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Prescreen and Firm Offers of Credit: Primary Sources for Lenders

Prescreened marketing rests on a few primary sources. They include sections of the Fair Credit Reporting Act and the CFPB’s Regulation V. The FTC and the CFPB also publish consumer guidance. This page quotes each one and links to the full text. CRS does not give legal advice. Read the sources with your counsel.

By
CRS Credit Experts
Updated

How do lenders stay FCRA compliant when using prescreen data for marketing?

CRS does not give legal advice. These are the sources lenders and their counsel start from.

When a prescreened list can be furnished

FCRA section 604(c)(1), 15 U.S.C. 1681b(c)(1):

“A consumer reporting agency may furnish a consumer report relating to any consumer pursuant to subparagraph (A) or (C) of subsection (a)(3) in connection with any credit or insurance transaction that is not initiated by the consumer only if— (A) the consumer authorizes the agency to provide such report to such person; or (B)(i) the transaction consists of a firm offer of credit or insurance; (ii) the consumer reporting agency has complied with subsection (e); (iii) there is not in effect an election by the consumer, made in accordance with subsection (e), to have the consumer’s name and address excluded from lists of names provided by the agency pursuant to this paragraph; and (iv) the consumer report does not contain a date of birth that shows that the consumer has not attained the age of 21, or, if the date of birth on the consumer report shows that the consumer has not attained the age of 21, such consumer consents to the consumer reporting agency to such furnishing.”

Keeping the selection criteria on file

FCRA section 615(d)(3), 15 U.S.C. 1681m(d)(3):

“A person who makes an offer of credit or insurance to a consumer under a credit or insurance transaction described in paragraph (1) shall maintain on file the criteria used to select the consumer to receive the offer, all criteria bearing on credit worthiness or insurability, as applicable, that are the basis for determining whether or not to extend credit or insurance pursuant to the offer, and any requirement for the furnishing of collateral as a condition of the extension of credit or insurance, until the expiration of the 3-year period beginning on the date on which the offer is made to the consumer.”

The notice that goes with each offer

Regulation V, 12 CFR 1022.54(c):

“Any person who uses a consumer report on any consumer in connection with any credit or insurance transaction that is not initiated by the consumer, and that is provided to that person under section 604(c)(1)(B) of the FCRA (15 U.S.C. 1681b(c)(1)(B)), shall, with each written solicitation made to the consumer about the transaction, provide the consumer with the following statement, consisting of a short portion and a long portion, which shall be in the same language as the offer of credit or insurance:”

Questions to settle with your counsel

  • Which permissible purpose covers each list you buy?
  • What firm offer will every selected consumer receive, and on what terms?
  • Where will the short and long notices appear on mail and email offers?
  • Where will you keep your selection criteria, and who owns that record?
  • How does your list provider handle opt-outs and suppression?

What is the FCRA requirement for using credit data in targeted marketing?

CRS does not give legal advice. The starting point is the statute’s definition of a firm offer of credit.

The definition of a firm offer

FCRA section 603(l), 15 U.S.C. 1681a(l):

“The term “firm offer of credit or insurance” means any offer of credit or insurance to a consumer that will be honored if the consumer is determined, based on information in a consumer report on the consumer, to meet the specific criteria used to select the consumer for the offer, except that the offer may be further conditioned on one or more of the following: (1) The consumer being determined, based on information in the consumer’s application for the credit or insurance, to meet specific criteria bearing on credit worthiness or insurability, as applicable, that are established— (A) before selection of the consumer for the offer; and (B) for the purpose of determining whether to extend credit or insurance pursuant to the offer. (2) Verification— (A) that the consumer continues to meet the specific criteria used to select the consumer for the offer, by using information in a consumer report on the consumer, information in the consumer’s application for the credit or insurance, or other information bearing on the credit worthiness or insurability of the consumer; or (B) of the information in the consumer’s application for the credit or insurance, to determine that the consumer meets the specific criteria bearing on credit worthiness or insurability. (3) The consumer furnishing any collateral that is a requirement for the extension of the credit or insurance that was— (A) established before selection of the consumer for the offer of credit or insurance; and (B) disclosed to the consumer in the offer of credit or insurance.”

The CFPB’s plain-language answer

From the CFPB’s What is a prescreened credit card offer?:

“Prescreened credit offers are firm offers of credit. Credit card companies use information from credit reporting companies to make firm offers of credit to consumers whose credit histories meet the criteria selected by the card company (for example, a minimum credit score). This does not mean the credit card company must provide you with a credit card. You must still apply and be approved.”

Questions to settle with your counsel

  • Is your campaign a prescreened firm offer, or a different kind of marketing?
  • Which conditions, set before selection, will your offer carry?
  • Which data will you use to select consumers, and does any of it need another permissible purpose?

What are the firm offer of credit requirements for a prescreened list?

CRS does not give legal advice. Two sources describe what goes with each prescreened offer: the FCRA’s section 615(d) and Regulation V.

The statement in each solicitation

FCRA section 615(d)(1), 15 U.S.C. 1681m(d)(1):

“Any person who uses a consumer report on any consumer in connection with any credit or insurance transaction that is not initiated by the consumer, that is provided to that person under section 1681b(c)(1)(B) of this title, shall provide with each written solicitation made to the consumer regarding the transaction a clear and conspicuous statement that— (A) information contained in the consumer’s consumer report was used in connection with the transaction; (B) the consumer received the offer of credit or insurance because the consumer satisfied the criteria for credit worthiness or insurability under which the consumer was selected for the offer; (C) if applicable, the credit or insurance may not be extended if, after the consumer responds to the offer, the consumer does not meet the criteria used to select the consumer for the offer or any applicable criteria bearing on credit worthiness or insurability or does not furnish any required collateral; (D) the consumer has a right to prohibit information contained in the consumer’s file with any consumer reporting agency from being used in connection with any credit or insurance transaction that is not initiated by the consumer; and (E) the consumer may exercise the right referred to in subparagraph (D) by notifying a notification system established under section 1681b(e) of this title.”

The short and long notice

Regulation V, 12 CFR 1022.54(c)(1)(i) and (c)(2)(i):

“The short notice shall state that the consumer has the right to opt out of receiving prescreened solicitations, and shall provide the toll-free number the consumer can call to exercise that right. The short notice also shall direct the consumer to the existence and location of the long notice, and shall state the heading for the long notice. The short notice shall not contain any other information.”

“The long notice shall state the information required by section 615(d) of the Fair Credit Reporting Act (15 U.S.C. 1681m(d)). The long notice shall not include any other information that interferes with, detracts from, contradicts, or otherwise undermines the purpose of the notice.”

The CFPB publishes model forms for both notices in Appendix D to Part 1022.

How consumers opt out

From the FTC’s What To Know About Prescreened Offers for Credit and Insurance:

“Go to optoutprescreen.com or call 1-888-5-OPT-OUT (1-888-567-8688). The major credit bureaus operate the phone number and website.”

Questions to settle with your counsel

  • Does your offer carry each statement in section 615(d)(1)?
  • Do your short and long notices follow the model forms in Appendix D?
  • How will an email offer present both notices?
  • Which verification and collateral conditions will your offer carry, and where are they disclosed?

Where CRS fits in a prescreen program

CRS is a credit reporting agency that delivers bureau data ready to use, through one integration. In a prescreen program, CRS handles the list. Your team and your counsel own the offer.

  • LeadsIQ builds prescreened lists for companies that make firm offers of credit.
  • You set your selection criteria in the CRS Portal and see the matched count before you buy.
  • Appended phone numbers are not scrubbed against federal or state Do Not Call lists. Ask your counsel how Do Not Call and consent rules apply before any call or text.
  • Your prescreened firm offer can go out by email as well as direct mail.
  • CRS customers complete compliance vetting before their first pull.
  • The consumer file behind LeadsIQ excludes minors and is filtered for opt-out and suppression status before matching.

See the sample firm offer of credit used in CRS vetting.

FAQ

What is a firm offer of credit?

FCRA section 603(l) defines it as “any offer of credit or insurance to a consumer that will be honored if the consumer is determined, based on information in a consumer report on the consumer, to meet the specific criteria used to select the consumer for the offer.” The full definition, with its listed conditions, is quoted above.

How do consumers opt out of prescreened offers?

The FTC tells consumers: “Go to optoutprescreen.com or call 1-888-5-OPT-OUT (1-888-567-8688).”

What notice goes with a prescreened offer?

Regulation V, 12 CFR 1022.54(c), calls for a statement “consisting of a short portion and a long portion.” The CFPB’s model forms are in Appendix D to Part 1022.

How long are selection criteria kept on file?

FCRA section 615(d)(3) says the criteria stay on file “until the expiration of the 3-year period beginning on the date on which the offer is made to the consumer.”

Does CRS give legal advice?

No. This page quotes primary sources so you and your counsel can read them directly. CRS customers complete compliance vetting before their first pull.