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Record Retention on Prescreening

by Mary Beth Guard, BOL Guru

Marketing expenses can be significant, so it's no wonder some financial institutions want to increase their marketing campaign success rate while decreasing their costs. That's what the practice of "prescreening" recipients of solicitations is all about.

In 1996, when the Fair Credit Reporting Act was amended by EGRPRA (the Economic Growth and Regulatory Paperwork Reduction Act), the practice of prescreening was expressly approved. The FCRA was amended to include language that permits the name, address, and certain other limited information about consumers to be obtained from a credit reporting agency by a company who intends to offer credit to individuals who meet certain criteria. The credit bureau screens according to the criteria and produces a list of qualifying individuals. The company must then make a firm offer of credit to the individuals who have passed the screening, unless an individual has passed away or otherwise no longer meets the criteria. The revisions to Regulation B which take effect April 15, 2003, and are mandatory a year later, clarify the record retention requirements for prescreening. Creditors must retain certain records related to prescreened solicitations, such as the list of criteria used to select potential customers, for 25 months. The purpose of this retention requirement is to allow the systematic review and analysis of creditors' possible use of race, age, national origin, and other prohibited bases of credit discrimination in connection with prescreened solicitations.

Specifically, a creditor must retain a copy of each solicitation mailing that contains different terms, plus the list of criteria used to determine the potential recipients of each solicitation and to determine who will actually be offered credit. Correspondence relating to consumers' complaints about prescreened solicitations must also be retained in a manner that is reasonably accessible and understandable to examiners.

The original version appeared in the March 2003 edition of the Oklahoma Bankers Association Compliance Informer.

First published on 7/28/03

First published on 07/28/2003

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