Federal Reserve and FTC Propose Credit Score Disclosure Rules

The Dodd-Frank Act amends the Fair Credit Reporting Act (FCRA) to require companies that use credit scores to include those scores, and related information, in adverse action and Risk-Based Pricing Notices provided to consumers. Yesterday, the Federal Reserve Board (FRB) and Federal Trade Commission (FTC) proposed new rules to implement these provisions. Highlights of the proposals include (a) no proposed changes to the “Credit Score Exception Notices” under the Risk-Based Pricing Rule—meaning that lenders may continue to use existing notices following the effective date of the new requirements; (b) new credit score disclosure language for the Regulation B sample adverse action notices, which could require the disclosure of up to nine reason codes in adverse action notices; and (c) a clarifying statement in the proposals that only one credit score need be disclosed in connection with an adverse action or a Risk-Based Pricing Notice. The proposals are silent on proposed mandatory compliance dates, and, to the extent that a July 21, 2011 compliance date for the new Risk-Based Pricing Notice would present challenges, we recommend that covered persons consider commenting on the proposals. Comments on the proposals will be due 30 days after the notices are published in the Federal Register.

Section 1100F of the Dodd-Frank Act amended section 615 of the FCRA to add credit score disclosure obligations in connection with adverse action and Risk-Based Pricing Notices.