Under the Fair Credit Reporting Act, what must an insurance company do when gathering information from a third party?

The Fair Credit Reporting Act (FCRA) establishes guidelines for how companies, including insurance companies, can gather and utilize consumer information, particularly when it comes from third-party sources. When an insurance company seeks information about an applicant from a third party, the law mandates that they first obtain the applicant’s consent and notify them that such information will be collected. This requirement is in place to ensure transparency and protect consumer privacy, allowing potential policyholders to be aware of the processes that might influence their insurance applications, such as background checks or credit reports.

This focus on consent and notification reflects the broader principles of the FCRA, which aims to promote fair and accurate processing of personal data. By requiring consent, it empowers consumers and instills trust in the insurance process, ensuring that individuals have knowledge and control over their personal information.

In contrast to this, the other options involve actions that are not specifically mandated by the FCRA when information is collected from third parties. While companies may choose to provide applicants with their findings or a copy of the information afterward, these are not legal requirements under the act when gathering third-party information. Verification processes with third parties may also be part of a company’s operational procedures but do not replace the necessity for prior consent and notification.