Consumer advocates often contend that Congress should prohibit arbitration agreements with class action waivers because servicemembers and other consumers need class actions to effectuate their statutory rights.  However, a report issued by the Government Accountability Office (GAO) to Congress last month contains data that refutes that argument.

The GAO report studied the impact of mandatory arbitration agreements on claims by servicemembers under the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) and the Servicemembers Civil Relief Act (SCRA).  The USERRA generally provides protections for individuals who voluntarily or involuntarily leave civilian employment to perform service in the uniformed services.  The SCRA generally provides protections for servicemembers on active duty, including reservists and members of the National Guard and Coast Guard called to active duty.  In particular, the GAO report examined (1) the effect that mandatory arbitration has on servicemembers’ ability to file claims under the USERRA and the SCRA, and (2) the extent to which data are available to determine the prevalence of mandatory arbitration clauses and their effect on servicemembers claims.

The GAO report concluded that existing data was insufficient to answer these specific questions definitively and that data on the outcome of specific claims pursued through arbitration were “limited.”  Nevertheless, the data that it did uncover shows that servicemembers can effectuate their USERRA and SCRA rights in an individual arbitration.  The report discussed instances in which arbitrations administered by the Financial Industry Regulatory Authority “specifically enforced servicemembers’ rights under USERRA.”  In one case, the arbitrators awarded $172,000 to a servicemember who pursued a USERRA claim against his employer.  The arbitrators also found the employer liable for the servicemember’s attorneys’ fees and costs, totaling over $262,000, as well as the costs of administering the arbitration, totaling more than $36,000.  In another case, the arbitrators ruled against a servicemember’s claim under the USERRA but assigned the costs of the arbitration to the employer, specifically citing USERRA’s protections against fees and costs.

The GAO report also shows that arbitration clauses do not preclude servicemembers from pursuing many USERRA and SCRA claims administratively, without the need for class actions.  The report stated that “mandatory arbitration clauses have not prevented DOJ [Department of Justice] from initiating lawsuits against employers and other businesses under USERRA or SCRA” and that
“[s]ervicemembers may also seek administrative assistance from federal agencies, and mandatory arbitration clauses have not prevented agencies from providing that assistance.”  Indeed, administrative remedies may benefit servicemembers even more than class actions because any recovery by the DOJ is not diminished by the 33% or more in attorneys’ fees typically siphoned off by private class counsel.

The report cites a case in which  the DOJ filed a lawsuit against and reached a settlement with a mortgage company, requiring it to pay $2.35 million for allegedly foreclosing on the houses of 17 servicemembers without court orders in violation of the SCRA.  It also cited another case in which the DOJ reached a settlement with an automobile lender in which the company agreed to pay $9.35 million for illegally repossessing over 1,100 vehicles in violation of the SCRA.  Moreover, according to the report, DOJ has filed 109 USERRA lawsuits and favorably resolved 200 USERRA complaints through consent decrees or private settlements, and DOJ officials said that none of the employers compelled a servicemember into arbitration.

The effectiveness of these administrative remedies strongly undercuts the argument of the plaintiffs’ bar that class actions are necessary to effectuate servicemembers’ statutory rights.  The GAO report notes that in addition to the DOJ, the Department of Defense and the Department of Labor also “often help informally resolve claims for servicemembers by educating employers and companies about servicemembers’ rights,” enabling the servicemembers to avoid legal proceedings altogether.

The data in the GAO report strongly supports the industry’s positions that (1) individual arbitration is more beneficial than class action litigation, and (2) administrative remedies can be sufficient to protect consumers’ statutory rights, without the need for class actions.  In its 2015 empirical study of consumer arbitration, the Consumer Financial Protection Bureau found that the consumer’s average recovery in arbitration was $5,389.  By contrast, settlement class members received a mere $32.35, while their lawyers recovered a staggering $424,495,451.  Similarly, a November 2020 study by the U.S. Chamber Institute for Legal Reform found that consumers are more likely to win in arbitration than in court, consumers receive higher awards in arbitration than in litigation, and consumer arbitration is faster than litigation.

The GAO’s preliminary data should be heeded by Congress as it weighs possible legislative or regulatory measures that would prohibit or restrict the use of class action waivers in consumer arbitration and employment agreements.  In considering such measures, Congress should be mindful not to throw the baby out with the bathwater.

Democratic Senators Sherrod Brown and Chris Van Hollen have introduced a resolution under the Congressional Review Act (CRA) to overturn the OCC’s “true lender” final rule.  The rule addresses when a national bank or federal savings association should be considered the “true lender” in the context of a partnership with a third party.

To be eligible for the special Senate procedure that allows a CRA resolution to be passed with only a simple majority, the Senate must act on the resolution during a period of 60 “session days” which begins on the later of the date when the rule is received by Congress and the date it is published in the Federal Register.  (If the period has not expired in the Congressional session during which the rule was adopted, it resets at the beginning of the next Congressional session.)  The OCC’s final rule was published in the Federal Register on October 30, 2020 and became effective on December 29, 2020.  Because the CRA 60-day period had not run before the last session of Congress adjourned, the 60-day period reset in its entirety in the new session of Congress that began in January 2021.  If the OCC rule were to be overturned under the CRA, it would be deemed not to have any effect at any time and the OCC would be foreclosed from adopting a comparable rule.

President Biden has not yet appointed a new Comptroller of the Currency.  One thoughtful commentator has suggested that the Democrats’ slim Senate majority makes a CRA reversal of the rule improbable.  This commentator suggests that the CRA resolution is primarily a messaging tactic intended to highlight that a new Comptroller has not yet been nominated and to raise the profile of the issue in the hopes that the next Comptroller will reopen the rulemaking.  However, in light of the discipline the Democrats have shown since the election, we would not rule out the possibility of a successful CRA resolution overturning the OCC true lender rule.

The OCC’s rule is also the subject of a pending lawsuit.  On January 5, 2021, the Attorneys General of New York, California, Colorado, the District of Columbia, Massachusetts, Minnesota, New Jersey, and North Carolina filed a complaint in a New York federal district court, seeking to set aside the final rule.

 

A California federal district court has denied the OCC’s motion to dismiss the lawsuit filed in June 2020 by the National Community Reinvestment Coalition and California Reinvestment Coalition that asks the court to declare the OCC’s CRA final rule (Rule) unlawful under the Administrative Procedure Act (APA) and set it aside.

In its order denying the OCC’s motion to dismiss, the court rejected the OCC’s argument that the plaintiffs lack standing because they have not shown that they have suffered an injury in fact.  The plaintiffs allege that the Rule’s expansion of CRA-qualifying activities will lead to divestment from the low- and moderate-income (LMI) communities that the CRA was enacted to protect by allowing banks to receive CRA credit for projects and activities with, at best, attenuated and speculative benefits to LMI communities and that will instead benefit upper-income individuals.  According to the plaintiffs, the Rule will force them and their members to compete with these projects and activities when seeking funding for CRA activities from OCC-supervised banks.

The court found that these allegations were sufficient to allege an injury in fact under the “competitor standing doctrine” which requires a showing that an agency action will result in an increase in competition but does not require an actual loss in business opportunities to be shown.  According to the court, it was “enough [for the plaintiffs] to allege that [their community] activities will now have to compete with investment opportunities that could not previously receive CRA credit.”

The court also rejected the OCC’s argument that the plaintiffs’ claims are not ripe.  According to the OCC, the basis for the plaintiff’s alleged injuries assertions–that banks will perform fewer or less valuable CRA activities—was speculative because the OCC has not yet finalized the thresholds and benchmarks that will apply under the Rule to evaluate a bank’s CRA performance. The court found this argument unpersuasive, agreeing with the plaintiffs that the pending rulemaking would at most affect the amount of harm caused by the Rule but would not eliminate harm altogether.  (The OCC issued a proposed rule in November 2020 on the evaluation measure benchmarks and thresholds.  The comment period on the proposal closed on February 2, 2021.)

Also rejected by the court was the OCC’s argument that the plaintiffs do not have prudential standing because their claims of potential harm from the Rule fall outside of the CRA’s zone of interests.  In the court’s view, plaintiffs and their members interests satisfied the “zone of interests test” because they receive grants and loans for which banks receive CRA credit, making them direct beneficiaries of the CRA.

Finally, the court denied the OCC’s attempt to dismiss the first count of the complaint for failure to state a claim under the APA.  The first count alleges that the Rule should be set aside because it is “arbitrary, capricious, and/or contrary to law.”  The court stated that it did not have the benefit of the administrative record and because the OCC’s argument went “directly to the merits of the case,” the argument was more appropriately addressed on summary judgment.  The court declined to convert the OCC’s motion to dismiss into a summary judgment motion.

As we previously observed, the Rule’s fate under the Biden Administration is unclear.  There is the real possibility that the new Comptroller of the Currency could seek to amend the Rule to address some of the concerns raised in the litigation and by critics.  It is also possible that the incoming Comptroller could potentially take the drastic step of withdrawing the Rule to try to again achieve interagency consensus with the FDIC and the Federal Reserve on a uniform CRA rule.

 

 

The fate of the OCC’s Community Reinvestment Act (“CRA”) final rule, issued on May 20, 2020, hangs in the balance following the inauguration of President Biden on January 20 and the resignation of former Acting Comptroller Brian Brooks, who was a major proponent of the rule, on January 14.

Although the OCC’s CRA final rule technically became effective on October 1, 2020, it provides transition periods for compliance based on a bank’s asset size, type of charter, and business model. Specifically, large banks and wholesale and limited purpose banks must comply by January 1, 2023, and small and intermediate banks that choose to opt-in to the performance standards contained in the OCC’s final rule have until January 1, 2024 to comply. This transition period provides 2-3 years of leeway for changes to occur in the OCC’s final rule prior to full implementation. The OCC’s recent proposed rule that seeks public comment on evaluation measure benchmarks, retail lending distribution test thresholds, and community development minimums under the new general performance standards – which is more fully explained below – also must be finalized before the OCC can fully implement the CRA final rule.

In the preamble to the OCC’s CRA final rule, the agency explained that it planned to issue a proposal that would explain the process the OCC would use to calibrate the requirements for each of the three components of the objective evaluation framework (i.e., the CRA evaluation measure benchmarks, retail lending distribution test thresholds, and community development minimums). The proposed rule, issued on November 24, 2020 and published in the Federal Register on December 4, 2020, requests comment on the agency’s approach to determining these objective benchmarks, thresholds and minimums (the OCC’s “benchmarking proposal”).

Under the OCC’s benchmarking proposal, the OCC would calculate historical CRA activity levels and corresponding performance ratings under the general performance standards had they been in place. Furthermore, based on additional data analysis and consideration of public comments, the OCC would set the CRA evaluation measure benchmarks, retail lending distribution test thresholds, and community development minimums such that the proportion of banks that would have received presumptive ratings of “outstanding” and “satisfactory” under the general performance standards would be no greater than the historical proportion of banks that received assigned ratings of “outstanding” and “satisfactory” under the previous CRA regulations.

The proposal also explains how the OCC would treat significant declines in CRA activity levels in connection with performance context following the establishment of the benchmarks, thresholds, and minimums. Specifically, the OCC would consider to be “precipitous” a decline of 10 percent or greater in a bank’s performance on the general performance standards as calculated based on historical data between the establishment of the objective benchmarks, thresholds, and minimums and the bank’s first evaluation under the general performance standards. Such a decline that could not be explained by market conditions or other performance context factors may warrant a downward adjustment in the OCC’s determination of the bank’s assigned rating.

In the benchmarking proposal, the OCC notes that it plans to issue an information survey to institutions subject to the general performance standards to obtain bank-specific information. The agency would use this information to calculate CRA evaluation measures and community development minimum calculations for each bank’s assessment areas, as well as a bank-level CRA evaluation measure and community development minimum calculation for each bank.

The benchmarking proposal was published in the Federal Register for a 60-day comment period. Comments are due on February 2, 2021.

Regardless of who is nominated as the next Comptroller and confirmed by the Senate, it is likely that he or she would reexamine the CRA final rule. At minimum, the new Comptroller can be expected to review the CRA final rule in light of the criticism it has received from consumer advocacy groups and public comments on the benchmarking proposal. The fact that the benchmarking rulemaking is not yet finalized creates an opportunity for the new Comptroller to adjust those measures and potentially seek additional comment on them, if needed, or on other elements of the final rule. Even before the appointment and confirmation of the next Comptroller, the OCC recently announced that national banks will not be required to respond to the agency’s CRA information collection survey by its original May 31, 2021 deadline, which affords the OCC an opportunity to review all comments it receives in response to the Paperwork Reduction Act notice that was published in the Federal Register on December 15, 2020. The Paperwork Reduction Act notice sought bank-specific data and information to supplement available data to help the OCC calibrate the benchmarks, threshold and minimums contained in its proposed rule. The information collection applies only to banks with assets of $2.5 billion or more that are subject to the general performance standards under the CRA final rule.

There is also the real possibility that the new Comptroller could seek to amend the final rule to address some of the concerns raised by consumer advocacy groups. As we have previously reported, consumer advocates have uniformly and vigorously opposed the OCC’s CRA final rule, accusing the agency of acting hastily to “unlawfully gut[]” the CRA. On June 25, 2020, the National Community Reinvestment Coalition (“NCRC”) and California Reinvestment Coalition filed a lawsuit against the OCC, asking a federal district court to declare the OCC’s CRA final rule unlawful and set it aside. That lawsuit remains pending as of this writing.

The incoming Comptroller could potentially take the even more drastic step of withdrawing the OCC’s CRA final rule to try to again achieve interagency consensus with the FDIC and the Federal Reserve on a uniform CRA rule. The FDIC has not yet proceeded to finalize its CRA modernization rulemaking, waiting until “peacetime” to do so, and the Federal Reserve issued its own CRA advance notice of proposed rulemaking (“ANPR”) on October 19, 2020 after bowing out of the interagency reform effort in 2019. Based on recent speeches by Federal Reserve Governor Lael Brainard, it is clear that one of the Fed’s key goals in issuing its CRA modernization ANPR was to bring the agencies back to the negotiating table. As Governor Brainard noted in her December 17, 2020 speech to the CBA, “[m]any of the ideas in the [Fed’s] ANPR reflect interagency discussions, and our hope is that the ANPR provides a foundation for the agencies to converge on a consistent approach to CRA modernization that also has strong stakeholder support.” The NCRC and other consumer groups are also advocating that the OCC table its CRA final rule and commit to an interagency rulemaking using the Fed’s ANPR as a starting point.

The change in administration and vocal criticism of the OCC’s final rule may cause the OCC to reconsider its “go it alone approach” to CRA modernization. It remains to be seen, however, if the new Comptroller, when he or she assumes the office, will be willing to depart from the OCC’s current CRA regulatory path or whether the OCC, FDIC and Federal Reserve may be able to reach agreement on CRA reform.

FTC Chairman Joseph Simons has announced that he is resigning from the FTC, effective January 29, 2021.  Rebecca Slaughter, one of the two current Democratic FTC Commissioners, has been named Acting FTC Chair by President Biden.  In addition to announcing his own departure, Mr. Simons announced the departure of a number of other senior FTC staff including Bureau of Consumer Protection Director Andrew Smith.

With Mr. Simons’ departure and President Biden’s expected appointment of a Democrat to fill Mr. Simons’ seat, control of the FTC will be in the hands of Democrats.  In addition to Ms. Slaughter, the other current Democratic FTC Commissioner is Rohit Chopra, who President Biden has nominated to serve as CFPB Director.  Since the Federal Vacancies Reform Act does not allow Mr. Chopra to serve as Acting CFPB Director while his nomination is pending, he is likely to remain at the FTC until his nomination is confirmed by the Senate.  When that happens, President Biden can be expected to appoint another Democratic FTC Commissioner to replace Mr. Chopra.

Once Mr. Simons leaves the FTC, the remaining Republican FTC Commissioners will be Noah Phillips and Christine Wilson.

 

The CFPB and the Arkansas Attorney General announced that they filed a proposed stipulated judgment and order settling their Fair Credit Reporting Act (FCRA) and Consumer Financial Protection Act of 2010 (CFPA) claims against Alder Holdings, LLC, a home-alarm company that extends closed-end credit to its customers by providing them the right to defer payment for Alder’s alarm and security-system equipment over the life of a long-term contract.

The Complaint, filed in an Arkansas federal district court, alleges that Alder charged higher activation-fees for customers who had lower credit scores, but failed to provide them with the required risk-based pricing notice in violation of the FCRA. 15 U.S.C. § 1681m(h)(1) requires that a company give consumers notice when it provides consumers with less favorable credit terms based on a review of their credit reports.

Additionally, the Arkansas Attorney General alleged that by violating the FCRA, Alder also violated § 1036(a)(1)(A) of the CFPA, which makes is unlawful for covered persons to “commit any act or omission in violation of a Federal consumer financial law.”

If entered by the court, the stipulated final judgment and order will require Alder to pay a $600,000 civil money penalty, to provide proper risk-based pricing notices under the FCRA, and to submit a comprehensive compliance plan to the Bureau.

The Supreme Court has granted certiorari to review a $40 million class action trial judgment for statutory and punitive damages under the Fair Credit Reporting Act, and its forthcoming decision later this Term will likely be the Supreme Court’s most important ruling in the consumer financial services space since its 2016 ruling in Spokeo, Inc. v. Robins.

In TransUnion, LLC. v. Ramirez, the Supreme Court agreed to decide the following question posed by TransUnion: “Whether either Article III or Rule 23 permits a damages class action where the vast majority of the class suffered no actual injury, let alone an injury anything like what the class representative suffered.”  In this case, plaintiff Sergio Ramirez alleged that he suffered difficulty in obtaining credit, embarrassment in front of family members, and had to cancel a vacation after an automobile dealer received a credit report incorrectly indicating that his name matched a name found on a list of terrorists and narcotics traffickers with whom U.S. companies may not transact business that is prepared by the Office of Foreign Assets Control.  He filed a class action against TransUnion alleging violations of the FCRA.  Significantly, it was stipulated by the parties that, unlike Ramirez, approximately 79% of the 8,185 class members did not have a credit report disseminated to a third party during the class period.  The court certified the class despite TransUnion’s objections that most of the class members lacked standing and that Ramirez was not typical of the class he represented.  Unlike the vast majority of class actions, the case proceeded to trial and the jury awarded each class member $984.22 in statutory damages and an additional $6,353.08 in punitive damages.  On appeal, the Ninth Circuit, ruling 2-1, upheld class certification, the jury verdict in favor of the class, and the statutory damages amount, but reduced the punitive damages to $3,936.88 per class member.

TransUnion’s cert petition forcefully argued that “the Ninth Circuit eviscerated critical Article III, Rule 23, and due process constraints, thereby paving the way for one highly atypical plaintiff to recover massive damages on behalf of thousands of uninjured class members.”  Given the grant of certiorari in this case and the current composition of the Supreme Court, it can reasonably be anticipated that the Court’s decision later this Term will be favorable to TransUnion and to class action defendants generally, and will likely enunciate more rigorous requirements for standing under Rule 23 and Spokeo and for typicality under Rule 23(a)(3).

The CFPB announced that it has entered into a settlement with Afni, Inc. to address its alleged FCRA violations in furnishing consumer information to consumer reporting agencies (CRAs).  Afni is a debt collector specializing in the collection of debts on behalf of telecommunications companies.  The consent order imposes a $500,000 civil money penalty.

The FCRA/Regulation V violations identified by the Bureau included the following:

  • FCRA Section 623(a)(1) provides that unless a furnisher clearly and conspicuously provides an address to which a consumer can send notice that information furnished to a CRA is inaccurate, a furnisher may not furnish any information relating to the consumer to any CRA if the furnisher knows or has reasonable cause to believe that the information is inaccurate.  The Bureau found that Afni did not specify such an address on any correspondence used generally with consumers and that the furnishing logic of the automated system used by Afni to furnish information to CRAs did not correctly input some account information into the format used for reporting, resulting in inaccurately reported information.  According to the Bureau, Afni violated Section 623(a)(1) because it (1) knew or had reasonable cause to believe the information it furnished to CRAs was inaccurate because it was different than the information in Afni’s files, and (2) did not clearly and conspicuously specify an address for notices that furnished information was inaccurate.
  • FCRA Section 623(a)(5) requires a furnisher of information regarding a delinquent account being placed for collection to notify the CRA of the date the delinquency began.  According to the Bureau, Afni violated Section 623(a)(5) because it failed to notify CRAs of the date of first delinquency on many accounts on which it furnished information.
  • FCRA Section 623(b)(1) provides than when a furnisher receives a notice of dispute regarding the completeness or accuracy of reported information from a CRA, the furnisher must conduct a reasonable investigation and review all relevant information provided by the CRA.  According to the Bureau, Afni violated Section 623(b)(1) because it did not conduct a reasonable investigation as required for reasons that included (1) not reaching out to the original creditor for information needed to reasonably investigate a dispute when the consumer’s allegations could not be reasonably investigated with the information in Afni’s files, and (2) using an automated program to handle certain disputes that only considered information in Afni’s database, did not access any creditor files, and did not refer disputes to creditors for further investigation.
  • Regulation V Section 1022.42 requires a furnisher to establish and implement reasonable written policies and procedures regarding the integrity and accuracy of information furnished to CRAs, consider and incorporate the appropriate guidelines in Appendix E to Regulation V in developing such policies and procedures, and periodically review such policies and procedures and update them as necessary to ensure their continued effectiveness.  The Bureau found that (1) Afni’s indirect dispute policy did not instruct its employees to access creditors’ systems or make requests to creditors to obtain information or source documentation as needed before attempting to resolve an indirect dispute, (2) Afni had no written policies explaining how its automated E-OSCAR program responds to indirect disputes or a policy that explained how to conduct a reasonable investigation of a FCRA dispute, (3) Afni’s direct dispute policy did not include procedures on how to determine whether a dispute was frivolous or irrelevant or require employees to send notices of such determinations, and (4) Afni’s policies and procedures were not reviewed or updated as necessary for continued effectiveness, with Afni having failed (a) to modify its automated furnishing code for at least 4 years prior to 2017 and (b) to review or update its dispute policies and procedures despite having knowledge that its employees were not complying with them.  According to the Bureau, based on these findings, Afni violated Section 1022.43 by not establishing or implementing reasonable policies and procedures regarding its furnishing of information to CRAs or handling disputes, not considering or incorporating Appendix E guidelines in developing its policies and procedures regarding the integrity and accuracy of information furnished to CRAs, and failing to review such policies and procedures and update them as necessary for continued effectiveness.

In addition to payment of the civil money penalty, the consent order requires Afni to take certain steps to improve and ensure the accuracy of the consumer information it furnishes to CRAs and its policies and procedures relating to credit reporting and dispute investigation.  These steps include conducting monthly reviews of account information to assess the accuracy and integrity of information it furnishes, conducting monthly reviews of consumer disputes and responses to assess whether its handling of consumer disputes complies with the FCRA/Regulation V and its own policies and procedures, and hiring an independent consultant to conduct a review of Afni’s activities, policies, and procedures relating to furnishing information and credit reporting.

 

A Maine federal district court ruled that that two 2019 amendments to Maine’s credit reporting law are preempted by the federal Fair Credit Reporting Act and granted the motion for judgment filed by the plaintiff, the Consumer Data Industry Association (CDIA).

One of the amendments prohibited a consumer reporting agency (CRA) from reporting medical debt on a consumer’s credit report until a delinquency was at least 180 days old.  Once a CRA received “reasonable evidence” that a medical debt had been settled or paid in full, the CRA could not report the debt and had to “remove or suppress” it from the consumer report.

The second amendment required a CRA to reinvestigate a debt if the consumer provided documentation that the debt was the result of “economic abuse.”  If the CRA found that the debt was the result of such abuse, it had to remove any reference to the debt from the consumer report.  “Economic abuse” was defined to mean “causing or attempting to cause an individual to be financially dependent by maintaining control over the individual’s financial resources” and included “unauthorized or coerced use of credit or property” and “stealing from or defrauding of money or assets.”

The district court concluded that the Maine amendments were preempted under the FCRA’s express preemption provision (15 U.S.C. 1681t(b)(1)(E)) which preempts state law “with respect to any subject matter regulated under…[15 U.S.C. 1681c], relating to information contained in consumer reports.”  15 U.S.C. 1681c, which is titled “Requirements relating to information contained in consumer reports,” includes a list of information that must be excluded from consumer reports (i.e. obsolete information) and also requires certain information to be included in consumer reports.  The district court agreed with the CDIA that the phrase “relating to information contained in consumer reports” should be read broadly to encompass any state law that regulates what information must or may not be included in a consumer report.

 

 

The FTC has issued five notices of proposed rulemaking seeking comments on changes to five rules that implement the Fair Credit Reporting Act.  Comments will be due no later than 75 days after the date the NPRMs are published in the Federal Register.

The Dodd-Frank Act transferred the FTC’s rulemaking authority under parts of the FCRA to the CFPB.  It also narrowed the FTC’s rulemaking authority with respect to other FCRA rules to cover only motor vehicle dealers that are predominately engaged in the sale and servicing of motor vehicles, the leasing and servicing of motor vehicles, or both.  For each of the five rules listed below, the FTC has proposed amendments to reflect their limited coverage.  In addition, in connection with the FTC’s periodic review of its rules and guides, each NPRM contains a series of questions on which the FTC seeks comments.

The NPRMs propose changes to the following rules:

  • Address Discrepancy Rule, which outlines the obligations of users of consumer reports when they receive a notice of address discrepancy from a nationwide consumer reporting agency.
  • Affiliate Marketing Rule, which gives consumers the right to restrict the use of information obtained from an affiliate to solicit a consumer.
  • Furnisher Rule, which requires entities that furnish consumer information to CRAs to establish and implement reasonable written policies and procedures regarding the accuracy and integrity of such information.
  • Pre-screen Opt-Out Notice Rule, which outlines requirements for the use of consumer report information to make unsolicited credit or insurance offers to consumers.  (The NPRM would also reinstate a previously rescinded model prescreen opt-out notice.)
  • Risk-Based Pricing Rule, which generally requires those who use consumer report information to offer less favorable APRs to consumers to provide a notice about the use of such information.