CUNA Comment Letter

Proposed Model Form for Furnishing Negative Information to Nationwide Consumer Reporting Agencies

May 9, 2004

Ms. Jennifer J. Johnson
Secretary
Board of Governors of the Federal Reserve System
20th Street and Constitution Avenue, NW
Washington, DC 20551

Re:    Docket No. R-1187 – Proposed Model Form for Furnishing Negative Information to Nationwide Consumer Reporting Agencies

Dear Ms. Johnson:

The Credit Union National Association (CUNA) appreciates the opportunity to comment on the proposed rule that provides a model form that financial institutions may use in order to provide “clear and conspicuous” written notice when negative information is provided to nationwide consumer reporting agencies (NCRAs). Under the Fair and Accurate Credit Transactions (FACT) Act, financial institutions must provide such notice prior to, or no later than 30 days after, furnishing negative information to NCRAs. CUNA represents more than 90 percent of our nation’s 9,800 federal and state-chartered credit unions.

The Federal Reserve Board (Board) proposes the following model language that financial institutions may use to comply with the FACT Act requirement:

We [may provide]/[have provided] information to credit bureaus about an insolvency, delinquency, late payment, or default on your account to include in your credit report.

CUNA supports the concept of model language of a brief and concise notice that will help consumers understand the consequences of not fulfilling their financial obligations. Credit unions may be concerned that the Board’s proposed model may imply to consumers that only information about an “insolvency, delinquency, late payment, or default” is reported to the consumer reporting agency. However, other types of information may be reported and the model notice should reflect this possibility. The following is a proposed model that would address our concern:

We [may provide]/[have provided] information to credit bureaus about your performance on your account, which may include negative information if you fail to fulfill your obligations on the account.

We also suggest that more than one model form could be provided so financial institutions may choose the one that best meets their needs. These additional model forms could include language already used within the financial institutions industry or already required under state law.

The use of model language approved by the Board is very important and many credit unions may decide to convert to the model approved by the Board, even if the language they currently use is widely accepted within the industry. In these situations, the burden of changing to the model form would be alleviated if the Board provides more than one form. CUNA would welcome the opportunity to work with the Board on identifying additional models if the Board decides to pursue the option of providing more than one form.

Thank you for the opportunity to comment on the proposed rule regarding the model form that financial institutions may use in order to provide “clear and conspicuous” written notice when negative information is provided to NCRAs. If you or other Board staff have questions about our comments, please give Associate General Counsel Mary Dunn or me a call at (202) 638-5777.

Sincerely,

Jeffrey Bloch
Assistant General Counsel