[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
[[Page E2519]]
(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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