Among the many changes enacted as a part of last year’s Dodd-Frank Wall Street Reform and Consumer Protection Act (Public Law 111-209) (Dodd- Frank) is an amendment to the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et. seq., which will require any person (not only creditors) that uses a credit score to take an adverse action against a consumer to make additional disclosures to consumers as part of the adverse action notice already required by FCRA Section 615(a), 15 U.S.C. § 1681m(a).
This new requirement is scheduled to become effective on July 21, 2011, which has been established as the “designated transfer date” for the transfer of functions under various consumer protection laws, including the FCRA, to the new Consumer Financial Protection Bureau (CFPB).
Existing FCRA Adverse Action Notice Requirements
FCRA Section 615(a) currently requires any person that uses information contained in a consumer report to take an adverse action against a consumer to provide the consumer with oral, written, or electronic notice of that adverse action, including information such as:
- Contact information for the consumer reporting agency that provided the consumer report;
- A statement that the consumer reporting agency did not make the decision to take the adverse action and is unable to provide the consumer with the specific reasons for the action;
- Information about the consumer’s right under the FCRA to obtain a free copy of their consumer report from the consumer reporting agency if they request it within 60 days of receiving the notice; and the consumer’s right to dispute the accuracy or completeness of information with the consumer reporting agency.
The New Dodd-Frank Requirements
Section 1100F of Dodd-Frank expands the above listed existing adverse action notice requirements to require any person that takes an adverse action based in whole or in part on a numerical credit score to also provide written or electronic (unlike the current requirements, oral disclosure would be insufficient) disclosure of the credit score.
The following information about the credit score also would need to be disclosed to the consumer by the user of the consumer report (who may need to obtain it from a consumer reporting agency if that is the source of the credit score):
- The range of possible credit scores under the model used;
- The date on which the credit score was created;
- The name of the person or entity that provided the credit score or the credit file used to create the credit score; and
The key factors, listed in order of importance, which adversely affected the score of the consumer in the model used.