Credit Repair

What Is a Trigger Lead and Is It Legal?

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A trigger lead is a marketing product created by the national credit bureaus. After you apply for a loan, information about your application is sold by Experian, TransUnion and Equifax to various lenders that know you’re actively looking for a loan and will target you with competing offers.

Trigger leads are legal and, in theory, offer a benefit to consumers: You get the best possible prices on services when a large quantity of providers are competing for your business. A trigger lead could allow competing lenders to come up with rates and terms that rival an offer you’re already considering. The problem is that trigger leads are often used by companies that may misrepresent themselves in an attempt to trick borrowers.

Here’s what you need to know about trigger leads and how to protect yourself against their misuse.

How does a trigger lead work?

Savvy consumers know that carefully researching lenders and offers is key to finding the best mortgage or auto loan. Once you apply, though, all of a sudden you might start getting calls from lenders you’ve never heard of with offers that seem too good to be true. What gives?

When you fill out a loan application and give a lender permission to pull your credit report, the national credit bureaus take note of the fact that you are shopping for credit. They then take that information, turn it into a trigger lead and sell it to competing lenders, often within 24 hours.

You may then start receiving calls, emails and letters in your mailbox with unsolicited offers from other companies that now have access to your data — and it’s completely legal.

“Under the Fair Credit Reporting Act, a long as the company that’s buying the trigger leads meets certain legal requirements, it’s legal in all 50 states,” said Rebecca Steele, president and chief executive officer at the National Foundation for Credit Counseling (NFCC).

The Federal Trade Commission (FTC) has said trigger leads can help consumers more easily discover other loans and compare costs and terms. However, companies that buy trigger leads are “usually the bad guys,” Ed Mierzwinski, senior director of the federal consumer program at the U.S. Public Interest Research Group, told The Washington Post.

Irritating phone calls might be the least of the problems created by trigger leads. The National Association of Mortgage Brokers (NAMB) has said that trigger leads could open borrowers up to identity theft, expose them to deceitful lenders and cause confusion during the already-complex process of taking out a loan.

“With trigger leads, you have to be very careful,” Steele said. “It’s important to know who you’re dealing with, especially with so much out in the digital world related to fraud and unscrupulous lenders.”

Who uses trigger leads?

A variety of legitimate companies use trigger leads in attempt to generate sales. Here are some of the most common types of businesses that purchase trigger leads:

  • Mortgage companies
  • Insurance companies
  • Auto financing providers
  • Car dealerships
  • Creditors

Can consumers prevent trigger leads?

Whether you’re trying to protect your personal information, avoid pushy telemarketers or streamline the process of borrowing money, there are plenty of good reasons to stop trigger leads. Here’s how to do it:

  • Sign up for the National Do Not Call Registry. After you register your phone number, it should appear on the list in 24 hours. However, you might still receive sales calls for up to 31 days, so it’s worth signing up the month before you start applying for loans. “Lenders who are buying lists of trigger leads will have to scrub for the numbers on the Do Not Call Registry,” said Steele.
  • Register at OptOutPrescreen.com. This is the official place where people can prohibit their name from being added to lists from major credit reporting agencies that companies use to provide firm offers of credit or insurance. You can use the online form to opt out of receiving these offers for a period of five years or mail in a request to opt out permanently.
  • Sign up at DMAchoice. Want to stop getting loan offers (and other junk) in the mail? You can request to stop mail solicitation via DMAchoice, a tool developed by the Direct Marketing Association (DMA). Online registration costs $2 and lasts for 10 years.

Is there any effort to stop trigger leads?

Given that there’s so much potential for abuse of trigger leads, is there any effort to stop the practice?

Yes, but not much. In February 2018, NAMB began pushing for changes to the PROTECT Act of 2017 that would ultimately ban trigger leads and provide greater protection for consumer information.

“While there has been some recent activity from some advocacy groups, like NAMB, it’s not widespread, and all efforts I’ve been aware of have not been successful in banning trigger leads,” explained Steele.

She encouraged borrowers to take steps to protect themselves in the meantime.

The bottom line

In theory, trigger leads might help you get an even better offer on a mortgage or auto loan than the one you were considering. The reality, though, is that these sales tools open you up to solicitors who are annoying at best and deceptive at worst. Take steps to protect yourself, and always do your homework before taking out a loan.

 

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