Our bank has recently begun to preapprove new customers for our bank credit card. When a new customer opens a deposit account such as a DDA or a SAV account and when their name is run through ChexSystems, they are also checked to see if they qualify for our bank issued credit card. The Credit Card officer stated that its a soft credit check that is made. If the customer is pre-approved, they are notified right then if they would like to receive the card. If they say yes, then a card is ordered and an application is filled out and sent to our CC department for review. The card will be mailed out and the customer can expect it about 2 weeks or less. If the customer is not pre-approved, they are not told that we had just attempted to pre-approve them.

I have two concerns: Are we obligated to inform the new customers that we are going to see if they are pre-approved for a CC?

Also, it sounds more like we are approving and denying people because if a person is pre-approved and agree to receive the card, it will be ordered while the application is en route to our CC department for review.

This has to be done though a prescreening process of some sort, otherwise you do not have a permissible purpose to obtain a credit report for the credit card without an application. We are going to need more details on exactly how this is happening to offer an opinion.

We do something similar -new customers call in for one product and we want to be able to offer them a credit card. I have heard of some type of prescreen firm offer for that particular individual which would be permissible - is this the type of prescreening you are referencing - are there ways we can do this?

Typically, prescreening involves a list of customers, but I have seen programs that involve customers one at a time that I believe complies with the prescreening rules.

You would have to establish your prescreening criteria with the credit reporting agency. You would submit the individual's identifying information and they tell you whether or not the individual passes (if they have not opted out of pre-screened solicitations). You do not get a credit report and it goes on the individual credit report as a prescreen rather than an inquiry. If they pass you have to extend a firm offer of credit.

Any other type of system IMHO would violate the FCRA and possibly the ECOA for permissible purpose and adverse action considerations.

Ok - one last questions - would this prescreen process not be viable if the customer is calling in response to an ad offered by one bank and the cc will be offered by a different bank?

How you get the names for the prescreening process would not impact this process.

However, if the CC bank is a non-affiliate, the sharing of the information may impact your privacy statement and require an opt-out. Same thing if the CC bank is an affiliate, since the information will be used for marketing purposes.

You are the best!
Thanks!