A mortgage lender receives a consumer report for a borrower who applied for a home equity loan. Three days later, the borrower calls to withdraw their application. The lender then uses the same consumer report to pre-screen the borrower for a credit card offer. Under the FCRA, this use is:
Correct Answer
C) Prohibited because it exceeds the original permissible purpose
Under FCRA Section 604, a consumer report obtained for one permissible purpose (credit transaction) cannot be used for a different purpose (prescreening) without separate authorization. The withdrawal of the original application terminates the permissible purpose for that specific transaction.
Why This Is the Correct Answer
Under FCRA Section 604, a consumer report obtained for one permissible purpose (credit transaction) cannot be used for a different purpose (prescreening) without separate authorization. The withdrawal of the original application terminates the permissible purpose for that specific transaction.
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