This is the final
installment of the column on Regulation B.
There is a difference between obtaining information and requesting
However, requesting a credit report whether it be consumer or commercial
requires the applicants permission simply because we are required to inform the applicant
of the action we take on their application. That permission can be nothing more then a
request to purchase from us today with a promise for payment tomorrow.
If we request a credit report and fail to advise who we pulled a credit
report on of our decision with regard to the information obtained then we are in violation
of Regulation B.
The penalties and liabilities are found in 202.14(b) of Regulation B. They
are punitive damages restricted to $10,000 for each individual action or the lesser of
$500,000 or 1% of the creditors net worth in a class action filing.
202.14(c) states that a creditor's failure to comply with sections 202.9 and
202.12 is not a violation if it results from an inadvertent error as long as the creditor
corrects it upon discovering the error.
The fact that we have engaged in an activity our entire credit career does
not mean that it is correct. We are responsible for not only performing our tasks but
carrying them out in a manner that is diligent, professional and most importantly correct.
I read in the CreditWorthy newsclip about Reg B. You said that a credit
report should only be obtained after applying for credit or extending credit.
What about pulling a updated credit report on an existing credit customer
customer? We operate a collection agency and frequently we ask the original creditor to
pull a up an updated report, especially of we cannot locate the person to collect from.
If it is permissible do the same rules apply for keeping records? Thanks, Jim
Since it has been placed for collection, adverse action has already taken
place and the obtaining of the credit report is to locate assets or other creditors who
are being paid. In this case Regulation B does not apply.
Although you are not required to maintain the information I would recommend
doing so in the event legal recourse is necessary this information may be advantageous to
Your questions or comments are welcome. I wish you well.