customer information.

What is he Safe Guards Rule? Gram

Use of Electronic signatures and records in interstate and foreign commerce. Insures the validity and legiltiy of contracts and documents in E sign way

What is the E-Sign ACt?

Protect consumers from individuals and companies that obtain personal financial information under false, fictitious or fraudulent pretenses.

What is the pretexting provision of Gram Le

Creditor is defined as

a person who regularly extends consumer credit that is subject to a finance charge, or is paid by written agreement in more than four installments, and to whom the obligation is originally payable

Title III of the Patriot Act, designated the International Money Laundering Abatement and Financial Anti- Terrorism Act of 2001, requires lenders and banks to create and maintain customer identification programs (CIPs) to prevent

- Financing of terrorist operations and money laundering. - CIPs require covered institutions to verify the identity of customers who are entering into a "formal relationship," such as taking out a loan or a credit account.

If a consumer believes he has been a victim of identity theft, the FACT Act allows the consumer to contact the credit bureau and place a

Fraud alert - If an MLO is running a credit report and sees a fraud alert, he must contact the person whose name is on the account at the number provided to the credit bureau or take other reasonable steps to ensure that the person applying for a mortgage loan is not really an identity thief.

The FACT Act requires that consumers applying for home loans receive the

Home Loan Applicant Credit Score Information Disclosure notice, which explains their rights.

Credit Freeze

Places a credit file 'on ice' by preventing the information from being reported to third parties, such as credit grantors and other companies. - Lenders are not able to gain access to the credit file unless given permission by the account holder. - The credit file can still be disclosed in certain situations, such as for companies (e.g., mortgage, credit card, cell phone) doing business with the account holder and for collection agencies working for one of the companies.

Seek Damages for Violations of their rights Additional rights for identity theft victims and active duty military personnel

What FCRA Violations Seek?

Give out Consent of credit information to employer, or potential employer without written consent.

What can they not give out?

Home Loan Applicant Credit Score Information

What disclosure does FACTA give ?

Have first 5 digits of their social security number not included on credit files

What does FACTA have done to SSN?

Credit Freeze, Fraud Alerts, Military to put credit freeze

What does Section 112 Facta Allow?

Requires to take measures to properly store and dispose items

What does section 216 mean for Facta

Calls by political organizations, charities, or telephone surv

What does the national do not call list not limit?

Same info that is used as the creditor

What information does FCRA give consumer?

211

What is Access to Credit Reports Section #

Intended primarily to help consumers fight crime of identify theft and to dispute inaccurate credit information

What is FACTA?

Section 112

What is Fraud Alerts and Freezes?

www.annualcreditreport.com

What is name of site FACTA gives free credit reports too?

Disposal and Security

What is section 216 of FACTA?

Federal Reserve & CFPB

What is the issuing agency and Enforcement Agency

Restrictions of non-personal data are based on a required Consumer Privacy Policy notice provided to the consumer, explaining the lender's information collection procedures and information sharing and transfer practices.

- A financial institution must disclose its policy to consumers before they disclose personal information, disclose the policy annually for customers throughout the financial relationship, and provide the consumer instructions on how to opt-out of having this information shared. - Even if a consumer does not opt-out, financial institutions are prohibited from disclosing—other than to a consumer reporting agency—access codes or account numbers to any nonaffiliated third party for use in telemarketing, direct mail marketing, or other marketing through electronic mail. - Creditors are responsible for validating any other entity to which they transfer custody of private consumer data.

The Fair Credit Reporting Act allows a consumer to request a A. credit score disclosure statement from a creditor. B. dispute of inaccurate or incomplete information of a report. C. fraud alert in the event of stolen identity. D. freeze on a credit bureau.

C. Fraud alert in the event of stolen identity.

Fraud Alert

Condition attached to a credit report that requires lenders to take extra precautions (e.g., contact by phone) to verify that the identity of the party seeking to establish the credit account is actually the individual who wants the new account.

The Financial Services Modernization Act of 1999, also known as the Gramm-Leach-Bliley Act, includes provisions in Title V - Privacy Gramm-Leach-Bliley Act, Privacy of Consumer Financial Information (Regulation P)

To protect and regulate the disclosure of consumers' personal financial information. - There are 3 principal parts to the privacy requirements: The Financial Privacy Rule, the Safeguards Rule, and Pretexting Provisions.

Consumers may choose to limit "prescreened" offers of credit and insurance based on information in their credit report. Unsolicited prescreened offers for credit and insurance must include

a toll-free phone number to call to be removed from the lists on which these offers are based.

The National Do Not Call Registry applies to any plan, program, or campaign to__ goods or services through interstate phone calls.

- Sell - This includes telemarketers who solicit consumers, often on behalf of third party sellers. It also includes sellers who provide, offer to provide, or arrange to provide goods or services to consumers in exchange for payment. - The National Do Not Call Registry does not limit calls by political organizations, charities, or telephone surveyors.

a company may call a consumer for up to __ months after the consumer makes an inquiry or submits an application to the company.

3 months

To keep from violating National Do Not Call regulations, a company must maintain national and internal lists of customers and prospects and keep them updated regularly. The national DNC list must be updated every three months, and the internal DNC list must be updated every __ days.

30

FACT Act prohibits businesses from printing more than five digits of any customer's

Credit/debit card number or expiration date on any receipt provided to the cardholder at the point of sale or transaction. - The provision excludes handwritten or imprinted receipts if that is the only method of recording the card number.

The penalty per occurrence per day for violating the National Do Not Call regulations is A. $5,000. B. $10,000. C. $11,000. D. $16,000.

D. $16,000.

The Fair and Accurate Credit Transaction Act regulates all of the following EXCEPT A. an adverse action notice to the borrower who is turned down for a loan. B. a credit freeze registered with a credit bureau. C. fraud alerts placed on a credit report. D. truncation of credit card numbers on a credit card receipt.

D. Truncation of credit card numbers on a credit card receipt.

The Patriot Act requires lenders and banks to create and maintain programs that verify their customers' identity. A. true B. false

True

True or False: If a lender is extending credit to the borrower using a mortgage broker as its agent, it must ensure the broker is performing the bank's CIP.

True

The FACT Act contains seven major titles: which are...

• Identity Theft Prevention and Credit History Restoration • Improvements in Use of and Consumer Access to Credit Information • Enhancing the Accuracy of Consumer Report Information • Limiting the Use and Sharing of Medical Information in the Financial System • Financial Literacy and Education Improvement • Protecting Employee Misconduct Investigations • Relation to State Laws

Under the Fair Credit Reporting Act, consumer reporting agencies:

• May not report outdated negative information. In most cases, a consumer reporting agency may not report negative credit information that is more than seven years old or bankruptcies that are more than ten years old. There is no time limit on the reporting of criminal convictions [see 15 U.S.C. §1681c]. • Must limit access to a credit file. A consumer reporting agency may provide information to people with a legitimate business need—usually to consider an application with a creditor, insurer, employer, landlord, or other business. FCRA specifies those with a valid need for access [see 15 U.S.C. §1681d]. • May not give out consumer credit information to an employer, or a potential employer, without written consent given to the employer by the consumer [see 15 U.S.C. §1681b].

Consumers are entitled to a free copy of their credit file from a consumer credit reporting agency under these circumstances:

• The information in a credit report resulted in adverse action. • The consumer was a victim of identity theft and a fraud alert was inserted in the credit file. • The credit file contains inaccurate information as a result of fraud. • The consumer is on public assistance or is unemployed.