The consumer reporting agency must exclude information about any individual that has elected not to be included on prescreened consumer lists. Once the prescreened individuals have been identified for inclusion on a consumer list, the consumer reporting agency may only provide the financial institution with limited information about each individual. Alternatively, rather than stipulating certain characteristics, a financial institution may also rely on the consumer reporting agency to use its own independent algorithms and credit evaluation processes-only consumers with a minimum credit score, for example-to identify consumers for the financial institution. Prescreening is the only circumstance in which consumer report information may be used for marketing purposes, and one of the few circumstances in which consumer report information may be provided in the absence of a consumer-initiated transaction.Ī financial institution can tailor the prescreening criteria based on a wide variety of characteristics, which typically include demographic information, such as ZIP code, and credit information, such as number of existing lines or credit or current credit limits. The process by which individual consumers are identified to receive firm offers of credit is based on a predetermined set of criteria used to prescreen those individuals for inclusion on a consumer list. How Are Consumers Prescreened to Receive Firm Offers of Credit? To avoid violating the FCRA, financial institutions must develop internal processes to ensure that the FCRA’s proscriptive requirements are satisfied when making firm offers of credit. However, the FCRA establishes a framework by which financial institutions can obtain such a prescreened consumer list if the financial institution intends to extend a firm offer of credit to each consumer on the list. Thus, a financial institution must have a permissible purpose to obtain a consumer report about each individual on the list. This includes lists of consumers that match a specified set of characteristics, because the FCRA treats each name on the “prescreened” list as a consumer report. Unless a financial institution has a permissible purpose as enumerated in the FCRA, a financial institution cannot obtain a consumer report nor can a consumer reporting agency provide one. The federal Fair Credit Reporting Act (FCRA) strictly regulates the use of consumer reports, which contain highly sensitive information bearing on a consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living.
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