Navigating the rules prescreened solicitations, Part II.

• Author: Pry, Carl G.
• Position: Marketing Compliance - Column

In our last column, we described the requirements of prescreened solicitations--"preapproved" credit offers rant to prospective borrowers from lists generated by credit bureaus. But in addition to rules governing the prescreening process, there are requirements regarding what must be included on the promotional piece.

Details of the firm offer must be described in the letter. Again this is an offer that absolutely will be honored should the consumer respond and continue to qualify. The specifics of what elements constitute a "firm offer of credit" are still being litigated in the courts, but as a general rule four pieces of information should be listed: the amount of credit being offered, the term of the loan (if a closed-end transaction), the interest rate/annual percentage rate (APR), and the method of calculating interest (simple interest, two-cycle balance, etc.). This information should appear in the main body of the letter. Any criteria used to qualify a consumer not specified in the bureau screening process should be listed. Collateral requirements are an example of this type of criteria. Criteria used in the process of requesting the list of qualified prospects from the credit bureau need not be listed, but these other "postscreening" qualifications must be disclosed.

Federal law allows consumers to prohibit the use of their credit information in these types of screenings, known as the right to "optout." This must be communicated clearly in the letter by what the regulations call "simple and easy to understand means." To accomplish this, two separate disclosures must both appear in the letter.

The first is known as the "short notice" and reads as follows: "You can choose to stop receiving "prescreened" offers of [credit or insurance] from this and other companies by calling toll-free [toll-free number]. See PRESCREEN & OPT-OUT NOTICE on the other side [or other location] for more information about prescreened offers." This is the...