How to Comply With the FCRA in Advertising

The Fair Credit Reporting Act protects consumers against misuse of financial information.

The Fair Credit Reporting Act was enacted in 1970 as a way to protect sensitive consumer financial information. The Act provides guidelines for the legal collection and use of consumer credit information; it's designed to keep private information confidential, and to regulate the practice of businesses using consumer credit information irresponsibly in advertising practices. In particular, the FCRA regulates how institutions may and may not use consumer credit information when extending offers of pre-approved credit. This is a practice frequently employed by financial institutions like credit card companies and banks.

Instructions

1. Ensure that all printed advertising materials state the specific terms of the offer being advertised. Many financial institutions send pre-approved credit offers to potential customers, enticing them to apply for a credit card, bank loan or line of credit. Institutions frequently use consumer financial data to identify individuals to extend these offers to. For example, if an advertisement states that a person is pre-approved for a particular interest rate or special, but in reality that individual must still undergo a credit check prior to being approved, all print advertising must state that fact.

2. Ensure that all provisions of an advertised financial service are spelled out in online materials. If an advertisement of financial services is contingent upon a consumer having a particular credit score, a pre-existing relationship with the financial institution or a minimal account balance, this information must be disclosed.

3. Outline any fees associated with services in print advertisements, as well as online and verbal communications. This includes annual fees, account maintenance fees, over-limit penalties and fees, and balance transfer charges.

4. Disclose in writing any provisions that may change an advertised introductory or initial interest rate. This includes over-limit fees, late payments or changes to a consumer’s credit rating.

5. Disclose in all advertising forums the specific requirements attached to so-called "free" credit reports. While consumers are entitled to view their credit reports without charge once annually, or when denied credit, organizations that charge membership or other fees for additional access to credit reports must disclose membership and fee guidelines in all advertising formats.

Tips & Warnings

• Individuals and organizations found to be in non-compliance with FCRA guidelines are subject to fines and penalties.

References

• Federal Trade Commission: The Fair Credit Reporting Act
• Bureau of Consumer Protection: Credit Reports