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#393095 - 07/28/05 06:45 PM Prescreened offer
15jwolander Offline
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Can someone give me a precise definition of "prescreened offer" or direct me to where I can find it? I couldn't locate anything in the FCRA. Thanks

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#393096 - 07/28/05 10:57 PM Re: Prescreened offer
rlcarey Online
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An unsolicited offer of credit or insurance based on information from a consumer's credit report.
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#393097 - 07/28/05 11:22 PM Re: Prescreened offer
Andy_Z Offline
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Randy's definition is on target.

The FCRA doesn't define prescreening. That is why you wouldn't find it there.
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#393098 - 07/29/05 09:01 PM Re: Prescreened offer
swiggles Offline
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But isn't it described (not by that exact name) at 604(c)(B)(i) as a "firm offer of credit or insurance?" This term IS defined at 603(l).
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#393099 - 07/29/05 09:09 PM Re: Prescreened offer
rlcarey Online
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In a roundabout way yes - but I think the point was that the term "prescreened offer" is not directly defined. I think we are saying the same thing
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#393100 - 08/02/05 08:55 PM Re: Prescreened offer
river girl Offline
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My marketing dept just informed me they are adhering to the pre-screened requirements by changing the word "preapproved" to "pre-qualififed" in our letters sent to members. They think this will null any compliance requirements. Is that true? Does the word change make the letters exempt from the FACTA requirements for prescreen opt out?

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#393101 - 08/02/05 09:08 PM Re: Prescreened offer
rlcarey Online
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Nope. You are talking semantics here. They are required to make a "firm offer of credit" once they pull the list from the credit bureau - whether they call it a "pre-approved" or "pre-qualified" offer really doesn't make a bit of difference. The opt-out is still required.
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#393102 - 08/10/05 10:02 PM Re: Prescreened offer
Anonymous
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Our marketing department wants to send out prescreened credit card offers to current customers based on the fact that they recently obtained another loan product with us. My question is this, if they are basing the unsolicited firm offer of credit on the fact that they just received another product from us, are we required to give them an opt-out? My other question is, if they are looking at a previous credit report used in making the credit decision on the first loan would we then be required to send out an opt-out?

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#393103 - 08/10/05 10:06 PM Re: Prescreened offer
rlcarey Online
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The answer to your first question is no.

However, while if you base your offer on the fact that you granted them another loan you would be OK, you could not base the offer on any specific information from the original credit report.
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#393104 - 08/11/05 04:51 PM Re: Prescreened offer
Anonymous
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I just want to make sure I have this right. Even if we have not purchased a list of names for prescreening purposes, the mere fact that we are using a beacon score from an old loan will trigger the opt-out notice? If so, we did not buy a list of names, so do we just use the number and address listed on the original credit bureau?

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#393105 - 08/15/05 03:52 PM Re: Prescreened offer
Anonymous
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I am still working on the marketing department and getting them to see how just changing the word "preapproved" to "prequalified" doesn't exempt us from offering the opt-out.
In the meantime, if we go with the opt-out short and long notice, does that mean we do not need the existing FCRA disclosure at the bottom of our offer?

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#393106 - 08/16/05 03:23 PM Re: Prescreened offer
Anonymous
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I believe the FCRA disclosure is now encompassed in the long notice. The long notice must state the information required by section 615(d) of the FCRA, which it does.

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#393107 - 08/17/05 09:13 PM Re: Prescreened offer
rlcarey Online
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Quote:

Even if we have not purchased a list of names for prescreening purposes, the mere fact that we are using a beacon score from an old loan will trigger the opt-out notice?




No - you are not allowed to do that. The credit score is a form of a credit report that you certified you obtained through a permissible purpose - i.e., the original credit application.

You would not have a permissible purpose to use that credit score later for marketing purposes.

There would be no opt-out required because use of the credit score in this manner will violate the FCRA.
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#393108 - 08/25/05 12:35 PM Re: Prescreened offer
etm614 Offline
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Ooh. I can see a big argument coming for me with management on this. So, we cannot in essence do our own prescreening using credit bureau information in our records, even if we provide the opt-out notices? Can you provide me a citation for this as I'll need all the help I can get to win this one? Thanks.

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#393109 - 08/25/05 12:49 PM Re: Prescreened offer
rlcarey Online
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Refer to the Gowan Letter .

Specifically:

"Second, the credit bureau must, pursuant to Section 607(a), require the creditor to "certify the purposes for which the information is sought, and certify that the information will be used for no other purpose." (emphasis added). Because Section 604(a) provides no authority for a creditor (or any party) to use a consumer report for marketing purposes, a creditor would violate its certification by using an existing report in such a manner."
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#393110 - 08/25/05 01:21 PM Re: Prescreened offer
etm614 Offline
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Thanks. I'm still going to have a battle, but then, what's new. Are we walking a fine line in offering a credit card at the same time that we are making an auto loan, since technically, this offer is made while looking at the credit report for the auto loan? Also, I am still confused about "soft" credit reports that don't show as inquiries on the customers' credit reports. Do the same criteria for permissible use apply to this?

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#393111 - 08/25/05 01:28 PM Re: Prescreened offer
rlcarey Online
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What do you mean by "soft" credit report? I can't imagine it would be any different.
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#393112 - 08/25/05 08:48 PM Re: Prescreened offer
etm614 Offline
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I couldn't get a clear explanation of what "soft" meant. Our consumer loan department pulls these reports (about $2) as opposed to the reports pulled by the mortgage department. Clear as mud? I am just assuming that they are both subject to the same requirements of FCRA.

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#393113 - 08/25/05 09:00 PM Re: Prescreened offer
rlcarey Online
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Why would the consumer loan department be pulling them. If you are talking about on closed-end credit customers - again, refer to the Gowan letter - most likely no permissible purpose. I know some banks that think they can update the credit scores on a reguler basis for all loan customers - that is just not true.
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#393114 - 08/25/05 09:06 PM Re: Prescreened offer
etm614 Offline
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Sorry I wasn't clear that this was a separate question from using credit information from an old loan to send an offer of new credit. They are only pulling these when actually making consumer loans.

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#393115 - 09/20/05 09:31 PM Re: Prescreened offer
Bullseye Offline
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I am going to tag on to this thread....I am needing some guidance regarding some software that our company wants to take advantage of.

How this would work would be a customer would come in to open a checking account & via this software we would pull their credit report (as we always do with new checking account customers). What it would also do is allow us to have entered guidelines for our other products (HELOC's, credit cards, etc.). It would then run this report against our guidelines allowing our frontline staff to cross-sell additional products they would qualify for while the customer is in their office. The guidelines would consist of more than just the information in the credit report, it would also include things like debt to income ratios we would have to enter in, but would include the beacon.

Are we getting ourselves into any trouble with a procedure such as this? I am not sure where to start with this one....is it a prescreened offer? Risk based Pricing guidelines? Help??!!

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#393116 - 09/20/05 11:42 PM Re: Prescreened offer
MRJ Offline
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Yes this would be a prescreened offer needing the proper prescreen disclosures, including opt-out. Also If you are prescreening for a non-credit product, you need to get the customers consent before the prescreening may occur.
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#393117 - 09/21/05 12:07 PM Re: Prescreened offer
hobot Offline
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You should also check your contract with your credit bureau provider. Most contracts state that you can pull and use the report for the stated purpose only. In other words, you may only be able to use the report you pull for the deposit account opening, and not also as a prescreen device for credit products. If you are unsure, I encourage you to check with your bureau rep, as the bureaus have been "testy" about this in the past.

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#393118 - 09/21/05 01:29 PM Re: Prescreened offer
Bullseye Offline
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Thanks guys! Actually, this software is coming directly from the credit reporting agency we use so that shouldn't be a problem. As far as the opt-out goes, can it be verbal? Since they are at our desk when this is being done, can it be as simple as us asking them if they would like to be pre-approved for a credit card?

This Q & A from Lucy G. seems to contradict what you are saying:

http://www.bankersonline.com/compliance/gurus_cmp120103e.html

Any thoughts?
Last edited by Drowning; 09/21/05 02:12 PM.
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#393119 - 09/21/05 04:04 PM Re: Prescreened offer
MRJ Offline
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"While you have the report, you may also review it to cross-sell."

This statement from the Q&A referenced directly conflicts with both the Gowen letter dated April 29, 1999 which states that using existing reports to market products is not permissable, also 604(f) of the FCRA states:
(f)Certain use or obtaining of information prohibited. A person shall not use or obtain a consumer report for any purpose unless
(1) the consumer report is obtained for a purpose for which the consumer report is authorized to be furnished under this section; and
(2) the purpose is certified in accordance with section 607 [ยง1681e] by a prospective user of the report through a general or specific certification."

What these sources say to me is that you cannot use a report for a non-permissable purpose, such as prescreening for a non-credit product. For deposit products, you must either have the business transaction initiated by the consumer, or get their permission. Prescreening is by definition, not initiated by the consumer, and prescreening using consumer reports is only allowed for credit and insurance products.

If anyone disagrees, please provide your rational and references, I would love to find out this practice is ok, so I can turn the marketing department loose
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