Question & Answer

Question: Help! I've just learned that several of our customer service staff have not been giving written notices to customers when we refuse to open an account because of information we learned from a consumer reporter - for check fraud purposes. How should we correct this?

Answer: This is one of those fun questions. It is fun because there isn't really a problem here. The Fair Credit Reporting Act does require that you give consumers a notice when you deny their application because information acquired from a credit reporting service. This includes companies that report on check fraud risks for deposit accounts. However - and here's the good news - the notice can be given in "oral, electronic, or written" form.

No matter how you give the notice, you must give all the required information, including the name, address, and telephone number of the reporting agency, a statement that the reporting agency did not make the decision, and an explanation of the consumer's right obtain a copy of their report and to dispute information in that report.

We tend to assume that notices must be in writing. In fact, that is a good practice and we recommend that you give these notices in writing as a general practice. It is the only realistic way to be sure that all of the information required in the notice is in fact given to the consumer. However, when you need to pull compliance out of a hat, it is nice to know that these notices don't specifically have to be in writing. Therefore, no corrective action is required.

Copyright © 1999 Compliance Action. Originally appeared in Compliance Action, Vol. 4, No. 4, 4/99