[Congressional Record Volume 149, Number 176 (Tuesday, December 9, 2003)]
[Extensions of Remarks]
[Pages E2512-E2519]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 CONFERENCE REPORT ON H.R. 2622, FAIR AND ACCURATE CREDIT TRANSACTIONS 
                              ACT OF 2003

                                 ______
                                 

                               speech of

                         HON. MICHAEL G. OXLEY

                                of ohio

                    in the house of representatives

                       Friday, November 21, 2003

  Mr. OXLEY. Mr. Speaker, I rise today to express my appreciation for 
the work Congress has done to pass H.R. 2622, the Fair and Accurate 
Credit Transactions Act of 2003. H.R. 2622 includes numerous consumer 
protection measures designed to combat the growing crime of identity 
theft and to improve the accuracy of the credit reporting system. This 
landmark legislation will also ensure the continued vibrancy of our 
national credit markets.
  Given the complexity of H.R. 2622, it is both appropriate and 
important to submit for the record a section-by-section summary of the 
legislation in order to help provide an understanding of the 
legislation and its impact on the Fair Credit Reporting Act.
  The legislation provides significant measures to help consumers, 
financial institutions and consumer reporting agencies prevent and 
mitigate identity theft. For example, the legislation establishes 
requirements for the placement of fraud alerts on consumer credit 
files, investigation of changes of address, truncation of credit card 
and debit card account numbers on receipts, and the manner in which 
information identified as having resulted from identity theft is 
blocked.
  In addition, the legislation establishes requirements for verifying 
the accuracy of consumer information and preventing the reporting of 
consumer information that results from identity theft. Financial 
institutions must also take certain steps before establishing new loans 
and credit accounts for consumers who have fraud alerts on their credit 
files.
  Lastly, the legislation includes provisions entitling consumers to 
obtain free credit reports and access to their credit scores. This 
provision will likely do more for financial literacy and consumer 
education than any legislation in decades.
  I am submitting this section-by-section analysis on behalf of myself 
and the gentleman from Alabama (Mr. Bachus), the Chairman of the 
Financial Institutions and Consumer Credit Subcommittee, who introduced 
H.R. 2622 and presided over a series of hearings over the past year 
that laid the groundwork for this landmark legislation.

             Section by Section Analysis of the Legislation

     Section 1. Short title; table of contents
       This section establishes the short title of the bill, the 
     ``Fair and Accurate Credit Transactions Act of 2003'' (the 
     FACT Act).
     Section 2. Definitions
       This section adds a number of definitions for use in 
     provisions of the Act that are not amendments to the Fair 
     Credit Reporting Act.
     Section 3. Effective dates
       This section specifies effective dates for the legislation. 
     Several sections are given specific effective dates. For 
     sections adding new provisions or standards where no 
     effective date is provided, this section provides a general 
     rule providing for the Federal Reserve Board (the Board) and 
     the Federal Trade Commission (FTC) within 2 months to jointly 
     determine the appropriate effective dates for the remaining 
     provisions, not to exceed 10 months from making their 
     determination.

   TITLE I--IDENTITY THEFT PREVENTION AND CREDIT HISTORY RESTORATION

                 Subtitle A--Identity Theft Prevention

     Section 111. Amendment to definitions
       This section includes a number of definitions, including 
     definitions for fraud alerts, identity theft reports, 
     financial institutions, and nationwide specialty consumer 
     reporting agency.

[[Page E2513]]

     Section 112. Fraud alerts and active duty alerts
       The section sets forth a uniform national consumer 
     protection standard for the processing of credit and 
     verification procedures where there is an elevated risk of 
     identity theft. The section allows certain identity theft 
     victims and active duty military consumers to direct 
     nationwide consumer reporting agencies to include a fraud 
     alert or active duty alert in each consumer report furnished 
     on them that can be viewed by creditors and other users of 
     the report in a clear and conspicuous manner. Upon receiving 
     proof of the consumer's identity and the consumer's request 
     for an alert, the agency must place the alert in the 
     consumer's file for a certain time period (or such other time 
     agreed to upon the request or subsequently) in a manner 
     facilitating its clear and conspicuous viewing, inform the 
     consumer of the right to request free credit reports within 
     12 months, provide the consumer with the disclosures required 
     under section 609 within 3 business days of requesting the 
     disclosures, and refer the necessary information related to 
     the alert to the other nationwide credit reporting agencies. 
     The request must be made directly by the consumer or by an 
     individual acting on their behalf or as their representative. 
     This limitation on the request is intended to allow a 
     consumer's family or guardian to request an alert for the 
     consumer where appropriate, while preventing credit repair 
     clinics and similar businesses from making such requests. 
     Resellers of credit reports must reconvey any alert they 
     receive from a consumer reporting agency. Agencies other than 
     those described in section 603(p) must communicate to the 
     consumer how to contact the Commission and the appropriate 
     agencies.
       The national standard creates 3 types of alerts. A consumer 
     with a good faith suspicion that he or she has been or is 
     about to be a victim of identity theft or other fraud may 
     request an initial alert. The initial alert must be placed in 
     the consumer's file for 90 days and the consumer may request 
     one free credit report within 12 months. If the consumer has 
     an appropriate identity theft report (typically a police 
     report) alleging that a transaction was the result of fraud 
     by another person using the consumer's identity, then the 
     consumer may alternatively request an extended alert. The 
     agency must place the extended alert in the consumer's file 
     for 7 years, inform the consumer of the right to 2 free 
     credit reports within 12 months, exclude the consumer's name 
     from lists used to make prescreened offers of credit or 
     insurance for 5 years, and include in the file the consumer's 
     telephone number (or another reasonable contact method 
     designated by the consumer). An active duty member of the 
     military may alternatively request an active duty alert, 
     which does not imply the immediate threat of identity theft, 
     but as a preventative measure, a nationwide consumer 
     reporting agency must respond to such a request by placing an 
     active duty alert in the member's file for one year and 
     exclude the member from lists used to make prescreened offers 
     of credit or insurance for 2 years.
       Users of consumer reports that contain an alert cannot 
     establish a new credit plan or provide certain other types of 
     credit in the name of a consumer, issue additional cards at 
     the request of a consumer on an existing credit account, or 
     grant an increase in a credit limit requested by the consumer 
     on an existing credit account, without utilizing reasonable 
     policies and procedures to form a reasonable belief of the 
     requester's identity. In the case of an initial or active 
     duty alert, if the requester has specified a telephone number 
     to be used for identity verification, then the user may 
     contact the consumer using that number or must take other 
     reasonable steps to verify the requester's identity and 
     confirm that the request is not the result of identity theft. 
     In the case of an extended alert, the user may not grant the 
     request unless the consumer is contacted either in person 
     (such as in a bank branch or retail store location), by 
     telephone, or through any another reasonable method provided 
     by the consumer, to confirm that the request is not the 
     result of identity theft.
     Section 113. Truncation of credit card and debit card account 
         numbers
       This section creates a uniform national standard requiring 
     businesses that accept credit or debit cards to truncate the 
     card account numbers (printing no more than the last 5 
     digits) and exclude card expiration dates on any 
     electronically printed receipts. This requirement becomes 
     effective 3 years after enactment for any cash registers in 
     use on or before January 1, 2005 and 1 year after enactment 
     for any register put into use after January 1, 2005. The 
     requirement does not apply to transactions in which the sole 
     means of recording the person's credit card or debit card 
     number is by handwriting or by an imprint or copy of the 
     card.
     Section 114. Establishment of procedures for the 
         identification of possible instances of identity theft
       This section directs the Federal banking agencies, the 
     National Credit Union Administration (NCUA), and FTC to 
     jointly formulate various red flag guidelines to help 
     financial institutions and creditors identify patterns, 
     practices and specific forms of activity that indicate the 
     possible existence of identity theft. These agencies also 
     must prescribe regulations creating uniform national 
     standards for the entities they supervise requiring the 
     entities to establish and adhere to reasonable policies and 
     procedures for implementing the guidelines. The policies and 
     procedures established under this section are not to 
     be inconsistent with the policies and procedures required 
     by section 326 of the USA PATRIOT Act, particularly with 
     respect to the identification of new and prospective 
     customers. In issuing regulations and guidelines under 
     this Act, the Federal agencies are expected to take into 
     account the limited personnel and resources available to 
     smaller institutions and craft such regulations and 
     guidelines in a manner that does not unduly burden these 
     smaller institutions.
       The red flag regulations shall include requiring issuers of 
     credit cards and debit cards who receive a consumer request 
     for an additional or replacement card for an existing account 
     within a short period of time after receiving notification of 
     a change of address for the same account to follow reasonable 
     policies and procedures to ensure that the additional or 
     replacement card is not issued to an identity thief. 
     Specifically, before issuing a new or replacement card the 
     issuer must either notify the cardholder of the request at 
     the cardholder's former address and provide a means of 
     promptly reporting an incorrect address change; notify the 
     cardholder of the request in a manner that the card issuer 
     and the cardholder previously agreed to; or otherwise assess 
     the validity of the cardholder's change of address in 
     accordance with reasonable policies and procedures 
     established by the card issuer pursuant to the ``red flag'' 
     guidelines applicable to the card issuer.
       The Federal banking agencies, the NCUA and the FTC also are 
     directed to consider whether to include in the red flag 
     guidelines instructions for institutions to follow when a 
     transaction occurs on a credit or deposit account that has 
     been inactive for more than 2 years in order to reduce the 
     likelihood of identity theft.
     Section 115. Authority to truncate social security numbers
       This section allows consumers, upon providing appropriate 
     proof of identity, to demand that a consumer reporting agency 
     truncate the first 5 digits of the consumer's social security 
     or other identification number on a consumer report that the 
     consumer is requesting to receive pursuant to section 609(a) 
     of the FCRA.

Subtitle B--Protection and Restoration of Identity Theft Victim Credit 
                                History

     Section 151. Summary of rights of identity theft victims
       This section requires the FTC, in consultation with the 
     banking agencies and the NCUA, to prepare a model summary of 
     the rights of consumers to help them remedy the effects of 
     fraud or identity theft. Consumer reporting agencies must 
     provide any consumer contacting them expressing the belief of 
     identity theft victimization with a summary of rights 
     containing the information in the FTC's model summary and the 
     FTC's contact information for more details. The section also 
     requires the FTC to develop and implement a media campaign to 
     provide more information to the public on ways to prevent 
     identity theft. It is important for the agencies to let 
     consumers know that identity thieves target home computers 
     because they contain a goldmine of personal financial 
     information about individuals. In educating the public about 
     how to avoid becoming a victim of identity theft, the FTC and 
     the federal banking regulators should inform consumers about 
     the risks associated with having an `always on' Internet 
     connection not secured by a firewall, not protecting against 
     viruses or other malicious codes, using peer-to-peer file 
     trading software that might expose diverse contents of their 
     hard drives without their knowledge, or failing to use safe 
     computing practices in general.
       The section further includes a provision creating an 
     obligation to make certain records of identity theft victims 
     more available to those victims and law enforcement. This 
     section requires businesses that enter into a commercial 
     transaction for consideration with a person who allegedly has 
     made unauthorized use of a victim's identification to provide 
     a copy of the application and business transaction records 
     evidencing the transaction under the businesses' control 
     within 30 days of the victim's request. The records are to be 
     provided directly to the victim or to a law enforcement 
     agency authorized by the victim to receive the records. The 
     business can require proof of the identity of the victim and 
     proof of the claim of identity theft, including a police 
     report and an affidavit of identity theft developed by the 
     FTC or otherwise acceptable to the business. A business may 
     decline to provide the records if in good faith it determines 
     that this section does not require it to; it does not have a 
     high degree of confidence it knows the true identity of the 
     requester; the request is based on a relevant 
     misrepresentation of fact; or the information is navigational 
     data or similar information about a person's visit to a 
     website or online service. The business is not required under 
     this section to retain any records (the obligation only 
     applies to applications and transaction records that the 
     business already is retaining under its otherwise applicable 
     record retention policy), nor is it required to provide 
     records that do not exist or are not reasonably available 
     (such as those that are not easily retrieved, in contrast to 
     records such as periodic statements listing transactions made 
     on a credit or deposit account that are easily

[[Page E2514]]

     retrieved). Businesses are also not required to produce 
     records not within their direct control.
     Section 152. Blocking of information relating to identity 
         theft
       This section provides that a consumer reporting agency must 
     block information identified as resulting from identity theft 
     within 4 business days of receiving from the consumer 
     appropriate proof of identity, a copy of an identity theft 
     report, an identification of the fraudulent information, and 
     confirmation that the transaction was not the consumer's. The 
     agency must then promptly notify the furnishers of the 
     information identified that the information may have resulted 
     from identity theft, that an identity theft report has been 
     filed, that a block on reporting the information has been 
     requested, and the effective date of the block.
     Section 153. Coordination of identity theft complaint 
         investigations
       This section directs nationwide consumer reporting agencies 
     to develop and maintain procedures for referring consumer 
     complaints of identity theft and requests for blocks or fraud 
     alerts to the other nationwide agencies, and to provide the 
     FTC with an annual summary of this information. That summary 
     may be a brief description of the estimated number of calls 
     received pertaining to identity theft, the number of fraud 
     alerts requested, and other issues which may be relevant. The 
     FTC, in consultation with the Federal banking agencies and 
     the NCUA, is directed to develop model forms and model 
     standards for identity theft victims to report fraud to 
     creditors and consumer reporting agencies.
     Section 154. Prevention of repollution of consumer reports
       This section creates a national standard governing the 
     duties of furnishers to block refurnishing information that 
     is allegedly the result of identity theft. 
     Specifically, companies that furnish information to a 
     consumer reporting agency are required to establish 
     reasonable procedures to block the refurnishing of the 
     information if they have received a notification from the 
     agency that the information furnished has been blocked 
     because it resulted from identity theft. Similarly, if a 
     consumer submits an identity theft report to a company 
     furnishing information to a consumer reporting agency and 
     states that the information resulted from identity theft, 
     the furnisher may not furnish the information to any 
     consumer reporting agency, unless the furnisher 
     subsequently knows or is informed by the consumer that the 
     information is correct.
       The section also restricts the sale or transfer of debt 
     caused by identity theft. This provision applies to any 
     entity collecting a debt after the date it is appropriately 
     notified that the debt has resulted from an identity theft. 
     The entity is then prohibited from selling, transferring, or 
     placing for collection the debt that is identity theft-
     related. The prohibition does not apply to the repurchase of 
     a debt where the assignee of the debt requires such 
     repurchase because the debt results from identity theft; the 
     securitization of debt (public or private) or the pledge of a 
     portfolio of debt as collateral in connection with a 
     borrowing; or the transfer of debt as a result of a merger, 
     acquisition, purchase and assumption transaction or transfer 
     of substantially all of the assets of an entity.
     Section 155. Notice by debt collectors with respect to 
         fraudulent information
       This section requires third-party debt collectors who are 
     notified that the debts they are attempting to collect may be 
     the result of identity theft or other fraud to notify the 
     third party on whose behalf they are collecting the debt that 
     the information may be the result of identity theft or fraud. 
     The debt collector must also then, upon the request of the 
     consumer to whom the debt purportedly relates, provide the 
     consumer with all the information that the consumer would be 
     entitled to receive if the information were not the result of 
     identity theft and the consumer were disputing the debt under 
     applicable law.
     Section 156. Statute of limitations
       This section extends the statute of limitations for 
     violations of the Fair Credit Reporting Act. The section 
     requires claims to be brought within 2 years of the discovery 
     of the violation (instead of the original standard of 2 years 
     after the date on which the violation occurred), but with an 
     outside restriction that all claims must be brought within 5 
     years of when the violation occurred.
     Section 157. Study on the use of technology to combat 
         identity theft
       This section directs the Secretary of the Treasury, in 
     consultation with the Federal banking agencies, the FTC, and 
     other specified public and private sector entities, to 
     conduct a study of the use of biometrics and other similar 
     technologies to reduce the incidence of identity theft.

    TITLE II--IMPROVEMENTS IN USE OF AND CONSUMER ACCESS TO CREDIT 
                              INFORMATION

     Section 211. Free consumer reports
       This section provides consumers with new rights to obtain 
     an annual free consumer report from each of the nationwide 
     credit bureaus (including the nationwide specialty consumer 
     reporting agencies). With respect to agencies defined in 
     603(p), the free report only has to be provided if the 
     consumer makes the request through the centralized source 
     system established for such purpose. The centralized source 
     shall be established in accordance with regulations 
     prescribed by the FTC in a manner to ensure that the consumer 
     may make a single request for the free reports using a 
     standardized form for mail or Internet. With respect to the 
     nationwide specialty consumer reporting agencies (as defined 
     in 603(w)), the FTC may prescribe a streamlined process for 
     consumers to request their free reports directly from that 
     agency, which shall include, at minimum, the establishment of 
     a toll-free telephone number by each agency, and shall take 
     into account the costs and benefits to each agency of how 
     requests may be fulfilled and the efficacy of staggering the 
     availability of requests to reduce surges in demand.
       The nationwide consumer reporting agencies must provide the 
     report to the consumer within 15 days. Any disputes raised by 
     a consumer who receives a free report under this section must 
     be reinvestigated within 45 days after the consumer raises 
     the dispute, which is a 15-day increase over the 30-day 
     reinvestigation time frame that would otherwise apply. The 
     new right to free reports shall not apply to any agency that 
     has not been furnishing consumer reports to third parties on 
     a continuing basis for the 12 months previous to a request. 
     This exclusion is intended to allow credit bureaus that have 
     just begun to fully operate on a nationwide basis (as defined 
     in section 603(p) and (w)) a window of time to ramp up for at 
     least 12 straight months before being subjected to the costs 
     of complying with free requests under this section. The FTC 
     is directed to prescribe regulations preventing consumer 
     reporting agencies from avoiding being treated as an agency 
     defined in section 603(p) by manipulating their corporate 
     structure or consumer records in a manner that allows them to 
     operate with essentially identical activities but for a 
     technical difference.
       In addition, the FTC is directed to prepare a model summary 
     of the rights of consumers under the FCRA, including: the 
     right to obtain a free consumer report annually and the 
     method of doing so, the right to dispute information in the 
     consumer's credit file, and the right to obtain a credit 
     score and the method of doing so. The FTC is further directed 
     to actively publicize the availability of the summary of 
     rights, and make the summary available to consumers promptly 
     upon request.
     Section 212. Disclosure of credit scores
       This section establishes a Federal standard governing the 
     provision of credit scores to consumers. Consumer reporting 
     agencies are required to make available to consumers upon 
     request (for a reasonable fee that the FTC shall prescribe) 
     the consumer's current or most recently calculated credit 
     score, as well as the range of scores possible, the top 4 
     factors that negatively affected the score, the date the 
     score was created, and the name of the company providing the 
     underlying file or score. The disclosure of the top factors 
     is intended to be consistent with the provisions of the Equal 
     Credit Opportunity Act (ECOA) requiring a creditor making an 
     adverse action to disclose the principal reasons in a credit 
     score that most contributed to the adverse action. Credit 
     scores are to be derived from models that are widely 
     distributed in connection with mortgage loans or more general 
     models that assist consumers in understanding credit scoring, 
     and must include a disclosure to the consumer stating that 
     the information and credit scoring model may be different 
     than that used by a particular lender.
       Credit scores do not include mortgage scores or automated 
     underwriting systems that consider factors other than credit 
     information, such as loan to value ratio. Consumer reporting 
     agencies that do not distribute credit scores in connection 
     with residential mortgage lending or develop scores in 
     connection with assisting credit providers in understanding a 
     consumer's general credit behavior and predicting the future 
     credit behavior of the consumer are not required to develop 
     or disclose any scores under this section. Consumer reporting 
     agencies that distribute scores developed by others are not 
     required to provide further explanation of them or to process 
     related disputes, other than by providing the consumer with 
     contact information regarding the person who developed the 
     score or its methodology, unless the agency has further 
     developed or modified the score itself. Consumer reporting 
     agencies are not required to maintain credit scores in their 
     files.
       If a consumer applies for a mortgage loan, and the mortgage 
     lender uses a credit score in connection with an application 
     by the consumer for a closed end loan or establishment of an 
     open end consumer loan secured by 1 to 4 units of residential 
     real property, then the mortgage lender is required to 
     provide the consumer with a free copy of the consumer's 
     credit score. In addition, the lender must provide a copy of 
     the information on the range of scores possible, the top 4 
     negative key factors used, the date the score was created, 
     and the name of the company providing the underlying file or 
     score, to the extent that the information is obtained from a 
     consumer reporting agency or developed and used by the 
     lender. A lender is not required to provide a proprietary 
     credit score, but instead may provide a widely distributed 
     credit score for the consumer together with the relevant 
     explanatory information regarding the consumer's credit 
     score. Beyond the information provided to the lender by a 
     third party score provider, the lender is only required to 
     provide a notice to the home loan applicant. This notice

[[Page E2515]]

     includes the contact information of each agency providing the 
     credit score used, and provides specific language to be 
     disclosed to educate consumers about the use and meaning of 
     their credit scores and how to ensure their accuracy.
       A mortgage lender that uses an automated underwriting 
     system to underwrite a loan or otherwise obtains a credit 
     score from someone other than a consumer reporting agency may 
     satisfy their obligation to provide the consumer with a 
     credit score by disclosing a credit score and associated key 
     factors supplied by a consumer reporting agency. However, if 
     the lender uses a numerical credit score generated by an 
     automated underwriting system used by the Federal National 
     Mortgage Association or the Federal Home Loan Mortgage 
     Corporation or their affiliates, and the score is disclosed 
     to the lender, then that score must be disclosed by the 
     lender to the consumer.
       Mortgage lenders are not required by this section to 
     explain the credit score and the related copy of information 
     provided to the consumer, to disclose any information other 
     than the credit score or negative key factor, disclose any 
     credit score or related information obtained by the lender 
     after a loan has closed, provide more than 1 disclosure per 
     loan transaction, or provide an additional score disclosure 
     when another person has already made the disclosure to the 
     consumer for that loan transaction.
       The only obligation for a mortgage lender providing a 
     credit score under this section is to provide a copy of the 
     information used and received from the consumer reporting 
     agency. A mortgage lender is not liable for the content of 
     that information or the omission of any information in the 
     report provided by the agency. This section and the 
     requirement for mortgage lenders to provide credit scores do 
     not apply to the Federal National Mortgage Association or the 
     Federal Home Loan Mortgage Corporation or their affiliates.
       Any provision in a contract prohibiting the disclosure of 
     credit scores by a person who makes or arranges loans or a 
     consumer reporting agency is void, and a lender will not have 
     liability under any contractual provision for disclosure 
     of a credit score pursuant to this section.
       This section also amends section 605 of the FCRA to provide 
     that if a consumer reporting agency furnishes a consumer 
     report that contains any credit score or other risk score or 
     other predictor, the report must include a clear and 
     conspicuous statement that the number of enquiries was a key 
     factor (as defined in section 609(e)(2)(B)) that adversely 
     affected a credit score or other risk score or predictor if 
     that predictor was in fact one of the key factors that most 
     adversely affected a credit score. This statement will be 
     made in those instances in which the number of enquiries had 
     an influence on the consumer's credit score, and it will thus 
     alert a user of the consumer report when the number of 
     enquiries has had an adverse effect on the consumer's credit 
     score.
       This section's technical and conforming amendments clarify 
     the application of certain Federal standards. State laws are 
     preempted with respect to any disclosures required to be made 
     as a result of various provisions of the FACT Act, including 
     the summary of rights to obtain and dispute information in 
     consumer reports and to obtain credit scores, the summary of 
     rights of identity theft victims, providing information to 
     victims of identity theft, and providing credit score and 
     mortgage score disclosures under this section, except for 
     certain State laws governing credit score disclosures that 
     are grandfathered. State laws that regulate the disclosure of 
     credit-based insurance scores in an insurance activity are 
     similarly not preempted by the requirements of those specific 
     provisions. State laws governing the frequency of credit 
     report disclosures are also preempted, except for certain 
     specific grandfathered laws.
     Section 213. Enhanced disclosure of the means available to 
         opt out of prescreened lists
       This section relates to the disclosure that has to be 
     provided in connection with a prescreened offer of credit or 
     insurance using a consumer's credit report. This section 
     provides that the disclosure must include the address and 
     toll-free number for the consumer to request exclusion from 
     certain prescreened lists and must be presented in a format, 
     type size, and manner that is simple and easy for reasonable 
     consumers to understand. The FTC, in consultation with the 
     Federal banking agencies and the NCUA, shall establish 
     regulatory guidance concerning the format of the disclosure 
     within one year of enactment. The length of time a consumer 
     can request to be excluded from lists for prescreened 
     solicitations is increased by this section from 2 years to 5 
     years. The FTC is directed to publicize on its website how 
     consumers can opt-out of prescreened offers (including 
     through the telephone number now required) and undertake 
     additional measures to increase public awareness of this 
     right. The Federal Reserve Board is directed to study and 
     report to Congress on the ability of consumers to opt out of 
     receiving unsolicited written offers of credit or insurance 
     and the impact further restrictions on these offers would 
     have on consumers.
     Section 214. Affiliate sharing
       This section adds a new Section 624 to the FCRA creating a 
     uniform national standard for regulating the use and exchange 
     of information by affiliated entities. While affiliates are 
     allowed to share information without limitation, they may not 
     use certain shared information to make certain marketing 
     solicitations without the consumer receiving a notice and an 
     option to opt-out of receiving those solicitations. 
     Specifically, an entity that receives certain consumer report 
     or experience information from an affiliate that would be 
     a ``consumer report'' except for the FCRA's affiliate 
     sharing exceptions may not use that information to make a 
     marketing solicitation to the consumer about the products 
     or services of that entity, unless it is clearly and 
     conspicuously disclosed to the consumer that information 
     shared among affiliates may be used for marketing purposes 
     and the consumer is given an opportunity and simple method 
     to opt out of those marketing solicitations. The notice 
     must allow the consumer to prohibit those types of 
     marketing solicitations based on that affiliate's 
     information, but also may allow the consumer to choose 
     from different options when opting out.
       The opt-out notice may be provided to the consumer together 
     with disclosures required by any other provision of law, such 
     as the Gramm-Leach-Bliley Act or other information sharing 
     notices required under FCRA. This provision (as well as a 
     parallel coordination and consolidation provision in the 
     rulemaking directions to the regulators) is intended to allow 
     an entity to time its notice to a consumer (after the 
     effective date of the regulations) in the next regularly 
     scheduled mailing to that consumer of other legally required 
     notices. This coordination and consolidation is intended to 
     reduce consumer confusion and avoid duplicative notices and 
     disclosures.
       The consumer's election to opt out is effective for at 
     least five years, beginning on the date the person receives 
     the consumer's election, unless the consumer revokes the opt 
     out or requests a different mutually agreeable period. After 
     the expiration of the five-year period, the consumer must 
     receive another notice and similar opt-out opportunity before 
     the affiliate can send another covered marketing solicitation 
     to the consumer.
       There are a number of exceptions to the limitations on the 
     use of affiliate information for marketing solicitations, 
     where notice and opt out are not required. For example, the 
     notice and opt-out do not apply to an entity using affiliate 
     information to make a marketing solicitation to a consumer if 
     the entity already has a pre-existing business relationship 
     with that consumer. An entity that has a pre-existing 
     business relationship with the consumer can send a marketing 
     solicitation to that consumer on its own behalf or on behalf 
     of another affiliate. For the purposes of determining a pre-
     existing business relationship, an entity and the entity's 
     licensed agent (such as an insurance or securities agent or 
     broker) are treated as a single entity, with the pre-existing 
     business relationships of one imputed to the other.
       A pre-existing business relationship exists between an 
     entity and a consumer when, within the previous 18 months, 
     the consumer has purchased, rented, or leased goods or 
     services from the entity, or where some other continuing 
     relationship exists between the consumer and the entity--for 
     example where a financial transaction has been made with 
     respect to the consumer, where the consumer has an active 
     account (such as an unexpired credit card), or where the 
     consumer has an in-force policy or contract. The term 
     ``active account'' is intended to include any account where 
     continuing legal obligations are in-force (such as a multi-
     year certificate of deposit) or for which a consumer 
     regularly or periodically receives statements (even if there 
     have been no recent transactions) such as a securities 
     brokerage, bank, or variable annuity account. A pre-existing 
     business relationship also exists when the consumer makes an 
     inquiry or application regarding the entity's products or 
     services during the three-month period immediately preceding 
     the date on which the consumer is sent a solicitation. The 
     financial functional regulators and the FTC are allowed to 
     create further categories of pre-existing business 
     relationships, which is in part intended to build upon the 
     extensive recognition of customer relationships in existing 
     regulations and guidance issued by the regulators under the 
     Gramm-Leach-Bliley Act.
       In addition to the pre-existing relationship exception, the 
     notice and opt-out requirements do not apply to a person 
     using information to facilitate communications with an 
     individual for whose benefit the person provides employee 
     benefit or other services pursuant to a contract with an 
     employer related to and arising out of the current 
     employment relationship of the individual participant or 
     beneficiary of an employee benefit plan. The requirements 
     also do not apply to the use of affiliate information to 
     perform services on behalf of an affiliate, unless the 
     affiliate could not send the solicitation itself because 
     of a consumer opt out. Thus, an affiliate cannot act as a 
     servicer for another affiliate and send out solicitations 
     for its own products or services to a consumer who has 
     opted out of receiving such solicitations. However, an 
     entity can send a marketing solicitation on behalf of an 
     affiliate that has a pre-existing business relationship 
     with the consumer regarding the products or services of 
     that affiliate or another affiliate. Furthermore, the 
     notice and opt-out do not apply to a person using 
     information in response to a communication initiated by 
     the consumer, to a consumer request about a product or 
     service, or to solicitations authorized or requested by 
     the consumer. Additionally, the

[[Page E2516]]

     notice and opt-out are not required where they would 
     conflict with any provision of State insurance law related 
     to unfair discrimination. This last exception is in part 
     intended to enable insurers and agents to continue full 
     compliance nationwide with State laws prohibiting insurers 
     from discriminating against similar risks or placing 
     similar risks in different rating programs, laws that 
     provide for ``mutual exclusivity'', and ``best rate'' laws 
     that may require insurers to provide customers with the 
     best qualified rates from among their affiliated entities.
       These provisions governing the exchange and use of 
     information among affiliates do not apply to information used 
     to make marketing solicitations if that information was 
     shared into a common database or received by any individual 
     affiliate before the effective date of the regulations 
     implementing this section. Furthermore, the section makes 
     clear that any State law that relates to the exchange and use 
     of information to make a solicitation for marketing purposes 
     is preempted.
       The Federal banking agencies, the NCUA, the Securities and 
     Exchange Commission (SEC), and the FTC are directed to 
     prescribe regulations to implement this new section. To the 
     extent that the section is applicable to insurers, it is 
     intended that any enforcement of FCRA would continue to be 
     performed by the State insurance departments. The Federal 
     agencies also must jointly conduct regular studies of the 
     information sharing practices of affiliates of financial 
     institutions and other persons who are creditors or users of 
     consumer reports to examine how that information is used to 
     make credit underwriting decisions regarding consumers.
       Finally, the section includes a technical and conforming 
     amendment to Section 603(d)(2)(A) of the FCRA. This amendment 
     is simply intended to integrate the new Section 624 into the 
     FCRA and does not affect the definition of a ``consumer 
     report.''
     Section 215. Study of the effects of credit scores and 
         credit-based insurance scores on availability and 
         affordability of financial products.
       Section 215 requires the FTC and the Board to study the use 
     of credit scores and credit-based insurance scores on the 
     availability and affordability of financial products.
     Section 216. Disposal of consumer credit information
       Section 216 directs the Federal banking agencies, the NCUA, 
     the SEC and the FTC to issue regulations requiring the 
     appropriate classes of persons that maintain or possess 
     consumer information ``derived'' from credit reports to 
     properly dispose of such records. The provision clarifies 
     that it does not apply to other types of information 
     (other than consumer report information) and does not 
     impose an obligation to maintain or destroy any 
     information that is not imposed under other laws. The 
     provision does not alter or affect any such requirement, 
     either.

    TITLE III--ENHANCING THE ACCURACY OF CONSUMER REPORT INFORMATION

     Section 311. Risk-based pricing notice
       This section establishes a new notice requirement for 
     creditors that use consumer report information in connection 
     with a risk-based credit underwriting process for new credit 
     customers. If a creditor grants credit to a new credit 
     customer ``on material terms that are materially less 
     favorable than the most favorable terms available to a 
     substantial proportion of [the creditor's other new] 
     consumers'' based on information from a consumer report, the 
     creditor must give the consumer a notice stating that the 
     terms offered to the consumer are based on information from a 
     consumer report. Nothing in the section, however, precludes a 
     creditor from providing such a notice to all of its new 
     credit customers, such as in a loan approval letter or other 
     communication that the credit has been granted. Such a notice 
     is not required, however, if the consumer applied for 
     specific material terms and was granted those terms and those 
     terms are not changed after the consumer responds to the 
     credit offer. Also, such a notice is not required if the 
     person has provided or will provide an adverse action notice 
     pursuant to section 615(a) of the FCRA in connection with an 
     application that is declined. In addition, the creditor is 
     provided with flexibility in the timing of providing such 
     notice, which can be given to the consumer at the time of 
     application for credit or, at communication of loan approval, 
     except where the regulations issued under this section 
     specifically require otherwise.
       The notice is intended to be a concise notice that 
     includes: a statement that the terms offered are based on 
     information from a consumer report; the name of a consumer 
     reporting agency used by the creditor; a statement that the 
     consumer may receive a free consumer report from that 
     consumer reporting agency; and the consumer reporting 
     agency's contact information for obtaining a free credit 
     report. The creditor is not required to tell the consumer 
     that it has taken or may take any unfavorable action, only 
     that it used or will use credit reporting information in the 
     underwriting process.
       The FTC and FRB are directed to jointly prescribe rules to 
     carry out this section. The rules are to address the form, 
     content, time and manner of delivery of the notice; the 
     meaning of the terms used in the section; exceptions to the 
     notice requirement; and a model notice. The section provides 
     creditors with a safe harbor if they maintain reasonable 
     policies and procedures for compliance, and the section is 
     only subject to administrative enforcement by the appropriate 
     Federal agencies.
       This section also adds a national uniformity provision 
     prohibiting any State from imposing a requirement or 
     prohibition relating to the duties of users of consumer 
     reports to provide notice with respect to certain credit 
     transactions.
     Section 312. Procedures to enhance the accuracy and integrity 
         of information furnished to consumer reporting agencies
       This section directs the Federal banking agencies, the NCUA 
     and the FTC, with respect to entities subject to their 
     respective enforcement authority and in consultation and 
     coordination with one another, to establish and maintain 
     guidelines for use by furnishers to enhance the accuracy and 
     integrity of the information they furnish to consumer 
     reporting agencies. ``Accuracy and integrity'' was selected 
     as the relevant standard, rather than ``accuracy and 
     completeness'' as used in sections 313 and 319, to focus on 
     the quality of the information furnished rather than the 
     completeness of the information furnished. The agencies also 
     are directed to prescribe regulations requiring furnishers to 
     establish reasonable policies and procedures for implementing 
     the new guidelines. In developing the guidelines, the 
     agencies are instructed to: identify patterns, practices and 
     specific forms of activity that can compromise the accuracy 
     and integrity of the information furnished; review the 
     methods used to furnish information; determine whether 
     furnishers maintain and enforce policies to assure the 
     accuracy and integrity of information furnished to consumer 
     reporting agencies; and examine the policies and processes 
     that furnishers employ to conduct investigations and correct 
     inaccurate information.
       In addition, this section modifies the standard in the FCRA 
     regarding the duty of furnishers to provide accurate 
     information. The FCRA prohibits furnishers from reporting 
     information with knowledge that it is not accurate. The 
     standard in section 623(a)(1) of the FCRA, ``knows or 
     consciously avoids knowing that the information is 
     inaccurate,'' is amended to ``knows or has reasonable cause 
     to believe that the information is inaccurate.'' This section 
     defines the new standard, ``knows or has reasonable cause to 
     believe that the information is inaccurate,'' to mean 
     ``having specific knowledge, other than solely allegations by 
     the consumer, that would cause a reasonable person to have 
     substantial doubts about the accuracy of the information.''
       This section also enables a consumer to dispute the 
     accuracy of the information furnished to a nationwide 
     consumer reporting agency directly with a furnisher under 
     certain circumstances. Specifically, the Federal banking 
     agencies, the NCUA and the FTC are required to jointly 
     prescribe regulations that identify the circumstances under 
     which a furnisher is required to reinvestigate a dispute 
     concerning the accuracy of information contained in a 
     consumer report, based on the consumer's request submitted 
     directly to the furnisher, rather than through the consumer 
     reporting agency. While the section authorizes a consumer to 
     submit a dispute directly to a furnisher, it is not to be 
     used by credit repair clinics to submit disputes on behalf of 
     one or more consumers.
       In developing the regulations required by this section, the 
     regulators are directed to weigh the benefits to consumers 
     against the costs on furnishers and the credit reporting 
     system; the impact on the overall accuracy and integrity of 
     consumer reports of requiring furnishers to reinvestigate 
     disputes brought directly by consumers; whether direct 
     contact by the consumer with the furnisher would likely 
     result in the most expeditious resolution of any such 
     dispute; and the potential impact on the credit reporting 
     system if credit repair organizations are able to circumvent 
     the prohibition on their submission of disputes on behalf of 
     one or more consumers,
       A consumer who seeks to dispute the accuracy of information 
     directly with a furnisher must: provide a dispute notice 
     directly to such person at the mailing address specified by 
     the person; identify the specific information disputed; 
     explain the basis for the dispute; and include all supporting 
     documentation required by the furnisher to substantiate the 
     basis of the dispute. Upon receipt of a consumer's notice of 
     dispute, the furnisher has specified responsibilities. The 
     furnisher must: conduct an investigation of the disputed 
     information; review all relevant information provided by the 
     consumer with the notice; and complete the investigation 
     and report the results to the consumer before the 
     expiration of the period under section 611(a)(1) ``within 
     which a consumer reporting agency would be required to 
     complete its action if the consumer had elected to dispute 
     the information under that section.'' Accordingly, for 
     example, where the agency would have 30 days to complete 
     the investigation of disputes regarding a consumer report 
     obtained by the consumer following receipt of an adverse 
     action notice, the furnisher would have 30 days as well. 
     Similarly, where the consumer reporting agency has 45 days 
     to complete a reinvestigation of a consumer dispute 
     because the consumer has requested a consumer report 
     through the centralized system under section 612, a 
     furnisher also would have the 45 days to complete an 
     investigation if the consumer has requested a consumer 
     report through the centralized system and then disputed 
     information on that consumer report directly with the 
     furnisher. In

[[Page E2517]]

     addition, if the investigation finds that the information 
     reported was inaccurate, the furnisher must promptly 
     notify each consumer reporting agency to which information 
     was furnished and provide the agency with any correction 
     necessary to make the information accurate.
       The furnisher requirements do not apply if the person 
     receiving a notice of a dispute directly from a consumer 
     reasonably determines that the dispute is frivolous or 
     irrelevant. Upon making such a determination, the person must 
     notify the consumer of this determination within five 
     business days after making the determination, by mail, or if 
     authorized by the consumer for that purpose, by any other 
     means available to the person. The notice provided to the 
     consumer must include the reasons for the determination, and 
     identification of any information required to investigate the 
     disputed information, which may consist of a standardized 
     form describing the general nature of the information.
       This section also amends section 623(a)(5) of the FCRA to 
     provide that a person that furnishes information to a 
     consumer reporting agency regarding a delinquent account may 
     rely upon the date provided by the entity to whom the account 
     was owed at the time that the delinquency occurred, so long 
     as a consumer has not disputed such information.
       Section 623 of the FCRA also is amended to clarify 
     liability and enforcement under the FCRA. Specifically, the 
     new requirements imposed upon furnishers of information are 
     subject to administrative enforcement, not private rights of 
     action. Section 623 is amended by providing that ``Except as 
     provided in section 621(c)(1)(B), sections 616 and 617 do not 
     apply to any violation of'' the furnisher responsibilities 
     under section 623(a), the accuracy guidelines and regulations 
     under section 623(e) and the red flag guidelines and 
     regulations and the requirements dealing with the prohibition 
     of the sale or transfer of a debt caused by identity theft 
     under sections 615(e) or (f) respectively. As a result, the 
     various sections cited in section 312(e) will be subject to 
     the administrative enforcement mechanisms provided under the 
     FCRA, and such mechanisms represent the exclusive remedy for 
     violations of such sections. A similar rule applies to any 
     other section of the legislation that limits enforcement 
     remedies to those administrative remedies set forth under the 
     FCRA, including section 151, which adds a new section 609(e) 
     relating to assistance to identity theft victims.
     Section 313. FTC and consumer reporting agency action 
         concerning complaints
       This section directs the FTC to compile a record of 
     complaints against nationwide consumer reporting agencies. If 
     a complaint is received by the FTC about the accuracy or 
     completeness of information maintained by a consumer 
     reporting agency, the FTC must transmit the complaint to the 
     consumer reporting agency for response. Each nationwide 
     consumer reporting agency under section 603(p) that 
     receives a complaint from the FTC must: review the 
     complaint to determine if the agency has met all legal 
     obligations imposed under the FCRA; report to the FTC the 
     determinations and actions taken by the agency with 
     respect to the complaint; and maintain, for a reasonable 
     time, records regarding the disposition of such complaint 
     in a manner sufficient to demonstrate compliance with the 
     FCRA.
       In addition, the FTC and the Board are directed to study 
     and report jointly on the performance of consumer reporting 
     agencies and furnishers of credit reporting information in 
     complying with the FCRA's procedures and time frames for the 
     prompt investigation and correction of disputed information 
     in a consumer's credit file.
     Section 314. Improved disclosure of the results of 
         reinvestigation
       This section amends sections 611 and 623 of the FCRA to 
     require consumer reporting agencies to promptly delete 
     information from a consumer's file, or modify that item of 
     information as appropriate, if the information is found to be 
     inaccurate, and to promptly notify the furnisher of that 
     information that the information has been modified or deleted 
     from the consumer's file. In addition, this section requires 
     that furnishers, upon completion of a reinvestigation, if the 
     information is found to be inaccurate or incomplete or cannot 
     be verified, must, for purposes of subsequently reporting to 
     a consumer reporting agency, modify the item of information, 
     delete the information, or block the reporting of the 
     information.
     Section 315. Reconciling addresses
       This section amends section 605 of the FCRA to require a 
     nationwide consumer reporting agency under section 603(p), 
     when it provides a consumer report, to inform the user 
     requesting that report if the request received from the user 
     includes an address for the consumer that substantially 
     differs from the addresses in the file of the consumer. The 
     Federal banking agencies, the NCUA and the FTC are directed 
     to prescribe regulations regarding reasonable policies and 
     procedures that users of consumer reports within the 
     agencies' respective enforcement jurisdiction should employ 
     when they receive notice of an address discrepancy. These 
     regulations are to describe reasonable policies and 
     procedures that a user may employ to form a reasonable belief 
     that the user knows the identity of the person to whom the 
     consumer report pertains and, if the user establishes a 
     continuing relationship with the consumer, to furnish the 
     consumer reporting agency with the appropriate address, as 
     part of information that the user regularly furnishes for the 
     period in which the relationship is established.
     Section 316. Notice of dispute through reseller
       This section amends section 611 of the FCRA to require 
     consumer reporting agencies to reinvestigate consumer 
     disputes forwarded to them by resellers of consumer reports. 
     Furthermore, if a reseller receives notice from a consumer of 
     a dispute concerning the accuracy or completeness of any item 
     of information contained in a consumer report, the reseller 
     must, within five business days and free of charge, determine 
     the accuracy or completeness of the information in question 
     and either correct or delete it, if it is the reseller's 
     error, within 20 days after receiving the notice, or convey 
     the notice of dispute with any relevant information to 
     each  consumer reporting agency that provided the 
     information that is the subject of the dispute, if the 
     error is not the reseller's. In the latter circumstance, 
     the consumer reporting agency must report the results of 
     its reinvestigation to the reseller that conveyed the 
     notice, and the reseller must then reconvey the notice to 
     the consumer immediately.
     Section 317. Reasonable reinvestigation required
       This section amends section 611 of the FCRA to provide that 
     when a consumer disputes the accuracy of information 
     contained in a consumer report, the consumer reporting agency 
     that prepared the report must conduct a reasonable 
     investigation free of charge to determine whether the 
     disputed information is inaccurate.
     Section 318. FTC study of issues relating to the Fair Credit 
         Reporting Act
       This section requires the FTC to study and report to 
     Congress within one of the date of enactment of the FACT Act 
     on ways to improve the operation of the FCRA. The FTC is 
     directed to study and report on: the efficacy of increasing 
     the number of points of identifying information that a credit 
     reporting agency must match before releasing a consumer 
     report; the extent to which requiring additional points of 
     identifying information to match would enhance the accuracy 
     of credit reports and combat the provision of incorrect 
     consumer reports to users; the extent to which requiring an 
     exact match of first and last name, social security number 
     and address and ZIP Code of the consumer would enhance the 
     likelihood of increasing the accuracy of credit reports; and 
     the effects of allowing consumer reporting agencies to use 
     partial matches of social security numbers and name 
     recognition software. The FTC also must report on the impact 
     of providing independent notification to consumers when 
     negative information is included in their credit reports, and 
     to consider the effects of requiring that consumers who 
     experience adverse actions receive a copy of the same credit 
     report used by the creditor in taking the adverse action. 
     Finally, the FTC is to study and report on common financial 
     transactions not generally reported to consumer reporting 
     agencies that may bear on creditworthiness, and possible 
     actions to encourage the reporting of such transactions 
     within a voluntary system.
     Section 319. FTC study of the accuracy of consumer reports
       This section directs the FTC to conduct an ongoing study of 
     the accuracy and completeness of information contained in 
     consumer reports, and to submit interim reports and a final 
     report to Congress on its findings and conclusions, together 
     with recommendations for legislative and administrative 
     action.

 TITLE IV--LIMITING THE USE AND SHARING OF MEDICAL INFORMATION IN THE 
                            FINANCIAL SYSTEM

     Section 411. Protection of medical information in the 
         financial system
       Section 411 amends section 604 of the FCRA to generally 
     prohibit a consumer reporting agency from providing credit 
     reports that contain medical information for employment 
     purposes or in connection with a credit or insurance 
     transaction (including annuities). Medical information may be 
     included in a report as part of an insurance transaction only 
     with the consumer's affirmative consent. Medical 
     information may be included in a report for employment or 
     credit purposes only where the information is relevant for 
     purposes of processing or approving employment or credit 
     requested by the consumer and the consumer has provided 
     specific written consent, or if the information meets 
     certain specific requirements and is restricted or 
     reported using codes that do not identify or infer the 
     specific provider or nature of the services, products, or 
     devices to anyone other than the consumer.
       In general, creditors are prohibited from obtaining or 
     using medical information in connection with any 
     determination of a consumer's eligibility for credit. Certain 
     exceptions are provided where authorized by Federal law, for 
     insurance activities (including annuities), and where 
     determined to be necessary and appropriate by a regulation or 
     order of the FTC or a financial regulator (including the 
     State insurance authorities). Any person who receives medical 
     information through any of the exceptions of this section is 
     prohibited from further disclosure

[[Page E2518]]

     of the information to any other person, except as necessary 
     to carry out the purpose for which it was originally 
     disclosed or as otherwise permitted by law. The Federal 
     banking agencies and the NCUA are directed to prescribe 
     regulations that are necessary and appropriate to protect 
     legitimate business needs with respect to the use of medical 
     information in the credit granting process, including 
     allowing appropriate sharing for verifying certain 
     transactions as well as for debt cancellation contracts, debt 
     suspension agreements, and credit insurance that are 
     generally not intended to be restricted by this provision.
       This section further amends section 603(d) of the FCRA to 
     restrict the disclosure among affiliates of consumer reports 
     that are medical information except as provided in the 
     exceptions above. Specifically, the exclusions from the term 
     ``consumer report'' in section 603(d)(2) (e.g., sharing among 
     affiliates of transaction and experience information) do not 
     apply if the information is medical information, an 
     individualized list or description based specifically on the 
     payment transactions of the consumer for medical products and 
     services, or an aggregate list of consumers identified based 
     on their payment transactions for medical products or 
     services. The section also creates a new definition for the 
     term ``medical information'', defining it as information 
     derived through a health care provider with respect to an 
     individual consumer relating to the individual's past, 
     present, or future physical, mental, or behavioral health, 
     the provision of health care to the individual, or the 
     payment for the provision of health care to the individual. 
     The definition specifically excludes information that is age, 
     gender, demographic information (including addresses), or 
     other information unrelated to the individual consumer's 
     physical, mental, or behavioral health.
     Section 412. Confidentiality of medical contact information 
         in consumer reports
       Section 412 requires furnishers whose primary business is 
     providing medical services, products, or devices to notify 
     the consumer reporting agencies of their status as a medical 
     information furnisher for purposes of compliance with the 
     medical information coding requirements. Once an entity 
     notifies a consumer reporting agency of its status as a 
     medical information furnisher, the agency may not include in 
     a consumer report the furnisher's name, address, or telephone 
     number unless that contact information is encoded in a manner 
     that does not identify or infer to anyone other than the 
     consumer the specific company or the nature of the medical 
     services, products, or devices provided. An exception is 
     provided for consumer reports provided to insurance 
     companies for insurance activities (including annuities) 
     other than property and casualty insurance. The encoding 
     requirement for medical information furnisher contact 
     information applies regardless of the dollar amounts 
     involved.

         TITLE V--FINANCIAL LITERACY AND EDUCATION IMPROVEMENT

     Section 511. Short title
       This section establishes the short title of ``Financial 
     Literacy and Education Improvement Act.''
     Section 512. Definitions
       This section defines the terms ``Chairperson'' and 
     ``Commission'' for purposes of this title.
     Section 513. Establishment of Financial Literacy and 
         Education Commission
       This section establishes the Financial Literacy and 
     Education Commission with the Secretary of the Treasury as 
     the Chairperson. The section sets forth the membership of the 
     Commission to include federal agencies with significant 
     financial literacy programs, and authorizes the President to 
     designate up to five additional members. The Commission is 
     required to meet at least once every four months and all such 
     meetings shall be open to the public. The initial meeting 
     shall take place not later than 60 days after the date of 
     enactment of the FACT Act.
     Section 514. Duties of the Commission
       This section sets forth the duties of the Commission to, 
     among other things, review financial literacy and education 
     efforts throughout the federal government; to identify and 
     eliminate duplicative federal financial literacy efforts; to 
     coordinate the promotion of federal financial literacy 
     efforts including outreach between federal, state and local 
     governments, non-profit organizations and private 
     enterprises; to increase awareness and improve development 
     and distribution of multilingual financial literacy and 
     education materials; to improve financial literacy and 
     education through all other related skills, including 
     personal finance and related economic education; to develop 
     and implement within 18 months a national strategy to promote 
     financial literacy and education among all Americans; and to 
     issue a report, the Strategy for Assuring Financial 
     Empowerment (``SAFE Strategy''), to Congress within the first 
     18 months of the Commission's first meeting and annually 
     thereafter, on the progress of the Commission in carrying out 
     this title. The Commission also shall establish a website and 
     a toll-free number as a one-stop-shop for all federal 
     financial literacy programs. The Commission's Chairperson is 
     required to provide annual testimony to the relevant 
     congressional committees.
     Section 515. Powers of the Commission
       This section authorizes the Commission to hold hearings and 
     receive testimony as necessary to carry out the title; to 
     receive information directly from any Federal department or 
     agency; to undertake periodic studies regarding the state 
     of financial literacy; and to take any action to develop 
     and promote financial literacy and education materials in 
     languages other than English, as the Commission deems 
     appropriate.
     Section 516. Commission personnel matters
       This section provides that members of the Commission shall 
     serve without compensation in addition to that received for 
     their primary duties, however, the Commission may pay for 
     travel expenses of members for official duties of the 
     Commission. In addition, the Director of the Office of 
     Financial Education of the Treasury Department shall provide 
     assistance to the Commission. The section also permits 
     federal employees to be detailed to the Commission.
     Section 517. Studies by the Comptroller General
       This section mandates that the General Accounting Office 
     (GAO) submit a report to Congress not later than 3 years 
     after the date of enactment of the FACT Act on the 
     effectiveness of the Commission, and conduct a separate study 
     to assess the extent of consumers' knowledge and awareness of 
     credit reports, credit scores, and the dispute resolution 
     process, and on methods for improving financial literacy. The 
     GAO is required to report the findings and conclusions of 
     this study to Congress within a year of the date of 
     enactment.
     Section 518. The national public service multimedia campaign 
         to enhance the state of financial literacy
       This section directs the Secretary of the Treasury, after 
     review of the recommendations of the Financial Literacy and 
     Education Commission, to develop, in consultation with 
     nonprofit, public, or private organizations, a pilot national 
     public service multimedia campaign to enhance the state of 
     financial literacy and education in the U.S. The campaign is 
     required to be consistent with the national strategy 
     developed pursuant to section 514, and to promote the toll-
     free telephone and the website required by that section.
       The Secretary shall develop measures to evaluate the 
     performance of the public service campaign for each fiscal 
     year for which there are appropriations, and shall submit a 
     report to the Committee on Banking, Housing, and Urban 
     Affairs and the Committee on Appropriations of the Senate and 
     the Committee on Financial Services and the Committee on 
     Appropriations of the House of Representatives, describing 
     the status and implementation of the provisions of this 
     section and the state of financial literacy and education in 
     the United States. Appropriations of $3 million are 
     authorized for fiscal years 2004, 2005, and 2006, for the 
     development, production, and distribution of the pilot 
     national public service multimedia campaign.
     Section 519. Authorization of appropriations
       This section authorizes appropriations to the Commission of 
     such sums as may be necessary to carry out this title, 
     including administrative expenses.

        TITLE VI--PROTECTING EMPLOYEE MISCONDUCT INVESTIGATIONS

     Section 611. Certain employee investigation communications 
         excluded from definition of consumer report
       This title amends section 603 of the FCRA to provide that 
     communications to an employer by an outside third party 
     retained to investigate suspected workplace misconduct or 
     compliance with legal requirements or with the employer's 
     preexisting written policies do not constitute a ``consumer 
     report'' for purposes of the FCRA. This provision is intended 
     to address the ill effects of certain regulatory guidance 
     issued by the FTC staff in 1999 that had the unintended 
     consequence of deterring employers from using outside firms 
     to investigate alleged employee misconduct, including racial 
     discrimination and sexual harassment claims. Employers that 
     take an adverse action based on the communication by the 
     outside investigative agency, however, continue to be 
     required to disclose to the employee a summary of the nature 
     and substance of the communication, although certain sources 
     of information are protected from disclosure. In particular, 
     the disclosure duty is not intended to require violation of 
     any confidentiality obligations, such as confidentiality 
     requirements regarding an individual's medical or other 
     private information (social security number, home residence, 
     etc.), or privileges, such as doctor-patient, attorney-
     client, or state secrets.

                   TITLE VII--RELATION TO STATE LAWS

     Section 711. Relation to state laws
       Section 711 eliminates the January 1, 2004 sunset of the 
     uniform national consumer protection standards contained in 
     current law and makes those preemptions permanent. It also 
     clarifies that all of the new consumer protections added by 
     the FACT Act are intended to be uniform national standards, 
     by enumerating as additional preemptions the 11 new 
     provisions of the FACT Act that do not contain specific 
     preemptions in those sections. Specifically, the section 
     establishes national uniform standards and preempts State law 
     with respect to the truncation of credit card and debit card 
     numbers (113), establishing fraud alerts (112), blocking 
     information resulting from identity theft

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     (152), truncating social security numbers on consumer reports 
     given to consumers (115), providing free annual disclosures 
     (211) (in addition to the preemption for disclosures provided 
     under section 212), any consumer protections addressed under 
     the red flag guidelines (114), prohibiting the transfer of 
     debt caused by identity theft (154), notice by debt 
     collectors with respect to fraudulent information (155), 
     coordination of identity theft complaints by consumer 
     reporting agencies (153), duties of furnishers to prevent 
     refurnishing of blocked information (154), and the disposal 
     of consumer report information (216). Under this new 
     preemption provision, no state or local jurisdiction may add 
     to, alter, or affect the rules established by the statute or 
     regulations thereunder in any of these areas. All of the 
     statutory and regulatory provisions establishing rules and 
     requirements governing the conduct of any person in these 
     specified areas are governed solely by federal law and any 
     State action that attempts to impose requirements or 
     prohibitions in these areas would be preempted. This section 
     also clarifies that with respect to any State laws for the 
     prevention or mitigation of identity theft that address 
     conduct other than those for which a national uniform 
     standard is created under FCRA, those laws are not preempted 
     to the extent they are not inconsistent with FCRA.

                       TITLE VIII--MISCELLANEOUS

     Section 811. Clerical amendments
       Section 811 makes a number of technical and clerical 
     amendments.

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