An insurance company decides to order an Investigative Consumer Report to gather details about a life insurance applicant's character and lifestyle. Under the Fair Credit Reporting Act (FCRA), which of the following is a mandatory requirement for the insurer regarding this report?
- The insurer must notify the applicant in writing that an investigative report may be requested.Answer
- BThe insurer must wait to disclose the use of the report until an adverse underwriting decision is reached.
- CThe insurer must classify the applicant's character as a physical hazard prior to ordering the report.
- DThe insurer must allow the agent to modify the original application based on the report's findings without the applicant's signature.
Answer
The insurer must notify the applicant in writing that an investigative report may be requested.
The Fair Credit Reporting Act strictly regulates how consumer information is gathered. When an insurer orders an Investigative Consumer Report (which involves interviews with friends, neighbors, and associates), they must provide the applicant with a written disclosure stating that such a report may be requested. This must typically occur within 3 days of the date the report was requested.
Step-by-Step Solution
Key Concept
Investigative Consumer Reports and FCRA Compliance
Estimated Time:45s