Are insurance companies required to send notification of adverse actions?

[Downto0]

Here's the section of the fcra which deals with users of consumer reports:

§ 615. Requirements on users of consumer reports [15 U.S.C. § 1681m]

(a) Duties of users taking adverse actions on the basis of information contained in consumer

reports. If any person takes any adverse action with respect to any consumer that is

based in whole or in part on any information contained in a consumer report, the

person shall

(1) provide oral, written, or electronic notice of the adverse action to the consumer;

I've read all of section 615.  It would seem to cover insurance companies too.  There does not seems to be an exclusion.  Yet, I never get notification form any of the insurance companies who have turned me down in the past.  I keep thinking that there must be something somewhere because all insurance companyies would not violated the fcra, would they?  What am I missing?

[HoldingOntoHope]

Perhaps the decision of the companies was not based on credit report information and thus they felt that it did not apply. I know in my state (CA) they are not even allowed to factor in credit reports so I have no personal experience. If you believe that their primary reason for adverse action was information that they received from your credit reports then I suppose you could write a letter to their legal department or file a complaint with your state agency that regulates insurance.

I am not familiar enough with the codes to know if a civil suit would be in order for a violation of this type but maybe RobertEG will pop onto this thread and he can offer an educated opinion. You could always PM him and ask him to take a look at your thread.

[Downto0]

You bring up a good point that the insurance companies may not have taken adverse action because of the cr.  However, I have a good driving record with no moving violations and I have had the same insurance company for over 10 years.  Regardless, the FCRA does not allow a private right of action:

(8) Enforcement

(A)No civil actions. Sections 616 and 617 shall not apply to any failure by any

person to comply with this section.

(B) Administrative enforcement. This section shall be enforced exclusively under

section 621 by the Federal agencies and officials identified in that section.

That being said, I'll probably just let the issue slide.  I'm just a little pissed because the inquiries made my fico score drop 41 points.  I did not know about this score drop until I was turned down for a credit increase by a company I have good relations with. 

I suppose I could send the issue to the FTC.   It'd be better to know first if insurance companies are lialbe to section 615.  If they aren't then a complaint to the FTC would be pointless.

Perhaps there is a state statue which may cover the matter such as you say there is in CA.  How would I even start to look for something like that?

[RobertEG]

Quoting from the FTC Staff Opinion Letter,  Riddle, March 17, 1999

"Adverse action" is  defined broadly in Section 603(k) of the FCRA to cover adverse actions in credit (including the denial of credit or the termination of an account), employment (including the denial of employment), licenses or benefits from a governmental entity (including denial or cancellation), and insurance (including the denial of coverage). In addition, Congress added a broad "catch-all" in Section 603(k)(1)(B)(iv), which covers, inter alia, all actions or determinations "adverse to the interests of the consumer" made in connection with an application made by, or a transaction initiated by, the consumer. The catch-all provision clearly covers the landlord-tenant situation. Thus, landlords who use consumer reports must now provide applicants Section 615(a) adverse action notices when they refuse to rent or lease a dwelling, or require an increased security deposit as a precondition to the rental, based on a consumer report. “

[Downto0]

Robert you're a lexicon.  I remember running across the Riddle letter but since it dealt with adverse action, which I was not researching at the time, I passed it over.

Anyway, I got to thinking about my situation.  The inquiries are a result of shopping for better insurance through my regular insurance agent.  I have a daughter who will be getting her regular driver's license soon and the agent told me that some insurance companies simply put a child on the regular policy without additional charges.  My current insurance company charges extra. 

The thing is, the insurance companies probably did not outright deny me insurance but quoted me a premium price with my daughter attached.  All except one was apparently going to charge me for the daughter and the one which would not will probably be getting my business.

That being said, there is a different type of adverse action going on here.  Instead of being denied, a higher price was quoted for the insurance.  It's the same as applying for a credit card where the creditor will give you credit except that they charge exuberant interest above the norm.  It's still adverse action taken from reading the credit report but it's also not quite so clear cut.

What I hate about the deal is that you go to either your insurance agent, or a car dealer, and they send out more than one request to several insurance companies, or banks, and it looks as if you are trying to get credit and being turned down.  This reflects poorly on your report.  Any subsequent lender will look at the cr as if you were desperately seeking credit.

I'll look into it a little further but, without private right of action, I probably won't do anything. 

[RobertEG]

Yes, the offering of terms less favorable, rather than outright denial, is treated separately under the FCRA.

It is considerted a "risk-based pricing" issue, and is covered under FCRA 615(f) and the related risk-based pricing rulemaking implemented under that section.

They are required to send you a risk-based pricing notice as opposed to a notice of adverse action.

[Downto0]

(f) Prohibition on Sale or Transfer of Debt Caused by Identity Theft

I think you typed the wrong letter.  I made a quick search but could not find another section wich referred to a risk-based pricing issue.  However, a lot of times I don't find something in the FCRA unless someone shows me or by pure chance while looking for something else.

Anyway, without private right of action, what's the point?

However, I learned a few things so this small venture was not a waste of time.

[RobertEG]

Section 615(h)