CFPB Supervisory Highlights for Summer 2016 Include FCRA Adverse Action Notice Issues

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Written By ESR News Blog Editor Thomas Ahearn

The Consumer Financial Protection Bureau (CFPB) Supervisory Highlights for Summer 2016 publication features some issues related to adverse action notices that the federal Fair Credit Reporting Act (FCRA) requires users of background check reports to send to subjects of those reports when any adverse (i.e. negative) action is taken against them based on information contained in the background check report.

The CFPB Supervisory Highlights report found some institutions failed to make FCRA required adverse action disclosures due to “a lack of both appropriate training and adequate policies and procedures.” The institutions were directed “to revise their training and policies and procedures mechanisms to ensure that employees provide FCRA-required information on adverse action notices.” As written in the report:

  • 2.3.3 Failure to provide Fair Credit Reporting Act adverse action notices: Section 615(a) of the Fair Credit Reporting Act (FCRA) requires that if any person takes any adverse action with respect to any consumer that is based on information contained in a consumer report, the person must provide the consumer with notice of the adverse action (e.g., a denial of credit) including: (1) the name, address, and telephone number of the consumer reporting agency that furnished the report to the person; (2) a statement that the consumer reporting agency did not make the decision to take the adverse action; (3) the consumer’s right to obtain a free copy of a consumer report from that consumer reporting agency; and (4) the consumer’s right to dispute with the furnishing consumer reporting agency the accuracy or completeness of information contained the consumer report. One or more institutions took adverse action based on information in consumer reports but failed to make the required disclosures. Examiners found these actions to be violations caused by a lack of both appropriate training and adequate policies and procedures. Supervision directed the institutions to revise their training and policies and procedures mechanisms to ensure that employees provide FCRA-required information on adverse action notices.

The Consumer Financial Protection Bureau (CFPB) helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. The CFPB Supervisory Highlights, Issue No. 12 (Summer 2016) is available at: www.consumerfinance.gov/documents/531/Supervisory_Highlights_Issue_12.pdf.

More Information about the Adverse Action Process from ESR

Employment Screening Resources® (ESR) – a leading global background check firm – offers more information about the adverse action process in the article “Complying with the Fair Credit Reporting Act in Four Easy Steps” by ESR founder and CEO Attorney Lester Rosen. The article is available at: www.esrcheck.com/Articles/Complying-with-the-Fair-Credit-Reporting-Act-in-Four-Easy-Steps/135/.

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