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In March 2023, the FDIC issued Consumer Compliance Supervisory Highlights. Here, there is a section on pages 6-7 on Fair Credit Reporting Act: Trigger Leads. This section started with a summary of prescreened offers of credit and noted that “[o]ne kind of prescreening, commonly referred to in the industry as a ‘trigger lead,’ involves a lender paying credit reporting agencies to produce a report on certain consumers’ credit activity.”
As noted in the Supervisory Highlights,
In 2022, the FDIC examiners noted issues involving financial institutions that purchased ‘trigger leads,’ but failed to provide consumers with ‘firm offers of credit.’ By listening to recorded phone calls, reviewing scripts and consumer complaints, and interviewing loan officers, examiners identified instances where financial institution representatives were contacting consumers during sales calls, but did not communicate that (1) an offer of credit was being made, (2) the offer was guaranteed as long as the consumer met the credit criteria, (3) the offer was a prescreened offer based on the consumer’s credit report, and (4) the consumer could opt out of future prescreened offers. FCRA does not state that a firm offer of credit must be in writing and does not explicitly prohibit verbal offers. However, these disclosure requirements of FCRA must still be met.
The section on trigger leads then discussed “Mitigating Risk.” Here
[The FDIC’s Division of Depositor and Consumer Protection] (DCP) has observed certain risk-mitigating activities that may assist supervised institutions in complying with FCRA requirements. Illustrative examples include:
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- Developing and implementing comprehensive oversight of marketing materials, including content approval and ongoing monitoring, to ensure compliance with applicable rules and regulations.
- Implementing an effective compliance management system for FCRA and the use of prescreen credit report information to ensure bank staff comply with regulatory requirements.
- Developing scripts that comply with FCRA prescreening requirements to use when calling consumers identified through the trigger lead process.
- Developing and implementing offer letters meeting all regulatory requirements to send to all consumers meeting prescreening criteria. The letters should provide firm offers of credit that are clear and accurate, avoid misleading representations, and include the opt-out language found in Section 615(d) of FCRA.