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FACTA Address Discrepancy Reg Finalized

John S. Burnett, BOL Guru

The federal fianncial institutions regulatory agencies (the Agencies) are just about ready to publish new rules required by the FACT Act*. These rules mandate policies and procedures for handling notices of address discrepancy your institution receives from a consumer reporting agency (credit bureau). If you haven't already set up policies and procedures to comply, it's time to get them in place.

Effective and Mandatory Compliance Dates
The effective date for these regulations will depend on when they are finally published in the Federal Register. Once they are published, the regulations will be effective on the first day of the calendar quarter that is at least 30 days after publication. So, if they're published on or before November 30, 2007, they'll be effective January 1. If they appear in the Federal Register in December, they won't be effective until April 1, 2008.

Compliance will be mandatory beginning November 1, 2008, but don't let that make you complacent. Address discrepancies are key clues that a customer's identity could have been compromised. Each day that your institution doesn't have an effective policy and procedures increases the odds that you or a customer could be damaged by the theft and misuse of a customer's identity.

The Address Discrepancy Rule
The regulations apply to users of credit reports who get a notice of address discrepancy from a consumer reporting agency. A notice of address discrepancy is a notice that the address included in the user's request for a consumer report and the address(es) in the consumer reporting agency's files are substantially different.

As a user of consumer reports (remember that your human resource department may be included here), you must have policies and procedures to enable you to form a reasonable belief that the consumer report you've received relates to the consumer on whom you requested the report. Those policies and procedures can be those you have included in your Customer Identification Program (CIP) under Treasury's BSA/AML and Recordkeeping regulations at 31 C.F.R. 103.121.

In addition, your financial institution must have policies and procedures designed to provide to the consumer reporting agency (from which you have received a report of address discrepancy) the address for the consumer that you have reasonably confirmed as accurate, if you establish an ongoing relationship with the consumer in question. This requirement will only apply if you regularly supply information to that consumer reporting agency, and the confirmed address can be included in your next regularly scheduled delivery of information to that agency.

Don't Delay!
There is already evidence that examiners have been asking financial institutions about their address discrepancy procedures; you should waste no time ramping up your planning for implementation. Even though compliance is optional until November 1, 2008, you can minimize your instituion's exposure to loss by putting policies and procedures into place as quickly as possible.

The agencies published proposed regulations on July 18, 2006, and received 128 comments. Like the proposal, the final regulations will be published together with the regulations and guidelines mandated by section 114 of the FACT Act, which requires financial institutions and creditors to develop and maintain a written Identity Theft Prevention Program (see our related article).

* FACT Act - Fair and Accurate Credit Transactions Act of 2003

Related Links

  • Final Red Flag and Address Discrepancy Regulations - PDF File (right-click and save to download before opening)
  • Proposed Regulations - For research purposes, here are the proposed Red Flag and Address Discrepancy Regulations
  • Comments on proposals - The 56 comments received by the Federal Reserve Board on the proposed regulations. You can review these comment letters for ideas on how the new requirements may affect your institution.
  • BankersOnline's Bankers' Threads FCRA/FACT Act Forum - Pose a question, offer an answer, or simply share information on all things related to FCRA.
  • BankersOnlne's FACT Act resource page - Proposed rules, guidance and final rules implementing FACTA provisions. You'll find handy FACT Act and FCRA Tools here, too.

First published on 10/19/2007

First published on 10/19/2007

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