A consumer who has recently been denied insurance, credit, or employment based on an unfavorable consumer report MUST be advised as such. Which statute does this originate from?

A consumer who has recently been denied insurance, credit, or employment based on an unfavorable consumer report MUST be advised as such. Which statute does this originate from?

• A. Consumer Credit Protection Act
• B. Fair Credit Reporting Act
• C. Equal Credit Opportunity Act
• D. Truth in Lending Act

Answer: (B)

The requirement for a consumer to be informed when they are denied insurance, credit, or employment based on an unfavorable consumer report originates from the Fair Credit Reporting Act (FCRA). This federal statute is designed to promote accuracy, fairness, and privacy of consumer information contained in the files of consumer reporting agencies. One of its key provisions mandates that if a consumer is adversely affected by a consumer report, the entity that took the action must notify the consumer, providing them with information about the reporting agency that supplied the report. This ensures that consumers are aware of their rights and have the opportunity to address any inaccuracies that may exist in their reports. The other options, while related to consumer rights and protections, do not specifically address the notification requirement following a denial based on a consumer report. The Consumer Credit Protection Act focuses on broader consumer credit issues; the Equal Credit Opportunity Act prohibits discrimination in credit transactions but does not specifically govern the disclosure of adverse actions based on consumer reports; and the Truth in Lending Act primarily deals with the disclosure of credit terms and loan costs, without addressing the adverse action notification requirement.

The requirement for a consumer to be informed when they are denied insurance, credit, or employment based on an unfavorable consumer report originates from the Fair Credit Reporting Act (FCRA). This federal statute is designed to promote accuracy, fairness, and privacy of consumer information contained in the files of consumer reporting agencies. One of its key provisions mandates that if a consumer is adversely affected by a consumer report, the entity that took the action must notify the consumer, providing them with information about the reporting agency that supplied the report. This ensures that consumers are aware of their rights and have the opportunity to address any inaccuracies that may exist in their reports.

The other options, while related to consumer rights and protections, do not specifically address the notification requirement following a denial based on a consumer report. The Consumer Credit Protection Act focuses on broader consumer credit issues; the Equal Credit Opportunity Act prohibits discrimination in credit transactions but does not specifically govern the disclosure of adverse actions based on consumer reports; and the Truth in Lending Act primarily deals with the disclosure of credit terms and loan costs, without addressing the adverse action notification requirement.