Beginning August 1, 2005, companies that send “prescreened” solicitations of credit or insurance to consumers will be required to provide simple and easy-to-understand notices that explain consumers’ right to opt out of receiving future offers. The Fair and Accurate Credit Transactions Act of 2003 (FACTA) required the FTC, in consultation with the federal banking and credit union agencies, to prescribe the format, type size, and manner for these opt-out notices. The FTC also is issuing a new consumer education brochure to help consumers understand the prescreening process and what they should consider in deciding whether to opt out.
Prescreened offers of credit or insurance – sometimes called “preapproved” offers - are sent to consumers unsolicited, usually by mail. They are based on information in consumers’ credit reports that indicates that the individuals receiving the offer meet the criteria set by the company making the offer. The Fair Credit Reporting Act (FCRA) limits the circumstances in which consumer reports can be used to make prescreened offers, and all such offers must include a notice of consumers’ right to stop receiving future prescreened offers. The FTC Rule is intended to make these notices simple and easy to understand.
The Rule adopts a “layered” notice approach that requires a short, simple, and easy-to- understand statement of consumers’ opt-out rights on the first page of the offer, along with a longer statement containing additional details elsewhere in the offer. Specifically, the short statement informs consumers about the right to choose not to receive future prescreened solicitations and specifies a toll-free number for consumers to call to exercise that right (1-888-5-OPTOUT). Consumers may choose to opt out for five years or permanently, and may opt back in at any time by calling the same number. The longer part of the notice provides consumers additional information about prescreening that is required by the FCRA. The Rule includes model short and long notices.
FACTA also requires the FTC to educate consumers about prescreened offers of credit or insurance and their opt-out rights. The FTC has created a new consumer brochure, “Prescreened Offers of Credit and Insurance,” which explains how the prescreening process works and provides some of the benefits and consequences of receiving these offers and of opting out.
Copies of the Rule and the FTC’s brochure, “Prescreened Offers of Credit and Insurance,” are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint in English or Spanish (bilingual counselors are available to take complaints), or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.