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#161436 - 02/18/04 06:35 PM FACT Act
Anonymous
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If a bank does NOT report information to a Credit Bureau, what aspects of the FACT Act must it be concerned with?

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#161437 - 02/18/04 09:05 PM Re: FACT Act
Bartman Offline
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Springfield
Well, there's more to the FACT Act than just reporting to the bureaus. For instance, if you use the credit score from the credit bureau in your risk-based pricing program, you have a new disclosure. If you have an affiliate, and you share information which the affiliate will use in a marketing solicitation, you will need to provide opt-out first. If a customer notifies you that a debt on your books is the result of their identity being stolen, you'll be limited in your ability to transfer, sell, or place that debt for collection. You'll need to establish some training for those who read credit reports, so that they can take steps to verify the identities of those who've placed alerts in their reports, prior to extending credit. You may need new procedures relating to address changes & issuing new or replacement credit or debit cards.

This act touches a lot of different areas of the bank - moreso than just reporting to the bureaus. We're spending some time with it, but are really waiting for the regulations to come out this fall.
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#161438 - 02/18/04 10:49 PM Re: FACT Act: Section 217
Anonymous
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I have a question that has to do with Section 217 Requirement to Disclose Communications to a Consumer Reporting Agency. Generally this states that if a financial institution reports any negative information to a CRA, the FI will have to provide a notice that it provided such information in writing to the customer. The bank has a concern regarding charge-off information. Today customers are not notified that their loan will be charged-off. Since this is negative information, are we understanding that going forward the bank will have to notify the customer that it is reporting the charge-off to the CRA? When the loan is past due, notices are already sent to the customer. We just want to make sure we understand this requirement. Thank you.

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#161439 - 02/18/04 10:57 PM Re: FACT Act: Section 217
Cowboys Fan Offline
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From what I've heard so far, we only have to give this notice one time - could include it as part of your application package, add wording to billing/past due notices, etc. I guess we'll find out the details when the final regs are completed.
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#161440 - 02/18/04 11:15 PM Re: FACT Act: Section 217
Anonymous
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So you are saying that when the model disclosure language is out, we will be able to use that and be in compliance with this requirement?

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#161441 - 02/19/04 09:30 AM Re: FACT Act: Section 217
Andy_Z Offline
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There is no sample yet that I have seen. It will be required and will be 30 words or less (or is supposed to be).

I believe you will need to do a blanket mailing to all customers to best meet these requirements. Those without addresses, too bad. They were supposed to provide you with those and didn't.

Going forward it will likely be a disclosure wherever accounts (loans, deposits and SD boxes) are opened. A front end notice just makes sense.
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My opinions are not necessarily my employers.
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#161442 - 02/19/04 02:57 PM Re: FACT Act: Section 217
Deena Offline
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I'm confused now. I thought the notice had to be given within 30 days after negative information about a consumer is supplied to a credit bureau. Isn't this a case-by-case notice? Why would we do a mass mailing? Why would we give the notice at account opening? Sorry if I'm missing something obvious - I haven't spent too much time on this yet.
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#161443 - 02/19/04 03:02 PM Re: FACT Act: Section 217
Bartman Offline
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Bartman
Joined: Oct 2000
Posts: 1,191
Springfield
ABA Bank Compliance did a summary in the Jan/Feb 04 issue. Their chart indicates:

Creditors reporting negative information shall notify customers of that fact in writing.
Notice shall be prior to, or not later than 30 days after, furnishing negative information.
Notice may be on notice of default or billing statement or other document, but not with initial disclosure.
No civil liability.

My initial reaction was to recommend placement on the past due notices - and if you're sending past due notices prior to the charge-off decision, you're most likely OK.

HOWEVER, I'm still more comfortable waiting for the final regs...
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Opinions are Bartman's, not those of my employer. "A noble spirit embiggens the smallest man."

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#161444 - 02/21/04 05:06 PM Re: FACT Act: Section 217
Andy_Z Offline
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If you report after the fact, you need to cover all bases. Review what accounts you report to the bureau, loans and deposits.

Rather than maintenance all of these, I'd recommend covering myself upfront with one notice given in conjunction with Privacy, as an example. It seems simpler, but this certainly is not a "one size fits all" reg. There will be a few ways to comply.
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AndyZ CRCM
My opinions are not necessarily my employers.
R+R-R=R+R
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell

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