Fair Credit Reporting Act (FCRA)

Question 1

Fair Credit Reporting Act Purpose?

Answer 1

Ensure accuracy, fairness, and privacy of consumer personal information handled by consumer reporting agencies (CRAs).

Question 2

FCRA Enacted by Congress in ?

Answer 2

1970

Question 3

Regulatory Agencies:

• Primary: Consumer Financial Protection Bureau (CFPB)
• Secondary: _________ __________ ______________ (FTC)

Answer 3

Federal Trade Commission

Question 4

Known as Regulation V ?

Answer 4

True

Question 5

Covered Transactions

• Use of credit reports,
• consumer investigatory reports,
• employment background checks ?

T/F

Answer 5

True

Question 6

Consumer Report

Answer 6

Information from a CRA relating to a consumer’s credit worthiness, credit standing, credit capacity, character, personal characteristics, or mode of living

Question 7

Consumer Reporting Agency (CRA)

Answer 7

Person/entity assembling or evaluating consumer credit information to provide reports to third parties.

Question 8

Prohibited Practices

• Furnishing reports for non-permissible purposes.
• Providing inaccurate information knowingly.
• Including outdated negative financial information in reports.
• Releasing disputed information without indicating the dispute.

Answer 8

True

Question 8

Creditor

Answer 8

Person regularly extending, renewing, or continuing credit.

Question 9

Penalties for Violations

• Civil Liability:
  
  • Willful noncompliance: Actual damages or $100-$________ plus punitive damages, costs, attorney’s fees.
  • False pretenses: Actual damages or $1,000.
  • Negligent noncompliance: Actual damages, costs, attorney’s fees.
• Criminal Penalties:
  
  • False pretenses: Fines and/or imprisonment up to ____ years.
  • Unauthorized disclosures by CRA employees: Fines and/or imprisonment up to 2 years.

Answer 9

$1,000
2 years

Question 10

What is the primary purpose of the Fair Credit Reporting Act (FCRA)?
- a) To regulate the interest rates on loans
- b) To ensure the accuracy, fairness, and privacy of consumers’ personal information
- c) To provide grants for consumer education
- d) To reduce the number of credit reports requested by lenders

Answer 10

To ensure the accuracy, fairness, and privacy of consumers’ personal information

Question 11

Which regulatory agency has general authority to enforce compliance with the FCRA?
- a) Federal Trade Commission (FTC)
- b) Federal Reserve
- c) Consumer Financial Protection Bureau (CFPB)
- d) Office of the Comptroller of the Currency (OCC)

Answer 11

The CFPB has general authority to enforce compliance with the FCRA, although the FTC retains some rulemaking and enforcement authority.

Question 12

What type of information is included in a consumer report according to the FCRA?
- a) Only financial account balances
- b) Information about a consumer’s character, personal characteristics, and mode of living
- c) Medical history and diagnoses
- d) Personal emails and text messages

Answer 12

b. Information about a consumer’s character, personal characteristics, and mode of living

A consumer report includes information about a consumer’s creditworthiness, character, and personal characteristics.

Question 13

Which of the following is NOT considered a permissible purpose for obtaining a consumer report under the FCRA?
- a) Consumer’s request for their own credit report
- b) Employment background check with the consumer’s consent
- c) Personal curiosity without the consumer’s knowledge
- d) Underwriting of life insurance

Answer 13

c) Personal curiosity without the consumer’s knowledge

Question 14

What is a “fraud alert” in the context of the FCRA?
- a) An alert indicating a consumer’s bankruptcy
- b) A statement in a consumer’s file indicating they may be a victim of fraud or identity theft
- c) A notice to lenders about a consumer’s credit limit
- d) An alert about a consumer’s recent loan application

Answer 14

A statement in a consumer’s file indicating they may be a victim of fraud or identity theft

Question 14

How long can a bankruptcy case be reported on a consumer report?
- a) 5 years
- b) 7 years
- c) 10 years
- d) Indefinitely

Answer 14

10 years - Bankruptcy cases can be reported for up to 10 years on a consumer report.

Question 15

What must a furnisher do if a consumer disputes the accuracy of information provided to a CRA?
- a) Ignore the dispute if it seems frivolous
- b) Report the dispute to the CRA and investigate
- c) Remove the disputed information immediately
- d) Wait for the CRA to resolve the issue

Answer 15

b) Report the dispute to the CRA and investigate

Question 16

Under the FCRA, what is the penalty for willful noncompliance?
- a) Actual damages, punitive damages, costs, and attorney’s fees
- b) A warning letter from the CFPB
- c) Mandatory credit counseling for the violator
- d) Loss of the violator’s credit rating

Answer 16

a. Actual damages, punitive damages, costs, and attorney’s fees

Question 17

What type of adverse action requires notification to the consumer?
- a) Denial of credit or an extension of credit in a substantially smaller amount than requested
- b) Approval of credit with favorable terms
- c) Consumer’s request to close an account
- d) None, adverse actions do not require notifications

Answer 17

a) Denial of credit or an extension of credit in a substantially smaller amount than requested

Question 18

What are the five categories of information that make up the FICO credit score?
- a) Payment history, amounts owed, length of credit history, types of credit used, new credit
- b) Payment history, medical history, personal relationships, new credit, employment history
- c) Length of credit history, marital status, new credit, types of credit used, amounts owed
- d) Payment history, loan types, credit limits, spending habits, social security number

Answer 18

a) Payment history, amounts owed, length of credit history, types of credit used, new credit

Question 19

What type of report contains information on a consumer’s character, reputation, and lifestyle obtained through interviews?
- a) Consumer Report
- b) Investigative Consumer Report
- c) Credit Report
- d) Employment Report

Answer 19

b) Investigative Consumer Report

Question 20

Which information is excluded from a consumer report after 7 years unless the statute of limitations has not expired?
- a) Bankruptcies
- b) Civil lawsuits, arrest records, and accounts placed for collection
- c) Positive credit history
- d) Recent inquiries

Answer 20

b) Civil lawsuits, arrest records, and accounts placed for collection

These types of information are excluded from a consumer report after 7 years unless the statute of limitations has not expired.

Question 21

Which entity is primarily responsible for enforcing the FCRA for large depository institutions?
- a) Federal Trade Commission (FTC)
- b) Consumer Financial Protection Bureau (CFPB)
- c) Office of the Comptroller of the Currency (OCC)
- d) Federal Deposit Insurance Corporation (FDIC)

Answer 21

b) Consumer Financial Protection Bureau (CFPB)

Question 22

Which information is NOT included in a consumer report under the FCRA?
- a) Credit inquiries
- b) Bankruptcy cases older than 10 years
- c) Address discrepancies
- d) Payment history

Answer 22

b) Bankruptcy cases older than 10 years

Question 23

What is the consequence for a CRA employee releasing information without authorization?
- a) A warning letter
- b) Fines and/or imprisonment up to 2 years
- c) Suspension without pay
- d) Reassignment to another department

Answer 23

b) Fines and/or imprisonment up to 2 years

Question 23

What must a CRA do if they receive a notice of address discrepancy?
- a) Ignore the notice
- b) Notify the requester if the address differs from the one on file
- c) Correct the address immediately
- d) Contact the consumer for verification

Answer 23

b) Notify the requester if the address differs from the one on file

Question 24

What is the penalty for furnishing a consumer report for a non-permissible purpose?
- a) There is no penalty
- b) Civil liability for actual damages, costs, and attorney’s fees
- c) Credit score reduction
- d) Temporary suspension of business activities

Answer 24

b) Civil liability for actual damages, costs, and attorney’s fees

Question 25

What type of information can a CRA include in a consumer report for credit transactions over $150,000?
- a) Bankruptcies older than 10 years
- b) Positive credit history only
- c) Personal emails and text messages
- d) Social media activity

Answer 25

a) Bankruptcies older than 10 years

Question 26

What should a consumer do if they believe there is inaccurate information on their credit report?
- a) Ignore the error
- b) Report the dispute to the CRA
- c) Contact their bank immediately
- d) File a lawsuit against the creditor

Answer 26

19. Answer: b) Report the dispute to the CRA
    
    • Explanation: If a consumer believes there is inaccurate information on their credit report, they should report the dispute to the CRA, which is then required to investigate.

Question 27

What type of report includes information obtained through personal interviews?
- a) Consumer Report
- b) Investigative Consumer Report
- c) Credit Report
- d) Employment Report

Answer 27

20. Answer: b) Investigative Consumer Report
    
    • Explanation: An investigative consumer report includes information obtained through personal interviews, providing insights into a consumer’s character, reputation, and lifestyle.