Fed Issues Negative Information Reporting Proposal, NCUA to Follow

WASHINGTON – The Federal Reserve Board issued proposed amendments to the Fair Credit Reporting Act regulation to move one step further to implementing the Fair and Accurate Credit Transactions Act. The proposal would add a model form for financial institutions, including credit unions, to use if they provide negative information about a consumer to a credit reporting agency. The FACT Act requires the Fed to have the model in final form by June 4. Under the FACT Act, the model form must be less than 30 words long for financial institutions to use to comply with the notice requirement for furnishing negative information. NCUA plans on issuing its own proposed rule, according to Public Affairs Specialist Cherie Umbel. The FACT Act requires financial institutions that (1) extend credit and in the ordinary course of business furnish information to a nationwide consumer reporting agency, and (2) furnish negative information to such an agency regarding credit extended to a customer, to provide a clear and conspicuous written notice to the customer/member. “Negative information” includes delinquencies, late payments, insolvency, or any form of default. Comments must be received by May 9. The NCUA Board voted unanimously, by notation vote, to issue a proposed rule regarding privacy of medical information, Umbel said, similar to the briefing papers provided at March’s board meeting. The FACT Act prohibits creditors from obtaining or using medical information to make credit decisions with some exceptions. Possible exceptions included in the Board Action Memorandum from March include coded medical information, information obtained directly from the consumer, verification information, payment activity information, transaction or experience information, or information obtained through other lawful means. NCUA’s BAM anticipated a 30-day comment period on the proposed regulation. Four exceptions outlined in the statute are in connection with the business of insurance or annuities; for any purpose permitted without authorization under the Department of Health & Human Services Standards for Individually Identifiable Health Information under the Health Insurance Portability and Accountability Act of 1996; as necessary to process a payment transaction under a provision or HIPAA; or for any purpose provided for in certain exceptions to the Gramm-Leach-Bliley Act’s consumer privacy provisions. [email protected]