Fair credit reporting Act

1. Fair credit reporting Act

2. Purpose and Scope • Serves the following principal purposes: • To regulate the consumer-reporting industry. • To prohibit unfair actions from CRAs • To restrict the availability and use of consumer reports. • Applies to all types of credit

3. Definitions • Consumer: An individual. • Consumer Report • Any oral, written, or other communication of information by a CRA. • Information about consumer’s creditworthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living. • Usedin establishing a consumer’s eligibility for any of the purposes permitted under the FCRA. • Consumer-Reporting Agency: Assembles consumer information for the purpose of furnishing consumer reports to third parties.

4. Permissible Purposes for Consumer Reports • Determining a consumer’s eligibility for an account or a service • Court Orders • Prescreening • Member’s Permission

5. Adverse Action Notice • Required when the credit union denies or increases the cost of a member’s credit or deposit account based on third-party information. • May be combined with the ECOA notice

6. Adverse Action Notice Contents • If Information Was From a Credit Bureau Information: • Credit bureau information was used • The name, address and telephone of the credit bureau • The credit bureau did not make the decision to take the adverse action. • Right to a free credit report • Right to dispute credit report • Credit Score Information, if applicable • If Information Was From Other Outside Sources: • The nature of information or right to request it • Source of the information (optional) • If the Information Was From the Credit Union’s Own Records: • No obligation

7. Don’t Become a CRA! • You can report your own transactions and experiences to others. • Do not report information received from third parties to others.

8. Negative Report Notice • Provide when you report negative information about a debtor to a CRA. • Provide before or after reporting information. • Use Model notices! • Variety of delivery methods available.

9. Notice to Home Loan Applicants • Required if you use or obtain credit scores in connection with a mortgage loan. • Contents: • The “Notice to Home Loan Applicants” • The credit score(s) used in connection with the application • Key factors that make up the credit score(s) • Provide as soon as “reasonably practical.” • Required whether or not the loan is approved. • Use the model notice!

10. Risk Based Pricing Notice Required when: • A credit report is used • A consumer’s loan terms are “materially less favorable”

11. Risk Based Pricing Notice • Applies to consumer credit only. • Use Model Forms! • There are various methods to determine who gets a notice. • Various Exceptions Apply.

12. Obligations of Furnishers of Data • Report correct information • Correct and update information • Establish policies and procedures to ensure accuracy • Investigate disputes • Report voluntary account closures • Report correct delinquency dates • Respond to ID Theft Notifications

13. Fraud and Active Duty Alerts • Fraud Alerts: Initial period of 90 days, or an extended period lasting seven years. • Active Duty Alerts: during the period of active duty.

14. Responding to Alerts • Maintain procedures to form a “reasonable belief” of the true identity of a member. • Use telephone numbers if provided on the report. • Follow procedures and document results before issuing new credit or new access devices.

15. ID Theft Red Flags • A policy and program is required • Applies to consumer accounts • Patterns, practices, or activities that indicate a possible risk of ID theft

16. Program Requirements • Risk-based • Board approval • Board and/or senior management involvement • Training • Service provider oversight • Procedures

17. Special rules for card issuers Validate change of address requests: • Required when a change-of-address notice and a new card request are received close together • Issuer must validate address before issuing a new card

18. Address Discrepancies • Credit unions must have procedures for responding to address discrepancy reports received from a CRA. • Credit unions must have procedures for providing updated addresses to a CRA.

19. Prescreening Rules • Notice must accompany all prescreened offers: • Long Notice • Short Notice • Pre-screened Offers • A credit union must make an offer of credit to all members who pass the prescreening process. • The offer can contain certain conditions • Record retention requirements apply

20. Medical Information Certain rules and prohibitions apply to the acquisition and use of medical information contained in consumer reports

21. Disposal of Records • Credit unions must procedures for disposing of information contained in consumer reports. • Follow Information Security Guidelines!