I. INTRODUCTION
The federal Fair Credit Reporting Act (FCRA), found at 15 U.S.C. § 1681, became effective April 25, 1971; however, significant changes were made in the “Economic Growth and Regulatory Paperwork Reduction Act of 1996,” effective September 30, 1997. The FCRA addresses the use, timeliness and accuracy of credit information on consumers, providing disclosure duties on banks as “users” of consumer credit reports, restricting the use of such reports and requiring deletion of obsolete or inaccurate information. The 1996 amendments made changes regarding bank’s role: as a user or provider of information; in marketing activities (e.g., prescreening); as a user of customer information provided by bank affiliates; as an employer selecting personnel; and in making credit and certain deposit account decisions.
The FCRA is unique among consumer laws. There are no implementing regulations in that Congress did not delegate such authority to any agency. The Federal Trade Commission (FTC) has primary enforcement duties and issues commentaries in the form of written interpretative statements and staff opinions. Federal bank regulatory agencies have issued guidelines to assist the banks they supervise and have enforcement powers to ensure bank compliance with the FCRA. Bank examiners may determine, during a consumer compliance examination, whether a bank makes proper disclosures when adverse actions are based, in whole or in part, on information obtained from outside sources, obtains consumer permission to pull credit reports when required by law, and to determine whether the bank is a credit bureau and if so, whether the bank complies with the FCRA in that capacity. In addition, consumers may sue for damages if a bank does not meet its statutory obligations regarding reinvestigations when a consumer disputes arise.
II. DEFINITIONS
Understanding key terms used in the FCRA is necessary to ensure compliance. The following definitions are most important for banks as users of consumer reports.
The term Consumer means “an individual” and Person is “any individual, partnership, corporation, trust, estate, cooperative, association, government or governmental subdivision or agency, or other entity.”
A consumer report is “any written, oral, or other communication of any information by a credit bureau bearing on a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living” used or gathered to serve as a factor in establishing the consumer’s eligibility for: credit or insurance to be used primarily for personal, family, or household purposes; employment purposes; or any other “permissible purposes” authorized under § 1681b (See, Paragraph III).
Note the exclusions. The term consumer report does not include:
An excluded communication is a similar to an investigative consumer report made to a prospective employer for employment purposes and not for any other purpose. The term employment purposes, used in connection with a consumer report, means a report used to evaluate a consumer for employment, promotion, reassignment or retention as an employee. A consumer must give oral or written consent to the nature and scope of the communication prior to the collection of any information and the making of any communication to a prospective employer. When oral consent is given, the consumer must be provided written confirmation of such consent by the person making the communication no later than three business days after the communication was made. The person making the communication may not inquire into matters that would violate state or federal equal employment opportunity laws or regulations applicable to the prospective employer and must provide a written consumer disclosure no later than five business days about the nature and substance of all information in the consumer’s file at the time of the request along with written notification of the consumer’s right to request the information.
The term credit or insurance transaction that is not initiated by the consumer does not include the use of a consumer report by a person with which the consumer has an account or insurance policy, for purposes of reviewing the account or insurance policy or collecting the account.
The original FCRA adverse action definition had the same meaning as in the Equal Credit Opportunity Act (Reg. B), meaning that a bank must give a consumer notice of adverse action if a credit application is denied, an account is terminated or the terms of an account are unfavorably changed. The 1996 FCRA amendments expand theadverse actiondefinition to include: denial or cancellation of, increase in any charge for or reduction or other adverse or unfavorable change in terms of coverage or amount of insurance, existing or applied for; denial of employment or any other employment decision that adversely affects a current or prospective employee; and any action taken or determination made in connection with an application made or transaction initiated by a consumer or in connection with an account review that is adverse to the consumer’s interests. E.g., the definition may include the bank’s refusal to open a deposit account or issue a debit or ATM card if based on information that the consumer has a bad check history or outstanding liens. This means that there will be times when a FCRA adverse action notice is required, but a Reg. B adverse action notice is not. Since combined FCRA/Reg. B adverse action notices will not always be applicable, banks should have FCRA-only adverse action notices in place for non-credit situations. Adverse action notices may be made orally, in writing or electronically.
Investigative Consumer Report is “a consumer report or portion thereof in which information on a consumer’s character, general reputation, personal characteristics, or mode of living is obtained through personal interviews with neighbors, friends, or associates of the consumer reported on or with others with whom he is acquainted or who may have knowledge concerning any such items of information. Such information must not include specific factual information on a consumer’s credit record obtained directly from a creditor of the consumer or from a credit bureau when such information was obtained directly from a creditor of the consumer or from the consumer.”
Finally, firm offer of credit or insurance means “any offer of credit or insurance to a consumer that will be honored if the consumer is determined, based on information in a consumer report on the consumer, to meet the specific criteria used to select the consumer for the offer.” The offer may be further conditioned on one or more of the following:
NOTE: Throughout this article, the term credit bureau will be used in lieu of the FCRA’s term credit reporting agency.
III. PERMISSIBLE PURPOSES FOR FURNISHING OR USING CONSUMER REPORTS – 15 U.S.C. § 1681b
In General. A credit bureau may furnish a consumer report to the bank under the following circumstances:
A credit bureau may not furnish for employment purposes, or in connection with a credit or insurance transaction or a direct marketing transaction, a consumer report containing medical information about a consumer without consumer consent.
A. Furnishing and Using Consumer Reports For Employment Purposes
1. Disclosure to Consumer
A prospective employer may not obtain a consumer report for employment purposes unless a clear and conspicuous written disclosure has been made to the consumer, prior to the procurement of the report, that such report may be obtained for employment purposes. The consumer must provide written authorization for the report.
2. Certification from User
A credit bureau may furnish a consumer report for employment purposes only if the prospective employer certifies to the bureau that: written disclosure has been given to the job applicant that a consumer report may be obtained for employment purposes; the consumer has provided written authorization for the employer to procure the report; the employer will comply with “conditions on use for adverse actions,” if applicable (See, below); and such information will not be used in violation of any applicable Federal or State equal employment opportunity law or regulation. The credit bureau must provide the consumer with a written consumer rights summary.
3. “Conditions on Use for Adverse Actions”
In using a consumer report for employment purposes, before taking any adverse action based in whole or in part on the report, the employer must provide the consumer with a copy of the report and a written consumer rights summary (See Paragraph VI., B).
4. Public Record Information
Under 15 U.S.C. § 1681k, a credit bureau furnishing a consumer report for employment purposes by compiling and reporting information which are matters of public record and likely to have an adverse effect upon a consumer’s ability to obtain employment must: (1) at the time such public record information is reported to the user of such report, notify the consumer that public record information is being reported by the credit bureau, together with the name and address of the person to whom such information is being reported; or (2) maintain procedures insuring that whenever public record information likely to have an adverse effect on a consumer’s ability to obtain employment is reported, it is complete and up-to-date. Public record relating to arrests, indictments, convictions, suits, tax liens and outstanding judgments are considered up-to-date if the public record status of the item (at the time of the report) is reported.
B. Furnishing Credit or Insurance Transaction Report Not Initiated by Consumer
1. In General
A credit bureau may furnish a consumer report in connection with any credit or insurance transaction notinitiated by the consumer only: if the consumer authorizes the bureau to provide such report; or when the transaction consists of a “firm offer of credit or insurance”, the bureau has set up a means for the consumer to opt-out of prescreened lists and the consumer has not opted to be excluded from the bureau’s prescreened lists. Regulation B § 202.12(b)(7) requires the retention of certain information used in prescreened credit solicitations defined as “firm offers of credit” under the Fair Credit Reporting Act. In accordance with this rule, creditors must retain for 25 months (12 months for business credit) information about the criteria used to select potential customers, the text of any solicitation, and any correspondence related to complaints about the solicitation.
A consumer may elect to have his or her name and address excluded from any list provided by a credit bureau in connection with a credit or insurance transaction not initiated by the consumer, by notifying the bureau through its notification system or by submitting to the bureau a signed notice of election form. Once a consumer elects to opt-out, the bureau must inform the consumer that the election is effective only for a two-year period if the consumer does not submit a signed notice of election form. If requested by the consumer, the bureau must provide the form not later than five business days after receipt of the notification through the system. A consumer’s election to opt-out is effective five business days after the date on which the consumer notifies the bureau.
2. Limits on Information Received Regarding Offers of Credit or Insurance
The credit bureau may only report the consumer’s name and address, an identifier not unique to the consumer to be used by the bank solely for the purpose of verifying the consumer’s identity and other consumer information not identifying the relationship or experience of the consumer with respect to a particular creditor or other entity. A credit bureau cannot furnish the bank with a record of inquiries in connection with a credit or insurance transaction not initiated by a consumer.
3. Notification System
A credit bureau that furnishes a consumer report in connection with a credit or insurance transaction that is not initiated by a consumer, must establish and maintain a notification system, including a toll-free telephone number, which permits any consumer whose consumer report is maintained by the bureau to notify the bureau, with appropriate identification, of the consumer’s election to have the consumer’s name and address excluded from any such list of names and addresses provided by the bureau for such a transaction. The bureau must also annually publish (in a publication of general circulation in the area served by the bureau) a notification that information in consumer files maintained by the bureau may be used in connection with such transactions and the address and toll-free telephone number for consumers to use to notify the bureau of the consumer’s election.
C. Use of Credit Reports For Commercial Purposes
In an FTC staff opinion letter issued June 22, 2001, in response to the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency and the Office of Thrift Supervision (“the agencies”) written letter request, the FTC staff state that when an individual is personally liable for repayment of an extension of credit for business purposes, the business transaction may be viewed as involving a consumer, thereby providing a permissible purpose for a lender to obtain a consumer report. Based on this interpretation, § 604(a)(3)(A) of the FCRA allows a lender to obtain a consumer report on an individual in connection with a business credit transaction when the person is an individual proprietor, co-signer or guarantor.
The FTC staff opinion revised a prior staff interpretation issued on July 26, 2000, however the agencies agree with FTC staff that there would not be a permissible purpose under § 604 of the FCRA to obtain a consumer report on an individual for an extension of credit for a business purpose when the person would not be personally liable for repayment. This includes cases in which the individual is a shareholder, director or officer of a corporation, but neither guarantees or co-signs the loan, nor is an individual proprietor liable for the loan. When a commercial transaction is not one of the delineated “permissible purposes” under the Act, consumer reports may not be obtained without the individual’s written permission. Lenders may, however, obtain a consumer report under these circumstances with the individual’s written permission.
IV. CONSUMER REPORT INFORMATION – 15 U.S.C. § 1681c
A. Information Excluded from Consumer Reports
Unless otherwise allowed, no credit bureau may make a consumer report containing any of the following information: (1) bankruptcy cases that, from the date of entry of the order for relief report are more than 10 years old; (2) suits and judgments which, from date of entry, are more than seven years old or until the governing statute of limitations has expired, whichever longer; (3) paid tax liens which, from date of payment, are more than seven years old; (4) accounts placed for collection or charged-off and is more than seven years old; (5) arrest, indictment, or criminal conviction records which, from date of disposition, release, or parole, are more than seven years old; or (6) any other adverse information which is more than seven years old.
The seven-year period in items (4) and (6) begins, with respect to a delinquent account placed for collection (internally or by referral to a third party, whichever earlier), charged-off, or subjected to similar action, upon the expiration of the 180-day period beginning on the date of the commencement of the delinquency immediately preceding the collection activity, charge-off, or similar action.
NOTE: The above-stated time periods do not apply to cases of consumer credit reports used in connection with (1) a credit transaction or the underwriting of life insurance involving, or which may reasonably be expected to involve, a principal amount of $150,000 or more; or (2) the employment of an individual at an annual salary equal to, or which may reasonably be expected to equal $75,000 or more.
B. Information Required to be Disclosed
Any credit bureau that furnishes a consumer report that contains information regarding any bankruptcy case involving the consumer must include the chapter of such case arises if provided by the information source. If a bankruptcy case is withdrawn by the consumer before a final judgment, the credit bureau includes that fact in the report upon receipt of documentation certifying such withdrawal.
If a credit bureau is notified that a consumer’s credit account was voluntarily closed by the consumer, the bureau must indicate that fact in any consumer report that includes information related to the account. If a credit bureau is notified that the consumer is disputing information furnished to the bureau, it must indicate that fact in each consumer report that includes the disputed information.
V. INVESTIGATIVE CONSUMER REPORTS – 15 U.S.C. § 1681d
A bank may not procure or cause to be prepared an investigative consumer report on a consumer unless it is clearly and accurately disclosed to the consumer that an investigative consumer report including information as to character, general reputation, personal characteristics and mode of living, whichever are applicable, may be made. The written disclosure must be mailed or delivered to the consumer not later than three days after the date on which the report was first requested and must inform the consumer of the right to request additional disclosures and a written summary of consumer rights. The must certify to the credit bureau that it has made the consumer disclosures and that the person will comply with the “nature and scope” disclosures.
A. Disclosure on Request of Nature and Scope of Investigation
Any person who procures or causes to be prepared an investigative consumer report on a consumer must, upon written request by the consumer within a reasonable period of time after the receipt of the disclosure, must make a complete and accurate disclosure of the nature and scope of the investigation requested. This written disclosure is either mailed or delivered to the consumer not later than five days after the date the disclosure request was received from the consumer or such report was first requested, whichever is later.
A credit bureau cannot make inquiry in preparing an employment purpose investigative consumer report if the inquiry by the employer or prospective employer violates applicable Federal or State equal employment opportunity law or regulation.
Unless otherwise excepted, a credit bureau cannot furnish an investigative consumer report that includes that is public record information relating to an arrest, indictment, conviction, civil judicial action, tax lien, or outstanding judgment, unless the bureau has verified the accuracy of the information during the 30-day period ending on the date on which the report is furnished.
A credit bureau may not prepare or furnish an investigative consumer report containing information adverse to the consumer’s interest that is obtained through a personal interview with a neighbor, friend, or associate of the consumer or with another person with whom the consumer is acquainted or who has knowledge of such information, unless the bureau has followed reasonable procedures to obtain confirmation from an additional source that has independent and direct knowledge of the information; or the person interviewed is the best possible source of the information.
NOTE: Under 15 U.S.C. § 1681l, whenever a credit bureau prepares an investigative consumer report, no adverse information (other than public record information) may be included in a subsequent report unless such adverse information has been verified when making the subsequent report or unless the adverse information was received within three-months preceding the date the subsequent report is furnished.
VI. CONSUMER DISCLOSURES – 15 U.S.C. § 1681g
A. Information on File; Sources; Report Recipients
Every credit bureau must clearly and accurately disclose to the consumer: (1) all information in the consumer’s file at the time of the request, except credit scores or any other risk scores or predictors relating to the consumer; (2) information sources, except information sources acquired solely for use in preparing an investigative consumer report; (3) the identification of each person (including each end-user identified) that procured a consumer report for employment purposes, during the two-year period preceding the date on which the request is made or for any other purpose, during the one-year period preceding the date on which the request is made; (4) the dates, original payees, and amounts of checks any adverse consumer characterization is based in the file at the time of the disclosure; (5) a record of all inquiries received by the bureau during the one-year period preceding the request that identified the consumer relating to a credit or insurance transaction not initiated by the consumer.
B. Consumer Rights Summary Required to be Included with Disclosure
A credit bureau must provide, with each written consumer disclosure, a written summary of all consumer rights. If a credit bureau compiles and maintains files on consumers on a nationwide basis, it must also provide a toll-free telephone number established by the bureau, at which personnel are accessible to consumers during normal business hours. The summary of rights includes: (1) a brief description of the FCRA and consumer rights; (2) an explanation of how the consumer may exercise such rights; (3) a list of all federal agencies responsible for FCRA enforcement, including the agency addresses and phone numbers, in a form to assist the consumer in selecting the appropriate agency; (4) a statement that the consumer may have additional rights under State law and that the consumer may wish to contact a State or local consumer protection agency or a State attorney general to learn of those rights; and (5) a statement that a credit bureau is not required to remove accurate derogatory information from a consumer’s file, unless the information is outdated or cannot be verified.
VII. DISCLOSURES TO CONSUMER – 15 U.S.C. § 1681h
If consumers wish to access their own credit reports, the credit bureau must require such consumers to furnish proper identification. The disclosures are provided in writing unless otherwise authorized by the consumer (e.g., a consumer may specify that disclosures be made in person, at the place of business of the credit bureau where disclosures are regularly provided, during normal business hours, and on reasonable notice; by telephone, if the consumer has made a written request for disclosure by telephone; by electronic means, if available from the bureau); or by other reasonable means available from the bureau. The credit bureau must provide trained personnel to explain to the consumer any information furnished.
The consumer may be accompanied by one other person of choice, who also must furnish reasonable identification. A credit bureau may require the consumer to furnish a written statement granting permission to the credit bureau to discuss the consumer’s file in such person’s presence.
VIII. DISPUTED INFORMATION PROCEDURES – 15 U.S.C. § 1681i
A. Reinvestigations of Disputed Information
If the completeness or accuracy of any item of information contained in a consumer’s file at a credit bureau is disputed by the consumer and the consumer notifies the bureau directly of such dispute, the bureau must reinvestigate free of charge and record the current status of the disputed information, or delete the item from the file before the end of the 30-day period beginning on the date on which the bureau receives the notice of the dispute from the consumer. The 30-day period may be extended for not more than 15 additional days if the credit bureau receives information from the consumer during that 30-day period relevant to the reinvestigation.
Prior to the expiration of the five business-day period beginning on the date on which a credit bureau receives notice of a dispute from a consumer, the bureau must notify any person who provided information in dispute, at the address and in the manner established with the person. The notice must include all relevant information regarding the dispute that the bureau has received from the consumer. The credit bureau must promptly provide the person who provided the information in dispute all relevant information regarding the dispute that is received by the bureau from the consumer.
NOTE: A credit bureau may terminate a reinvestigation of information disputed by a consumer if it reasonably determines that the dispute is frivolous or irrelevant, including by reason of a failure by a consumer to provide sufficient information to investigate the disputed information. Upon making such determination, the bureau must notify the consumer no later than five business days, by mail or, if authorized by the consumer for that purpose, by any other means available to the bureau, that gives the reasons for the determination and identification of any information required to investigate the disputed information, which may consist of a standardized form describing the general nature of such information.
In conducting any reinvestigation, the credit bureau must review and consider all relevant information submitted by the consumer. If any information disputed by a consumer or information is found to be inaccurate or incomplete or cannot be verified, the credit bureau must promptly delete that information from the consumer’s file or modify that information, as appropriate.
If any information is deleted from a consumer’s file, it may not be reinserted unless the person who furnishes the information certifies that the information is complete and accurate. If any deleted information is reinserted, the credit bureau must notify the consumer of the reinsertion in writing not later than five business days after the reinsertion or, if authorized by the consumer for that purpose, by any other means available to the bureau. As part of or in addition to the notice, a credit bureau must provide a consumer (not later than five business days after the date of the reinsertion) a written statement that: the disputed information has been reinserted; the business name and address of any furnisher of information contacted and the telephone number of such furnisher, if reasonably available, or of any furnisher of information that contacted the credit bureau, in connection with the reinsertion of such information; and a notice that the consumer has the right to add a statement to the consumer’s file disputing the accuracy or completeness of the disputed information. A credit bureau must maintain procedures designed to prevent the reappearance in a consumer’s file, and in consumer reports on the consumer, of deleted information (other than information that is reinserted in accordance with the FCRA). Any credit bureau that compiles and maintains files on consumers on a nationwide basis must have an automated system through which furnishers of information to that bureau may report the results of a reinvestigation finding incomplete or inaccurate information in a consumer’s file to other such credit bureaus.
A credit bureau must provide written notice to a consumer of the results of a reinvestigation not later than five business days after the completion of the reinvestigation, by mail or, if authorized by the consumer for that purpose, by other means available to the bureau. As part of or in addition to the notice, a credit bureau must provide the consumer, prior to the expiration of the five-day period with a written statement containing the following: that the reinvestigation is completed; that the consumer report is revised as a result; that if the consumer so requests, a description of the procedure used to determine the accuracy and completeness of the information, including the business name, address and telephone number of any furnisher of information contacted in connection with such information is available within 15 days; the consumer’s right to add a statement to the consumer’s file disputing the accuracy or completeness of the information; and the consumer’s right to request that the credit bureau furnish notifications to any person the consumer designates who has received the prior consumer report for employment purposes (within the past two years) or for any other purposes (within the past six months).
B. Expedited Dispute Resolution
If a dispute regarding information is resolved by the deletion of the disputed information within three business days after the date on which the bureau receives notice of the dispute from the consumer, then the bureau may: provide prompt notice of the deletion to the consumer by telephone, including in such notice, or in a written notice accompanying a confirmation and revise consumer report provided, a statement of the consumer’s right that the bureau furnish notifications to any person the consumer designates who has received the prior consumer report for employment purposes (within the past two years) or for any other purposes (within the past six months; and provide written confirmation of the deletion and a copy of a consumer report after the deletion, not later than five business days after making the deletion.
C. Statement and Notification of Dispute
If the reinvestigation does not resolve the dispute, the consumer may file a brief statement setting forth the nature of the dispute. The credit bureau may limit such statements to not more than one hundred words if it provides the consumer with assistance in writing a clear summary of the dispute.
Whenever a statement of a dispute is filed, unless there is reasonable grounds to believe that it is frivolous or irrelevant, the credit bureau must note in subsequent consumer reports containing the information in question, that it is disputed by the consumer and provide either the consumer’s statement or a clear and accurate codification or summary thereof.
IX. ADVERSE ACTION – 15 U.S.C. § 1681m
A. Adverse Actions Taken Based on Information Contained in Consumer Reports
If any person takes any adverse action with respect to a consumer based in whole or in part on information contained in a consumer report, the person must provide the consumer with oral, written or electronic notice of:
B. Adverse Action Based on Information Obtained from Third Parties Other than Credit Bureaus
Whenever credit for personal, family, or household purposes is denied or the charge for such credit is increased either in whole or in part because of information obtained from a person other than a credit bureau bearing upon the consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living, the user of such information must, within a reasonable period of time, upon the consumer’s written request for the reasons for such adverse action received within sixty days after learning of such adverse action, disclose the nature of the information to the consumer. The user of such information must clearly and accurately disclose the consumer’s right to make such written request at the time such adverse action is communicated to the consumer.
Whenever credit for personal, family, or household purposes is denied or the charge for such credit is increased either in whole or in part because of information obtained from a person related by common ownership or affiliated by common corporate control to the person taking the action, bearing upon the consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living (and not including information solely as to transactions or experiences between the consumer and the person furnishing the information or information in a consumer report), the person must: notify the consumer of the action, including a statement that the consumer may obtain the information upon a written request from the consumer received within 60 days after transmittal of the notice; and disclose to the consumer the nature of the information upon which the action is based by not later than 30 days after receipt of the request.
C. Users Making Written Credit or Insurance Solicitations Based on Information Contained in Consumer Files
A person using a consumer report on any consumer in connection with any credit or insurance transactionnot initiated by the consumer, must provide with each written solicitation a statement that: information contained in the consumer’s consumer report was used in connection with the transaction; the consumer received the offer of credit or insurance because the consumer satisfied the criteria for credit worthiness or insurability under which the consumer was selected for the offer; if applicable, the credit or insurance may not be extended if, after the consumer responds to the offer, the consumer does not meet the criteria used to select the consumer for the offer or any applicable criteria bearing on credit worthiness or insurability or does not furnish any required collateral; the consumer has a right to prohibit information contained in the consumer’s file with any credit bureau from being used in connection with any credit or insurance transaction not initiated by the consumer; and the consumer may exercise the right to be excluded from credit screening lists (See above, Paragraph III, B). The name, address and toll-free telephone number of the appropriate notification system must be included in the notice.
A person who makes an offer of credit or insurance to a consumer under a credit or insurance transaction described above must maintain on file the criteria used to select the consumer to receive the offer, all criteria bearing on credit worthiness or insurability, as applicable, that are the basis for determining whether or not to extend credit or insurance pursuant to the offer, and any requirement for the furnishing of collateral as a condition of the extension of credit or insurance, until the expiration of the three-year period beginning on the date on which the offer is made to the consumer.
X. BANKS AS FURNISHERS OF INFORMATION – 15 U.S.C. § 1681s-2
A. Provide Accurate Information
1. Knowledge of or Notice and Confirmation of Errors
A bank may not furnish any information relating to a consumer to any credit bureau if the bank knows or consciously avoids knowing that the information is inaccurate. In addition, a bank may not furnish information relating to a consumer to any credit bureau if notified by the consumer, at the address specified by the bank for such notices, that specific information is inaccurate, and the information is, in fact, inaccurate.
2. Information Correction and Update
A bank that regularly and in the ordinary course of business furnishes information to credit bureaus about transactions or experiences with a consumer and has furnished information determined not to be complete or accurate, must promptly notify the credit bureau of that determination with any corrections or any additional information necessary to make the information provided complete and accurate, and must not furnish to the bureau any information that remains not complete or accurate.
3. Notice of Dispute
If the completeness or accuracy of any information furnished by a bank to a credit bureau is disputed by a consumer, and the dispute is communicated to the bank, the bank may not furnish the information to the credit bureau without notice that it is being disputed.
4. Notice of Closed Accounts
A bank that regularly and in the ordinary course of business furnishes information to a credit bureau regarding a consumer who has a credit account with the bank must notify the bureau of the voluntary closure of the account by the consumer, in the information that is regularly furnished for the period in which the account is closed.
5. Notice of Account Delinquency
A bank that furnishes information to a credit bureau regarding a delinquent account being placed for collection, charged-off, or subjected to similar action must, not later than 90 days after furnishing the information, notify the bureau of the month and year of the commencement of the delinquency that immediately preceded the action.
B. Duties of Banks upon Notice of Dispute
After receiving notice of a dispute from a consumer with regard to the completeness or accuracy of any information provided by a bank to a credit bureau, the bank must: conduct an investigation with respect to the disputed information; review all relevant information provided by the credit bureau; report the results of the investigation to the credit bureau; and if the investigation finds that the information is incomplete or inaccurate, report those results to all other credit bureaus to which the bank furnished the information and that compile and maintain files on consumers on a nationwide basis.
Investigations, reviews, and reports regarding information provided by the bank to a credit bureau must be completed before the expiration of the 30-day period under section 15 U.S.C. § 1681i within which the credit bureau is required to complete actions regarding that information.
XI. BANK SHARING OF CUSTOMER INFORMATION WITH AFFILIATES
In general, a bank is not subject to the FCRA’s regulations applicable to consumer reporting agencies if the bank communicates only transaction or experience information to third parties or among its affiliates. The definition of “consumer report” does not include a bank sharing with any other party information that solely relates to the bank’s transactions or experiences with consumers (See, Paragraph II. Definitions above). Also, a bank is not a consumer reporting agency if the bank shares with its affiliates other information that would normally be considered consumer report information if the bank does so in compliance with the consumer “opt-out procedure”, i.e., disclosed to consumer that such information sharing may occur and the consumer is given an opportunity to direct that the information not be shared.
EXAMPLE: A bank could disclose a consumer’s history of payment delinquency or disclose other information about the status of loans or deposits that the consumer has with the bank.
If a bank regularly passes on information in its files about a consumer, other than information solely about its transactions or experiences with a consumer, then it may become a “consumer reporting agency” under the FCRA. A consumer reporting agency is defined to include any person or business of any type that, for fees or for free, “regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties”, and that uses any means of interstate commerce to prepare or furnish such reports.
EXAMPLE: Unless it wants to become a consumer reporting agency and be subject to its regulations, a bank may not regularly give out information contained in credit or other applications that bear on the any of the following characteristics: creditworthiness, credit standing, credit capacity, character, general reputation, personal characteristics or mode of living to the extent such information is neither transaction nor experiential in nature. Also, a bank may not regularly give out information obtained in reports from consumer reporting agencies or any other non-experiential or non-transactional information obtained from a third party. A bank that obtains information as a “user” may become a consumer reporting agency if it subsequently conveys the information to another entity, even if an affiliate of the bank.
The FCRA permits the sharing of non-experiential or non-transactional information with affiliates, if the consumer has been given a clear and conspicuous right to opt out. The FCRA definition of “consumer report” excludes:
XII. FCRA’S RELATIONSHIP WITH GRAMM-LEACH-BLILEY PRIVACY PROVISIONS
The consumer privacy provisions in the Gramm-Leach-Bliley “Financial Modernization Act” (GLB) states that it does not modify, limit or supersede the operations of the FCRA, but does provide that the FCRA opt-out notice be included in initial and annual privacy notices provided to customers and consumers. Both GLB and the FCRA may apply to a bank’s disclosure of certain consumer information.
FTC “Interpretations” of the FCRA regulations appear to allow banks to share customer information with affiliates without becoming consumer reporting agencies. Although a bank’s sharing of nonpublic personal information qualifies for an exemption under GLB, it may still become a consumer reporting agency under FCRA if the information shared involves non-experiential or non-transactional information. A proposed FTC interpretation would require the opt-out notice to accurately explain: (1) the categories of opt out information about the consumer that the company communicates to others; (2) the categories of affiliates to which the company communicates the information; (3) the consumer’s ability to opt out; and (4) a reasonable means of opt out. The proposal included a sample opt out notice. No interpretation has been finalized as of this date. Until final interpretations or rules are issued banks may be advised not to share non-experiential or non-transactional information with third parties where such third parties might use the information for one of the purposes described within the definition of “consumer report.”