ABA backs bills to prevent abuse of mortgage ‘trigger leads’

The American Bankers Association today urged Congress to pass legislation to ban the practice of credit reporting firms selling consumer contact information to lenders who then barrage those same consumers with unwanted solicitations. In a letter to lawmakers, the association expressed support for S. 3502 and H.R. 7297, both of which would eliminate abusive mortgage “trigger leads” and limit prescreened credit offers to consumers who consent or who have a preexisting relationship with a financial institution.

When a consumer applies for credit and consents to a credit check, a bank pulls their credit report to evaluate their application, ABA said. This “triggers” the credit reporting agency to identify that the consumer is shopping for credit and to sell their information to other lenders who do not have a relationship with the bank or customer. Bank customers in recent years have reported a dramatic increase in unwanted calls, text messages, emails and other solicitations, with some designed to deceive customers into believing the solicitations are coming from the bank where they applied for credit.

“This can damage banks’ relationships with their customers, who often mistakenly believe it was their bank that sold their information,” ABA said. “In reality, banks carefully safeguard their customers’ privacy and it is consumer reporting agencies who sell trigger leads. Nonetheless, this misperception can erode customers’ trust in their banks and in the financial system.”