Hi All,

I am trying to figure out what credit reporting agency should be listed on an adverse action notice? Example: The bank pulls a tri-merge credit report from a third party vendor. The bank uses the middle credit score from the 3 major credit bureaus (Equifax, Transunion, or Experian). As of right now the bank is reporting the third party vendor on the adverse action notice (assuming the loan applicant was denied for a credit report reason). I am thinking the adverse action notice should list the actual credit reporting agency of the credit report that the bank used in making the credit decision. Any thoughts on what the bank is actually supposed to be using?

The third party vendor is your credit reporting agency that you are using.

Agree!! (Also verified through FDIC, Atlanta on behalf of a Florida bank)

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) 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 (e.g.) Equifax, so when the information is given on the credit score, then Equifax has to appear along with their contact information.

I agree also, but my EIC from my last exam didn't. I decided to pick my battles elsewhere and acquiesced to his wishes (although i still don't agree).

Agree with Rocky and rlcarey, as confirmed by my FDIC EIC as the correct process during our most recent exam. The vendor's name that provides the tri-merge report is the contact for the customer.

Tell the EIC to look at the Commentary to the FCRA:
http://www.law.cornell.edu/cfr/text/16/part-600/appendix-lii3

Section 615—Requirements on Users of Consumer Reports
(a) Whenever credit or insurance for personal, family, or household purposes, or employment involving a consumer is denied or the charge for such credit or insurance is increased either wholly or partly because of information contained in a consumer report from a consumer reporting agency, the user of the consumer report shall so advise the consumer against whom such adverse action has been taken and supply the name and address of the consumer reporting agency making the report.

13. Agency To Be Identified
The consumer report user should provide the name and address of the consumer reporting agency from which it obtained the consumer report, even if that agency obtained all or part of the report from another agency.

David, thanks, but i've already been down that road with him.

Then you need to go higher.

He wanted to find something. I let it be that.

Well, that's great until the next examiner shows up and cites you again and due to the consistent citation of violations of the FCRA you get an C&D or MOU, which impacts your compliance rating and jeopardizes your chances to expand your operations.

Explain that one to your board:

"Mr. Chairman, the original examiner was wrong, we knew he was wrong, but we just let it go because it was just easier that way. Sorry about the acquisition you guys were thinking about doing."

Well, they won't cite us again since we changed our procedure due to his findings. In my real world, i didn't want to p*ss my EIC off in what was otherwise a very good working relationship by saying "well, i appreciate all your cooperation, but on this one rather small issue, i'm going to go over your head. Hope you understand and have a great trip back to Kansas City".

If you're saying they'll cite us again based on our new procedure, all they have to do is go back to the last exam notes and see that we changed the procedure at their own behest.

Well, they won't cite us again since we changed our procedure due to his findings.

We all have to pick our own battles of course, but that is far from a true statement as "in my real world" I have seen it happen many times where a bank was cited for doing something wrong and they then pull out a previous exam and say the last examiner told us to do it that way.

The standard response is, it's wrong so you are in violation of the law or regulation. Sorry, there is nothing we can do about what you were told previously.

Well, i wasn't asking for any advice in this thread on how to do my job. I should have stayed out of the discussion.

I would not try and tell you how you should do your job. As I said "We all have to pick our own battles". I was just adding another perspective.

Well, they won't cite us again since we changed our procedure due to his findings.

I have to agree with Randy on this one. It is the financial institution responsibility to insure they are complying with the regulations. If they allow an examiner to "bully" them into following procedures that the financial institution knows is a violation of regulation then any future citings of that violation falls on the financial institution, not on the previous examiner.

Rocky P - how do you show both. My setup doesn't allow for that.

FWIW, my prior EIC's [if memory serves, both FRB and FDIC] have also wanted to see the score producer, rather than the contracted company shown on the form, so we switched same as raitchjay has done.

Unfortunately, everyone's compliance situation is different. We had some issues in our last exam that pre-dated me (i found the issues on existing loans and self-corrected as well as i could, although in some cases, it did nothing to change the original mistake) in which the EIC could have dropped the hammer a bit if he had chosen. Instead, he commended me for finding the issues and took it easy on my bank. I did have a long discussion with him on the CRA issue, voiced my concerns and disagreement, but decided in the end that i wasn't in a position to go "over his head" on this.

I hear you, raitch. I was shut down on going higher in a situation once where management decided to just go along with the findings. Their call but it tasted awful going down.

Also got caught with acquiescing to one EIC only to have the next one cite us for following the previous one's direction because it was wrong and, as pointed out above, we should have known it.

So I have first hand knowledge of the rock and the hard place. As you stated, you have to consider all the factors and pick your battles in the situation you're in at the time. And document like he// to cya for the next time.

You know your stuff so I'm sure be able to figure out the best way to handle your situation.