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Fair Credit Reporting: VI. OBLIGATIONS OF USERS OF MEDICAL INFORMATION

Section 604(g) limits the use of medical information obtained from consumer reporting agencies (other than payment information that appears in a coded form that does not identify the medical provider). If the information is to be used for an insurance transaction, the consumer must give consent to the user of the report or the information must be coded. If the report is to be used for employment purposes or in connection with a credit transaction (except as provided in federal regulations), the consumer must provide specific written consent and the medical information must be relevant.

Fair Credit Reporting: VII. OBLIGATIONS OF USERS OF “PRESCREENED” LISTS

The FCRA permits creditors and insurers to obtain limited consumer report information for use in connection with unsolicited offers of credit or insurance under certain circumstances. Sections 603(l), 604(c), 604(e), and 615(d). This practice is known as “prescreening” and typically involves obtaining from a CRA a list of consumers who meet certain pre-established criteria.

Fair Credit Reporting: IX. LIABILITY FOR VIOLATIONS OF THE FCRA

Failure to comply with the FCRA can result in state government or federal government enforcement actions, as well as private lawsuits. Sections 616, 617, and 621. In addition, any person who knowingly and willfully obtains a consumer report under false pretenses may face criminal prosecution. Section 619.

The CFPB’s website, www.consumerfinance.gov/learnmore, has more information about the FCRA, including publications for businesses and the full text of the FCRA.

Fair Credit Reporting: C.8 Model Prescreen Opt-Out Notices

Section 1681m(d) of the FCRA directs the CFPB, in consultation with FTC, the federal banking agencies and the National Credit Union Administration, to adopt a rule governing the required notice to consumers regarding the right to opt out of prescreened solicitations for credit or insurance. The CFPB issued such a rule, 12 C.F.R. § 1022.54(c) (Appx.

Fair Credit Reporting: Introduction

This section contains five sample notification forms. These forms are intended for use in fulfilling notification requirements of both the Fair Credit Reporting Act and the Equal Credit Opportunity Act (ECOA), 15 U.S.C. 1691 through 1691f.

Fair Credit Reporting: Form C-1—Sample Notice of Action Taken and Statement of Reasons

Statement of Credit Denial, Termination or Change

Date: __________________________________________________________________________________________________________________

Applicant’s Name: _______________________________________________________________________________________________________

Applicant’s Address: _____________________________________________________________________________________________________

Description of Account, Transaction, or Requested Credit: _______________________________________________________________________

Fair Credit Reporting: Form C-2—Sample Notice of Action Taken and Statement of Reasons

Date

Dear Applicant: Thank you for your recent application. Your request for [a loan/a credit card/an increase in your credit limit] was carefully considered, and we regret that we are unable to approve your application at this time, for the following reason(s):

Your Income:

__________________ is below our minimum requirement.

__________________ is insufficient to sustain payments on the amount of credit requested.

__________________ could not be verified.

Your Employment:

Fair Credit Reporting: Form C-3—Sample Notice of Action Taken and Statement of Reasons [(Credit Scoring)]

Date

Dear Applicant: Thank you for your recent application for __________________. We regret that we are unable to approve your request.

[Reasons for Denial of Credit]

Your application was processed by a [credit scoring] system that assigns a numerical value to the various items of information we consider in evaluating an application. These numerical values are based upon the results of analyses of repayment histories of large numbers of customers.

Fair Credit Reporting: Form C-4—Sample Notice of Action Taken, Statement of Reasons and Counteroffer

Date __________________

Dear Applicant:

Thank you for your application for ________________________________________________. We are unable to offer you credit on the terms that you requested for the following reason(s):

______________________________________________________________________________________________________________________

We can, however, offer you credit on the following terms:

______________________________________________________________________________________________________________________

Fair Credit Reporting: Form C-5—Sample Disclosure of Right to Request Specific Reasons for Credit Denial

Date __________________

Dear Applicant:

Thank you for applying to us for __________________.

After carefully reviewing your application, we are sorry to advise you that we cannot [open an account for you/grant a loan to you/ increase your credit limit] at this time. If you would like a statement of specific reasons why your application was denied, please contact [our credit service manager] shown below within 60 days of the date of this letter. We will provide you with the statement of reasons within 30 days after receiving your request.

Creditor’s Name

Fair Credit Reporting: C.10 Risk-Based Pricing Notices

Section 1681m(h) of the FCRA requires creditors to provide a risk-based pricing notice whenever they grant credit on terms that are materially less favorable than their most favorable terms based on a consumer report. Subsection 1681m(h)(6)(B)(iv) requires the CFPB to issue a model notice for this purpose. The CFPB has issued seven model forms, set forth below. Model Forms H-6 and H-7 incorporate the credit score disclosure requirement added by the Dodd-Frank Act.

Fair Credit Reporting: Introduction

If a company engages in affiliate sharing of consumer information, section 1681s-3(a)(1) of the FCRA requires the company to provide a notice and opportunity to opt out. The FCRA requires regulations to govern this notice, and the CFPB issued such a rule, 12 C.F.R. § 1022.23 (Appx. B.2.1, supra). To assist in compliance, the CFPB provided five model notices.

Fair Credit Reporting: Section 603(x)

Section 603(x) defines “nationwide specialty consumer reporting agency” as a CRA “that compiles and maintains files on consumers on a nationwide basis relating to (1) medical records or payments; 2) residential or tenant history; (3) check writing history; (4) employment history; or (5) insurance claims.”155

1. RELATION TO OTHER SECTIONS

Fair Credit Reporting: Sections 603(y)(1), 603(y)(2)

Section 603(y)(1) excludes from the definition of “consumer report” those reports made solely for the purpose of investigating (1) suspected employment misconduct or (2) compliance with applicable laws or rules or “any pre-existing written policies of the employer.” Section 603(y)(2) requires that an employer that has taken adverse action based on such a report provide the employee a summary of the “nature and substance” of the information.

1. PRE-EXISTING WRITTEN POLICIES

Fair Credit Reporting: Section 604(a)

Section 604(a) says that “any consumer reporting agency may furnish a consumer report under the following circumstances and no other. . . .” Its subsections enumerate specific permissible purposes.

1. RELATION TO SECTION 603(d) (DEFINITION OF “CONSUMER REPORT”)

Fair Credit Reporting: Section 604(a)(1)

Section 604(a)(1) allows CRAs to furnish consumer reports in response to the “order of a court having jurisdiction to issue such an order, or a subpoena issued in connection with proceedings before a Federal grand jury.”

1. SUBPOENA

Fair Credit Reporting: Section 604(a)(3)(A)

Section 604(a)(3)(A) allows a CRA to furnish consumer reports to a person which it has reason to believe “intends to use the information in connection with a credit transaction involving the consumer on whom the information is to be furnished and involving the extension of credit to, or review or collection of an account of, the consumer”

1. REPORTS “IN CONNECTION WITH A CREDIT TRANSACTION INVOLVING THE CONSUMER”

Fair Credit Reporting: Section 604(a)(3)(B)

Section 604(a)(3)(B) allows a CRA to furnish consumer reports to a person which it has reason to believe “intends to use the information for employment purposes.”

1. RELATION TO OTHER SECTIONS

This subsection establishes that CRAs may provide reports for employment purposes. Section 604(b) imposes certain duties on employers and CRAs in such cases.

2. CURRENT EMPLOYEES

Fair Credit Reporting: Section 604(a)(3)(C)

Section 604(a)(3)(C) allows a CRA to furnish consumer reports to a person which it has reason to believe “intends to use the information in connection with the underwriting of insurance involving the consumer.”

1. PERMISSIBLE PURPOSE EXISTS FOR “UNDERWRITING OF INSURANCE”

Fair Credit Reporting: Section 604(a)(3)(D)

Section 604(a)(3)(D) allows a CRA to furnish consumer reports to a person which it has reason to believe “intends to use the information in connection with a determination of the consumer’s eligibility for a license or other benefit granted by a governmental instrumentality required by law to consider an applicant’s financial responsibility or status.”

1. GENERAL

Fair Credit Reporting: Section 604(a)(3)(E)

Section 604(a)(3)(E) allows a CRA to furnish consumer reports to a person which it has reason to believe “intends to use the information, as a potential investor or servicer, or current insurer, in connection with a valuation of, or an assessment of the credit or prepayment risks associated with, an existing credit obligation.”