Back to basics, continued – Magic in less than 30 words | Dentons
Those who work in the consumer credit industry are accustomed to the disclosure requirements of federal and state laws and regulations. But here’s one that you may not have heard of recently: Section 623 of the Fair Credit Reporting Act requires financial institutions that report negative or derogatory information about consumers to credit reporting agencies in inform consumers, unless they have already given preventive advice. in a form not exceeding 30 words. Really! Let me elaborate.
When the Fair Credit Reporting Act (FCRA) was amended by the Fair and Accurate Credit Transactions Act (FACTA) (collectively the “Act”), an obligation was imposed on providers of credit information to credit reporting agencies. credit. One of these obligations, set out in section 623 (a) (7) of the Act, is to inform consumers that the lender is providing reports to credit bureaus and that the information reported may be negative. .
To comply with this reporting requirement, the law allows for a preventive disclosure notice in the “documents provided to the client” if it is clear and visible. And, the law requires the CFPB to prepare a brief disclosure template that “does not exceed 30 words”.
Well, the CFPB or its predecessor, the Federal Trade Commission, did their job and gave us a template B-1 notice in the FCRA regulations. The model’s notification language is:
We may report information about your account to the credit bureaus. Late payments, missed payments, or other defaults on your account may be reflected in your credit report.
Take a look at your retail note or contract forms. If you can’t find this disclosure notice, ask why not. Disclosure can be handled in a different way, but educate yourself.
Interestingly, there is a related notice that can give information providers another level of protection. The law also prohibits the communication of inaccurate information with real knowledge of errors. However, this obligation is somewhat mitigated if the creditor has clearly and conspicuously given the consumer an address for the notice. So, although not mandatory, a well-written disclosure will also tell the consumer exactly where and how to notify the creditor of the alleged inaccuracy of the information.
You might want to check if your forms also contain this language.