QUESTION
We implement the Red Flags Rules in accordance with the Identity Theft Prevention Program requirements. The subject of address discrepancies comes up from time to time and we are not sure about the policies and procedures needed to handle these situations. What are the procedures we should use for instances of address discrepancy?
ANSWER
There are essentially two features of the procedures to implement address discrepancies: comparative analysis and verification. The underlying premise is the need to form a reasonable belief that a consumer report relates to the consumer who is the subject of the report.
Here are the two ways to implement address discrepancies.
1. Comparing the information in the consumer report provided by the Consumer Reporting Agency (“CRA”) with the information that your firm:
a. Obtains and uses to verify the consumer’s identity in accordance with the requirements of the Customer Identification Program (“CIP”) rules [see 31 USC § 5318(i); for depositories, see 31 CFR § 103.121];
b. Maintains in its own records, such as applications, change of address notifications, other customer account records, or retained CIP records; or
c. Obtains from third-party sources; or
2. Verifying with the consumer the information in the consumer report provided by the CRA. [12 CFR § 334.82(d)(1)-FDIC; 16 CFR § 641.1(c)-FTC; 12 CFR § 222.82(c)-FRB; CFR § 81.82(c)-OCC; 12 CFR §717.82(c)-NCUA]
Jonathan Foxx
Managing Director
Lenders Compliance Group
