II 109th CONGRESS 2d Session S. 3176 IN THE SENATE OF THE UNITED STATES May 25, 2006 Mr. Reid (for Mr. Rockefeller) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs A BILL To protect the privacy of veterans and spouses of veterans affected by the security breach at the Department of Veterans Affairs on May 3, 2006, and for other purposes.

1.

Short title

This Act may be cited as the Veterans Privacy Protection Act of 2006.

2.

Federal Trade Commission program for veterans an spouses of veterans at risk of identity theft

(a)

Program required

The Federal Trade Commission shall, in consultation with the Secretary of Veterans Affairs, develop and implement a program to provide financial counseling and support to any veteran or spouse described in subsection (e). (b)

Access

The program required by subsection (a) shall be accessible through a toll-free telephone number (commonly referred to as an 800 number) established and operated by the Federal Trade Commission for purposes of the program. (c)

Elements

Under the program required by subsection (a), the Federal Trade Commission shall— (1)provide to veterans and spouses described in subsection (e) such financial and other counseling as the Commission considers appropriate relating to identity theft and the theft of data as described in that subsection; and (2)upon request of any veteran or spouse described in subsection (e), assist such veteran or spouse in securing the placement of an extended fraud alert or credit security freeze under sections 605A(b)(3) and 605C of the Fair Credit Reporting Act, as added by this Act, respectively. (d)

Veterans not subject to identity theft

(1)

Notice to ftc of identification of veterans not subject to identity theft

Upon conclusively identifying any veteran otherwise described in subsection (e) as not being at risk of identity theft as described in that subsection, the Secretary shall immediately notify the Federal Trade Commission of such identification. (2)

Notice to veterans

The program required by subsection (a) shall include mechanisms to ensure that any veteran who seeks counseling and support under the program after receipt by the Commission of notice under paragraph (1) covering such veteran is informed that such veteran is no longer subject to identity theft as described in subsection (e). (e)

Applicability

This section shall apply with respect to— (1)any veteran, as defined in section 101 of title 38, United States Code, who may be a victim of identity theft as a result of the security breach at the Department of Veterans Affairs on May 3, 2006; and (2)any spouse (or former spouse) of such veteran who the Secretary of Veterans Affairs has conclusively identified as being at risk of identity theft as a result of that security breach.

3.

Extended consumer credit fraud alerts and security freezes for veterans and spouses of veterans affected by security breach

(a)

Automatic fraud alerts

Section 605A(b) of the Fair Credit Reporting Act (15 U.S.C. 1681c–1(b)) is amended by adding at the end the following: (3)

Automatic extended fraud alerts for certain veterans

(A)

In general

Upon the direct request of a veteran or spouse described in subparagraph (D), each consumer reporting agency described in section 603(p)(1) that maintains a file on the veteran shall take the actions specified in subparagraphs (A) through (C) of paragraph (1) with respect to the veteran or spouse. (B)

Automatic alerts

Notwithstanding the requirements of paragraph (1), a veteran or spouse described in subparagraph (D) is not required to submit any identity theft report, proof of identity, or other documentation with respect to an extended fraud alert required by subparagraph (A). (C)

Veterans not subject to identity theft

Upon conclusively identifying any veteran as not being at risk of identity theft as a result of the security breach described in subparagraph (A)— (i)the Secretary of Veterans Affairs shall immediately notify each consumer reporting agency and the veteran involved that such veteran is no longer subject to identity theft as a result of the security breach described in subparagraph (A); and (ii)the requirements of subparagraph (A) shall no longer apply with respect to any such veteran as of the date of such notification. (D)

Applicability

This paragraph shall apply to— (i)each veteran, as defined in section 101 of title 38, United States Code, who may be a victim of identity theft as a result of the security breach at the Department of Veterans Affairs on May 3, 2006; and (ii)each spouse (or former spouse) of such veteran who the Secretary of Veterans Affairs has conclusively identified as being at risk of identity theft as a result of that security breach. . (b)

Security freezes for veterans

The Fair Credit Reporting Act (15 U.S.C. 1681 et seq.) is amended by inserting after section 605B the following:

605C.

Security freezes for certain veterans

(a)

Applicability

This section shall apply with respect to— (1)any veteran, as defined in section 101 of title 38, United States Code, who may be a victim of identity theft as a result of the security breach at the Department of Veterans Affairs on May 3, 2006; and (2)any spouse (or former spouse) of such veteran who the Secretary of Veterans Affairs has conclusively identified as being at risk of identity theft as a result of that security breach. (b)

Security freezes

(1)

Emplacement

A veteran or spouse described in subsection (a) may include a security freeze in the file of that veteran or spouse maintained by a consumer reporting agency described in section 603(p)(1), by making a request to the consumer reporting agency in writing, by telephone, or through a secure electronic connection made available by the consumer reporting agency. (2)

Consumer disclosure

If a veteran or spouse described in subsection (a) requests a security freeze under this section, the consumer reporting agency shall disclose to that person the process of placing and removing the security freeze and explain to that veteran or spouse the potential consequences of the security freeze. A consumer reporting agency may not imply or inform a veteran or spouse that the placement or presence of a security freeze on the file of that veteran or spouse may negatively affect their credit score. (c)

Effect of Security Freeze

(1)

Release of information blocked

If a security freeze is in place in the file of a veteran or spouse described in subsection (a), a consumer reporting agency may not release information from the file of that veteran or spouse for consumer credit purposes to a third party without prior express written authorization from that veteran or spouse. (2)

Information provided to third parties

Paragraph (2) does not prevent a consumer reporting agency from advising a third party that a security freeze is in effect with respect to the file of a veteran or spouse described in subsection (a). If a third party, in connection with an application for credit, requests access to a consumer file on which a security freeze is in place under this section, the third party may treat the application as incomplete. (3)

Credit score not affected

The placement of a security freeze under this section may not be taken into account for any purpose in determining the credit score of the veteran or spouse to whom the security freeze relates. (d)

Removal; Temporary Suspension

(1)

In general

Except as provided in paragraph (4), a security freeze under this section shall remain in place until the veteran or spouse to whom it relates requests that the security freeze be removed. A veteran or spouse may remove a security freeze on his or her credit report by making a request to the consumer reporting agency in writing, by telephone, or through a secure electronic connection made available by the consumer reporting agency. (2)

Conditions

A consumer reporting agency may remove a security freeze placed in the file of a veteran or spouse under this section only— (A)upon request of that veteran or spouse, pursuant to paragraph (1); or (B)if the agency determines that the file of that veteran or spouse was frozen due to a material misrepresentation of fact by that veteran or spouse. (3)

Notification to consumer

If a consumer reporting agency intends to remove a security freeze pursuant to paragraph (2)(B), the consumer reporting agency shall notify the veteran or spouse to whom the security freeze relates in writing prior to removing the freeze. (4)

Temporary suspension

A veteran or spouse described in subsection (a) may have a security freeze under this section temporarily suspended by making a request to the consumer reporting agency in writing or by telephone and specifying beginning and ending dates for the period during which the security freeze is not to apply. (e)

Response Times; Notification of Other Entities

(1)

In general

A consumer reporting agency shall— (A)place a security freeze in the file of a veteran or spouse under subsection (b) not later than 5 business days after receiving a request from the veteran or spouse under subsection (b)(1); and (B)remove or temporarily suspend a security freeze not later than 3 business days after receiving a request for removal or temporary suspension from the veteran or spouse under subsection (d). (2)

Notification of other agencies

A consumer reporting agency shall notify all other consumer reporting agencies described in section 603(p)(1) of a request under this section not later than 3 days after placing, removing, or temporarily suspending a security freeze in the file of the veteran or spouse under subsection (b), (d)(2)(A), or (d)(4). (3)

Implementation by other agencies

A consumer reporting agency that is notified of a request under paragraph (2) to place, remove, or temporarily suspend a security freeze in the file of a veteran or spouse shall— (A)request proper identification from the veteran or spouse, in accordance with subsection (g), not later than 3 business days after receiving the notification; and (B)place, remove, or temporarily suspend the security freeze on that credit report not later than 3 business days after receiving proper identification. (f)

Confirmation

Except as provided in subsection (c)(3), whenever a consumer reporting agency places, removes, or temporarily suspends a security freeze at the request of a veteran or spouse under subsection (b) or (d), respectively, it shall send a written confirmation thereof to the veteran or spouse not later than 10 business days after placing, removing, or temporarily suspending the security freeze. This subsection does not apply to the placement, removal, or temporary suspension of a security freeze by a consumer reporting agency because of a notification received under subsection (e)(2). (g)

ID Required

A consumer reporting agency may not place, remove, or temporarily suspend a security freeze in the file of a veteran or spouse described in subsection (a) at the request of the veteran or spouse, unless the veteran or spouse provides proper identification (within the meaning of section 610(a)(1)) and the regulations thereunder. (h)

Exceptions

This section does not apply to the use of the file of a veteran or spouse described in subsection (a) maintained by a consumer reporting agency by any of the following: (1)A person or entity, or a subsidiary, affiliate, or agent of that person or entity, or an assignee of a financial obligation owing by the veteran or spouse to that person or entity, or a prospective assignee of a financial obligation owing by the veteran or spouse to that person or entity in conjunction with the proposed purchase of the financial obligation, with which the veteran or spouse has or had prior to assignment an account or contract, including a demand deposit account, or to whom the veteran or spouse issued a negotiable instrument, for the purposes of reviewing the account or collecting the financial obligation owing for the account, contract, or negotiable instrument. (2)Any Federal, State, or local agency, law enforcement agency, trial court, or private collection agency acting pursuant to a court order, warrant, subpoena, or other compulsory process. (3)A child support agency or its agents or assigns acting pursuant to subtitle D of title IV of the Social Security Act (42 U.S.C. et seq.) or similar State law. (4)The Department of Health and Human Services, a similar State agency, or the agents or assigns of the Federal or State agency acting to investigate medicare or medicaid fraud. (5)The Internal Revenue Service or a State or municipal taxing authority, or a State department of motor vehicles, or any of the agents or assigns of these Federal, State, or municipal agencies acting to investigate or collect delinquent taxes or unpaid court orders or to fulfill any of their other statutory responsibilities. (6)The use of consumer credit information for the purposes of prescreening, as provided for under this title. (7)Any person or entity administering a credit file monitoring subscription to which the veteran or spouse has subscribed. (8)Any person or entity for the purpose of providing a veteran or spouse with a copy of his or her credit report or credit score upon request of the veteran or spouse. (i)

Fees

(1)

In general

Except as provided in paragraph (2), a consumer reporting agency may charge a reasonable fee, for placing, removing, or temporarily suspending a security freeze in the file of the veteran or spouse described in subsection (a), which cost shall be submitted to and paid by the Department of Veterans Affairs, pursuant to procedures established by the Secretary of Veterans Affairs. (2)

ID theft victims

A consumer reporting agency may not charge a fee for placing, removing, or temporarily suspending a security freeze in the file of a veteran or spouse described in subsection (a), if— (A)the veteran or spouse is a victim of identity theft; (B)the veteran or spouse requests the security freeze in writing; (C)the veteran or spouse has filed a police report with respect to the theft, or an identity theft report (as defined in section 603(q)(4), within 90 days after the date on which the theft occurred or was discovered by the veteran or spouse; and (D)the veteran or spouse provides a copy of the report to the reporting agency. (j)

Limitation on information changes in frozen reports

(1)

In general

If a security freeze is in place in the file of a veteran or spouse described in subsection (a), the consumer reporting agency may not change any of the following official information in that file without sending a written confirmation of the change to the veteran or spouse within 30 days after the date on which the change is made: (A)Name. (B)Date of birth. (C)Social Security number. (D)Address. (2)

Confirmation

Paragraph (1) does not require written confirmation for technical modifications of the official information of a veteran or spouse, including name and street abbreviations, complete spellings, or transposition of numbers or letters. In the case of an address change, the written confirmation shall be sent to both the new address and to the former address of the veteran or spouse. (k)

Certain Entity Exemptions

(1)

Aggregators and other agencies

The provisions of this section do not apply to a consumer reporting agency that acts only as a reseller of credit information by assembling and merging information contained in the data base of another consumer reporting agency or multiple consumer reporting agencies, and does not maintain a permanent data base of credit information from which new consumer credit reports are produced. (2)

Other exempted entities

The following entities are not required to place a security freeze in the file of a veteran or spouse described in subsection (a) in accordance with this section: (A)A check services or fraud prevention services company, which issues reports on incidents of fraud or authorizations for the purpose of approving or processing negotiable instruments, electronic fund transfers, or similar methods of payments. (B)A deposit account information service company, which issues reports regarding account closures due to fraud, substantial overdrafts, ATM abuse, or similar negative information regarding such veteran or spouse, to inquiring banks or other financial institutions for use only in reviewing the request of such veteran or spouse for a deposit account at the inquiring bank or financial institution.

. (c)

Fees

Any fee associated with an extended fraud alert or security freeze required by the amendments made by this section that would otherwise be required to be paid by the consumer shall be paid by the Department of Veterans Affairs.

4.

Penalties for identity theft of veterans

Section 1028 of title 18, United States Code, is amended— (1)in subsection (b), by striking The punishment for and inserting the following Except as provided in subsection (j), the punishment for; and (2)by adding at the end the following: (j)

Identity theft of veterans

(1)

In general

In determining the punishment applicable under subsection (b), if the offense is an offense described in paragraph (2), the fine and term of imprisonment otherwise applicable under subsection (b) shall be doubled. (2)

Type of offense

An offense described in this paragraph is an offense under subsection (a) that— (A)involves any document or other information— (i)relating to a veteran (as defined in section 101 of title 38) or a spouse of a veteran; and (ii)obtained as a direct or indirect result of the security breach at the Department of Veterans Affairs on May 3, 2006; and (B)was committed after the date of enactment of this subsection. .

5.

Funding

(a)

Reimbursement

The Secretary of Veterans Affairs shall reimburse the Federal Trade Commission for any costs incurred by the Commission in carrying out this Act and the amendments made by this Act. (b)

Availability of funds

Amounts appropriated to the Secretary and available for obligation may be utilized for purposes of reimbursement of the Federal Trade Commission under subsection (a).

6.

Comptroller General studies on data protection and other matters

(a)

Study on data protection by Department of Veterans Affairs

(1)

In general

The Comptroller General of the United States shall conduct a study of the data protection procedures of the Department of Veterans Affairs. (2)

Elements

The study required by paragraph (1) shall include the following: (A)A review and assessment of the data protection procedures of the Department of Veterans Affairs in effect before May 3, 2006. (B)A review and assessment of any modifications of the data protection procedures of the Department of Veterans Affairs adopted as a result of the loss of data resulting from the security breach at the Department on May 3, 2006. (b)

Study on security breach investigation by Department of Veterans Affairs

(1)

In general

The Comptroller General of the United States shall conduct a review and assessment of the investigation carried out by the Department of Veterans Affairs with respect to the security breach at the Department on May 3, 2006. (2)

Cooperation

The Secretary of Veterans Affairs shall ensure that the personnel of the Department of Veterans Affairs cooperate fully with the Comptroller General in the conduct of the review and assessment required by paragraph (1). (c)

Study on FTC program for veterans and spouses at risk of identity theft

The Comptroller General of the United States shall conduct a study of the program of the Federal Trade Commission for veterans and spouses of veterans at risk of identity theft required by section 2. The study shall include an assessment of the effectiveness of the program in meeting the financial counseling and similar needs of individuals seeking counseling and support through the program. (d)

Study on compliance of Federal agencies with requirements on personal data

(1)

In general

The Comptroller General of the United States shall conduct a study of the compliance of the departments and agencies of the Federal Government with applicable requirements relating to the preservation of the confidentiality of personal data. (2)

Elements

The study required by paragraph (1) shall include the following: (A)A review and assessment of the current procedures and practices of the departments and agencies of the Federal Government regarding the preservation of the confidentiality of personal data. (B)A comparative analysis of the procedures practices referred to in subparagraph (A) with current standards of the Federal Trade Commission for the preservation of the confidentiality of personal data by commercial and non-commercial private entities. (C)A review and assessment of the modifications of the data protection procedures adopted by the Department of Veterans Affairs as a result of the loss of data resulting from the security breach on May 3, 2006, including an assessment of the feasibility and advisability of the adoption of any such modifications by other departments and agencies of the Federal Government. (D)An identification of recommendations for improvements to the procedures and practices of the departments and agencies of the Federal Government regarding the preservation of the confidentiality of personal data. (e)

Report

Not later than 18 months after the date of the enactment of this Act, the Comptroller General of the United States shall submit to Congress a report setting forth the results of each study conducted under this section. The report shall set forth the results of each study separately, and shall include such recommendations for legislative and administrative action as the Comptroller General considers appropriate in light of the studies.

7.

Authorization of appropriations

There are authorized to be appropriated to the Secretary of Veterans Affairs, such sums as may be necessary to carry out this Act and the amendments made by this Act.