Examkin

Question

Difficulty: MediumFair Credit Reporting Act (FCRA)

An underwriter declines a commercial property insurance application due to negative financial history found in a standard consumer credit report. Under the Fair Credit Reporting Act (FCRA), which of the following rights and procedures apply to this adverse action? (Select all that apply)

  1. The insurer must provide the applicant with the name and contact information of the consumer reporting agency that supplied the report.Answer
  2. The applicant has the right to request a free copy of the credit report from the reporting agency within 60 days of the adverse action.Answer
  3. C
    The insurer is legally required to include a complete copy of the consumer report along with the formal declination letter.
  4. D
    The applicant must file any disputes regarding the report's accuracy directly with the insurer's underwriting department.

Answer

The insurer must provide the applicant with the name and contact information of the consumer reporting agency, and the applicant has the right to request a free copy of the report from the agency within 60 days.
When an adverse action is taken based on a consumer report, the FCRA mandates two primary things: the insurer must notify the applicant and provide the contact information of the consumer reporting agency, and the applicant has the right to obtain a free copy of that report from the agency within 60 days.

Step-by-Step Solution

1
Identify the law governing the scenario.
The scenario involves an adverse action (declination) based on a consumer credit report, which is governed by the Fair Credit Reporting Act (FCRA).
Understanding the applicable federal law is necessary to determine the required compliance procedures.
2
Determine the insurer's obligations under the FCRA when taking adverse action.
The insurer must provide an adverse action notice that includes the name, address, and phone number of the consumer reporting agency that furnished the report.
This fulfills the FCRA requirement to inform the consumer where the negative information originated.
3
Identify the consumer's rights under the FCRA following an adverse action.
The consumer has the right to request a free copy of the report from the reporting agency within 60 days and the right to dispute inaccurate information directly with that agency.
FCRA protects consumers by giving them access to their files and a mechanism to correct errors, but these interactions occur with the reporting agency, not the insurer.

Key Concept

Under the FCRA, adverse actions based on a consumer report require the insurer to provide the reporting agency's contact information, while the consumer retains the right to obtain a free report within 60 days and dispute errors directly with the agency.
Rate this question

Topics

Fair Credit Reporting Act (FCRA)

More questions from this topic