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Difficulty: MediumFair Credit Reporting Act (FCRA)

A client's application for a health insurance policy is denied based on financial data obtained from a consumer report. Believing the report contains inaccuracies, the client contacts the insurance producer to demand a copy of the document and requests that the agency correct the negative payment history. Under the Fair Credit Reporting Act (FCRA), which action represents the correct compliance procedure for the insurance company?

  1. Supply the name and contact details of the credit reporting agency so the client can obtain the report and dispute the errors directly.Answer
  2. B
    Print and mail a complete copy of the credit report to the client within five business days of the verbal request.
  3. C
    Launch an internal investigation into the credit bureau's data to verify the late payments before finalizing the denial.
  4. D
    Forward the client's dispute to the state's Guaranty Association for independent arbitration of the credit history.

Answer

The insurer must supply the name and contact details of the credit reporting agency so the client can obtain the report and dispute the errors directly.
Under the FCRA, when an adverse action (like denying coverage) is taken based on a consumer report, the insurer must provide the consumer with the name, address, and phone number of the reporting agency. It is the reporting agency's responsibility—not the insurer's—to provide a copy of the report upon request and investigate disputed information.

Step-by-Step Solution

1
Analyze the applicant's demands following the adverse underwriting action.
The applicant wants the insurer to provide the credit report and fix the reporting errors.
Identifying the consumer's request is necessary to determine the insurer's statutory obligations.
2
Recall the Fair Credit Reporting Act (FCRA) provisions regarding adverse action notices.
FCRA mandates that the entity taking adverse action must inform the consumer and provide the contact information of the consumer reporting agency.
This establishes the legal boundary of the insurance company's responsibility.
3
Determine who is responsible for providing the report and correcting errors.
The consumer reporting agency is responsible for providing the free report and investigating disputed items, not the insurance company.
The insurer merely uses the data; the agency maintains it.

Key Concept

Fair Credit Reporting Act (FCRA) - Adverse Action Procedures
Estimated Time:1m 15s
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Topics

Fair Credit Reporting Act (FCRA)

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