Posts tagged ‘credit reports’

Are You Using Your Credit Reports Illegally?

I’m asking this question to highlight an enforcement action announced by the CFPB yesterday against several companies which, if the allegations are true, blatantly violated several sections of the Fair Credit Reporting Act (FCRA) by obtaining credit reports under false pretenses and passing them around like stewardesses passing  out airline peanuts. I want to highlight the case not only because of its accusations, but because I wanted to provide you an ever so gentle reminder to use your credit reports consistent with the reasons you obtained them in the first place.

15 U.S.C. 1681b(f) permits entities to obtain prescreened credit reports provided that the individuals who qualify under the criteria will receive a firm offer of credit. A “firm offer” is an offer that will be honored subject to certain exceptions. The bottom line is that credit reports are not to be used simply to facilitate marketing, but are instead to be used for legitimate underwriting purposes.

The lawsuit that the CFPB announced yesterday is against several companies, ranging from a mortgage broker to a student loan debt consolidator to a mortgage lender that apparent did not get this memo. For instance, Monster Loans obtained prescreened lists from Experian, ostensibly to offer mortgage loans. There would, of course, be nothing wrong with this if that was all that Monster Loans used these lists for. However, Monster Loans subsequently distributed these lists to third parties, including an entity that specialized in student loan debt consolidation.

Although I’m concentrating on the FCRA part of the complaint, the defendants are also accused of engaging in unfair and deceptive practices, and the Telemarketing and Consumer Fraud and Abuse Prevention Act by marketing these deceptive loan products over the phone. This allegation underscores, yet again, why it is so important for all institutions to understand TCPA and ensure proper compliance.

On that brief note, its time for you to receive my annual Super Bowl prediction, which as you all know, is considered tier-one capital for credit unions and their employees. I like the Seahawks to take on the Chiefs with the Seahawks winning in a dramatic last-second field goal by the score of 20-17. Peace out.

January 10, 2020 at 9:18 am Leave a comment

Four Things To Ponder On An August Weekend

Judging by the numbers a good chunk of you have better things to do on a Summer time Friday than read my blog. I’m deeply insulted but also a realist so here are three things you should know when you get around to reading this.

First, New York’s Federal Reserve released its quarterly report on consumer household debt and I don’t think I will ever get used to just how dependent the American economy is on people spending money they don’t have. The “good news” is that household debt rose sharply for the 16th straight quarter to a mere $13.29 trillion. This means that consumers are spending at a record pace 20% higher than the low point way back in 2013.

When you look inside the numbers there is even more good news. Mortgage debt rose by $60 billion. Interestingly, HELOC continues to decline and the median credit score remained at about 760 for first time home buyers so maybe we have learned some lessons after all. Then again, California is once again gouging on mortgage fueled consumer debt as are many other west coast states. New York is relatively stable but growing.

Credit Report on Procedures Are Improving…So are credit scores

It takes a big man to admit when he’s wrong so I’m coming up huge today. When the CFPB and Attorney Generals began releasing reports, critical of credit reporting procedures, I thought this was much ado about nothing. The occasional technical mistake is inevitable and I was incredulous at the suggestion that people’s credit was being materially harmed by reporting mistakes.

Well, in its quarterly credit report the New York Fed also did an analysis of debt collection procedures and its findings indicate that faulty credit reporting was a bigger problem than I certainly thought it was. According to the bank, 40% of Americans have third-party collection accounts opened against them. But there has been a sharp decrease in negative reports since 2017. According to researchers this decrease was a direct result of the implementation by the credit reporting agencies of the National Consumer Assistance Plan which is basically a joint settlement between state regulators and reporting agencies on adopting and enforcing best practices. It appears that people love being wrongly harmed by inaccurate credit reports after all.

Escrow Case Appealed To The Supreme Court

A request for the Supreme Court to review a recent ruling in California mandating that Federal banks comply with a State law mandating the payment of interest on mortgage escrow accounts has been filed. This case is emerging as the one with the greatest potential direct impact on credit unions in New York State. As I explained in this blog, New York has a similar law to California’s and currently Federal Credit Unions and banks are exempt from the state’s escrow requirement. If the Supreme Court takes the case we will have definitive guidance on whether or not all credit unions have to comply and pay interest.

Second Quarter Medallion News

The second quarter was another rough ones for New York’s taxi medallion credit unions as summarized in this article by the CUTimes. Remember, of course this quarter doesn’t reflect the impact that restrictions placed on Uber and Lyft services in NYC may have on medallion prices.

On that note, enjoy your weekend.

August 17, 2018 at 9:31 am Leave a comment

More Legal Trapdoors For Employers Looking To Hire

imagesCA2JJEZ8What should you be able to ask a potential employee during a job interview? Are there certain jobs for which inquiring about someone’s employment status is reasonable and others where it isn’t? Recently enacted legislation by the New York City Council as well as other proposal floating around at both the state and national level underscore that if some legislators have their way, you are going to need a lawyer in the room when interviewing prospective job applicants.

Exhibit one is a local law passed by the New York City Council over the veto of Mayor Michael Bloomberg, who actually has extensive experience in hiring people in the private sector. This law makes it unlawful for an employer to discriminate based on a job applicant’s employment status. The ordinance not only prohibits, with certain exceptions, an employer from publishing job postings listing current employment as a requirement for the job, but creates a private right of action and empowers the city to impose hefty fines on employers who violate these provisions. Employers are still allowed to inquire about a person’s employment status but if they do so the burden is on them to show why it is reasonable to be asking such questions in the first place. Remember, only our brethren based in New York City must comply with this new requirement. But, as anyone who attended our yearly walk-around the state capitol yesterday may have sensed, New York City carries a lot of weight in the legislature and proposals like this often end up being debated at the state level.

A second proposal being considered by the Council has a little more traction nationally. Recently, the Council held a hearing on a proposal banning the use of credit reports as part of the hiring process. A similar proposal has been introduced both in Congress and in the state legislature. The Fair Credit Reporting Act already mandates that applicants be put on notice when their credit reports are going to be reviewed as part of an employer’s due diligence. In expressing opposition to the proposal, a representative from the Bloomberg Administration pointed out that unlike similar proposals that have been enacted in states and localities across the country, the Council’s proposal makes no exception for credit unions, banks and other financial institutions for whom a job applicant’s ability to handle money is certainly something worth considering before making an offer.

Against the backdrop of the persistently high unemployment rates we are experiencing, proponents of these measures argue that disqualifying someone from job consideration due to their unemployment is, like racial characteristics, another example of disqualifying someone based on attributes over which they have no control. The problem with this logic is that it categorically assumes that employers discriminate against job applicants. This conveniently overlooks the fact that there are many situations where someone’s credit report or employment status is relevant, particularly when you are trying to whittle down a field of more than one qualified applicant. Furthermore, one of the reasons why this country is so much more productive on a per capita basis than every other nation in the world (including China) is because we try not to make it too expensive to hire and fire people. The more well intended legislators place legalistic straight jackets on what can and can’t be considered when making determinations, the more expensive it’s going to be to hire anyone, and that is bad news for the unemployed.

April 18, 2013 at 7:49 am Leave a comment

Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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