FCRA
What is the difference in procedures for a bank to: -establish a new loan -issue an additional card -increase a credit limit in the case of an EXTENDED ALERT or INITIAL ALERT
For EXTENDED ALERTS, a bank must contact the consumer IN PERSON
When is a risk-based pricing not required?
For adverse actions, or consumer lease transactions
How long does an active duty alert stay on a consumer report?
No less than 12 months
How long do initial fraud alerts stay on a consumer report?
No less than 90 days
What items on an ATM or Point-of-Sale receipt are prohibited?
More than 5 digits on the card Card expiration date
Negative information notice can be provided with:
Notice of Default Billings Statement; or any materials provided to the customers (NOT with TILA documents)
What is considered "Completing an investigation" after receiving a notice of dispute?
Report the investigation to the consumer reporting agency, modify, delete, or permanently block the reporting of that information
What two items must an employer provide if the applicant does not gain employment due to consumer report?
1. Copy of the report 2. Description in writing of the rights of the consumer
4 Reasons to legally obtain a credit report
1. In response to a court order or Federal Grand Jury subpoena 2. Written instructions from a consumer 3. To someone who intends to used the report in connection with a CREDIT TRANSACTIONS, EMPLOYMENT, underwriting of INSURANCE, LICENSING, valuing CREDIT RISKS, or for reasons BUSINESS TRANSACTIONS 4. Head of State or local child support enforcement agency.
What are the requirements for an Adverse Action Notice for FCRA if the information from a credit report WAS USED *in whole or in part* to make the decision? *even no credit history is a reason for denial and a credit report would be necessary to notify the consumer
1. Provide orally, written, or electronic 2. Statement that the consumer reporting agency did not make the decision 3. Right to a copy within 60 CALENDAR DAYS of the notice 4. Right to dispute 5. Name, address, and toll-free telephone number from the agency
What are the requirements for an Adverse Action Notice for FCRA if the information from a credit report WAS NOT USED to make the decision?
1. Right to file a request of the reasons for the denial 2. if the bank receives a request for the reason with 60 days, the bank must respond within a reasonable amount of time
Banks CAN MAKE SOLICITATIONS with information received from an affiliate (without initial notice and opt-out) IF what ONE of SIX things are true?
1. They already have a pre-existing business relationship 2. Communications are about employee benefits at the bank 3. Bank performs services on behalf of an affiliate (NA if the customer has already opted out) 4. Response to communication about bank's product's and services 5. Response to a consumer's authorization or rquest to receive solications 6. Bank's compliance with the affiliate marketing regulations would prevent if from complying with State insurance laws
If an adverse action is taken based on information obtained from an affiliate, what are the requirements in the adverse action notice?
1. the information came from an entity of common ownership 2. Bears upon the creditworthiness and 5 C's of credit of the applicant 3. Is not based solely on the transaction or experiences between the consumer and the person furnishing the information 4. the information is not a credit report 5. the consumer may obtain a disclosure of the nature of the information within 60 days.
When a bank has records of fraudulent transactions, who should those records be provided to?
1. the victim 2. law enforcement agency specified by the vitem 3. An law enforcement agency investigating the identity theft that was authorized by the victim to take receipt of those records
How many days does a bank have to conduct an INVESTIGATE AND COMPLETE after it received a notice of dispute from a consumer reporting agency?
30 days, with a possible extension to 45 days.
Delinquency notices to a credit agency must be sent no later than how many days of the month and year that the delinquency began?
90 days
What can a bank NOT do when there is a Fraud or Active Duty alert on behalf of the consumer?
A bank cannot: -establish a new loan in the name of the consumer - issue an additional card on an existing account -increase a credit limit
What is the credit score proxy method?
A calculation where a credit sets the material terms of credit based in whole or in part on a credit score 40/60 where 40 percent of consumers have high scores and 60 have low scores > 60 get the notice
What if an applicant does not have a credit score? How does a bank determine if it should send a risk-based pricing notice?
A risk-based pricing notice is REQUIRED as the bank should assume it is providing credit on Materially Less Favorable Terms
How long is the election of the opt-out?
AT LEAST 5 years
How long do adverse credit items and bankruptcy stay on consumer reports?
Adverse credit infromation: 7 years Bankruptcy: 10 years
When offering a prescreened offer, what must also be included?
An opt-out notice that says the offer was due to pre-screened criteria the toll-free number to Consumer Reporting Agencies
When is the notice of Home Loan Applicant provided?
As soon as practicable AFTER USING THE CREDIT REPORT for mortgages (closed or open-end for consumer purpose 1-4 family)
What is provided on the Notice to Home Loan Applicant?
Borrowers Name Address Telephone numbers of all credit reporting agencies that provide a credit scare Credit score Range of possible scores key factors that go into a score (cannot exceed 4)
Describe pre-existing business relationship between consumer and bank for FCRA
CURRENT financial contract between the bank and the consumer at the time of the solicitation of the affiliate marketing Purchase or lease by the consumer of the bank's goods or services/financial transaction between the bank and the consumer DURING THE 18 MONTH PERIOD preceding the date on the solicitation is sent Application or inquiry by the consumer regarding the product or service offered by that person DURING THE 3 MONTH period preceding the date on which the solicitation is sent
How can consumer elect to opt-out of prescreened lists?
Calling a toll-free number
How is a Risk-Based Pricing Notice provided?
Can be orally, in writing, or electronically and provided within 30 days of approved application for all loan types
What are FCRA solicitations?
Communication that is directed to a particular consumer that is based on eligibility information received from an affiliate. Telemarketing call Direct Mailer E-Mail
Constructive Sharing requirements for FCRA
Constructive sharing is when an affiliate markets the bank's products on behalf of the bank using eligibility of consumer using the affiliate's information of their consumers with pre-existing business relationship. AN OPT-OUT notice is NOT required
What does a consumer have to submit to have an extended alert?
Consumer's must submit ID theft reports and appropriate proof of identity to the nationwide credit reporting agencies
FCRA applicability- who does it protect?
Consumers with credit primarily for personal, family, or household purposes
Investigative Consumer Reports Disclosure requiresments
Disclosure contains a statement of the consumer's right to request other information about the report In writing Delivered 3 business days after the investigative report was requested Must show the consumer reporting agency the correct disclosure requirements
How many years should a bank recalculate their credit score proxy?
Every 2 years
True or False: After the 5 year opt-out, the bank can begin sending solicitations based on eligibility information it receives from an affiliate to a customer.
FALSE. A bank must send a RENEWAL NOTICE as another opportunity to OPT OUT
Consumer reports for employment purposes
FCRA requires WRITTEN permission before it may be obtained
what is the requirement for credit and debit card issuers when a consumer has a change of address?
FCRA requires that the CARD ISSUERS (the bank) have procedures to assess the validity of an address change IF during a short period of time receives a request for an additional or replacement card for the same account (potential fraud)
True or False: A bank does not have to notify credit agencies of account closures
False
How does tiered pricing and risk-based pricing work together?
If the bank has 4 OR FEWER pricing tiers, a risk-based pricing notice is PROVIDED TO ALL EXCEPT TOP TIER If 5 OR MORE, Risk-based pricing notice provided to all EXCEPT the TOP TWO TIERS
Definition of a consumer reporting agency
In WHOLE or in PART of assembling or evaluating consumer credit information for purpose of providing information to consumer reports to 3rd parties
If the loan is joint credit, how are the risk-based pricing notices mailed?
It can be a single notice if it is address to both borrowers and they are at the same address. If it is a different address, each consumer must be mailed a separate notice.
How long can an extended alert last for consumers who allege they are victims of identity theft?
It can last up to 7 years
When is the Risk-Based Pricing Notice provided for CLOSED-END Credit?
It is provided after the decision to approve the application and before consummation
When is the Risk-Based Pricing Notice provided for OPEN-END Credit?
It is provided after the decision to approve the application and before the first transaction
Does this scenario qualify to send an opt-out opportunity? A bank obtaining selection information (qualifiers) from an affiliate to send marketing materials to its own customers who might be eligible for the products sold by the affiliate?
NO. Because the bank is sending out the marketing materials on behalf of the affiliate
Does this scenario qualify to send an opt-out opportunity? A bank marketing its own products
No. They can market their own products to all their consumers
Is this a consumer report regulated by FCRA? A report telephoned by a Bank A loan officer to Bank B loan officer, describing B A's lending experience with a borrower.
No, because Bank A is just reporting its OWN experience. A bank can discuss its OWN transaction with a third-party but as soon as it discusses anything other than that, it would be a consumer report
Does this scenario qualify to send an opt-out opportunity? A bank sending information/marketing materials to individuals whose names are obtained on public lists (like a phone book)
No- and they can market their affiliate's products as well.
Is it a violation if the bank used medical debt in the same way it would consider retail debt?
No.
Is it a violation if the bank used medical information in determining credit decisions related to debts, expenses, income, benefits, assets, collateral, or the purpose of the loan, including use of the loan proceeds?
No.
Is it a violation if the bank used power of attorney needed when making credit decisions?
No.
Risk-Based Pricing Notice is required when:
PERSONAL, family, or household purposes LOAN terms are MATERIALLY LESS FAVORABLE than the terms the bank has extended to other consumers (APR & FEE)
What is the record retention for the criteria used for the product (pre-screened and other underwriting criteria)?
Period of 3 years, beginning the date a offer was made to the consumer
To receive a eligibility (qualifying) information about a consumer from an affiliate (think: Optum Bank's affiliate United Health), a bank must have what know what?
That the consumer has a disclosure and the opportunity to Opt-Out
What does a bank do if they received a fraud notice from a consumer reporting agency as a result of identify theft?
The bank must have procedures to ensure the information is not re-reported to the consumer reporting agency
what is the requirement in FCRA when a credit reporting agency provides a notice of address discrepancy to the bank if the address "substantially differs" from the address on file?
The bank must: 1. Have POLICIES AND PROCEDURES for furnishing to the reporting agency an address for the consumer 2. CONFIRM the correct address
Which of the following methods is NOT valid for determining which consumer borrowers should receive a risk-based pricing notice? - The credit score proxy method - The direct comparison method - The tiered pricing method - The comparative file method
The comparative file method
If a creditor is not funding a loan, who is responsible for sending a risk-based notice?
The creditor
Using medical information when determining eligibility of credit, according to FCRA, generally?
The regulation prohibits banks from obtaining and using medical information in connection with any determination of the consumer's eligibility, or continued eligibility for credit.
True or False: Banks can determine who should get the Risk-Based Pricing Notice by comparing material terms to other consumers for a specific type of credit product
True
True or False: Risk-based pricing notices are not mailed to co-signers, guarantors, surety, or endorse of a loan
True
True or False: A bank can use market research for their new products to determine the cut-off score for their credit score proxy for sending a risk-based pricing method
True And it must be reculatated within 1 YEAR of introducing the product
True or False: Prescreened Consumer Reports can be used to extend firm offers of credit or insurance to consumer
True unless consumers have election to opt out
Prescreened Consumer Reports Bank must make a firm offer of credit or insurance but is not required to grant credit or insurance if the consumer is not credit worthy after the consumer responds and the bank ater finds that required collateral (DTI, for example) is not sufficient
True; The bank must send an adverse action notice
Does this scenario qualify to send an opt-out opportunity? A bank's affiliate receiving individualized information on the bank's customers and selecting them to receive marketing materials.
Yes, because the affiliate is receiving ALL credit information from ALL the bank customers and selecting those. If it had sent the bank criteria and the bank creates the list, it would not need an opt-out notice.
Is it a violation if the bank uses a consumer's physical, mental, or behavioral health condition, history, type of treatment, or prognosis into account as part of any determination?
Yes.
Can a bank report negative information to a consumer reporting agency BEFORE providing information to the consumer?
Yes. Banks can send a notice EITHER before negative information is provided to a nationwide consumer reporting agency, or within 30 days AFTER reporting the negative information
Is this a consumer report: A borrower applies for an apartment and uses her bank as a credit reference. The apartment company calls the bank and asks for information about the borrower. The bank states that she has insufficient checks on her account, but paid off a car loan. However, the bank recently denied the borrower for a loan because of a slow-pay report from a department store that appeared on the borrower's credit report.
Yes. The bank gave credit information from another source.
If JOINT applicants apply for a mortgage loan to purchase a single-family residence, and the lender uses both credit scores
both credit scores can be disclosed on ONE DISCLOSURE
What is included as "negative information"?
delinquencies late payments insolvency any form of default
