We are thinking about going with a certain vendor for bill payment services, and in reviewing the contract, we saw that they conduct "standard credit screening" on all users (our bill pay customers), which is a "soft inquiry" of credit histories. Apparently this doesn't affect the users credit rating, nor does it appear as an inquiry on the consumer's report.

In addition, they "reserve the right" to access a user's credit report in a "hard inquiry" manner, thereby affecting the users credit rating and appearing as an inquiry. These hard inquiries are only to occur in fraud investigations and to solve payee setup issues.

So, knowing this, what are our duties to the consumer? It seems to me like this information should be disclosed to our bill pay customers at the time they enroll, but I can't find anything in the FCRA that requires such disclosure. I believe the vendor is acting under the "permissable purposes" defined in 604(a)(3)(E), for those who "intend to use the information, as a potential...servicer...in connection with a valuation of, or an assessment of...prepayment risks..."

Can anyone offer an opinion on what we should do about this matter? I'm also wanting to make sure of the vendor's procedure is for handling denials. I want to make sure they are sending the adverse action!

Thanks for any help you can offer!