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Question: Last year we had a prescreened credit campaign. Earlier this year, we had a banking examination and were scored down because we did not have all the record retention requirements for prescreened credit solicitations. In the case of the prescreened credit, what are the record retention requirements?
For specific information about prescreened solicitations, please consult the Fair Credit Reporting Act. Under the Equal Credit Opportunity Act, for a period of twenty-five months after the date on which an offer of credit is made to potential customers in connection with a prescreened credit solicitation, the creditor must retain:
►The text of any prescreened solicitation;
►The list of criteria the creditor used to select potential recipients of the solicitation; and
►Any formal or informal correspondence related to complaints about the solicitation. [12 CFR § 202.12(b)(7); 12 CFR Supplement I to Part 202 – Official Staff Interpretations § 202.12(b)(7)-1]
Regarding the requirement to retain information on any prescreened solicitation, a creditor complies with the record retention requirement if it retains a copy of each solicitation mailing that contains different terms, such as the amount of credit offered, annual percentage rate or annual fee. [12 CFR Supplement I to Part 202–Official Staff Interpretations § 202.12(b)(7)-1]
In order to satisfy the requirement to retain the criteria used to select potential recipients, a creditor must retain the criteria used to determine the potential recipients of the particular solicitation, and the criteria to determine who actually will be offered credit. [12 CFR Supplement I to Part 202 – Official Staff Interpretations § 202.12(b)(7)-2]
With respect to the requirement to retain correspondence, a creditor may retain correspondence relating to complaints of consumers about prescreened solicitations in any manner that is reasonably accessible and is understandable to examiners. There is no requirement to establish a separate database or set of files for such correspondence, or to match consumer complaints with specific solicitation programs. [12 CFR Supplement I to Part 202 – Official Staff Interpretations § 202.12(b)(7)-3]
Jonathan Foxx is president and managing director of Lenders Compliance Group, Brokers Compliance Group, Servicers Compliance Group and Vendors Compliance Group, national companies devoted to providing regulatory compliance advice and counsel to the mortgage industry. He may be contacted by phone at (516) 442-3456, by e-mail at [email protected] or visit LendersComplianceGroup.com.