Page images
PDF
EPUB

inconsistent instructions provided by consumers to different

credit bureaus and credit grantors, or even the same credit

bureau or credit grantor.

As a result, credit grantors and

credit bureaus are likely to be operating under different

instructions from the same consumers.

Similarly, such a notice and "opt-out" requirement

could prove to be both anti-consumer and anti-competitive.

More specifically, some consumers may not wish to be excluded

permanently from all such solicitations. Other consumers may

wish to be excluded from some types of credit and non-credit

prescreened solicitations but included in others.

Moreover,

some credit grantors may actually attempt to solicit such "opt-out" responses from their existing customers so that their customers do not receive any information regarding competing credit products available from other credit grantors. Such anti-competitive practices are unlikely to

[blocks in formation]

Finally, there is an additional issue relating to prescreening which is not specifically addressed in

H.R. 4213, H.R. 4122, or H.R. 3740, but which MasterCard and

VISA believe deserves mention.

Specifically, VISA and

MasterCard understand that questions have arisen concerning language used in some solicitations indicating that consumers have been "preapproved" for a credit account when in fact

such consumers may ultimately be denied the credit offered in

the solicitation.

For example, a consumer may be misled by

an indication on a solicitation that the consumer has been "preapproved" for an account when in fact the credit grantor intends to determine the consumer's continued eligibility for

the account after the consumer submits a response form.

MasterCard and VISA believe strongly that consumers should receive accurate information on or with solicitations

for credit products and are taking steps to address the issue

with respect to credit card solicitations.

For example, both

VISA and MasterCard have already sent to all of their member

financial institutions a bulletin which discusses this

important issue. The bulletin explains, for example, that a solicitation should not state that it is preapproved unless

[blocks in formation]

also believe that issues raised by those solicitations are already adequately addressed by existing federal and state laws concerning unfair and deceptive advertising.

CONCLUSION

Prescreening is an important marketing process which enables credit grantors to provide their products in a manner which is cost effective to consumers and credit grantors alike. Prescreening expands the credit opportunities available to the general public without infringing upon important privacy rights protected under the FCRA. As a result, prescreening activities should not be restricted

under the FCRA.

VISA and MasterCard appreciate the opportunity to present our views to the Subcommittee and would be pleased to work with the Subcommittee and its staff with respect to the

important issue of prescreening.

[ocr errors][ocr errors][merged small][merged small][merged small][merged small][merged small][merged small][merged small]

Members of Congress and federal regulatory agencies have expressed concern regarding card issuers who distribuce solicitations in connection with prescreening prograas which indicate that consumers have been "preapproved for a credit account when in fact such consumers nay ultimately be denied the credit account offered in the solicitation. For example, it has been suggested that some card issuers nay mislead consumers by indicating on a solicitation that a consuzer has been "preapproved for an account when in fact the card issuer intends to determine the consumer's eligibility for the account after further reviewing the consuaer's credit history or evaluating some other credit criteria. It also has been suggested that some card issuers describe a solicitation as "preapproved" in large or bold print, but state in fine print, or less obvious type, that additional analysis of the consuner's creditworthiness will be conducted to determine whether the consumer actually is eligible for the credit.

The use of solicitations which are in fact misleading could be found to violate various federal statutory and regulatory prohibitions against unfair or deceptive acts or practices. Moreover, there are

joint message from Visa und MasterCard.

indications that congress may consider federal legislation il the use of misleading solicitations is found to be widespread and the practice continues.

In order to avoid potential confusion on the part of consumers who receive solicitations in connection with prescreening programs, VISA and MasterCard members should review their solicitation and response forms to ensure that the forms adequately and accurately describe the offer being made.

The contacts at the Associations are:
Harry E. Hasselmann, Jr.
MasterCard International, Inc.
888 Seventh Avenue, 24th Floor
New York, NY 10106

Broox W. Peterson
VISA U.S.A. Inc.
3125 Clearview Way
San Mateo, CA 94402

A joint message from VISA and MasterCard.

-2

« PreviousContinue »