What information should remain private?
Advances in technology and social media guarantee the topic of privacy will never, ever go away.
With every new version of information gathering software will come another wave of the same questions: What is considered private? What is public? What should we be free to know and what are we free to share?
Electronic credit will continue to be shaped by technology. And in all likelihood, it will only get easier to obtain and share customer information with each new generation of software.
More than ever, credit professionals must educate themselves on customer privacy rights and the enactment of any and all new legislation.
When it comes to applying the Fair Credit Reporting Act (FCRA) to commercial credit, the FTC has an opinion. (You knew they would.) The FTC states that a vendor must obtain the consumer’s consent before they run a consumer credit report … and this applies for a legitimate business purpose. If obtaining a personal guarantee, it’s the same deal. Consent is required.
In the event that credit is denied based on the findings of the credit report, notice must be provided to the consumer, whether personal or commercial.
If a personal credit report is pulled in connection with a commercial transaction, notice must be provided. A notice is not required however, for a commercial transaction based on unfavorable trade references, negative public records or bad business credit reports.
As a credit professional, always obtain written permission to run a consumer credit report!