An underwriter is evaluating a life insurance application and determines that an investigative consumer report is necessary. The application is ultimately declined based on the report's findings. According to the Fair Credit Reporting Act (FCRA), arrange the following compliance steps in the correct chronological sequence.
- 1The underwriter formally orders an investigative consumer report from a third-party consumer reporting agency.
- 2Within 3 days of the report request, the insurer sends the required initial written disclosure to the applicant.
- 3Upon receiving the initial disclosure, the applicant submits a written request for further details about the investigation.
- 4Within 5 days of receiving the applicant's inquiry, the insurer provides a detailed description of the nature and scope of the investigation.
- 5After reviewing the completed report, the insurer declines the application and provides an adverse action notice.
Answer
The correct chronological sequence is: ordering the report, sending the initial 3-day disclosure, receiving the applicant's request for details, providing the 5-day nature and scope disclosure, and finally issuing the adverse action notice.
The Fair Credit Reporting Act (FCRA) establishes a strict timeline for investigative consumer reports to protect consumer privacy. First, the report is ordered. Second, the insurer must notify the applicant within 3 days. Third, the consumer has the right to request more information based on that initial notice. Fourth, the insurer must respond to that request with a detailed nature and scope disclosure within 5 days. Finally, if the completed report leads to a denial, an adverse action notice must be provided.
Step-by-Step Solution
Key Concept
FCRA Investigative Consumer Report Timelines and Adverse Action