What are the potential consequences, if any, in the event a Sales Consultant pulls a client's credit report before obtaining their permission to do so? FYI - This does not relate to a married couple.

How do they look in pinstripes??? In order to pull the report they would be attesting to the fact that they had a permissible purpose.

§ 619. Obtaining information under false pretenses [15 U.S.C. § 1681q]
Any person who knowingly and willfully obtains information on a consumer from a consumer reporting agency under false pretenses shall be fined under title 18, United States Code, imprisoned for not more than 2 years, or both.

Is this something that the examiners are LIKELY to review? Thanks.

Yes, I have seen them look at it. More importantly would be the civil libility from the customer that sees the pull on their credit report later and sues you for pulling a report without a permissible purpose.

This is something our examiners (FDIC) looked at in our last exam.

Not to mention the operational risk when the CRA cancels your contract because you violated it by pulling reports without a permissible purpose.

Are you saying that the sales staff pulls credit before meeting the consumer at the office? Our sales staff does that to quickly facilitate the discussion regarding type of loan product they will offer to the consumer.

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Our sales staff does that to quickly facilitate the discussion regarding type of loan product they will offer to the consumer.

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Under what permissible purpose? Sounds like a perfect set-up for pre-screening/steering to me.

Also, (besides RLClarey's comments): if you are relying on them coming into the bank to discuss their credit needs - what if they don't show up? you just pulled a credit report on someone that never made much of an inquiry, and you arguably don't have a permissable purpose. What if they just want to make a draw on the HELOC they already have? Sticky issues.

We allow our sales staff to pull a report only with permission from any potential applicant, whether verbal or written permission. We have never been cited by an examiner for this practice being a violation nor have any applicants ever brought suit.

I believe B of A lost a significant court case over its liability for employees who pulled credit reports without a permissible purpose.

Here's a website that references the BofA case along with an eyeful of other stuff!

http://www.epic.org/privacy/fcra/

I agree with Randy that you must have a permissible purpose before pulling the CR; however, I will assume that in most cases an applicant calls a loan officer (LO) and gives a partial application over the phone. The LO asks for their SSN and explains that s/he will pull their CR so that when the applicant comes in tomorrow, they can expedite the process. The applicant agrees. This would be OK.

Bonnie, you're right. But the B of A case involved a rogue empoyee pulling credit reports for the purpose of identity theft. B of A paid out for not having sufficient controls in place to prevent the occurrence.

I haven't seen any case law or publicity regarding the kind of premature report requests we are talking about here. But it's probably just a matter of time before we do.

Was the BofA case over ID Theft, or was it because the employees were selling the credit reports to a landlord who wasn't set up to pull credit reports on propective tenants?

If the BofA case wasn't about a landlord, then there is an even older case that is.

Bottom line - all it takes is for someone to object to an inquiry on their credit report (and people are getting much more savvy about checking those things) and find an institution that cannot prove it had a permissible purpose.

Regardless of the fact of what the BofA case was really about, it came down to the fact that an employee was pulling CBs without a permissible purpose and the bank allowed it to happen and apparantly didn't have procedures in place to detect such things. So whether you have employess pullling report to sell them on the side or for marketing purposes prior to triggering a permissible purpose - the result would be the same.

The key is to look at your procedures and make sure that you don't have practices in place that violate FCRA and that you periodically check to make sure that CBs that are requested are for permissible purposes.

What the reasons for the BofA suit is moot, the underlying theme of the suit revolves around pulling CBs with no permissible purpose.