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NAFCU Asks for Modification in Fed Negative Information Disclosure Proposal

ARLINGTON, Va. - NAFCU said in a comment letter that it generally supports the Fed's proposed regulation on negative information disclosure with some minor tweaking. The proposal, due to be implemented under Section 217 of the Fair and Accurate Credit Transactions Act, includes the clause "to include in your credit...

By Staff Writer | Updated on May 18, 2004

ARLINGTON, Va. – NAFCU said in a comment letter that it generally supports the Fed’s proposed regulation on negative information disclosure with some minor tweaking. The proposal, due to be implemented under Section 217 of the Fair and Accurate Credit Transactions Act, includes the clause “to include in your credit report,” which NAFCU said was confusing and recommended that it be eliminated. NAFCU President and CEO Fred Becker wrote in the letter that this phrase could cause confusion about whether and when the credit bureau would include negative information in a credit report. It also goes beyond what is required under the law, he pointed out, so deleting it should not be a problem. “Section 217 does not require the financial institution to disclose to the consumer what the credit bureau may do with the information. The financial institution has no knowledge of or control over how the credit bureau treats the information,” Becker wrote. “Deletion of this clause will result in a clear model notice that satisfies the requirements of section 217.” NAFCU suggested the wording, “We [may provide]/[have provided] information to credit bureaus about an insolvency, delinquency, late payment, or default on your account.” The disclosure is statutorily limited to 30 words or less. Additionally, NAFCU supported the Fed’s idea to amend Regulation V (Fair Credit Reporting Act) to specify that all financial institutions could use the notice to comply with the law. “This express authorization to use the model notice will provide helpful guidance for financial institutions. A model notice that can be used by all financial institutions encourages standardization and minimizes confusion for consumers,” Becker wrote.

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