July 16, 1998
Sam Kelley, Esq
815 Brazos, Suite 702
Austin, TX 78701
Section 603(d)(2)(C) of the Fair Credit Reporting Act
Dear Mr. Kelley:
This is in response to your recent letter in which you ask whether the Fair Credit Reporting Act ("FCRA") requires a seller of consumer merchandise ("merchant") to give advance notification to a consumer of the name of each financing source ("creditor") to whom the consumer's application may be submitted.
There is no provision in the FCRA that specifically requires a merchant to disclose to its customers the names of the creditors to whom the merchant may refer credit applications. However, the creditors themselves may require merchants to make these disclosures to ensure that the creditors are not considered "consumer reporting agencies" for the FCRA purposes when they inform merchants of their decisions to grant or deny credit.
Under the definition of "consumer report" and "consumer reporting agency" in Section 603 of the FCRA, a creditor may be considered a "consumer reporting agency" when it conveys to a merchant its decision whether or not to grant credit to the merchant's customers, unless it comes within the exclusion set forth in Section 603(d)(2)(C). That subsection provides that the term "consumer report" does not include a report in which a person who has been requested by a third party to make a specific extension of credit directly or indirectly to a consumer conveys his or her decision with respect to such request, if the third party advises the consumer of the name and address of the person to whom the request was made, and such person makes the disclosures to the consumer required under Section 615. In essence, this provision exempts from the Act communications between creditors and merchants concerning extensions of credit to the merchant's customers if the merchant informs these customers of the name and address of each creditor to whom the application is being forwarded and the creditor gives a Section 615 notice.
As you can see, the finance company with whom your client is dealing is undoubtedly requiring the disclosure of its name and address in order to qualify for the exemptions set forth in Section 603(d)(2)(C). Thus, although the merchant is not required to make these disclosures under the FCRA, any creditor may by contract require merchants with whom it has a business relationship to make these disclosures to ensure its compliance with the FCRA.
The opinions set forth in this informal staff letter are not binding on the Commission.
Yours truly,
Cynthia S. Lamb