Financial Privacy (FCRA)

Question 1

Credit Reporting Agency

Answer 1

Any person or entity that compiles or evaluates personal information for the purpose of furnishing consumer reports to third parties for a fee

Question 2

Consumer Report

Answer 2

Any communication by a CRA related to an individual that pertains to the person’s: 1) creditworthiness, 2) credit standing, 3) credit capacity, 4) character, 5) general reputation, 6) personal characteristics, or 7) mode of living

Question 3

Fair Credit Reporting Act Obligations

Answer 3

• Provide consumers access to information contained in their report and opportunity to dispute
• Take reasonable steps to ensure maximum possible accuracy
• Not report negative information that is outdated
• Provide consumer reports only to entities (users) that have a permissible purpose
• Maintain records regarding entities that receive consumer reports

Question 4

Users of Consumer Reports

Answer 4

All users must have a permissible purpose:
- Extension of credit
- Employment purposes (where consumer has given permission)
- Insurance underwriting
- As instructed by consumer

Question 5

Requirements of Users when adverse action is taken

Answer 5

User must provide consumer notice when adverse action is taken, including:
- Contact information of the CRA
- Explain that CRA was not the decision maker
- Free disclosure of the file upon consumer request to CRA
- Ability to dispute any inaccuracy

Question 6

Furnisher Requirements

Answer 6

• Provide only accurate information to CRA
• Implement reasonable procedures to respond to identity theft
• Notify consumer within 30 days after providing negative information to CRA
• Notify CRA if:
  Information provided is not accurate;
  If any information is being disputed by the consumer;
  If account has been voluntarily closed by consumer;
  Delinquency of an account within 90 days

Question 7

Fair and Accurate Credit Transactions Act (FACTA) Requirements

Answer 7

• Truncate credit card and account numbers
• Explanation of credit score
• Free annual credit report
• Disposal Rule: need to dispose of records in a reasonable way to protect against unauthorized access
• Red Flags Rule: detection, prevention, and mitigation of identity theft

Question 8

Gramm-Leach-Bliley Act (GLBA) Scope and Obligations

Answer 8

Scope: Financial institutions such as banks, insurance providers, and securities firms.

Obligations:
-Store personal financial information in a secure way (Safeguards rule)
- Provide clear and conspicuous notice at beginning of relationship and annually

Question 9

Consumer Financial Protection Bureau (CFPB)

Answer 9

It oversees the relationship between consumers and providers of financial products and services, including rulemaking authority for FCRA and GLBA. It can bring actions against “unfair and deceptive” acts or practices but can also enforce against “abusive acts and practices.”

Question 10

Abusive Acts and Practices

Answer 10

Materially interferes with the ability of a consumer to understand a term or condition of a consumer financial product or service, or

Takes unreasonable advantage of:
1. A lack of understanding on the part of the consumer of the material risks, costs, or conditions of the product or service
2. The inability of the consumer to protect its interests in selecting or using a consumer financial product or service
3. The reasonable reliance by the consumer on a covered person to act in the interests of the consumer