To: All Member Banks and Others Concerned in the Third Federal Reserve District

Attention: Chief Executive Officer and Chief Compliance Officer



The Board of Governors of the Federal Reserve System has issued amendments to Regulation V, which implements the Fair Credit Reporting Act (FCRA), that would add model notices for financial institutions to use if they furnish negative information to consumer reporting agencies. The amendments also provide guidance to financial institutions regarding the use of the model notices. The Board is publishing the model notices pursuant to the Fair and Accurate Credit Transactions Act (FACT Act) amendments to the FCRA.

The FACT Act provides that if any financial institution (1) extends credit and regularly and in the ordinary course of business furnishes information to a nationwide consumer reporting agency; and (2) furnishes negative information to such an agency regarding credit extended to a customer, the institution must provide a clear and conspicuous notice about furnishing negative information, in writing, to the customer. “Negative information” means information concerning a customer’s delinquencies, late payments, insolvency, or any form of default.

The FACT Act defines the term “financial institution” to have the same meaning as in the privacy provisions of the Gramm-Leach-Bliley Act. The term “financial institution” includes not only institutions regulated by the Board and other federal banking agencies but also other financial entities, such as merchant creditors that extend credit and report negative information. The Board’s model notices can be used by all financial institutions, as defined by the act.

The Board’s Federal Register notice, published June 15, 2004, is available here (167 KB, 11 pages).

Date: The amendments are effective July 16, 2004.

For Further Information: Krista P. DeLargy, Senior Attorney, or David A. Stein, Counsel, Division of Consumer and Community Affairs, at (202) 452 3667 or 452-2412; or Thomas E. Scanlon, Counsel, Legal Division, at (202) 452-3594. For users of Telecommunications Device for the Deaf (“TDD”) only, contact (202) 263-4869.