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Question

Difficulty: EasyFair Credit Reporting Act (FCRA)

When an insurer takes adverse action, such as denying coverage or charging a higher premium, based on information contained in a consumer report, the Fair Credit Reporting Act (FCRA) mandates specific notification procedures. Which action must the insurer take to comply with this federal law?

  1. Supply the consumer with the name and address of the reporting agency.Answer
  2. B
    Mail a complete copy of the credit report directly to the applicant's home address.
  3. C
    File a formal notification of the adverse underwriting decision with the state Department of Insurance.
  4. D
    Instruct the insurance producer to verbally disclose the specific negative financial details to the applicant.

Answer

Supply the consumer with the name and address of the reporting agency.
Under the FCRA, consumers have the right to know who provided the negative information that led to an adverse underwriting decision. Therefore, the law strictly requires the insurer to provide the name and address of the consumer reporting agency so the applicant can exercise their right to dispute potential inaccuracies.

Step-by-Step Solution

1
Identify the trigger event described in the scenario.
An insurer takes an adverse action (denial or rate increase) based on a consumer report.
Understanding the trigger event is necessary to apply the correct regulatory framework.
2
Recall the consumer rights established by the Fair Credit Reporting Act (FCRA) for this specific event.
The FCRA requires the entity taking adverse action to notify the consumer and provide the contact information of the agency that supplied the report.
This allows the consumer to contact the agency to review their file and dispute any inaccurate information.
3
Evaluate the given options against the FCRA requirement.
Providing the name and address of the reporting agency is the only legally mandated action among the choices.
Other options describe actions that are either prohibited, unnecessary, or the responsibility of another party.

Key Concept

FCRA Adverse Action Notification Requirements
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Topics

Fair Credit Reporting Act (FCRA)

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