BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D.C.  20551

DIVISION OF CONSUMER
AND COMMUNITY AFFAIRS

CA 10-14

December 2, 2010

TO THE OFFICERS AND MANAGERS IN CHARGE OF CONSUMER AFFAIRS SECTIONS

SUBJECT: Interagency Examination Procedures for the Regulation on Risk-Based Pricing Notices

The Task Force on Consumer Compliance of the Federal Financial Institutions Examination Council recently approved the attached examination module ¹ for the regulation pertaining to risk-based pricing notices. The regulation implements Section 615(h) of the Fair Credit Reporting Act (FCRA) as amended by the Fair and Accurate Credit Transactions Act of 2003. The regulation was incorporated into the Board's Regulation V and has an effective date of January 1, 2011.

The regulation (12 CFR 222.70) generally requires a creditor to provide a consumer with a notice when, based on the consumer's credit report, the creditor provides credit to the consumer on materially less favorable terms than it provides to other consumers. The notice includes information on how a consumer can obtain a free credit report to check the accuracy of the report.

Risk-based pricing refers to the practice of setting or adjusting the price and other terms of credit provided to a particular consumer based on the consumer's creditworthiness. The regulation provides creditors with several methods for determining which consumers must receive risk-based pricing notices. As an alternative to providing risk-based pricing notices, the regulation permits creditors to provide consumers who apply for credit with a free credit score and information about their score.

If you have any questions, please contact Kathleen Conley, Senior Supervisory Consumer Financial Services Analyst at (202) 452-2389, or Paul Robin, Manager, Oversight and Policy, at (202) 452-3140.

Sincerely,
(signed)

Sandra F. Braunstein
Director
Division of Consumer and Community Affairs

Notes:

^1.   The examination module will be consolidated into Module 3 (Disclosures to Consumers and Miscellaneous Requirements) of the FCRA chapter of the Consumer Compliance Handbook in a 2011 release. Please note that FCRA examination procedures cover provisions required either by statute (FCRA) or regulation (Regulation V). Thus, examination reports (and data entry into NED) should reflect the appropriate statutory or regulatory cite.  Return to text

Attachment: CA 10-14 Attachment Risk-based procedures (116 kb PDF)