Pre-approved Home Equity Loan Promotion

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Question:

We want to start a promotion where we notify customers that they have been pre-approved for a Home Equity loan, what guidance can you provide and what regulation should I look at?

Answer:

First, consider the Federal Trade Commission Act which prohibits unfair or deceptive trade practices. Promising pre-approved status when that is not the case would clearly be deceptive.

Any "pre-approved" lending offer must also comply with the Fair Credit Reporting Act's rules on prescreening if the credit report of the targets is accessed in any way to develop the list. You should also consider who is included on the list, who is excluded by criteria or by policy, and whether this may result in discrimination.

First published on BankersOnline.com 3/13/06