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Consumer Reports in Connection with Overdraft Protection

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Question: 
We have an overdraft protection product for our customers. If they carry an overdraft balance for over 30 days we mail them a interest free loan to sign to cover the overdraft and take away the protection in the future. When we open a new account, can we run a credit check on each one without them signing a form allowing us to do this to help in our decision on allowing them the use of this overdraft protection, or do they need to sign a form allowing us to do the credit check? I know with a loan we must have a application signed before we can check credit. I wasn't sure if a new account had exceptions to this rule.
Answer: 

You don't have to obtain a written consent to access a credit report. That applies to your loan and overdraft program.

Refer to 604(a)(3)(F) of the Fair Credit Reporting Act for permissible reasons...otherwise has a legitimate business need for the information

(i) in connection with a business transaction that is initiated by the consumer; or

(ii) to review an account to determine whether the consumer continues to meet the terms of the account.

First published on BankersOnline.com 1/6/03

First published on 01/06/2003

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