Chapter 3 FCRA & FACTA & GMBA Flashcards
Fair Credit Reporting Act (FCRA or Reg V)
-Created in 1970
-Restricts use of credit reports and requires accuracy on credit reports.
-Requires disclosures: Risk-Based Pricing Disclosure, Adverse Action Notice
Per FCRA what are the acceptable circumstances that a credit reporting agency can furnish consumer credit reports?
-In response to a court order or Federal rand Jury subpoena
-Per written instructions from the consumer
-Per request by the head of a child support enforcement agency
-To an agency administering a state plan under section 454 of the social security act
-To a person (including MLO) when they have reason to believe any of the following:
-They intend to use it for a credit transaction or review or collection of an account
-Use for employment purposes
-Use for underwriting of insurance for consumer
-Use to determine consumer’s eligibility for a license or other benefit granted by governmental agencies.
What does an Adverse Action Disclosure do
-Disclose which credit reporting agency provided credit information
-Disclose that the credit reporting agency is not responsible for denying the loan.
-Disclose that the credit reporting agency will provide a free copy of the exact report used. (MLOs cannot provide but can tell borrowers their score.)
-Be given within 30 days of the credit decision.
Consumers are entitled to 1 free copy of their credit report for the following reasons;
-Adverse action against you because of information on your credit report
-They are the victim of identity theft
-They are on public assistance
-They are unemployed but expect to apply for employment within 60 days
When must a FCRA Adverse Action Notice be delivered?
When the reason for denial pertains to the consumers credit
Fair and Accurate Credit Transaction Act (FACTA)
Created in 2003 to improve consumer access to credit information giving them the right to 1 free credit report each year from each credit agency. Provides avenues for the resolution of customer disputes and helps prevent identity theft.
Disclosures: Notice to Home Loan Applicant
Per FACTA what must be disclosed to the consumer as soon as is reasonably practical:
Notice to Home Loan Applicant Disclosure
When must a creditor disclose negative information to a consumer after disclosing the same information to a credit agency?
30 days
When must a credit dispute be resolved?
30 days after the dispute was received.
Economic Growth, Regulatory Relief and Consumer Protection Act
Passed in 2018 to amend FCRA and require consumer reporting agencies to provide national security freezes free to consumers.
National Security Freeze
restricts lenders from obtaining access to credit reports making it harder for identity theft.
Summary of Consumer Rights
Summary of rights to obtain and dispute information in consumer reports and obtain credit scores.
How long does a fraud alert stay active
1 year
4 Elements of Red Flag Rule
-Program must include policies and procedures to identify red flags of identity theft
-The program must be designed to detect the red flags that have been identified. (example: Fake ID)
-The program must spell out actions to be taken when a red flag is detected.
-The program must detail how to keep current against new threats.
What is a Red Flag
Patterns, practices, or specific activities that indicate the possibility of identity theft.
Disposal Rule
Part of FACTA dictating that institutions dispose of consumer information properly.
Gramm-Leach-Bliley Act (Reg P or GLBA)
Created in 1999. Protects confidentiality of personal information.
Establishes minimum federal privacy standards.
3 arms
-Safeguard Rule
-Financial Privacy Rule (Opt Out Rule)
-Pretexting Rule
Safeguard Rule
Requires companies to have a written information security plan. Must include:
-Designates 1 or more employees to coordinate the information security program.
-Identify and assess the risks to consumer information and evaluate the effectiveness of current safeguards.
-Design and implement a safeguard program and regularly monitor it.
- Select service providers that can maintain appropriate safeguards.
-Evaluate and adjust the program er relevant circumstances and changes.
Financial Privacy Rule (Opt Out Rule)
Institutions are required to provide a detailed privacy policy disclosure to the application with the option to opt-out if they are going to share or sell nonpublic personal information.
Pretexting Rule
Prohibits
-someone from obtaining information under false pretenses
-Use of forged, counterfeit, lost, or stolen documents
-asking someone to obtain another person’s information using false statements.
