New Consumer Safeguards Put in Place
In June, the Federal Reserve Board amended Regulation V, which implements the Fair Credit Reporting Act (FCRA). Among other changes, the amendments provide model language that financial institutions must use when reporting information such as a customers delinquencies, late payments, insolvency, or any type of default. For example, under the new guidelines financial institutions that furnish negative information to consumer reporting agencies must use the model language to provide notice to the affected credit customer.
Two types of model language for notifying customers
The Board provides two types of model language. A financial
institution uses one type when providing notice to its customer
prior to furnishing negative credit information to a nationwide
consumer reporting agency. The other type of language is used
when providing the notice to the customer after having reported
the negative information (but not more than 30 days afterward).
Its a FACT
The model language is just one example of changes resulting from amendments Congress made to the Fair and Accurate Credit Transactions Act (FACT Act), which in turn amends the FCRA. The FACT Act increases consumers protections against identity theft, and these increased protections will require financial institutions to adopt new consumer safeguards. For example, if a financial institution receives a consumer report with a fraud alert, it must take steps to verify a consumers identity before giving that consumer a loan.
More changes implemented
Other changes include new restrictions on sharing customer information with affiliated institutions, limits on creditor use of medical information, and notification to customers who receive loans under less favorable terms than those available to a substantial portion of that lenders customers. Also, if a financial institution has extended credit to someone who has been accused of identity theft, that institution must make the information concerning the transaction available to any requesting law enforcement agencies.