Podcast
Questions and Answers
Under the FCRA, when is a creditor required to disclose a consumer's credit score?
Under the FCRA, when is a creditor required to disclose a consumer's credit score?
What information must be included in the disclosure of a consumer's credit score, as required by the FCRA?
What information must be included in the disclosure of a consumer's credit score, as required by the FCRA?
When is a creditor required to disclose the identity of the credit reporting agency that supplied the credit score?
When is a creditor required to disclose the identity of the credit reporting agency that supplied the credit score?
What additional disclosures are required if adverse action is taken based on information in a consumer report?
What additional disclosures are required if adverse action is taken based on information in a consumer report?
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What is the purpose of an opt-out notice requirement under the FCRA?
What is the purpose of an opt-out notice requirement under the FCRA?
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Which organization was granted rule-making authority under the FCRA by the Dodd-Frank Act?
Which organization was granted rule-making authority under the FCRA by the Dodd-Frank Act?
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What is a free fraud alert notification under the FCRA, and what does it enable a consumer to do?
What is a free fraud alert notification under the FCRA, and what does it enable a consumer to do?
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What is the purpose of the FACT Act?
What is the purpose of the FACT Act?
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Which of the following is NOT a type of fraud alert available under credit bureau regulations?
Which of the following is NOT a type of fraud alert available under credit bureau regulations?
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What is the maximum duration of an active-duty fraud alert?
What is the maximum duration of an active-duty fraud alert?
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What specific documentation is required to place an extended fraud victim alert on a credit report?
What specific documentation is required to place an extended fraud victim alert on a credit report?
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Which of the following is NOT considered a permissible purpose for providing a consumer credit report, as defined by FCRA and FACTA?
Which of the following is NOT considered a permissible purpose for providing a consumer credit report, as defined by FCRA and FACTA?
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What is the duration of an extended fraud victim alert?
What is the duration of an extended fraud victim alert?
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Which of the following is NOT required to be included in a consumer credit report?
Which of the following is NOT required to be included in a consumer credit report?
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Under what circumstances is credit bureau information allowed to be provided in response to a court order?
Under what circumstances is credit bureau information allowed to be provided in response to a court order?
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What does the term "covered account" refer to under the Red Flag rules?
What does the term "covered account" refer to under the Red Flag rules?
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Which of the following is NOT considered a "red flag" under the Red Flag rules?
Which of the following is NOT considered a "red flag" under the Red Flag rules?
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What is the purpose of a written Identity Theft Prevention Program required by the Red Flag rules?
What is the purpose of a written Identity Theft Prevention Program required by the Red Flag rules?
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Which of the following is NOT a category of red flags to consider under the Red Flag rules?
Which of the following is NOT a category of red flags to consider under the Red Flag rules?
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Which of the following entities are NOT subject to the Red Flag rules?
Which of the following entities are NOT subject to the Red Flag rules?
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What is the purpose of the "Dodd-Frank Act"'s provisions related to credit scores?
What is the purpose of the "Dodd-Frank Act"'s provisions related to credit scores?
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What is the primary difference between a temporary fraud alert and an extended fraud victim alert?
What is the primary difference between a temporary fraud alert and an extended fraud victim alert?
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What is a key difference between the FCRA/FACTA regulations and the Red Flag rules?
What is a key difference between the FCRA/FACTA regulations and the Red Flag rules?
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Which of the following is NOT a requirement for entities offering covered accounts under the Red Flag rules?
Which of the following is NOT a requirement for entities offering covered accounts under the Red Flag rules?
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Study Notes
Fair Credit Reporting Act (FCRA) and Amendments
- FCRA became effective in 1971, amended by the FACT Act of 2003, and further amended by the Dodd-Frank Act of 2010.
- The Consumer Financial Protection Bureau (CFPB) gained rule-making authority under FCRA (with exceptions) via the Dodd-Frank Act.
- CFPB restated FCRA regulations in 12 CFR Part 1022 (76 Fed. Reg. 79308) in 2011.
Consumer Disclosure Requirements
- Creditors must disclose credit scores when used for credit term decisions.
- Disclosure must include:
- Explanation that a credit score is a number reflecting consumer report information.
- Statement that the credit score is part of loan term determination, and credit scores are based on credit use and history.
- Identification of the credit scoring model used.
- Range of possible credit scores.
- Main factors affecting the credit score adversely.
- Date of credit score creation, and the credit reporting agency that provided the score.
- Additional disclosures required for adverse actions based on consumer reports:
- Oral, written, or electronic notice of adverse action.
- Consumer reporting agency's name, address, and toll-free number.
- Statement that the reporting agency did not make the decision and cannot explain the reasons.
- Notice of consumer's right to a free credit report and to dispute report accuracy.
Opt-Out Notices and Identity Theft
- FCRA mandates opt-out notices when lenders use prescreened reports for credit offers.
- Provisions to address identity theft include:
- Enabling consumers to add free fraud alert notifications to credit reports.
- A fraud alert at one bureau applies to all three.
- Instructions to verify identities for credit applications.
- Three types of fraud alerts:
- Temporary/initial alert (90-day minimum, one-year maximum, renewable).
- Active-duty alert (protects military, one-year maximum, unless removed).
- Extended fraud victim alert (seven years).
- Alert requires submission of a law enforcement report.
Access to Consumer Reports and Data
- Provisions for improved access to consumer report information.
- Dodd-Frank Act mandates credit score disclosure when used for adverse actions or risk-based pricing.
Covered Entities and Account Types
- Entities covered by FCRA/FACTA include: procurers/users of credit information (creditors, purchasers of dealer paper, deposit account providers), and furnishers/transmitters of information.
- “Creditor” defined as persons who regularly extend, renew, or continue credit and their assignees. Creditors may potentially be other parties with a legitimate business need to access consumer reports.
- Covered accounts: personal, family, or household accounts permitting multiple payments/transactions, and accounts with foreseeable identity theft risks.
"Red Flag" Rules
- The FTC retains authority for identity theft rules (Red Flag rules, 16 CFR Part 681).
- Red flag is any pattern/practice that indicates possible identity theft.
- Red flags include: alerts from bureaus or fraud services, suspicious documents, unusual account activity, notification from customers/authorities about possible fraud.
- Financial institutions with covered accounts must develop and implement written Identity Theft Prevention Programs including detection, prevention, and mitigation of identity theft losses.
Contents of Credit Reports
- Required information: bankruptcy information, key factors affecting credit scores, account closure indications, consumer dispute indications, full credit card account numbers, and address discrepancies.
- Excluded information: bankruptcies discharged over 10 years prior. Civil suits, judgments, arrest records, paid tax liens and collection/charge-off accounts from beyond 7 years. Exceptions for statute of limitations longer than 7 years. Medical service information may be withheld. Some criminal convictions may be reported although generally excluded.
Permissible Purposes for Credit Reports
- Permissible purposes: court orders, written consumer instructions, credit extensions, employment, insurance underwriting, license eligibility determination, valuations/risk assessments, legitimate business needs, consumer-initiated business transactions, account review, government-sponsored travel charge cards, child support enforcement, and liquidation of failing institutions.
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Description
This quiz covers the Fair Credit Reporting Act (FCRA) and its amendments, including key provisions established by the FACT Act and the Dodd-Frank Act. Participants will explore consumer disclosure requirements for credit scores and the role of the Consumer Financial Protection Bureau (CFPB) in enforcing these regulations. Test your knowledge on these essential components of consumer finance law.
