Topic: Fair Credit Reporting Act (FCRA)
-
An individual applied for a consumer loan and was denied. We sent him an adverse action notice regarding our credit decision. Subsequently, his wife agreed to co-sign on the loan with him, so she added her name to his original application. We have decided to deny that application, too. Is the wife as a co-applicant entitled to an adverse action notice? If so, what should the notice contain?
—
by
Yes, the wife is entitled to an adverse action notice, but only if your denial was based at least in part on the information in her consumer report (which appears to be the case here). Adverse action notices are required by two different laws. The Equal Credit Opportunity Act (ECOA) — as implemented by Regulation…
-
If we investigate a customer’s direct dispute regarding their credit card account and determine that the dispute is frivolous, what is our obligation under Regulation V when our response is returned as undeliverable? What if our response is returned with a forwarding address? Are we required to attempt a new mailing to the new address?
—
by
In our view, if your direct dispute response is returned as undeliverable — and you have no other customer contact information — your bank has no further obligation to resend that notice. However, if your response is returned with a forwarding address, your bank should resend the notice to the new address. Regulation V requires…
-
An unidentified individual recently cashed several checks totaling about $10,000. The individual used a customer’s ID to cash several forged checks that were drawn on another person’s account. We reimbursed the payor bank for the losses but are not charging the customer. This incident prompted us to review our identity theft policy. When a customer is a victim of identity theft, we generally require them to fill out an ID Theft Affidavit. However, our policy is not clear on whether this incident constituted identity theft. Are there any regulations that would clarify when identity theft occurs? Also, do we need to file a SAR?
—
by
If your institution’s ID Theft Affidavit is used for purposes of fulfilling the FCRA’s obligations to provide certain records to consumers who are victims of identity theft, we recommend using that law’s definition of an identity theft victim: “a consumer whose means of identification or financial information has been used or transferred (or has been…
-
Our bank is hiring for an open position. We pulled credit reports for the applicants (with their consent), without obtaining numerical credit scores. One applicant had a number of negative items on their report. The hiring employee emailed the applicant regarding the report, identifying the negative items and including verbiage from the report regarding those items. Would this violate the Fair Credit Reporting Act (FCRA)?
—
by
No, we do not believe that sharing information from a job applicant’s credit report with that applicant would violate the FCRA. Nothing in the FCRA prohibits the sharing of information from a credit report with the consumer who is the subject of the report. In fact, the FCRA may require your bank to share some…
-
We have a consumer loan with a co-signer who did not receive any proceeds of the loan. Our agreement states that if the debt is ever in default, that fact may become a part of the co-signer’s credit record. Does the Consumer Fraud and Deceptive Business Practices Act require us to provide a co-signer on a consumer loan with fifteen days’ notice before reporting a delinquent loan to credit reporting agencies? What negative information can we report with respect to the co-signer? Can we report the borrower’s late payments on the co-signer’s file with the credit bureaus?
—
by
Yes, your bank must notify a co-signer of the primary borrower’s delinquency at least fifteen days before reporting adverse information about the co-signer to a credit reporting agency. The Illinois Consumer Fraud and Deceptive Business Practices Act (“Consumer Fraud Act”) requires lenders to notify co-signers before reporting adverse information to a consumer reporting agency. While…
-
Can we email teller receipts to our customers? What information should we include in the receipts?
—
by
Yes, we believe that your bank may provide electronic receipts for teller transactions, without needing to meet the disclosure and consent requirements in the federal E-Sign Act. We are not aware of any federal or Illinois law that requires financial institutions to issue receipts for basic teller transactions, such as deposits and withdrawals (in fact,…
-
We recently acquired some affiliates and had to update our privacy notice. Our notice permits customers to opt-out of information sharing by calling a toll-free number. Can we also accept opt-outs on our website or in person, even though those methods are not listed in our privacy notice?
—
by
Yes, we believe that you may accept opt-outs by any method, even if those methods are not listed in your privacy notice. Regulation P requires financial institutions to provide and disclose to customers “a reasonable means” to opt out of information sharing, and Regulation V requires “a reasonable and simple method to opt out.” Neither…
-
We use a third party vendor that prepares credit reports on our loan applicants. Sometimes the reports show multiple names and addresses associated with the applicant’s social security number under “SSN Validation.” Our customers disclaim any knowledge of these names and addresses, and the other information on their reports appears to be accurate. The report does state that its information cannot be used “in establishing a customer’s eligibility for credit, residence, or employment.” Should we require the customers to contact the credit bureaus or certify in writing that they are unaware of who these people are, or is there other information we should require?
—
by
From what you have told us, it appears that you are describing a vendor’s proprietary report and not a credit report issued by a credit bureau. If so, it is possible the additional names and addresses are being provided as part of your vendor’s process for validating an applicant’s social security number (which may be…
-
When we report negative information about a customer to a credit bureau, what notice must we provide to the customer? Do we have to provide a disclosure for every delinquent loan? Should we provide the disclosure before reporting, or within a specified number of days after reporting?
—
by
The Fair Credit Reporting Act (FCRA) requires you to provide customers with a notice before furnishing negative information to a credit bureau. Regulation V provides two model forms of notice for this purpose. While the FCRA and Regulation V do not require the use of these model notices, they do provide a safe harbor when…