Shielding Clients from Relentless Credit Offers: A Guide for MLOs to Safeguard Applicant Data
I recently read a social media post through which a mortgage loan originator shared how he received a telephone call from an irate borrower. The borrower was livid because, within hours of applying for a mortgage through our loan officer friend, his phone “exploded.” This borrower ended up receiving over 100 phone calls over the next three to four days from desperate mortgage loan originators wanting to sell him a mortgage loan. He eventually had to turn his phone off and, needless to say, was not in the least bit thrilled with his MLO, who he assumed was responsible for this chaos.
What is a Trigger Lead and is it Actually Legit?
Whenever a company, through which a consumer applies for credit, accesses that consumer’s credit profile as a condition of their application, the act of doing so is referred to as a “hard inquiry.” As egregious as this might seem, under the Fair Credit Reporting Act (FCRA) (15 U.S.C. § 1681 et seq.), companies meeting certain requirements are legally permitted to buy leads resulting from hard inquiries directly from the Consumer Reporting Agencies. These companies then, often relentlessly, call and mail the consumer material promoting prescreened offers of credit.
Section 15 U.S.C. 1681b(c)(1)(B) of the Fair Credit Reporting Act, establishes, that, unless a consumer has otherwise and independently opted out from receiving prescreened offers of credit, trigger leads are encouraged to promote fair trade and competition in order to afford consumers the opportunity to procure the best possible deal. The theory is that, if a consumer is solicited with multiple offers, the consumer will ultimately be able to competitively shop for and proceed with the offer that proves most advantageous. In theory, this sounds quite noble. But, more commonly, it results in a chaotically-desperate flurry of sales professionals trying to steal the consumer away from the original salesperson.
Although the Trigger Leads Abatement Act (H.R. 7661), which would formally prohibit trigger leads, is currently progressing its way through Congress, unless and until H.R. 7661 is signed into law by the president, consumers will continue to be inundated by offers of prescreened credit resulting from the purchase of trigger leads after applying for credit involving:
• Mortgages;
• Auto loans and leases;
• Credit cards;
• Insurance; and
• Personal loans.
So How Do You Become a Hero?
The Fair Credit Reporting Act established a process for consumers to opt out from receiving inquiries surrounding prescreened offers of credit. Mortgage loan originators desiring to proactively protect their clients from being inundated by countless creditors trying to sell them what they already entered into agreement to buy (while preserving and protecting their sale), should educate each borrower about trigger leads very early on in the transaction and explain the process through which he or she can opt out prior to applying for the loan.
Opting Out of Trigger Leads
Permit me to begin by emphasizing that simply omitting the consumer’s telephone number and e-mail address when ordering his or her credit report will not prevent companies that purchase trigger leads from accessing that consumer’s contact information. Instead, consumers have two options to formally opt out of those prescreened offers of credit resulting from trigger leads generated by their original credit application.
Five-Year Opt-Out
By submitting a request through www.optoutprescreen.com or by calling 1-888-5-OPT-OUT (1-888-567-8688), consumers can provide their information and request to be removed from trigger lead lists. Doing so will remove the consumer from these lists thereby preventing them from receiving prescreened offers of credit for five years. This option generally takes effect within five days from the date when the opt-out request was made.
Permanent Opt-Out
If an individual desires to be permanently removed from trigger lead lists, he or she must visit www.optoutprescreen.com, complete a permanent opt-out request, print it out, sign and date it, and mail it in. The steps to do this are as follows:
1. Visit www.optoutprescreen.com;
2. Scroll to the bottom of the page and click on, “CLICK HERE TO OPT-IN OR OPT-OUT”;
3. Scroll down and click on the radio button to the left of, “Permanent Opt-Out by Mail”;
4. Click on, “CONTINUE”;
5. Complete all of the information requested on that page including the security feature at the bottom;
6. Click on, “CONFIRM”;
7. On the resulting confirmation page, click on the “click here” link appearing towards the end of the first line of the first bolded paragraph to print out the form that the consumer must sign and mail; and
8. Sign and date page two and then mail page two to the address at the top of the page.
If the consumer neglects to sign, date, and submit this form by mail, he or she will only be removed from trigger lead lists for five years. Whether originally opting out for five years or permanently, the consumer maintains the right to opt back in, at a future time, if he or she ultimately desires to do so.
As previously mentioned, it takes approximately five days from the date on which a consumer submits his or her trigger leads opt-out request for it to take effect (although mailings prepared by creditors prior to the consumer’s opting out may still be mailed). Therefore, discussing trigger leads and the methods for opting out should be one of the very first things that a mortgage loan originator does once it becomes apparent that the consumer is likely to apply for a loan.
By preventing your customer’s inundation of unsolicited sales calls, you will proactively assist your borrower while preserving the transaction, and the commission, for yourself.