[Congressional Record Volume 149, Number 173 (Monday, November 24, 2003)]
[Senate]
[Pages S15806-S15807]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




           FAIR AND ACCURATE CREDIT TRANSACTIONS ACT OF 2003

  Mr. SARBANES. Mr. President, Saturday evening the Senate passed by 
voice vote the Fair and Accurate Credit Transactions Act of 2003. I 
want to congratulate Chairman Shelby, Chairman Oxley and Congressman 
Frank and all the conferees on the successful completion of the 
conference on this bill. This is an important piece of legislation and, 
as I have previously done, I want to acknowledge the thorough 
examination of these important issues provided by the comprehensive 
series of six hearings on this subject that Chairman Shelby held in the 
Banking Committee. The bill passed unanimously out of the Banking 
Committee on a voice vote on September 23, 2003 and was adopted 95-2 on 
the floor on November 5, 2003. These votes, I believe, are a testament 
to our chairman's willingness to work on a bipartisan basis.
  I believe the same can be said of Chairman Oxley and Congressman 
Frank. Their bill was voted out of the House Financial Services 
Committee by 63-3 on July 24, 2003, and was passed overwhelmingly on 
the floor 392-30 on September 10, 2003. The conference report was 
passed on the floor of the House on Friday night on a vote of 379-49.
  While there were a number of differences between the Senate and House 
passed versions, I think the conference successfully took many of the 
best provisions from each bill. Although I would have liked to have 
gone further in a few areas--in the affiliate sharing section to 
provide more protection for the financial privacy of consumers, and 
also in preserving the rights of States to act--I believe a good 
compromise was reached. Among other things, this legislation provides 
consumers with free credit reports annually from the national credit 
bureaus and provides consumers with an easy method to obtain their free 
credit reports, and easier access to their credit scores; requires that 
consumers be given a summary of their right to opt out of prescreened 
offers; provides for accuracy guidelines; requires financial 
institutions to send their customers written notice prior to submitting 
negative information about them to a national consumer reporting 
agency; lengthens the statute of limitations for all Fair Credit 
Reporting Act violations; extends the situations in which consumers are 
notified when adverse actions have been taken against them; prohibits 
the sale, transfer, or collection of identity theft debt, so that such 
bad debt will not be perpetuated in the credit system; limits the 
sharing of medical information in the financial system; with certain 
limitations, provides consumers with the right to opt out of 
solicitations for marketing purposes that result from affiliate 
information sharing; and helps enhance the financial literacy of all 
Americans.
  This legislation contains a number of important consumer protections, 
and I want to address some of these provisions more thoroughly.
  First I would like to note a significant consumer right contained in 
the legislation--the right to obtain a free credit report annually. 
This legislation will, for the first time, allow consumers to make one 
request, and obtain their credit report free annually from each of the 
national credit bureaus. Financial institutions rely heavily on credit 
report information to make credit decisions, and it is extremely 
important that consumers be aware of the information contained in their 
credit reports. Providing consumers with the right to obtain this 
important information free is a major step forward in ensuring 
consumers' knowledge of, and control over, their financial information.
  In addition to obtaining free reports, under this legislation 
consumers will be informed when negative information is added to their 
credit reports. This important provision, combined with the consumer's 
right to a free report, will help improve Americans' access to and 
understanding of information contained in their credit reports.
  This legislation will also help ensure that consumers are aware of 
how to opt out of the prescreening process which results in many of the 
unsolicited offers of credit that consumers receive in the mail. Under 
the FCRA, credit reporting agencies may generate for creditors 
prescreened lists of individuals with certain characteristics to be 
targeted to receive a direct mailing. The success of the FTC's ``Do-
Not-Call'' Registry has highlighted Americans' frustration with 
unsolicited telephone offers. Under this legislation, creditors making 
such unsolicited offers of credit to consumers by mail will be required 
to include a summary of consumers' right to opt-out of prescreening in 
their offers to consumers. The FTC in consultation with

[[Page S15807]]

the banking agencies and the National Credit Union Association will be 
required to write rules on the size and prominence of the disclosure of 
the opt-out telephone number that is included with offers of credit to 
consumers.
  In order to ensure that consumers are aware of the many rights 
provided for them under the Fair Credit Reporting Act, this bill 
directs the FTC to undertake an educational campaign. The FTC is 
directed to actively publicize, and conspicuously post on its website, 
a number of important FCRA consumer rights. Among these are the right 
to obtain free credit reports annually, and other circumstances in 
which consumers may obtain free credit reports; the right of a consumer 
to dispute information in his or her credit report; the consumer's 
right to obtain a credit score from a consumer reporting agency, and a 
description of how to obtain a credit score; and the consumer's right 
to opt out of prescreened lists, and the toll-free telephone number 
maintained by the national credit bureaus by which consumers may opt 
out. This FTC campaign will help ensure that Americans are informed of 
their rights under the FCRA, including the new rights afforded to them 
by this Act.
   This legislation will also add a new provision to the FCRA that 
would provide consumers with a notice when they receive less favorable 
credit terms, based on their credit report. Receiving the notice would 
trigger the consumer's right to examine his or her credit report free 
of charge. Although the new provision would give the Federal Trade 
Commission and the Federal Reserve Board broad authority to make rules 
regarding the form and content of the notice and when it should be 
delivered, the notice, by its very logic, must be given after the terms 
of the offer have been set based on whole or in part on the credit 
report. The notice should be provided as early as practicable in the 
transaction after the terms have been set.
   This legislation will also benefit consumers by requiring Federal 
agencies to provide greater oversight of the accuracy and integrity of 
credit reports. Under this act, Federal banking regulators and the 
Federal Trade Commission will, for the first time, establish and 
maintain guidelines regarding the accuracy and integrity of information 
provided by data furnishers to credit reporting agencies. The Act also 
requires these agencies to prescribe regulations requiring creditors 
and other furnishers of information to credit bureaus to establish 
reasonable policies and procedures for implementing these guidelines. 
For the purposes of this section, ``accuracy'' relates to whether the 
information that is provided by data furnishers to credit reporting 
agencies is factually correct. The term ``integrity'' relates to 
whether all relevant information that is used to assess credit risk and 
to grant credit is accurately provided. Integrity of information is not 
achieved when furnishers do not fully provide data that, by its 
absence, could have a positive or negative effect on a consumer's 
credit score, or on his or her ability to obtain credit under the most 
favorable terms for which he or she qualifies.
   The bill also contains important provisions relating to financial 
companies' ability to market to their customers based on private 
financial information of the customers that has been shared among 
affiliates. For the first time, the bill will require affiliates who 
share customer information to make solicitations for marketing purposes 
to disclose this sharing to consumers, and to provide consumers with an 
opportunity to opt out of marketing resulting from such sharing. 
Exceptions are provided for pre-existing customers, solicitations based 
on existing shared data, solicitations contracted for by employers, 
compliance with State insurance laws, service providers, and responding 
to consumer requests.
   In addition to providing an opt-out of marketing based on affiliate 
sharing, this legislation helps protect consumers' private financial 
information by including a number of important identity theft 
prevention and protection provisions. I want particularly to note 
Senator Cantwell's leadership in the area of identity theft. Senator 
Cantwell's identity theft legislation passed on the floor of the Senate 
last year, and several of the provisions from her bill have been 
incorporated in the FACT Act, including an extension of the statute of 
limitations, provisions allowing consumers to block identity theft 
information from appearing on their credit reports, and a provision 
allowing consumers to obtain copies of business records reflecting any 
transactions that have been carried out in their name by identity 
thieves. I believe that these provisions will be beneficial to identity 
theft victims, and I want to commend Senator Cantwell's leadership in 
this area along with that of Senators Enzi and Feinstein.
   After careful consideration by the conferees, the conference report 
provides for preemption of the States with respect to conduct required 
by specific listed provisions of the Act on identity theft. This 
narrowly focused preemption will leave States free to supplement these 
protections and to develop additional approaches and solutions to 
identity theft.
   I would also like to highlight the important steps this legislation 
takes to improve the financial literacy of consumers by establishing a 
Financial Literacy and Education Commission which will coordinate 
promotion of Federal financial literacy efforts, and will develop a 
national strategy to promote financial literacy and education. I want 
to commend Senators Enzi and Stabenow, along with Senators Corzine, 
Akaka and others, for their leadership in the Senate in this area. The 
House had a strong interest in the development of this title, and 
added, among other provisions, an authorization of $3 million dollars 
for the development of a national public service multimedia campaign 
that will be consistent with the national strategy.
   In closing, I would like to take a moment to acknowledge the 
outstanding work done by the staff of the Committee on this 
legislation. On my staff, I would like to express my deep appreciation 
for the work done by Lynsey Graham as well as Dean Shahinian, Aaron 
Klein, Marty Gruenberg and Steve Harris.
   It was a pleasure working with the staff of Chairman Shelby who are 
to be congratulated for their outstanding work. I particularly want to 
acknowledge the work of Mark Oesterle, Doug Nappi and Chairman Shelby's 
staff director, Kathy Casey.
   I would also like to thank Laura Ayoud from Senate Legislative 
Counsel, who has worked tirelessly and, as always, effectively, to put 
this package together.
   I would also like to acknowledge the vital role played in developing 
this legislation by all of our Senate conferees: Senators Bennett, 
Allard, Enzi, Dodd and Johnson, and in particular by the Chairman, 
Senator Shelby.

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