We will be utilizing a prescreened list to make a firm offer of credit (for a mortgage loan - non home-equity) but will making that offer by phone and not in writing. As that is the case I realize that FCRA provisions do not apply since the offer is not made in writing. However, I was wondering if the FTC's Telemarketing Sales Rules apply? We are not a bank (we are a non-bank mortgage lender) and therefore are not exempt from the FTC's TSR.

We are reviewing the scripts and they were written to provide the short notice to the consumer even though the FCRA requirements do not apply. However, I don't want to run afoul of other requirements that I might not be thinking about. Are the FTC rules, or any other rules, applicable from a consumer compliance standpoint?

A "firm offer of credit" has to be in writing and it cannot be verbal. Then you have the Regulation B record retention requirements.

12(b)(7) Preapplication marketing information.
1. Prescreened credit solicitations. The rule requires creditors to retain copies of prescreened credit solicitations. For purposes of this part, a prescreened solicitation is an “offer of credit” as described in 15 U.S.C. 1681a(1) of the Fair Credit Reporting Act. A creditor complies with this rule if it retains a copy of each solicitation mailing that contains different terms, such as the amount of credit offered, annual percentage rate, or annual fee.

2. List of criteria. A creditor must retain the list of criteria used to select potential recipients. This includes the criteria used by the creditor both to determine the potential recipients of the particular solicitation and to determine who will actually be offered credit.

3. Correspondence. A creditor may retain correspondence relating to consumers' complaints about prescreened solicitations in any manner that is reasonably accessible and is understandable to examiners. There is no requirement to establish a separate database or set of files for such correspondence, or to match consumer complaints with specific solicitation programs.

I see that the short and long notice must be provided in the event of a firm offer of credit but do not see where it requires the offer to be in writing. What are you citing to draw that conclusion. I believe a firm offer of credit will be send out in writing to all those interested in the initial offer which would be verbal.

My understanding is also that the FCRA does not prohibit making a verbal firm offer of credit. That said, from my experience relying on verbal firm offers, especially for mortgages, ends in disaster. The staff making the calls quickly reverts back to their comfortable sales pitch and good bye firm offer, hello FCRA litigation.

As we are a non-bank lender do I need to worry about the FTC Telemarketing Sales Rules?

What about if we follow up the verbal / call with an email?

E-mail? The written disclosures under Section 615(d) would require E-Sign delivery and that also says the solicitation has to be in writing. Yes, all telemarketing rules would also apply to you.

(d) Duties of Users Making Written Credit or Insurance Solicitations on the Basis of Information Contained in Consumer Files

(1) In general. Any person who uses a consumer report on any consumer in connection with any credit or insurance transaction that is not initiated by the consumer, that is provided to that person under section 604(c)(1)(B) [§ 1681b], shall provide with each written solicitation made to the consumer regarding the transaction a clear and conspicuous statement that: