FCRA Regulations & Legal Framework 3 — Questions and Answers
Question 1: Under the FCRA, a 'consumer reporting agency' is defined by which key characteristic?
- It must be a for-profit corporation chartered in a U.S. state
- It regularly assembles or evaluates consumer information for the purpose of furnishing consumer reports to third parties (Correct answer)
- It holds consumer deposits and extends credit
- It operates exclusively under federal charter
Correct answer: It regularly assembles or evaluates consumer information for the purpose of furnishing consumer reports to third parties
The FCRA defines a CRA as any entity that regularly assembles consumer credit information for the purpose of furnishing consumer reports to third parties.
Question 2: Which FCRA section requires that users of consumer reports provide adverse action notices?
- Section 604
- Section 609
- Section 615 (Correct answer)
- Section 623
Correct answer: Section 615
Section 615 requires users who take adverse action based wholly or partly on a consumer report to provide the consumer with specific disclosures.
Question 3: A nationwide consumer reporting agency must make free annual disclosures available to consumers. Under which FCRA provision is this requirement codified?
- Section 611
- Section 612 (Correct answer)
- Section 609
- Section 605B
Correct answer: Section 612
Section 612 of the FCRA requires nationwide CRAs to provide consumers one free file disclosure per 12-month period upon request.
Question 4: Under the FCRA's 'investigative consumer report' rules, what additional disclosure must users provide before ordering such a report?
- A permissible purpose certification signed by a judge
- Written notice to the consumer at least 5 days before the report is requested
- Oral notification to the consumer within 3 days of the report
- Written disclosure within 3 days of the request and consumer's right to request interview information (Correct answer)
Correct answer: Written disclosure within 3 days of the request and consumer's right to request interview information
Section 606 requires users to provide written disclosure within 3 days of requesting an investigative report and to inform the consumer of their right to request the nature and scope of the investigation.
Question 5: The FCRA preempts state credit reporting laws in certain areas but expressly preserves state laws in others. Which of the following areas is FCRA preemption MOST limited?
- Furnisher duties under section 623
- Adverse action notice content
- State laws that impose requirements on CRAs that are inconsistent with federal FCRA provisions (Correct answer)
- Reporting periods for bankruptcies
Correct answer: State laws that impose requirements on CRAs that are inconsistent with federal FCRA provisions
FCRA preemption is most limited — meaning states retain the most authority — where state laws impose requirements that go beyond rather than conflict with federal FCRA provisions.
Question 6: Which federal regulation implements the 'Red Flags Rule' as required by the FACT Act amendment to the FCRA?
- Regulation V (Correct answer)
- Regulation B
- Regulation P
- Regulation Z
Correct answer: Regulation V
Regulation V (12 CFR Part 1022) implements the FCRA's Red Flags Rule, requiring covered entities to implement identity theft prevention programs.
Question 7: When the FCRA refers to a 'firm offer of credit or insurance,' what must the offer include to qualify for the prescreening exemption?
- A guaranteed approval with no conditions whatsoever
- A minimum credit line of $500
- A bona fide offer that will be honored if the consumer meets the criteria used in the prescreened list (Correct answer)
- Written pre-approval valid for at least 60 days
Correct answer: A bona fide offer that will be honored if the consumer meets the criteria used in the prescreened list
A firm offer under FCRA must be a bona fide offer that will be honored if the consumer meets the criteria used to select them, not a marketing ploy.
FCRA Regulations & Legal Framework 3
Under the FCRA, a 'consumer reporting agency' is defined by which key characteristic?