Fair Credit Reporting Act

In which of the following cases must a furnisher of consumer information investigate the dispute?

A dispute about a delinquent account that has been previously submitted but upon which the furnisher took no action -A furnisher can consider a dispute to be a frivolous dispute if it does not include sufficient identifying information, such as a social security number, it is submitted by a credit repair company or on a form by a credit repair company. Disputes that have been submitted previously can be considered to be frivolous if the furnisher investigated the dispute when it was previously submitted.

Which of the following communications is NOT a consumer report regulated by the Fair Credit Reporting Act?

A report telephoned by a Bank A loan officer to a Bank B loan officer, describing Bank A's lending experience with a borrower - A consumer report does not include a report that only contains information about experiences between the person making the report and the consumer. Therefore, a bank can provide information about its own lending experience and not be covered by the Fair Credit Reporting Act.

Consumer reports used for credit transactions may contain which of the following items?

Adverse credit items for 7 years and bankruptcies for 10 years

In which of the following circumstances is it NOT permissible for a financial institution to obtain a consumer report from a consumer reporting agency?

As an employee service, the bank requests credit reports on employees' family members for the employees' and their families' own use. -There are several permissible uses for the consumer report, including use in credit transactions (extending, reviewing, or collecting loans) and employment purposes. Providing consumer reports on family members to employees for other purposes without written permission of the person who is the subject of the report is a violation.

To avoid being considered a "consumer reporting agency," the FCRA requires banks that regularly purchase dealer paper from automobile dealers to be sure that the:

Dealer reports to the consumer the name and address of the bank. -This information must be given to the consumer in order to prevent the bank from becoming a consumer reporting agency

Friendly Service Bank has an affiliated insurance company, FSB Insurance. In which of the following cases would the consumer receiving the marketing materials have to have received the affiliate marketing opt-out opportunity?

FSB Insurance receives individualized credit score information from Friendly Service Bank about the bank's loan customers. After selecting eligible customers from the list, FSB Insurance sends a qualified list back to Friendly Service Bank who sends the FSB Insurance marketing materials to the selected bank customers.

Mr. Hilliard applied to First National Bank for a car loan. The bank requested a credit report on Mr. Hilliard from the local credit reporting agency and found that he had almost no credit. No negative items were on the report. In addition, Mr. Hilliard had been employed at his job for four months and his previous work experience was difficult to verify. The bank denied his application for a loan and sent him an adverse action notice. What should the bank do under the Fair Credit Reporting Act?

Notify Mr. Hilliard that a credit report was obtained and give him the name and address of the credit bureau. -Fair Credit Reporting Act, Section 615(a) and 15 USC CH41 1861m Outline III A(1) That information on the credit report was partially responsible for the credit denial gives rise to the responsibility to report it to the consumer. Even too little credit history is enough reason to report under the Fair Credit Reporting Act. In addition, under ECOA's Regulation B, the reasons for credit denial must be provided either automatically or on request after notice of that right is provided.

Friendly Service Bank is a new bank that will focus on offering financial services to consumers. The compliance officer needs to comply with the identity theft prevention requirements of the FACT Act. What should she do first?

Perform a risk assessment of the bank's risk factors for identity theft -The first step in developing an identity theft prevention program is to perform a risk assessment to determine whether the bank offers or maintains covered accounts, consider the methods used to open and provide access to accounts in order to assess the bank's exposure to identity theft threats.

A compliance officer is monitoring a financial institution's credit reports for compliance with the Fair Credit Reporting Act requirements. Which of the following is NOT a permissible purpose for obtaining and using the consumer report?

Review of the personal credit history of a prospective customer on whom the bank officer plans to call -The bank cannot obtain a consumer report without a legitimate credit or employment purpose. The consumer must either apply for credit or employment, or the bank must be planning to make a firm offer of credit in order to obtain a consumer report.

First National Bank has denied a credit application from Mr. Johnson because the application scored too low on the bank's internal credit-scoring system. Mr. Johnson's credit report, received from a credit reporting agency, scored a 4 out of a possible 10. Other parts of Mr. Johnson's application received low scores also. Which statement best describes First National's responsibility to Mr. Johnson under the Fair Credit Reporting Act?

Send an adverse action notice that states that a credit report was used and gives the name and address of the credit reporting agency

First National Bank received a credit application from Lewis Nelson for a home equity loan. Mr. Nelson indicated that he has a $75,000 loan from the Overton Cancer Center. The bank called the cancer center to check the credit history and balance on the loan. The bank discovered that Mr. Nelson is four months past due on the loan. Based on this information, the bank denied the home equity credit application to Mr. Nelson. Which statement is correct?

The bank acted correctly because it treated the applicant's medical debt just as it would any other debt. -Using medical information in a manner that is no less favorable than it uses other forms of credit information is an exception to the general rule.

Which of the following methods is NOT valid for determining which consumer borrowers should receive a risk-based pricing notice?

The comparative file method -The direct comparison method is used when the lender directly compares borrowers to other similar borrowers in the portfolio to determine who receives a notice. The credit score proxy method is used when a lender derives a cutoff credit score where at least 40% of its borrowers fall above the cutoff and 60% below the cutoff. Borrowers below the cutoff receive notices. The tiered pricing method allocates notices to borrowers in the higher pricing tiers.

Mrs. Williams applies to rent an apartment from Better Living Apartments. She has been a customer of First National Bank for several years, so she lists the bank as a credit reference. Better Living sends the bank a credit inquiry letter, and the bank sends Better Living a list of Mrs. Williams's bank transactions. The report states that she has had several insufficient checks on her account over the last two months and that she has satisfactorily paid off a car loan. Better Living calls the bank and speaks to Consumer Loan Officer George Dillon. Mr. Dillon states that Mrs. Williams applied for a loan three months ago, and he denied the loan because of a slow-pay report from ABC Department Store that appeared on Mrs. Williams's credit report. Did the bank give Better Living a consumer report under the Fair Credit Reporting Act?

Yes. The bank gave credit information it received from another source.