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contained in any periodic statement or other document provided
to the consumer by the creditor.
Creditors frequently include a brief statement in the credit agreements governing loans and accounts that the creditor may report credit information about the accounts to consumer reporting agencies from time to time. Such statements are provided in light of the privacy laws of many states and help to respond to questions that occasionally arise regarding the reporting of customer information. Moreover, most consumers expect creditors to furnish information concerning their credit
accounts, both positive and adverse, to consumer reporting
agencies. Accordingly, CBA and ABA believe that separate
notices informing consumers that these commonly known and
accepted practices are occurring is unnecessary. Further, CBA and ABA are adamantly opposed to any provision that would
require a creditor to provide disclosures to consumers each time
information is provided to a consumer reporting agency. Such a requirement would be unduly burdensome and of little benefit to
In addition to the costs of the notices themselves, the
likely effect of sending a notice to a consumer every time such information is reported to a consumer reporting agency would be
to inundate consumers with unnecessary and unwanted notices and
create a flood of unwarranted inquiries to creditors and
consumer reporting agencies regarding consumer credit files. The proposal is not practical because of the sheer volume of
notices that would be required.
Tens of millions of items of
credit experience are reported to consumer reporting agencies
each month. The cost of sending corresponding disclosures, or even providing such notices with monthly statements, for even a fraction of these items of information would be staggering.
ADVERSE ACTION REQUIREMENTS
H.R. 4213, H.R. 4122 and H.R. 3740 all would amend the
FCRA adverse action provisions to require creditors that use
credit reports to provide additional information to consumers.
Currently, the FCRA requires a creditor that denies credit on
the basis of information contained in a credit report to provide
the consumer with the name and address of the consumer reporting agency supplying the report. H.R. 4122 would require such creditors to provide written notice of the telephone number of the consumer reporting agency that supplied the credit report. H.R. 4213 and H.R. 3740 also would require such creditors to provide the applicant with written notice of the names and addresses of the three largest consumer reporting agencies and a
summary of the consumer's rights and remedies under the FCRA.
H.R. 4122 and H.R. 3740 would require creditors also to provide a copy of the consumer's credit report which was the basis of
the adverse action.
CBA and ABA believe that none of these proposed changes warrant adoption and, in particular, are opposed to the proposal that consumers be provided with a copy of their credit report with their adverse action notice. The Equal Credit Opportunity
Act already provides that a consumer who has been denied credit must be furnished with a statement of the principal reasons for
the credit denial.
In addition, the FCRA already provides
applicants with adequate information regarding the role of a credit report in the adverse action and the opportunity to obtain further information. Currently, the FCRA adverse action provisions require a creditor to disclose to the consumer the name and address of the consumer reporting agency that provided the report, so that rejected applicants may easily contact the agency with any questions about their reports. In addition, the FCRA already requires the consumer reporting agency to provide to the consumer upon request information contained in the
consumer's credit file, and to explain that information to the
As a result, a consumer who has been denied credit
based on information contained in a credit report currently
receives a statement of the principal reasons for the credit
denial and has the right, if he or she chooses to exercise it,
to examine fully the information that provided the basis for the
credit report and denial of credit.
regarding other consumer reporting agencies, or notices beyond
those already required under the FCRA and the Equal credit
Opportunity Act, can only serve to confuse the consumer and detract from the important information currently provided. addition, such disclosures are likely to increase the number of unwarranted consumer inquiries to these three agencies, thereby
interfering with their ability to provide and correct information in their files and substantially increasing costs
ultimately born by consumers.
Moreover, providing a copy of a credit report along with each adverse action notice may substantially undercut the
usefulness of the information currently required under the Equal Credit Opportunity Act. The Equal Credit Opportunity Act
adverse action notice requirements are based on the premise that
a consumer who has been denied credit should be provided with a statement of only the principal reasons for that action. Ву focusing the applicant's attention on these key reasons, the applicant is more likely to identify inaccuracies in the information relied on by the creditor and improve the aspects of their credit record that caused the credit denial. Requiring
extraneous information in the adverse action notice unrelated to
the creditor's decision is likely to confuse the consumer and,
thus, frustrate the purposes of the Equal Credit Opportunity
Requiring a creditor to provide an actual copy of a
credit report for each denial of credit also would raise
consumer privacy concerns not currently raised in connection
with many credit transactions.
Presently, many creditors do not
even request a hard copy of a credit report on a consumer who
applies for credit. Instead, the consumer's application is analyzed and evaluated electronically through the use of computer-to-computer links with consumer reporting agencies.
Consequently, no actual credit report is produced for, provided to, or reviewed by, the creditor. It would be contrary to the privacy interests of the consumer to require that such a report
be prepared and distributed.
Similarly, a provision requiring creditors to provide consumers with actual copies of credit reports in connection with adverse action notices would be particularly inefficient
and difficult to implement.
The credit operations of many
creditors are highly automated.
Credit applications are
evaluated by computer and the required adverse action notices are generated automatically. Such automated credit application processing systems would be severely burdened if adverse action notices must be matched and sent with copies of corresponding
Regardless of the type of information furnished to a
consumer with respect to his or her credit file, it is essential
that the information received and reviewed by the consumer be provided by a consumer reporting agency so that the information is furnished by the entity that compiled and can explain that
IMPACT ON STATE LAWS
CBA and ABA urge the Subcommittee to keep in mind the
many inconsistencies the proposed amendments to the FCRA would
create with respect to state fair credit reporting act statutes
and the impact such inconsistencies would have on the multi
state operations of consumer reporting agencies and creditors