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#2106282 - 11/07/16 10:37 PM Adverse Action and Tri-merged Reports
swiggles Offline
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swiggles
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I just read something disturbing in a well-respected banking magazine written by a well-respected author. The article was a Q&A and one of the questions was about disclosure requirements on an adverse action notice when a tri-merged report is used. The person who submitted the question stated that when they use a tri-merged report, they disclose the names, addresses and phone numbers of all three credit reporting agencies represented on the report. But the bank's external audit firm said that the bank should disclose only the name, address and phone number of the company that provided the tri-merged report.

Maybe I am misinformed, but to me, the company that provided the report is just a vendor....not a consumer reporting agency and does not have anything to do with what is contained in the data base of each credit reporting agency. Further, I don't think that the vendor meets the definition of a "consumer credit reporting agency" found in the FCRA...which is:

(f) The term “consumer reporting agency” means any person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties, and which uses any means or facility of interstate commerce for the purpose of preparing or furnishing consumer reports.

I thought that the purpose for providing the name, address and phone was so that the customer would have a contact number for disputes and to obtain a free report. Can the vendor, under its contract, provide the borrower with a free tri-merged report? Is the vendor considered to be a consumer reporting agency???

At my bank, we only use the median score and we disclose the credit reporting agency information only for that score. I am worried that we may be disclosing incorrectly.
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#2106301 - 11/08/16 01:20 PM Re: Adverse Action and Tri-merged Reports swiggles
Rocky P Offline
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Florida
I had sent this to a bank I was working with, and also subsequently verified through FDIC Atlanta. (Think Equifax as also to include experian and Trans Union in a tri-merge)

While looking at some declined files and vendor adverse action notices (“AAN”), we saw that the bank contracted with, and obtains their credit reports from Kroll Factual Data. Kroll in turn obtains the credit data and score from Equifax. On the AAN however, the vendor system lists Equifax as the provider of the information. I recommend that Kroll, along with their contact address and phone number be listed as the source rather than Equifax, per the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. 1681.

The FCRA definition of consumer reporting agency states [603(f)]:

“The term “consumer reporting agency” means any person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties. . . .”

It further defines a “reseller of credit”, (such as Kroll Factual Data) in 603(u) as a credit reporting agency (emphasis added).

“The term “reseller” means a consumer reporting agency that--
(1) assembles and merges information contained in the database of another consumer reporting agency or multiple consumer reporting agencies concerning any consumer for purposes of furnishing such information to any third party, to the extent of such activities; and
(2) does not maintain a database of the assembled or merged information from which new consumer reports are produced. . . .”

So, even though Kroll gets the credit information from Equifax, the credit reporting agency of record for adverse action notices should be Kroll. the Bank's contract is with Kroll, they additionally provided the credit information to the Bank. Furthermore, The Bank has no contractual agreement with Equifax, and Equifax also would have no record of the Bank being listed as the creditor who acquired the credit information from them.

Historically, there have been questions what might occur if an applicant disputes the information with a reseller – it might never get to the right CRA. That is again covered in the FCRA (emphasis added):


611 - Reinvestigations of Disputed Information
(1) Reinvestigation Required
(A) In general. Subject to subsection (f), if the completeness or accuracy of any item of information contained in a consumer’s file at a consumer reporting agency is disputed by the consumer and the consumer notifies the agency directly, or indirectly through a reseller, of such dispute, the agency shall, free of charge, conduct a reasonable reinvestigation to determine whether the disputed information is inaccurate and record the current status of the disputed information, . . .

Unfortunately, compliance is not all simple. The credit score is generated by Equifax, so if the FCRA portion of the AAN is utilized, then Equifax has to appear along with their contact information in addition to the contact information from Kroll for supplying the credit details.

Please let me know if additional information might be needed.
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#2106308 - 11/08/16 02:12 PM Re: Adverse Action and Tri-merged Reports Rocky P
swiggles Offline
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Thank you.....very interesting. At my former bank, examiners criticized the bank because it was disclosing Kroll Factual Data rather than the credit reporting agency (this was before credit score disclosure requirements).

Unfortunately, the software we use has no provision for disclosing two entities. We have to choose one or the other.
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#2106311 - 11/08/16 02:22 PM Re: Adverse Action and Tri-merged Reports swiggles
swiggles Offline
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swiggles
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I take that back! There is a way to disclose both!
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#2107241 - 11/14/16 08:12 PM Re: Adverse Action and Tri-merged Reports swiggles
Burgess Offline
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Not for sure I understand
ok Kroll is listed as the Consumer Reporting Agency.

But wouldn't you then report Equfax's name under the section on "we also obtained your credit score from this consumer reporting agency"
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#2107250 - 11/14/16 08:32 PM Re: Adverse Action and Tri-merged Reports swiggles
swiggles Offline
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Correct, Burgess. Rocky P is saying, disclose as the credit reporting agency that merges and supplies the report as the 3rd Party vendor you're using, for the paragraph "Our credit decision on your application was based in whole or in part on information obtained in a report from the consumer reporting agency listed below......" (list the 3rd party vendor). Then if you only use, for example, the median score, disclose that score and the particular credit reporting agency in connection with the score information. "If you have questions regarding your credit score, you should contact: ________."
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#2107253 - 11/14/16 08:51 PM Re: Adverse Action and Tri-merged Reports swiggles
Burgess Offline
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thanks swiggles
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#2120150 - 03/01/17 10:30 PM Re: Adverse Action and Tri-merged Reports swiggles
mweaver Offline
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Pennsylvania
I stumbled on this thread while looking for something else, but wanted to provide a comment. I am not sure I agree with Rocky P on this. It is not clear to me which part of FCRA he is saying requires you to list a reseller over Experian (etc.) on the AAN. I understand he verified with the Atlanta office, however I try not to rely on opinions outside of my region as there are often differences among examiners let alone regional offices.

My reasoning for disagreeing is that, per Rocky's cited definition of "reseller" from 603(u)... (for simplicity we keep talking about Kroll)... a reseller, “(2) does not maintain a database of the assembled or merged information from which new consumer reports are produced. . . .”

If you refer to FCRA 615(f)(1), "Upon the request of a consumer for a credit score, a consumer reporting agency shall supply... a notice which shall include --" For this piece, as I emphasized, it is stating the consumer reporting agency shall supply. Now here we are saying Kroll is the CRA responsible for supplying the information. The information therefore, which Kroll would supply under 615(f)(1)(E), "(E) the name of the person or entity that provided the credit score or credit file upon which the credit score was created," would be Experian (etc.). This should make sense because as a "reseller" Kroll does not, "maintain a database of assembled or merged information from which new consumer reports are produced..." therefore Kroll being the consumer reporting agency supplying this notice would list the agency which had the information from which the score was produced.

Now if we look at 615(a), for the adverse action requirements, 615(1)(2) requires the Bank to "provide to the consumer written or electronic disclosure... of the information set forth in subparagraphs (B) through (E) of section [609(f)]" Therefore, to me, we are just passing along the information Kroll supplied to us through 609(f). We are not changing that information. Again, since Kroll would not have access to the information from which the score was produced that makes sense.

In addition, and if that is not enough, also consider 615(a)(3)(A) which require the AAN to have the name, address, and phone number of the CRA that furnished the report to the person. Here is where I was thinking we could be talking about Krolls information, however... if you continue on to 615(a)(4) which requires notice of the consumer's right, "to obtain, under section 1681j [or 612], a free copy of a consumer report on the consumer from the consumer reporting agency referred to in paragraph (3) which notice shall include an indication of the 60-day period under that section for obtaining such a copy ..." So 615(a)(4) says that it is the same reporting agency referred to in paragraph (3). But wait... 615(a)(4) says we are notifying the consumer of their rights under [612] to obtain the free report. Section 612(a) and 612(b), the latter of which is specifically regarding adverse action, states it only applies to credit reporting agencies which "maintains files on consumer" ... if you keep following the references you'll get there at 603(p) as well.

The only portion of 612 which may apply to Kroll is 612(c) which (might) require a free report to be provided by a reseller CRA if the consumer certifies they are unemployed, a recipient of public welfare, or has reason to believe they are a victim of fraud. Those are limited cases though, no the same type of indication you are giving in the AAN with a 60 day expiration.

All of this (if you are still reading) also ignores that technically 615(a)(3) and (a)(4) do not have to be in writing. Therefore, unless you believe 615(a)(2)(B) and by extension 609(f) are requiring you to list Kroll, then nothing would require it to actually be on the AAN. Also if Kroll is the agency meant by 609(f) then there would be no additional requirement for Experian (etc.) to be given in writing as part of 615(a). So regardless you only "must" list 1 agency on the AAN. I think even if you include all of the required notices in writing on your AAN, you could still keep it to Experian, Transunion, and/or Equifax.

I also do not see a problem listing all 3... even if you only provide 1 score, if and only if you identify which of the 3 supplied the score you used. I also saw notices which provide a score from all 3 which I think would be fine as well, assuming you identify which is which, since the same practice is permitted on your RBP or Exception notices, and is not explicitly prohibited on the AAN.


Sorry for the long post. I am sometime bad at expressing my interpretations in a concise way. Ha.
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#2122577 - 03/18/17 07:58 PM Re: Adverse Action and Tri-merged Reports swiggles
Rocky P Offline
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Florida
Simple terms - I'm not an attorney, nor play one in real life.

Creditor orders information from vendor [say Kroll]. Contract is between creditor and Kroll. Kroll has record of order, nothing of the request from the bank is on the 3 CRA's - the request is from Kroll. There is no contractual liability between creditor and equifax, experian or trans union. They supplied nothing to the bank. If John Doe goes back to one of the 3 major CRA's, they would have no record of bank pulling a report on John Doe. Kroll however has the record of the order, and if there are errors has the responsibility per 611 to get it fixed.

I believe others have shared this opinion too.
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#2189434 - 08/16/18 06:41 PM Re: Adverse Action and Tri-merged Reports swiggles
deeb Offline
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Rocky,
When you use a vendor to pull a credit report (ie Kroll), the inquiry shows the financial institutions name, not the vendors (Kroll), so the credit agency must have record of the bank pulling the report. True?

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#2220407 - 08/26/19 06:18 PM Re: Adverse Action and Tri-merged Reports swiggles
POWFNB Offline
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Resurrecting this subject again....

We use Credco to pull tri-merge credit reports, so with that in mind:

Part 2 of adverse action notice: "Our credit decision was based in whole or in part on information obtained in a report from the consumer reporting agency listed below." We would disclose Credco's name, address, and toll free number in space provided.

Credit Score Disclosure information: We would use the actual credit score from the bureau that was used to make the credit decision, along with range of scores and key factors, for that section of the notice.

Is this an accurate assessment?
Last edited by POWFNB; 08/26/19 07:44 PM.
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#2220565 - 08/28/19 03:02 PM Re: Adverse Action and Tri-merged Reports POWFNB
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Bump

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#2220580 - 08/28/19 04:37 PM Re: Adverse Action and Tri-merged Reports swiggles
rlcarey Online
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Galveston, TX
Yes
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#2221311 - 09/10/19 05:47 PM Re: Adverse Action and Tri-merged Reports swiggles
POWFNB Offline
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Thanks!

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#2222495 - 09/27/19 04:24 PM Re: Adverse Action and Tri-merged Reports swiggles
ckme Offline
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What about the Notice to Home Loan Applicant and credit score disclosure? We use Equifax Mortgage Services and they include their name and contact information on the credit score disclosure - no contact information on the NHLA notice. We get a tri-merge from them and they are showing all 3 scores and key factors on the disclosure that they generate, however they do not include their contact information.

I think we are technical compliance, since they self-identify as a CRA. However, I am a little concerned since I asked them what they would do if someone calls them about their score, and they said that they would direct them to call the appropriate bureau.

We were thinking of adding an addendum with the contact details for the 3 bureaus, any feedback?

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