FACTA Verification - Fraud Alert on Credit Bureau

Question:

When granting open-end credit card accounts is it necessary for the bank to call the applicant (if the phone number is provided in the bureau statement) in the event that they have an extended fraud alert on their bureau or can the bank leave a message and accept a return call from the applicant and verify the applicant's bureau contact phone number from the bank's caller ID? Does the bank have to call the bureau contact number of a card holder (with an extended fraud alert on the bureau) who requests a credit line increase or to have an account reactivated and new plastic sent or are these two scenarios exempt from FACTA verification compliance?

Answer:

FCRA has specific requirements on users of credit reports when either a fraud or an extended fraud alert is placed on a consumer report. If a specific contact number is provided, the creditor "shall contact the consumer using that telephone number or take reasonable steps to verify the consumer's identity and confirm that the application for a new credit plan is not the result of identity theft." If the creditor has left a message at the contact number and then accepts a subsequent phone call as authorization, you would want to document the reasonable steps taken to verify the authenticity of the caller's identity. (FCRA 605a(h)(1)(B)(ii). Credit line increases, reactivation and new cards are not exempt from this section. The reference to an open-end credit plan refers to activity on a current account. Otherwise, each transaction on a credit card or line of credit would require verification.

First published on BankersOnline.com 12/01/08