FTC proposes revisions to risk-based pricing rule

The Federal Trade Commission and Federal Reserve Board are proposing changes to the risk-based pricing rule that would affect what information creditors have to disclose about decisions they base on consumer credit reports. The proposal would require creditors to give credit report information to consumers whose credit score is used in setting or adjusting credit terms, according to an FTC statement. The rule reflects provisions of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act and would go into effect on July 21. Currently, creditors must send a "risk-based pricing" notice only when a credit report results in credit terms that are less favorable than average, the commission said. At the moment, consumers who are notified of a negative report can check its accuracy by getting a free credit report. Under the rule, creditors can give credit applicants a free credit score and information about the score in lieu of providing the notice. Public comment on the rule will be open for 30 days after it is published in the Federal Register. The Dodd-Frank Act is meeting some resistance from other government groups. The Securities and Exchange Commissioner, Troy Paredes, recently warned that the new restrictions from the Dodd-Frank Act would hurt the economy by raising the cost of capital for companies, Dow Jones Newswires reports.