CIPP Financial Privacy (GLBA, FCRA, and FACTA) 2 — Questions and Answers
Question 1: The Fair Credit Reporting Act (FCRA) primarily regulates which entities?
- Banks and mortgage lenders only
- Consumer reporting agencies and users of consumer reports (Correct answer)
- The IRS and tax collection agencies
- Financial institutions subject to GLBA
Correct answer: Consumer reporting agencies and users of consumer reports
FCRA regulates consumer reporting agencies (CRAs) that compile consumer information and the entities that use consumer reports, establishing rights for consumers and duties for these parties.
Question 2: Under FCRA, how long may a Chapter 7 bankruptcy remain on a consumer's credit report?
- 5 years from the discharge date
- 7 years from the filing date
- 10 years from the filing date (Correct answer)
- 15 years from the filing date
Correct answer: 10 years from the filing date
Chapter 7 bankruptcy is the longest-retained adverse item under FCRA, remaining on a consumer credit report for up to 10 years from the date of filing.
Question 3: Which of the following constitutes a 'permissible purpose' for obtaining a consumer report under FCRA?
- General marketing campaigns to existing customers
- A credit transaction initiated by the consumer (Correct answer)
- Sending unsolicited promotional materials
- Data analytics by third-party data brokers
Correct answer: A credit transaction initiated by the consumer
FCRA limits access to consumer reports to specific permissible purposes, including credit transactions initiated by the consumer, employment screening, and insurance underwriting.
Question 4: When an employer intends to take an adverse action based on a consumer report, FCRA requires the employer to:
- Immediately delete the consumer report from its systems
- Provide a pre-adverse action notice followed by an adverse action notice (Correct answer)
- Notify the consumer reporting agency within 30 days
- Obtain written consumer consent before using the report
Correct answer: Provide a pre-adverse action notice followed by an adverse action notice
FCRA mandates a two-step process: a pre-adverse action notice with a copy of the report before the decision, and then a formal adverse action notice if the employer proceeds.
Question 5: Under FCRA, how long does a consumer reporting agency generally have to investigate a consumer dispute about inaccurate information?
- 15 business days
- 30 days (Correct answer)
- 45 days under all circumstances
- 60 days
Correct answer: 30 days
FCRA requires CRAs to complete dispute investigations within 30 days of receiving the dispute, extendable to 45 days when the consumer provides additional information during the investigation.
Question 6: Which of the following is NOT a permissible purpose for obtaining a consumer report under FCRA?
- Pre-employment background screening
- Insurance underwriting for a new policy
- Satisfying personal curiosity about a neighbor (Correct answer)
- Reviewing an existing account relationship
Correct answer: Satisfying personal curiosity about a neighbor
Personal curiosity is never a permissible purpose under FCRA; access must be tied to a legitimate business reason expressly listed in the statute.
Question 7: The FCRA 'Furnisher Rule' primarily requires entities that report information to consumer reporting agencies to:
- Pay a fee for each consumer record submitted to a CRA
- Maintain reasonable policies to ensure accuracy and integrity of reported information (Correct answer)
- Obtain consumer consent before submitting any information
- Delete all submitted consumer records after 7 years
Correct answer: Maintain reasonable policies to ensure accuracy and integrity of reported information
The Furnisher Rule requires data furnishers to have written policies and procedures ensuring that information reported to CRAs is accurate, complete, and kept current.
CIPP Financial Privacy (GLBA, FCRA, and FACTA) 2
The Fair Credit Reporting Act (FCRA) primarily regulates which entities?