Pre-screening is a new concept introduced by the Privacy Amendment (Enhancing Privacy Protection) Act (Cth) 2012.
Pre-screening allows a credit reporting body to provide an assessment as to whether an individual meets a credit provider’s pre-determined criteria in relation to direct marketing of consumer credit. The assessment is separate to the credit provider’s obligation to carry out its responsible lending obligations under the National Consumer Credit Protection Act (Cth) 2009.
There are several conditions before an entity can use ‘pre-screening’:
- the entity must be a credit provider licenced under the NCCP and therefore bound by responsible lending criteria; and
- the direct marketing must be about consumer credit that the credit provider
provides in Australia.
At the request of a credit provider, a credit reporting body will be able to undertake pre-screening of a list of consumers to meet pre-determined eligibility requirements nominated by the credit provider.
The Regulations and the Credit Reporting Code will provide more detail about how pre-screening will work in practice, but they are yet to be finalised.
However, it is envisaged that a credit provider will provide a list of eligibility requirements (specific to the credit offer) to a credit reporting body. The credit reporting body will then carry out the pre-screening assessment and inform the credit provider which of those consumers meet the criteria.
Consumer credit liability information (such as the type, amount and terms and conditions of the consumer credit contract) and repayment history information are excluded from the pre-screening assessment.
Individuals must be notified at the time the credit provider collects their personal information that it may be used for marketing purposes.
The explanatory memorandum to the Privacy Amendment (Enhancing Privacy Protection) Bill 2012 states the purpose of pre-screening is to remove individuals from receiving direct marketing offers. If the credit provider or credit reporting body no longer requires the pre-screening assessment for its original purpose then it must be destroyed.
Pre-screening is subject to specific requirements, including:
- the consumer must be notified at the time their personal information is collected that the information may be used for pre-screening;
- the consumer must be provided with an opportunity to ‘opt out’ of pre-screening; and
- a prohibition on using the results of one pre-screening offer for any future offer.
Any entity involved in pre-screening must maintain auditable evidence to verify compliance, and this information must be available to individuals.