August 11, 1997
S.E. Wichmann, Vice President
Columbia (SC) Teachers Federal Credit Union
P.O. Box 5846
Columbia, South Carolina 29250-5846
Dear Mr. Wichmann:
You have asked whether Columbia (SC) Teachers Federal Credit Union
(Columbia FCU) may use the services of a credit reporting agency
(CRA) to assist the credit union in identifying members for offers
of pre-approved automobile loans. You did not provide any specific
details about Columbia FCU's proposed prescreening program in
your letter. While we have no objection to credit unions implementing
such programs, you should be aware that there are several laws,
some of which we note below, that may be applicable to these programs.
To ensure compliance with the appropriate laws, Columbia FCU
should consult with its attorney.
Prescreening occurs when a CRA compiles or edits a list of consumers
meeting specific criteria of credit worthiness and provides that
list to a creditor who then uses the list to make offers of credit.
FCUs are permitted to establish prescreening programs provided
such programs are in compliance with the Fair Credit Reporting
Act (FCRA), the Equal Credit Opportunity Act (ECOA), or any other
applicable laws.
FCRA is designed to promote accurate and fair dissemination and
proper utilization of consumer credit information. 15 U.S.C.
§§1681 et seq.; 16 C.F.R. Part 601. FCRA was
amended recently, and the new amendments become effective on September
30, 1997. Columbia FCU should take particular note of the new
amendments in Sections 1681a(l) and (m), 1681b(c), and 1681m(d)
of FCRA which address the rules involving the prescreening of
potential borrowers from CRA files.
ECOA is designed to make the extension of credit equally available
to all creditworthy borrowers, and to prohibit discrimination
based on race, color, religion, national origin, sex, marital
status, age, and the receipt of public assistance income in all
extensions of credit. 15 U.S.C. §§1691 et seq.;
Regulation B, 12 C.F.R. Part 201. Columbia FCU should make sure
that, under its prescreening program, borrowers are not treated
differently based on one of the above prohibited bases or that
the program does not have a disproportionately adverse impact
on borrowers in one of the protected groups.
Sincerely,
Sheila A. Albin
Associate General Counsel
GC/NSW:bhs
SSIC 3213
97-0717
cc: Richard Arcia, Region III