Q. What is a “notice of address discrepancy?”
A. A “notice of address discrepancy” is a notice sent to a user of a consumer report (including landlords and property managers) by a nationwide consumer reporting agency (“NCRA”, e.g. Experian, Equifax and/or TransUnion) notifying the user (you) that the address provided by the user to obtain the report “substantially differs” from the address the NCRA has in the consumer’s file. The FCRA does not define the phrase “substantially differs” nor does it direct the Agencies to define this phrase as a part of the rulemaking on address discrepancies.
Q. What are the “Address Discrepancy Rules”?
A. For all notices of address discrepancy received from an NCRA (regardless of whether it is procured directly from the NCRA or through a reseller), the user would be obligated to develop and implement reasonable policies and procedures to enable it to form a reasonable belief that the consumer report relates to the consumer about whom it has requested the report. However, the user must have reasonable policies and procedures to furnish the consumer’s confirmed address to an NCRA only if the three-prong test set out in 12 C.F.R. § __.82(d) and 16 C.F.R. § 681.1(d) of the Address Discrepancy Rules applies: in other words, only if (1) the user regularly and in the ordinary course of business furnishes information to the NCRA from which the notice of address discrepancy was obtained by the reseller or procurer, (2) the user can form a reasonable belief that the consumer report relates to the consumer about whom the user requested the report, and (3) the user establishes a continuing relationship with the consumer. If the consumer report does not indicate from which NCRA the notice of address discrepancy was obtained (for example, in the case of a merged report), the user’s reasonable policies and procedures would not need to provide for the furnishing of confirmed addresses.
Q. What is the relationship between the Address Discrepancy Rules and the Red Flags Rules?
A. There is very little relationship between the substantive provisions of the Address Discrepancy Rules and the Red Flags Rules. The primary purpose of the Address Discrepancy Rules is to enhance the accuracy of consumer reports, while the objective of the Red Flags Rules is to detect and prevent identity theft. Also, the two rules cover different categories of entities. The Address Discrepancy Rules apply to users of consumer reports, while the Red Flags Rules apply to financial institutions and creditors. The Address Discrepancy Rules focus on whether a notice of address discrepancy may be an indication that a user of a consumer report does not have the correct consumer report for the consumer about whom it requested the report and require the user to provide a confirmed address to the NCRA that supplied the report.
Q. What are my obligations if I receive a notice of address discrepancy?
A. When you receive a notice of address discrepancy the onus is on you as the user to form a reasonable belief of the identity of the consumer. The user of the consumer report could compare the information from the consumer report to information obtained from “third-party sources” or verify the information in the consumer report with the consumer. This regulation also indicates that other “reasonable” authentication procedures may be used. For property owners and managers, this means that the prospective landlord or management company must have a procedure in place to investigate and resolve any reported discrepancy(s) when reviewing an applicant’s credit report.
Q. What does compliance look like?
The FACT Act Address Discrepancy Rules are purposefully vague to accommodate a wide variety of businesses and all landlords and property managers are strongly encouraged to review all policies, procedures and documents, including those related to the Address Discrepancy Rules, with a qualified and experienced legal professional. Compliance means developing and following a set of policies and procedures outlining your response if and when you receive a notice of address discrepancy. Your response could include:
- Asking questions of the consumer to confirm that the content of the consumer report pertains to them.
- Cross-checking the current and previous addresses returned on the report with those provided by the consumer.
- Confirming that the information entered when requesting then consumer report is accurate.
- Cross-checking the account information on the consumer report with materials provided by the consumer.
- Using information from the consumer or a third-party to verify that the consumer report pertains to the consumer.
This information originally appeared on the Federal Trade Commission’s Bureau of Consumer Protection Business Center website.