QUESTION
We are a lender
with several affiliates. We have been cross-marketing with the affiliates for a
long time. However, our regulator now is examining us and our affiliates to find
out if we have “information sharing” violations. A complaint to the CFPB
triggered the examination.
Their main concern seems to center on potential violations of the Fair Credit Report Act.
So, our question is, are there restrictions on using our affiliates’ information for marketing purposes?
ANSWER
A word of
caution at the outset: work with a compliance professional for guidance on
information sharing between affiliates. Information sharing is a very challenging
area of compliance and involves several regulations. Your question specifies
the Fair Credit Report Act (FCRA), so I will respond exclusively in the context
of the FCRA.
It is important to know what information is subject to affiliate marketing. The provisions apply to the use of “eligibility information” of consumers, where you receive such information from your affiliate for purposes of marketing products or services to those consumers.
“Eligibility information” means any information that, if communicated by a consumer reporting agency, would be a consumer report but for the exclusions set forth under the definition of “consumer report” in the FCRA for
(1) transaction or experience information regarding a consumer, or
(2) non-transaction or experience information regarding a consumer that affiliates may share with one another if notice and opt-out procedures are followed and the consumer does not opt out.
It is worth noting that eligibility information excludes aggregate or blind data that does not contain personal identifiers, such as account numbers, names, or addresses.
The communication of transaction or experience information among companies related by common ownership or affiliated by corporate control is not considered sharing consumer report information.
Furthermore, companies related by common ownership or affiliated by corporate control may communicate among one another information regarding a consumer that
(1) is not transaction or experience information, and
(2) would otherwise be considered consumer report information, if a notice and opt-out procedure are followed and the consumer does not opt out.
However, even though such information may be shared among affiliates, the information is subject to FCRA affiliate marketing provisions, including affiliate marketing rules adopted by the federal financial institution regulators and the Federal Trade Commission (FTC).
The rules impose restrictions on the use of consumer report information regarding a consumer whom a company receives from an affiliate for the purpose of the company marketing its products or services to the consumer. Therefore, the affiliate marketing provisions impose restrictions on the use, not the sharing of information.
Jonathan Foxx, Ph.D., MBA
Chairman & Managing Director
Lenders Compliance Group
