FCRA Compliance Management & Risk Mitigation 4 — Questions and Answers
Question 1: Under FCRA Section 611, a CRA may terminate a reinvestigation of a consumer's dispute as 'frivolous or irrelevant' if which condition is met?
- The consumer has disputed the same item more than once in any 12-month period
- The consumer fails to provide sufficient information to investigate the dispute (Correct answer)
- The furnisher has previously verified the information as accurate
- The disputed item is more than 7 years old
Correct answer: The consumer fails to provide sufficient information to investigate the dispute
A CRA may deem a dispute frivolous when the consumer provides insufficient information to conduct a meaningful investigation.
Question 2: A financial institution's compliance management system identifies a pattern of adverse action notices missing the 'right to a free copy of the report' disclosure. Which corrective action addresses BOTH the symptom and root cause?
- Send retroactive notices to all affected consumers and retrain the mailing team
- Audit and update the notice template, implement automated template validation, and conduct a lookback to identify consumers who need re-notice (Correct answer)
- File a voluntary disclosure with the CFPB and await guidance
- Increase the frequency of annual compliance training
Correct answer: Audit and update the notice template, implement automated template validation, and conduct a lookback to identify consumers who need re-notice
Fixing the template, adding a technical control to catch future errors, and providing remediation to affected consumers addresses root cause and consumer harm simultaneously.
Question 3: Which FCRA provision specifically governs the obligations of entities that compile and sell lists of consumers for prescreened firm offers of credit or insurance?
- Section 605 — Obsolescence of information
- Section 604(c) — Transactions not initiated by consumers (Correct answer)
- Section 623 — Responsibilities of furnishers
- Section 616 — Civil liability for willful noncompliance
Correct answer: Section 604(c) — Transactions not initiated by consumers
Section 604(c) is the FCRA provision that permits prescreened solicitations only when the consumer receives a firm offer and the creditor maintains an opt-out mechanism.
Question 4: An employer wants to conduct a background check on a current employee suspected of workplace theft. Under FCRA, which step is UNIQUE to investigations of current employees versus applicant background checks?
- A summary of rights must be provided before the report is ordered
- No disclosure or authorization is required if the employer is investigating employee misconduct
- The employer may use a consumer report but must provide an 'investigative consumer report' notice describing the nature and scope of the investigation (Correct answer)
- A court order is required before pulling the report
Correct answer: The employer may use a consumer report but must provide an 'investigative consumer report' notice describing the nature and scope of the investigation
For investigative consumer reports used to investigate employee misconduct, FCRA Section 606 requires the employer to disclose the nature and scope of the investigation to the employee.
Question 5: A CRA's compliance team is stress-testing its reinvestigation capacity. Under FCRA, what is the maximum permissible investigation period when a consumer provides additional relevant information during the investigation?
- 30 days, with no extensions permitted
- 45 days when the consumer provides additional information after the initial dispute (Correct answer)
- 60 days if the furnisher requests extra time to verify
- 90 days if the dispute involves medical debt
Correct answer: 45 days when the consumer provides additional information after the initial dispute
FCRA Section 611(a)(1) allows a 15-day extension (to 45 days total) when the consumer submits additional relevant information during the reinvestigation period.
Question 6: Which practice BEST demonstrates a mature FCRA compliance culture within a furnisher organization?
- Responding to all CFPB complaints within 60 days
- Integrating FCRA accuracy metrics into frontline employee performance evaluations (Correct answer)
- Issuing quarterly compliance newsletters to all staff
- Designating one compliance officer to handle all FCRA matters
Correct answer: Integrating FCRA accuracy metrics into frontline employee performance evaluations
Embedding FCRA accuracy standards into performance metrics creates accountability at the operational level where data errors most commonly originate.
Question 7: Under FCRA, a 'nationwide consumer reporting agency' has additional obligations compared to specialty CRAs. Which obligation is EXCLUSIVE to nationwide CRAs?
- Maintaining reasonable procedures for accuracy
- Providing consumers with one free annual file disclosure upon request (Correct answer)
- Investigating consumer disputes within 30 days
- Notifying furnishers when a dispute is received
Correct answer: Providing consumers with one free annual file disclosure upon request
FCRA Section 612 requires nationwide CRAs to provide consumers one free file disclosure per 12-month period upon request, an obligation not imposed on specialty CRAs.
FCRA Compliance Management & Risk Mitigation 4
Under FCRA Section 611, a CRA may terminate a reinvestigation of a consumer's dispute as 'frivolous or irrelevant' if which condition is met?