TRIGGERED! How Federal Agencies and Credit Bureaus Are Working Against You

Have you heard customers complain about receiving junk phone calls from other lenders after applying for credit?

Based on what we’re hearing from banks, it’s an issue happening across the board. The cause for these unwanted solicitations? Trigger leads.

by Timothy Schenk, General Counsel

Trigger leads are leads that come from mortgage trigger products offered by the three major credit bureaus. When a lender requests a credit report, that inquiry automatically “triggers” lenders that a customer is looking for credit. Lenders of all sorts purchase that information and then begin calling your customer, tens, if not hundreds, of times.

The nature of these calls is concerning. One bank president who recently asked what we are doing to combat trigger leads told a shocking, but not unique, story of harassment.

His credit report was pulled on a Tuesday at 9:30 a.m. His first call from lender came just ten minutes later. By Friday, he had received fifty-one harassing calls. Lenders refused to stop calling, would not provide their full names, offered unrealistic loan terms (often the source of bait and switch), and knew personal details that he could not trace. It all began when the credit bureau sold his personal information. He asked the same thing that many bankers ask: How is this legal?

Trigger leads are not only legal, but are encouraged by some regulators. The Federal Trade Commission and Consumer Financial Protection Bureau believe these triggers are valuable because they offer more options for customers. While the regulatory compliance side of me wonders how any of this passes the ever-obscure standards of UDAAP, I’ll digress for purposes of this article.

So what is being done? The good news is that we are taking the fight to the credit bureaus.

On the federal level, bipartisan legislation has been introduced – the Homebuyers Protection Act (S.3502/ H.R. 7297). These bills would not only enhance consumer protection and strengthen trust in the financial system, but would significantly limit the ability of credit bureaus to share your customers’ information with third parties.

On the state level, Representative Steve Bratcher has filed House Bill 578, which would essentially ban trigger leads. The bill prohibits credit reporting agencies from furnishing customer information to third parties without customer consent, provides for supervision from the Attorney General, a private right of action that would allow customers to sue credit bureaus that violate the law and statutory damages. As of the date of this writing, House Bill 578 passed unanimously out of the House Banking and Insurance Committee and was referred to the House of Representatives for a full vote.

While legislative action is in process, you can educate customers to minimize the impact of trigger leads. Optoutprescreen.com will take your customers’ name off of the “trigger lists” from the credit reporting agencies for five (5) years or permanently. The site will ask your customers for personal information, including their name, address, social security number and address and may take several weeks to process, but it has proven to be effective. The customer can even selectively choose which portions of “trigger leads” they would like to screen (calls, but not mail, for example). OptOutPrescreen.com is the only internet website authorized by Equifax, Experian, Innovis and TransUnion for consumers to opt-out of firm offers of credit or insurance.

Another option is for customers to register their number on DoNotCall.gov. The process takes a minute or two but can prevent unsolicited phone calls. It can take up to thirty-one (31) days to process, but it can prevent many unwanted calls.

The other means of protecting your customers is education. You are likely the first person to discuss trigger leads with your customer. By bringing their attention to the issue, you may prevent them from falling prey to scams and fraud while also protecting your institution from losing that customer.

While we cannot promise an overnight fix to these issues, we are fighting for you on every front to stop trigger leads. In the meantime, please make your customers aware of the options they do have to fight trigger leads to avoid potential harassment, confusion and deception.