The Federal Trade Commission (FTC) released final regulations on September 8, 2021, specifying that five Fair Credit Reporting Act (FCRA) rules over which it retains regulatory power will only apply to motor vehicle dealers.
In 2010, the FTC’s regulatory authority for the FCRA was assigned to the Consumer Financial Protection Bureau (CFPB) by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), which significantly changed the legal framework. and monitoring of providers. consumer financial products and services. In 2012, the FTC repealed certain rules it had promulgated under the FCRA and those rules were replaced by rules issued by the CFPB. However, pursuant to Section 1029 (a) of the Dodd-Frank Act, the FTC retained regulatory power over certain motor vehicle dealers. These rules apply primarily to motor vehicle dealers engaged in the sale, maintenance and rental of motor vehicles.
One of the retained FTC rules that now apply only to motor vehicle dealers is the supplier rule (discussed further below), while the CFPB supplier rule applies to all other entities. . It is important to note that the Dodd-Frank Act limited only the regulatory power of the FTC, but did not affect the power of the FTC to enforce the CFPB supplier rule. For example, as recently as 2020, the FTC filed a complaint alleging violations of the CFPB’s version of the rule. The FTC agrees with the only comment it received, that the Furnisher Rule has helped millions of consumers uncover inaccuracies in consumer reporting and emphasized the need to enforce the Furnisher Rule.
The FTC regulations of September 8, 2021 affect the following FCRA regulations.
- Address discrepancy rule: Provides obligations to users of consumer reports when a notice of address discrepancy is received from a consumer information agency (CRA).
- Affiliate Marketing Rule: Provides consumers with the ability to prevent individuals from using information received from an affiliate for consumer solicitation purposes.
- Supplier rule: Requires suppliers to establish and maintain reasonable written policies and procedures regarding the accuracy and integrity of consumer information provided to rating agencies.
- Prior unsubscribe notice rule on the screen: Establishes requirements for consumer reporting users to make unsolicited credit or insurance offers to consumers. The pre-screen takedown rule also includes a web address that consumers can opt out of from credit offers for model reviews used by motor vehicle dealers.
- Risk Based Pricing Rule: Require users of consumer reports to inform consumers about the use of this data when they offer less favorable terms. The risk-based pricing rule has been revised to add examples detailing its scope limited to motor vehicle dealers.
Conclusion and Considerations
While the substance of the recent FTC regulations is not inherently revolutionary, it should remind the consumer financial services industry of the focus federal agencies have on FCRA compliance and enforcement. The FCRA is perhaps preeminent among all federal consumer financial services laws (with the possible exception of the Equal Credit Opportunity Act) in its role as a filter for access to consumer credit. . Because reviewing your consumer report is usually an essential step in assessing creditworthiness, ensuring that these reports are accurate and not misused is fundamental to ensuring proper allocation of consumer credit. Unrectified errors in a consumer report can deny credit to an eligible applicant.
The recent FTC regulations are expected to remind all consumer financial service providers and consumer reporting users to review how they access consumer reports, process consumer report information, and respond to alleged discrepancies.