Kelly’s Korner: Credit Application Retention
Q. Do we have to keep a copy of the credit application taken by our sales personnel for those deals that never closed?
A. Yes. According to Regulation B and the ECOA (Preservation of Records), credit applications must be retained for a period of 25 months (12 months for business credit) after the date of the customer’s notification of the action taken. For deals which were made, the copy of the credit application located in the deal jacket and associated sales records are retained for the time prescribed for accounting and IRS records.
In our industry, we have a duty to maintain confidential customer information in a secured environment. The number one crime has been stealing credit identities. Last year alone, there were more than 400,000 cases reported to the authorities. Customers are tracking down the locations where their credit identities were stolen and are suing businesses that do not keep non-public information in a secured place. The information given on a credit application is confidential and is a source of information for this type of credit fraud. We must act responsibility and maintain the customer’s trust with the information given.
The federal government has new legislation – the Gramm- Leach- Bliley Act – which will be coming effective on July 01, 2001. This legislation will force dealerships to create a privacy policy and to inform their customers about information flow, collection and storage.
Each of your associations has been busy preparing the rules for their members to follow to meet the new criteria. Our office recommends that you consult with the association and your legal counsel to determine how your dealership will comply and be ready for July 01, 2001.
This information is not meant as legal advice. Please consult your attorney for the exact details of the Gramm – Leach – Bliley Act. You may also call Kelly Enterprises and request a copy of the Regulation B / ECOA publication for your records.