[House Report 108-263]
[From the U.S. Government Publishing Office]



108th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    108-263
======================================================================
 
           FAIR AND ACCURATE CREDIT TRANSACTIONS ACT OF 2003

                                _______
                                

 September 4, 2003.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

  Mr. Oxley, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                             together with

                   ADDITIONAL AND SUPPLEMENTAL VIEWS

                        [To accompany H.R. 2622]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Financial Services, to whom was referred the 
bill (H.R. 2622) to amend the Fair Credit Reporting Act, to 
prevent identity theft, improve resolution of consumer 
disputes, improve the accuracy of consumer records, make 
improvements in the use of, and consumer access to, credit 
information, and for other purposes, having considered the 
same, report favorably thereon with an amendment and recommend 
that the bill as amended do pass.

                                CONTENTS

                                                                   Page
Amendment........................................................     2
Purpose and Summary..............................................    22
Background and Need for Legislation..............................    23
Hearings.........................................................    27
Committee Consideration..........................................    28
Committee Votes..................................................    28
Committee Oversight Findings.....................................    34
Performance Goals and Objectives.................................    34
New Budget Authority, Entitlement Authority, and Tax Expenditures    34
Committee Cost Estimate..........................................    34
Congressional Budget Office Cost Estimate........................    34
Federal Mandates Statement.......................................    36
Private Sector Mandates Estimate.................................    36
Advisory Committee Statement.....................................    37
Constitutional Authority Statement...............................    37
Applicability to Legislative Branch..............................    37
Section-by-Section Analysis......................................    37
Changes in Existing Law Made by the Bill, as Reported............    54
Additional and Supplemental Views................................    79

                               Amendment

  The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

  (a) Short Title.--This Act may be cited as the ``Fair and Accurate 
Credit Transactions Act of 2003''.
  (b) Table of Contents.--The table of contents for this Act are as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
Sec. 3. Effective dates.

        TITLE I--UNIFORM NATIONAL CONSUMER PROTECTION STANDARDS

Sec. 101. Uniform national consumer protection standards made 
permanent.

                  TITLE II--IDENTITY THEFT PREVENTION

Sec. 201. Investigating changes of address and inactive accounts.
Sec. 202. Fraud alerts.
Sec. 203. Truncation of credit card and debit card account numbers.
Sec. 204. Summary of rights of identity theft victims.
Sec. 205. Blocking of information resulting from identity theft.
Sec. 206. Establishment of procedures for depository institutions to 
identify possible instances of identity theft.
Sec. 207. Study on the use of technology to combat identity theft.

          TITLE III--IMPROVING RESOLUTION OF CONSUMER DISPUTES

Sec. 301. Coordination of consumer complaint investigations.
Sec. 302. Notice of dispute through reseller.
Sec. 303. Reasonable investigation required.
Sec. 304. Duties of furnishers of information.
Sec. 305. Prompt investigation of disputed consumer information.

            TITLE IV--IMPROVING ACCURACY OF CONSUMER RECORDS

Sec. 401. Reconciling addresses.
Sec. 402. Prevention of repollution of consumer reports.
Sec. 403. Notice by users with respect to fraudulent information.
Sec. 404. Disclosure to consumers of contact information for users and 
furnishers of information in consumer reports.
Sec. 405. FTC study of the accuracy of consumer reports.

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

Sec. 501. Free reports annually.
Sec. 502. Disclosure of credit scores.
Sec. 503. Simpler and easier method for consumers to use notification 
system.
Sec. 504. Requirement to disclose communications to a consumer 
reporting agency.
Sec. 505. Study of effects of credit scores and credit-based insurance 
scores on availability and affordability of financial products.
Sec. 506. GAO study on disparate impact of credit system.
Sec. 507. Analysis of further restrictions on offers of credit or 
insurance.
Sec. 508. Study on the need and the means for improving financial 
literacy among consumers.
Sec. 509. Disclosure of increase in APR under certain circumstances.

        TITLE VI--PROTECTING EMPLOYEE MISCONDUCT INVESTIGATIONS

Sec. 601. Certain employee investigation communications excluded from 
definition of consumer report.

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

Sec. 701. Protection of medical information in the financial system.
Sec. 702. Confidentiality of medical information in credit reports.

SEC. 2. DEFINITIONS.

  Section 603 of the Fair Credit Reporting Act (15 U.S.C. 1681a) is 
amended by adding at the end the following new subsections:
  ``(r) Reseller.--The term `reseller' means a consumer reporting 
agency that--
          ``(1) assembles and merges information contained in the 
        database of another consumer reporting agency or multiple 
        consumer reporting agencies concerning any consumer for 
        purposes of furnishing such information to any third party, to 
        the extent of such activities; and
          ``(2) does not maintain a database of the assembled or merged 
        information from which new consumer reports are produced.
  ``(s) Other Definitions.--
          ``(1) Board; credit; creditor, credit card.--The terms 
        `Board', `credit', `creditor', and `credit card' have the same 
        meanings as in section 103 of the Truth in Lending Act.
          ``(2) Commission.--The term `Commission' means the Federal 
        Trade Commission.
          ``(3) Debit card.--The term `debit card' means any card 
        issued by a financial institution to a consumer for use in 
        initiating electronic fund transfers (as defined in section 
        903(6) of the Electronic Fund Transfer Act) from the account 
        (as defined in such Act) of the consumer at such financial 
        institution for the purpose of transferring money between 
        accounts or obtaining money, property, labor, or services.
          ``(4) Electronic fund transfer.--The term `electronic fund 
        transfer' has the same meaning as in section 903 of the 
        Electronic Fund Transfer Act.
          ``(5) Federal banking agency.--The term `Federal banking 
        agency' has the same meaning as in section 3 of the Federal 
        Deposit Insurance Act.
          ``(6) Identity theft.--The term `identity theft' means a 
        fraud committed using another person's identifying information, 
        subject to such further definition as the Commission and the 
        Board may prescribe, jointly, by regulation.
          ``(7) Police report.--The term `police report' means a copy 
        of any official valid report filed by a consumer with any 
        appropriate Federal, State, or local government law enforcement 
        agency, or any comparable official government document that the 
        Board and the Commission shall jointly prescribe in 
        regulations, that is subject to a criminal penalty for false 
        statements.''.

SEC. 3. EFFECTIVE DATES.

  (a) In General.--Except as provided in subsections (b) and (c)--
          (1) before the end of the 2-month period beginning on the 
        date of the enactment of this Act, the Board of Governors of 
        the Federal Reserve System and the Federal Trade Commission 
        shall jointly prescribe regulations in final form establishing 
        effective dates for each provision of this Act (except as 
        otherwise specified); and
          (2) the regulations prescribed under paragraph (1) shall 
        establish effective dates that are as early as possible while 
        allowing a reasonable time for the implementation of the 
        provisions of this Act, but in no case shall the effective date 
        be later than 10 months after the date of issuance of such 
        regulations in final form.
  (b) Immediate Effective Date.--The following provisions shall take 
effect on the date of the enactment of this Act:
          (1) Title I.
          (2) Section 201.
          (3) Section 609(d)(1) of the Fair Credit Reporting Act (as 
        added by the amendment in section 204(a)).
          (4) Section 305.
          (5) Section 505.
          (6) Section 506.
          (7) Title VI.
  (c) Effective Date For Protection of Medical Information in the 
Financial System.--Section 701 shall take effect at the end of the 180-
day period beginning on the date of the enactment of this Act, except 
that paragraph (2) of section 604(g) of the Fair Credit Reporting Act 
(as added by section 701) shall take effect on the later of--
          (1) the end of the 90-day period beginning on the date the 
        regulations required under paragraph (5)(B) of such section 
        604(g) (as added by section 701) are prescribed in final form; 
        or
          (2) the date specified in the regulations referred to in 
        paragraph (1).

        TITLE I--UNIFORM NATIONAL CONSUMER PROTECTION STANDARDS

SEC. 101. UNIFORM NATIONAL CONSUMER PROTECTION STANDARDS MADE 
                    PERMANENT.

  Section 624(d) of the Fair Credit Reporting Act (15 U.S.C. 1681t(d)) 
is amended--
          (1) by striking ``Subsections (b) and (c)'' and all that 
        follows through ``do not affect any settlement,'' and inserting 
        ``Subsections (b) and (c) do not affect any settlement,''; and
          (2) by striking ``Consumer Credit Reporting Reform Act of 
        1996'' and all that follows through the period at the end of 
        paragraph (2) and inserting ``Consumer Credit Reporting Reform 
        Act of 1996.''.

                  TITLE II--IDENTITY THEFT PREVENTION

SEC. 201. INVESTIGATING CHANGES OF ADDRESS AND INACTIVE ACCOUNTS.

  (a) In General.--Section 605 of the Fair Credit Reporting Act (15 
U.S.C. 1681c) is amended by inserting after subsection (f), the 
following new subsection:
  ``(g) `Red Flag' Patterns of Possible Identity Theft.--
          ``(1) Investigation of changes of address.--The Federal 
        banking agencies and the National Credit Union Administration, 
        in carrying out the responsibilities of such agencies and 
        Administration under subsection (k), shall jointly prescribe 
        regulations for credit card and debit card issuers to ensure 
        that, if any such issuer receives a request for an additional 
        or replacement card for an existing account within a short 
        period of time after the issuer has received notification of a 
        change of address for the same account, the issuer will follow 
        reasonable policies and procedures that require, as 
        appropriate, that the issuer not issue the additional or 
        replacement card unless the issuer--
                  ``(A) notifies the cardholder of the request at the 
                former address of the cardholder and provides to the 
                cardholder a means of promptly reporting incorrect 
                address changes;
                  ``(B) notifies the cardholder of the request by such 
                other means of communication as the cardholder and the 
                card issuer previously agreed to; or
                  ``(C) uses other means of assessing the validity of 
                the change of address, in accordance with reasonable 
                policies and procedures established by the card issuer 
                in accordance with the regulations prescribed under 
                subsection (k).
          ``(2) Inactive accounts.--The Federal banking agencies and 
        the National Credit Union Administration, in carrying out the 
        responsibilities of such agencies and Administration under 
        subsection (k), shall consider including, as a possible `red 
        flag' pattern, reasonable guidelines providing that when a 
        transaction occurs with respect to a credit or deposit account 
        that has been inactive for more than 2 years, the creditor or 
        depository institution shall follow reasonable policies and 
        procedures that provide for notice to be given to a consumer in 
        a manner reasonably designed to reduce the likelihood of 
        identity theft with respect to such account.''.
  (b) Clerical Amendments.--
          (1) The heading for section 605 of the Fair Credit Reporting 
        Act is amended to read as follows:

``Sec. 605. Requirements relating to information contained in consumer 
                    reports and to identity theft prevention''.

          (2) The table of sections for title VI of the Consumer Credit 
        Protection Act is amended by striking the item relating to 
        section 605 and inserting the following new item:

``605. Requirements relating to information contained in consumer 
reports and to identity theft prevention''.

          (3) Section 624(b)(1)(E) of the Fair Credit Reporting Act (15 
        U.S.C. 1681t(b)(1)(E)) is amended by inserting ``and to 
        identity theft prevention'' after ``consumer reports''.

SEC. 202. FRAUD ALERTS.

  Section 605 of the Fair Credit Reporting Act (15 U.S.C. 1681c) is 
amended by adding at the end the following new subsection:
  ``(i) One-Call Fraud Alerts.--
          ``(1) Initial alerts.--Upon the direct request of a consumer, 
        or an individual acting on behalf of or as a personal 
        representative of a consumer, who asserts, in good faith, a 
        suspicion that the consumer has been or is about to become a 
        victim of fraud or related crime, including identity theft, a 
        consumer reporting agency described in section 603(p) shall, if 
        the agency maintains a file on the consumer who is making the 
        request and has a reasonable belief that the agency knows the 
        identity of the consumer--
                  ``(A) include a fraud alert in the file of that 
                consumer for a period of not less than 90 days 
                beginning on the date of such request, unless the 
                consumer specifically requests that such fraud alert be 
                removed before the end of such period;
                  ``(B) disclose to the consumer that the consumer may 
                request a free copy of the file of the consumer and 
                provide the consumer, upon request, a free disclosure 
                of the consumer's file (as described in section 609(a)) 
                within 3 business days after such request;
                  ``(C) for 2 years after the date of such request, 
                exclude the consumer from any list of consumers 
                prepared by the agency and provided to any third party 
                to offer credit or insurance to the consumer as part of 
                a transaction that was not initiated by the consumer, 
                unless the consumer subsequently requests that such 
                exclusion be rescinded before the end of such period; 
                and
                  ``(D) refer the information regarding the fraud alert 
                to each of the other consumer reporting agencies 
                described in section 603(p), as required under section 
                621(f)(1).
          ``(2) Extended alerts.--Upon the direct request of a 
        consumer, or an individual acting on behalf of or as a personal 
        representative of a consumer, who contacts a consumer reporting 
        agency described in section 603(p) to report details of an 
        identity theft and submits evidence that provides the agency 
        with reasonable cause to believe that such identity theft has 
        occurred, the agency shall, if the agency maintains a file on 
        the consumer who is making the request and has a reasonable 
        belief that the agency knows the identity of the consumer--
                  ``(A) include a fraud alert in the file of that 
                consumer and provide an opportunity for the consumer to 
                extend the alert for a period of up to 7 years from the 
                date of such request, unless the consumer subsequently 
                requests that such fraud alert be removed before the 
                end of such period;
                  ``(B) provide the consumer with the option of 
                including more complete information in the consumer's 
                file, including a telephone number or some other 
                reasonable means of communication that any person who 
                requests the consumer's report may utilize for 
                authorization before establishing a new credit plan in 
                the name of the consumer; and
                  ``(C) provide the consumer with at least 2 free 
                disclosures of the information described in section 
                609(a) during the 12-month period beginning on the date 
                of such request.
          ``(3) Active duty alerts.--Upon the direct request of an 
        active duty military consumer, or an individual acting on 
        behalf of or as a personal representative of an active duty 
        military consumer, who contacts a consumer reporting agency 
        described in section 603(p), the agency shall, if the agency 
        maintains a file on the consumer who is making the request and 
        has a reasonable belief that the agency knows the identity of 
        the consumer--
                  ``(A) include an active duty alert in the file of 
                that consumer during a period of not less than 12 
                months beginning on the date of the request, unless the 
                consumer requests that such active duty alert be 
                removed before the end of such period;
                  ``(B) for 2 years after the date of such request, 
                exclude the consumer from any list of consumers 
                prepared by the agency and provided to any third party 
                to offer credit or insurance to the consumer as part of 
                a transaction that was not initiated by the consumer, 
                unless the consumer subsequently requests that such 
                exclusion be rescinded before the end of such period; 
                and
                  ``(C) refer the information regarding the active duty 
                alert to each of the other consumer reporting agencies 
                described in section 603(p), as required under section 
                621(f)(1).
          ``(4) Procedures.--Each consumer reporting agency described 
        in section 603(p) shall establish policies and procedures to 
        comply with the obligations of paragraphs (1), (2), and (3), 
        including procedures that allow consumers to request initial, 
        extended, or active duty alerts in a simple and easy manner, 
        including by telephone.
          ``(5) Notice to users.--No person who obtains any information 
        that includes a fraud alert under this section from a file of 
        any consumer from a consumer reporting agency may establish a 
        new credit plan in the name of the consumer for a person other 
        than the consumer without utilizing reasonable policies and 
        procedures described in paragraph (9).
          ``(6) Referrals of fraud alerts.--Each consumer reporting 
        agency described in section 603(p) that receives a referral of 
        a fraud alert from another such agency pursuant to paragraph 
        (1)(D) or (3)(C) shall follow the procedures required under 
        subparagraphs (A), (B), and (C) of paragraph (1), in the case 
        of a referral under paragraph (1)(D), and subparagraphs (A) and 
        (B), in the case of a referral under paragraph (3)(C), as if 
        the agency received the request from the consumer directly.
          ``(7) Duty of reseller to reconvey alert.--A reseller that is 
        notified of the existence of a fraud alert in a consumer's 
        consumer report shall communicate to each person procuring a 
        consumer report with respect to such consumer the existence of 
        a fraud alert in effect for such consumer.
          ``(8) Duty of other consumer reporting agencies to provide 
        contact information.--If a consumer contacts any consumer 
        reporting agency that is not a consumer reporting agency 
        described in section 603(p) to communicate a suspicion that the 
        consumer has been or is about to become a victim of fraud or 
        related crime, including identity theft, the agency shall 
        provide the consumer with information on how to contact the 
        Commission and the consumer reporting agencies described in 
        section 603(p) to obtain more detailed information and request 
        alerts under this subsection.
          ``(9) Fraud alert.--
                  ``(A) Definition.--For purposes of this subsection, 
                the term `fraud alert' means, at a minimum, a 
                statement--
                          ``(i) in the file of a consumer that the 
                        consumer may be a victim of fraud, including 
                        identity theft, or is a consumer described in 
                        paragraph (3); and
                          ``(ii) that is transmitted in a manner that 
                        facilitates a clear and conspicuous view of the 
                        statement by any person requesting such file.
                  ``(B) Other information.--A fraud alert shall include 
                information that notifies all prospective users of a 
                consumer report on the consumer to which the alert 
                relates that the consumer does not authorize 
                establishing any new credit plan in the name of the 
                consumer, unless the user utilizes reasonable policies 
                and procedures to form a reasonable belief that the 
                user knows the identity of the person for whom such new 
                plan is established, which may include obtaining 
                authorization or preauthorization of the consumer at a 
                telephone number designated by the consumer or by such 
                other reasonable means agreed to.
          ``(10) Other definitions.--For purposes of this subsection, 
        the following definitions shall apply:
                  ``(A) Active duty military consumer.--The term 
                `active duty military consumer' means a consumer in 
                military service who--
                          ``(i) is on active duty (as defined in 
                        section 101(d)(1) of title 10, United States 
                        Code) or is a reservist performing duty under a 
                        call or order to active duty under a provision 
                        of law referred to in section 101(a)(13) of 
                        title 10, United States Code; and
                          ``(ii) is assigned to service away from the 
                        consumer's usual duty station.
                  ``(B) New credit plan.--The term `new credit plan' 
                means a new account under an open end credit plan (as 
                defined in section 103(i) of this Act) or a new credit 
                transaction not under an open end credit plan.''.

SEC. 203. TRUNCATION OF CREDIT CARD AND DEBIT CARD ACCOUNT NUMBERS.

  (a) In General.--Section 605 of the Fair Credit Reporting Act (15 
U.S.C. 1681c) is amended by inserting after subsection (k) (as added by 
section 206 of this title) the following new subsection:
  ``(l) Truncation of Credit Card and Debit Card Account Numbers.--
          ``(1) In general.--Except as provided in this subsection, no 
        person that accepts credit cards or debit cards for the 
        transaction of business shall print the expiration date or more 
        than the last 5 digits of the card number upon any receipt 
        provided to the cardholder at the point of the sale or 
        transaction.
          ``(2) Limitation.--This section shall apply only to receipts 
        that are electronically printed, and shall 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.''.
  (b) Effective Date.--The amendments made by subsection (a) shall 
apply after the end of--
          (1) the 3-year period beginning on the date of the enactment 
        of this Act, with respect to any cash register or other machine 
        or device that electronically prints receipts for credit card 
        or debit card transactions that is in use before January 1, 
        2005; and
          (2) the 1-year period beginning on the date of the enactment 
        of this Act, with respect to any cash register or other machine 
        or device that electronically prints receipts for credit card 
        or debit card transactions that is first put into use on or 
        after January 1, 2005.

SEC. 204. SUMMARY OF RIGHTS OF IDENTITY THEFT VICTIMS.

  (a) In General.--Section 609 of the Fair Credit Reporting Act (15 
U.S.C. 1681g) is amended by adding at the end the following new 
subsection:
  ``(d) Summary of Rights of Identity Theft Victims.--
          ``(1) In general.--The Commission, in consultation with the 
        Federal banking agencies and the National Credit Union 
        Administration, shall prepare a model summary of the rights of 
        consumers under this title with respect to the procedures for 
        remedying the effects of fraud or identity theft involving 
        credit, electronic fund transfers, or accounts or transactions 
        at or with a financial institution.
          ``(2) Summary of rights and contact information.--If any 
        consumer contacts a consumer reporting agency and expresses a 
        belief that the consumer is a victim of fraud or identity theft 
        involving credit, electronic fund transfers, or accounts or 
        transactions at or with a financial institution, the consumer 
        reporting agency shall, in addition to any other action the 
        agency may take, provide the consumer with the model summary of 
        rights prepared by the Commission under paragraph (1) and 
        information on how to contact the Commission to obtain more 
        detailed information.''.
  (b) Technical and Conforming Amendment.--Section 624(b)(3) of the 
Fair Credit Reporting Act (15 U.S.C. 1681t(b)(3)) is amended by 
striking ``section 609(c)'' and inserting ``subsection (c) or (d) of 
section 609''.

SEC. 205. BLOCKING OF INFORMATION RESULTING FROM IDENTITY THEFT.

  Section 605 of the Fair Credit Reporting Act (15 U.S.C. 1681c) is 
amended by inserting after subsection (i) (as added by section 202 of 
this title) the following new subsection:
  ``(j) Block of Information Resulting From Identity Theft.--
          ``(1) Block.--Except as provided in paragraph (3), a consumer 
        reporting agency shall block the reporting of any information 
        in the file of a consumer that the consumer identifies as 
        information that resulted from an alleged identity theft and 
        confirms is not information relating to any transaction by the 
        consumer not later than 5 business days after the date of 
        receipt by such agency of--
                  ``(A) appropriate proof of the identity of a 
                consumer;
                  ``(B) a police report evidencing the claim of the 
                consumer of identity theft;
                  ``(C) the identification of the information by the 
                consumer; and
                  ``(D) confirmation by the consumer that the 
                information is not information relating to any 
                transaction by the consumer.
          ``(2) Notification.--A consumer reporting agency shall 
        promptly notify the furnisher of information identified by the 
        consumer under paragraph (1)--
                  ``(A) that the information may be a result of 
                identity theft;
                  ``(B) that a police report has been filed;
                  ``(C) that a block has been requested under this 
                subsection; and
                  ``(D) of the effective date of the block.
          ``(3) Authority to decline or rescind.--
                  ``(A) In general.--A consumer reporting agency may 
                decline to block, or may rescind any block, of consumer 
                information under this subsection if the consumer 
                reporting agency reasonably determines that--
                          ``(i) the information was blocked in error or 
                        a block was requested by the consumer in error;
                          ``(ii) the information was blocked, or a 
                        block was requested by the consumer, on the 
                        basis of a misrepresentation of fact by the 
                        consumer relevant to the request to block; or
                          ``(iii) the consumer knowingly obtained 
                        possession of goods, services, or moneys as a 
                        result of the blocked transaction or 
                        transactions, or the consumer should have known 
                        that the consumer obtained possession of goods, 
                        services, or moneys as a result of the blocked 
                        transaction or transactions.
                  ``(B) Notification to consumer.--If the block of 
                information is declined or rescinded under this 
                paragraph, the affected consumer shall be notified 
                promptly, in the same manner as consumers are notified 
                of the reinsertion of information under section 
                611(a)(5)(B).
                  ``(C) Significance of block.--For purposes of this 
                paragraph, if a consumer reporting agency rescinds a 
                block, the presence of information in the file of a 
                consumer prior to the blocking of such information is 
                not evidence of whether the consumer knew or should 
                have known that the consumer obtained possession of any 
                goods, services, or monies as a result of the block.
          ``(4) Exceptions.--
                  ``(A) Verification companies.--This subsection shall 
                not apply to--
                          ``(i) a check services company, which issues 
                        authorizations for the purpose of approving or 
                        processing negotiable instruments, electronic 
                        funds transfers, or similar methods of 
                        payments; or
                          ``(ii) a deposit account information service 
                        company, which issues reports regarding account 
                        closures due to fraud, substantial overdrafts, 
                        automated teller machine abuse, or similar 
                        negative information regarding a consumer, to 
                        inquiring banks or other financial institutions 
                        for use only in reviewing a consumer request 
                        for a deposit account at the inquiring bank or 
                        financial institution.
                  ``(B) Resellers.--
                          ``(i) No reseller file.--This subsection 
                        shall not apply to a consumer reporting agency 
                        if the consumer reporting agency--
                                  ``(I) is a reseller;
                                  ``(II) is not, at the time of the 
                                request of the consumer under paragraph 
                                (1), otherwise furnishing or reselling 
                                a consumer report concerning the 
                                information identified by the consumer; 
                                and
                                  ``(III) informs the consumer, by any 
                                means, that the consumer may report the 
                                identity theft to the Commission to 
                                obtain consumer information regarding 
                                identity theft.
                          ``(ii) Reseller with file.--The sole 
                        obligation of the consumer reporting agency 
                        under this subsection, with regard to any 
                        request of a consumer under this subsection, 
                        shall be to block the consumer report 
                        maintained by the consumer reporting agency 
                        from any subsequent use if--
                                  ``(I) the consumer, in accordance 
                                with the provisions of paragraph (1), 
                                identifies, to a consumer reporting 
                                agency, information in the file of the 
                                consumer that resulted from identity 
                                theft; and
                                  ``(II) the consumer reporting agency 
                                is a reseller of the identified 
                                information.
                          ``(iii) Notice.--In carrying out its 
                        obligation under clause (ii), the reseller 
                        shall promptly provide a notice to the consumer 
                        of the decision to block the file. Such notice 
                        shall contain the name, address, and telephone 
                        number of each consumer reporting agency from 
                        which theconsumer information was obtained for 
resale.
          ``(5) Access to blocked information by law enforcement 
        agencies.--No provision of this subsection shall be construed 
        as requiring a consumer reporting agency to prevent a Federal, 
        State, or local law enforcement agency from accessing blocked 
        information in a consumer file to which the agency could 
        otherwise obtain access under this title.''.

SEC. 206. ESTABLISHMENT OF PROCEDURES FOR DEPOSITORY INSTITUTIONS TO 
                    IDENTIFY POSSIBLE INSTANCES OF IDENTITY THEFT.

  (a) In General.--Section 605 of the Fair Credit Reporting Act (15 
U.S.C. 1681c) is amended by inserting after subsection (j) (as added by 
section 205 of this title) the following new subsection:
  ``(k) `Red Flag' Guidelines Required.--
          ``(1) In general.--The Federal banking agencies and the 
        National Credit Union Administration, in consultation with the 
        Commission, shall jointly establish and maintain guidelines for 
        use by insured depository institutions in identifying patterns, 
        practices, and specific forms of activity that indicate the 
        possible existence of identity theft with respect to accounts, 
        and update such guidelines as often as necessary.
          ``(2) Regulations.--The Federal banking agencies and the 
        National Credit Union Administration, in consultation with the 
        Commission, shall jointly prescribe regulations requiring 
        insured depository institutions to establish and adhere to 
        reasonable policies and procedures for implementing the 
        guidelines established pursuant to paragraph (1) to identify 
        possible risks to customer accounts or to the safety and 
        soundness of the institutions.
          ``(3) Consistency with verification requirements.--Policies 
        and procedures established pursuant to paragraph (2) shall not 
        be inconsistent with, or duplicative of, the policies and 
        procedures required under section 5318(l) of title 31, United 
        States Code.
          ``(4) Insured depository institution defined.--For purposes 
        of this subsection, the term `insured depository institution'--
                  ``(A) has the meaning given to such term in section 3 
                of the Federal Deposit Insurance Act; and
                  ``(B) includes an insured credit union (as defined in 
                section 101 of the Federal Credit Union Act).''.
  (b) Effective Date.--The amendment made by subsection (a) shall take 
effect at the end of the 1-year period beginning the date of the 
enactment of this Act.

SEC. 207. STUDY ON THE USE OF TECHNOLOGY TO COMBAT IDENTITY THEFT.

  (a) Study Required.--The Secretary of the Treasury shall conduct a 
study of the use of biometrics and other similar technologies to reduce 
the incidence and costs of identity theft by providing convincing 
evidence of who actually performed a given financial transaction.
  (b) Consultation.--The Secretary of the Treasury shall consult with 
Federal banking agencies, the Federal Trade Commission, and 
representatives of financial institutions, credit reporting agencies, 
Federal, State, and local government agencies that issue official forms 
or means of identification, State prosecutors, law enforcement 
agencies, and the biometric industry and other representatives of the 
general public, in formulating and conducting the study required by 
subsection (a).
  (c) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary of the Treasury for fiscal year 2004 such 
sums as may be necessary to carry out the provisions of this section.
  (d) Report Required.--Before the end of the 180-day period beginning 
on the date of the enactment of this Act, the Secretary shall submit a 
report to Congress containing the findings and conclusions of the study 
required under subsection (a), together with such recommendations for 
legislative or administrative actions as may be appropriate.

          TITLE III--IMPROVING RESOLUTION OF CONSUMER DISPUTES

SEC. 301. COORDINATION OF CONSUMER COMPLAINT INVESTIGATIONS.

  Section 621 of the Fair Credit Reporting Act (15 U.S.C. 1681s) is 
amended by adding at the end the following new subsection:
  ``(f) Coordination of Consumer Complaint Investigations.--
          ``(1) In general.--The consumer reporting agencies described 
        in section 603(p) shall develop and maintain procedures for the 
        referral, to each such agency, of any consumer complaint 
        received by any such agency alleging any identity theft or 
        requesting a block or a fraud alert.
          ``(2) Model form and procedure for reporting identity 
        theft.--The Commission, in consultation with the Federal 
        banking agencies and the National Credit Union Administration, 
        shall develop a model form and model procedures to be used by 
        consumers who are victims of identity theft for contacting and 
        informing creditors and consumer reporting agencies of the 
        fraud.
          ``(3) Annual summary reports.--Each consumer reporting agency 
        described in section 603(p) shall submit an annual summary 
        report to the Commission on consumer complaints received by the 
        agency on identity theft or fraud alerts.''.

SEC. 302. NOTICE OF DISPUTE THROUGH RESELLER.

  (a) Requirement For Reinvestigation of Disputed Information Upon 
Notice From a Reseller.--Section 611(a) of the Fair Credit Reporting 
Act (15 U.S.C. 1681i(a)(1)(A)) is amended--
          (1) in subparagraph (A) of paragraph (1)--
                  (A) by striking ``If the completeness'' and inserting 
                ``Subject to subsection (e), if the completeness'';
                  (B) by inserting ``, or indirectly through a 
                reseller,'' after ``notifies the agency directly''; and
                  (C) by inserting ``or reseller'' before the period at 
                the end of such subparagraph;
          (2) in subparagraph (A) of paragraph (2)--
                  (A) by inserting ``or a reseller'' after ``dispute 
                from any consumer''; and
                  (B) by inserting ``or reseller'' before the period at 
                the end of such subparagraph; and
          (3) in subparagraph (B) of paragraph (2), by inserting ``or 
        the reseller'' after ``from the consumer''.
  (b) Reinvestigation Requirement Applicable to Resellers.--Section 611 
of the Fair Credit Reporting Act (15 U.S.C. 1681i) is amended by adding 
at the end the following new subsection:
  ``(e) Reinvestigation Requirement Applicable to Resellers.--
          ``(1) Exemption from general reinvestigation requirement.--
        Except as provided in paragraph (2), a reseller shall be exempt 
        from the requirements of this section.
          ``(2) Action required upon receiving notice of a dispute.--If 
        a reseller receives a notice from a consumer of a dispute 
        concerning the completeness or accuracy of any item of 
        information contained in a consumer report on such consumer 
        produced by the reseller, the reseller shall, within 5 business 
        days of receiving the notice and free of charge--
                  ``(A) determine whether the item of information is 
                incomplete or inaccurate as a result of an act or 
                omission of the reseller; and
                  ``(B) if--
                          ``(i) the reseller determines that the item 
                        of information is incomplete or inaccurate as a 
                        result of an act or omission of the reseller, 
                        correct the information in the consumer report 
                        or delete it; or
                          ``(ii) if the reseller determines that the 
                        item of information is not incomplete or 
                        inaccurate as a result of an act or omission of 
                        the reseller, convey the notice of the dispute, 
                        together with all relevant information provided 
                        by the consumer, to each consumer reporting 
                        agency that provided the reseller with the 
                        information that is the subject of the dispute.
          ``(3) Reseller reinvestigations.--No provision of this 
        subsection shall be construed as prohibiting a reseller from 
        conducting a reinvestigation of a consumer dispute directly.''.
  (c) Technical and Conforming Amendment.--The heading for paragraph 
(2)(B) of section 611(a) of the Fair Credit Reporting Act (15 U.S.C. 
1681i(a)(2)(B)) is amended by striking ``from consumer''.

SEC. 303. REASONABLE REINVESTIGATION REQUIRED.

  Section 611(a)(1)(A) of the Fair Credit Reporting Act (15 U.S.C. 
1681i(a)(1)(A)) is amended by striking ``shall reinvestigate free of 
charge'' and inserting ``shall, free of charge, conduct a reasonable 
reinvestigation to determine whether the disputed information is 
inaccurate''.

SEC. 304. DUTIES OF FURNISHERS OF INFORMATION.

  (a) In General.--Section 623(a) of the Fair Credit Reporting Act (15 
U.S.C. 1681s-2(a)) is amended--
          (1) in paragraph (1)(A), by striking ``knows or consciously 
        avoids knowing that the information is inaccurate'' and 
        inserting ``knows or has reasonable cause to believe that the 
        information is inaccurate'';
          (2) in paragraph (1)--
                  (A) by redesignating subparagraphs (B) and (C) as 
                subparagraphs (C) and (D), respectively;
                  (B) by inserting after subparagraph (A), the 
                following new subparagraph:
                  ``(B) Reasonable procedures to ensure accuracy.--A 
                person that regularly furnishes information relating to 
                consumers to a consumer reporting agency described in 
                section 603(p) shall maintain reasonable procedures 
                designed to ensure that the information furnished is 
                accurate.''; and
                  (C) by adding at the end the following new 
                subparagraph:
                  ``(F) Definition.--For purposes of subparagraph (A), 
                the term `reasonable cause to believe that the 
                information is inaccurate' means, based on the 
                procedures described in subparagraph (B), has 
                knowledge, other than solely allegations by the 
                consumer, that would cause a reasonable person to have 
                substantial doubts about the accuracy of the 
                information.''; and
          (3) by adding at the end the following new paragraph:
          ``(6) Ability of consumer to dispute information directly 
        with furnisher.--
                  ``(A) In general.--A consumer may dispute directly 
                with a person the accuracy of information that--
                          ``(i) is contained in a consumer report on 
                        the consumer prepared by a consumer reporting 
                        agency described in section 603(p); and
                          ``(ii) was provided by the person to that 
                        consumer reporting agency in accordance with 
                        paragraph (1)(B).
                  ``(B) Submitting a notice of dispute.--A consumer who 
                seeks to dispute the accuracy of information with a 
                person under subparagraph (A) shall provide a dispute 
                notice directly to such person at the address specified 
                by the person for such notices that--
                          ``(i) identifies the specific information 
                        that is being disputed; and
                          ``(ii) explains the basis for the dispute.
                  ``(C) Duty of person after receiving notice of 
                dispute.--After receiving a notice of dispute from a 
                consumer pursuant to subparagraph (B), the person that 
                provided the information in dispute to a consumer 
                reporting agency referred to in subparagraph (A) 
                shall--
                          ``(i) conduct an investigation with respect 
                        to the disputed information;
                          ``(ii) review all relevant information 
                        provided by the consumer with the notice;
                          ``(iii) complete such person's investigation 
                        of the dispute and report the results of the 
                        investigation 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; and
                          ``(iv) if the investigation finds that the 
                        information reported was inaccurate, promptly 
                        thereafter report correct information to each 
                        consumer reporting agency described in section 
                        603(p) to which the person furnished the 
                        inaccurate information.''.
  (b) Technical and Conforming Amendments.--
          (1) Section 621(c)(5)(A) of the Fair Credit Reporting Act (15 
        U.S.C. 1681s(c)(5)(A)) is amended by striking ``section 
        623(a)(1)'' and inserting ``paragraph (1) or (6) of section 
        623(a)''.
          (2) The heading for section 621(c)(5) of the Fair Credit 
        Reporting Act (15 U.S.C. 1681s(c)(5)) is amended by striking 
        ``violation of section 623(a)(1)'' and inserting ``certain 
        violations of section 623(a)''.

SEC. 305. PROMPT INVESTIGATION OF DISPUTED CONSUMER INFORMATION.

  (a) Study Required.--The Board of Governors of the Federal Reserve 
System and the Federal Trade Commission shall jointly study the extent 
to which, and the manner in which, consumer reporting agencies and 
furnishers of consumer information to consumer reporting agencies are 
complying with the procedures, time lines, and requirements under the 
Fair Credit Reporting Act for the prompt investigation of the disputed 
accuracy of any consumer information, the completeness of the 
information provided to consumer reporting agencies, and the prompt 
correction or deletion, in accordance with such Act, of any inaccurate 
or incomplete information or information that cannot be verified.
  (b) Report Required.--Before the end of the 6-month period beginning 
on the date of the enactment of this Act, the Board of Governors of the 
Federal Reserve System and the Federal Trade Commission shall jointly 
submit a progress report to the Congress on the results of the study 
required under subsection (a).
  (c) Recommendations.--The report under subsection (b) shall include 
such recommendations as the Board and the Commission jointly determine 
to be appropriate for legislative or administrative action to ensure 
that--
          (1) consumer disputes with consumer reporting agencies over 
        the accuracy or completeness of information in a consumer's 
        file are promptly and fully investigated and any incorrect, 
        incomplete, or unverifiable information is corrected or deleted 
        immediately thereafter;
          (2) furnishers of information to consumer reporting agencies 
        maintain full and prompt compliance with the duties and 
        responsibilities established under section 623 of the Fair 
        Credit Reporting Act; and
          (3) consumer reporting agencies establish and maintain 
        appropriate internal controls and management review procedures 
        for maintaining full and continuous compliance with the 
        procedures, time lines, and requirements under the Fair Credit 
        Reporting Act for the prompt investigation of the disputed 
        accuracy of any consumer information and the prompt correction 
        or deletion, in accordance with such Act, of any inaccurate or 
        incomplete information or information that cannot be verified.
  (d) Definitions.--For purposes of this section, the terms 
``consumer'', ``consumer report'', and ``consumer reporting agency'' 
have the same meaning as in the Fair Credit Reporting Act.

            TITLE IV--IMPROVING ACCURACY OF CONSUMER RECORDS

SEC. 401. RECONCILING ADDRESSES.

  Section 605 of the Fair Credit Reporting Act (15 U.S.C. 1681c) is 
amended by inserting after subsection (g) (as added by section 201 of 
this Act) the following new subsection.
  ``(h) Notice of Discrepancy.--
          ``(1) In general.--If a person has requested a consumer 
        report relating to a consumer from a consumer reporting agency 
        described in section 603(p), the request includes an address 
        for the consumer that substantially differs from the addresses 
        in the file of the consumer, and the agency provides a consumer 
        report in response to the request, the consumer reporting 
        agency shall notify the requester of the existence of the 
        discrepancy.
          ``(2) Regulations.--
                  ``(A) Regulations required.--The Federal banking 
                agencies and the National Credit Union Administration 
                shall jointly prescribe regulations providing guidance 
                regarding reasonable policies and procedures a user of 
                a consumer report should employ when such user has 
                received a notice of discrepancy under paragraph (1).
                  ``(B) Policies and procedures to be included.--The 
                regulations prescribed under subparagraph (A) shall 
                describe reasonable policies and procedures for use by 
                a user of a consumer report--
                          ``(i) to form a reasonable belief that the 
                        user knows the identity of the person to whom 
                        the consumer report pertains; and
                          ``(ii) if the user establishes a continuing 
                        relationship with the consumer, and the user 
                        regularly and in the ordinary course of 
                        business furnishes information to the consumer 
                        reporting agency from which the notice of 
                        discrepancy pertaining to the consumer was 
                        obtained, to reconcile the consumer's address 
                        with the consumer reporting agency by 
                        furnishing such address to such consumer 
                        reporting agency as part of information 
                        regularly furnished by the user for the period 
                        in which the relationship is established.''.

SEC. 402. PREVENTION OF REPOLLUTION OF CONSUMER REPORTS.

  Section 623(a)(1) of the Fair Credit Reporting Act (15 U.S.C. 1681s-
2(a)(1)) is amended by inserting after subparagraph (D) (as so 
redesignated by section 304(2)(A)) the following new subparagraph:
                  ``(E) Information alleged to result from identity 
                theft.--If a consumer submits a police report to a 
                person who furnishes information to a consumer 
                reporting agency that states that information 
                maintained by such person that purports to relate to 
                the consumer resulted from identity theft, the person 
                may not furnish such information that purports to 
                relate to the consumer to any consumer reporting 
                agency, unless the person subsequently knows or is 
                informed by the consumer that the information is 
                correct.''.

SEC. 403. NOTICE BY USERS WITH RESPECT TO FRAUDULENT INFORMATION.

  Section 615 of the Fair Credit Reporting Act (15 U.S.C. 1681m) is 
amended by adding at the end the following new subsection:
  ``(e) Notice of Fraudulent Information Relating to Identity Theft.--
If an agent acting as a debt collector (as defined in title VIII) of a 
person who furnishes information to any consumer reporting agency uses 
information contained in a consumer report on any consumer and learns 
that any such information so used is the result of identity theft or 
otherwise is fraudulent, the agent shall--
          ``(1) if such information--
                  ``(A) originated from the person for whom the debt 
                collector is acting as agent, notify the person of the 
                fraudulent information; or
                  ``(B) originated from a person other than the person 
                for whom the debt collector is acting as agent, notify 
                the consumer reporting agency (that provided the 
                consumer report) of the fraudulent information, either 
                directly or through the person for whom the debt 
                collector is acting as agent; and
          ``(2) upon the request of the consumer, provide the consumer 
        with all information which the consumer would be entitled to 
        receive if the information related to the consumer other than 
        by reason of identity theft.''.

SEC. 404. DISCLOSURE TO CONSUMERS OF CONTACT INFORMATION FOR USERS AND 
                    FURNISHERS OF INFORMATION IN CONSUMER REPORTS.

  Section 609(a) of the Fair Credit Reporting Act (15 U.S.C. 1681g(a)) 
is amended--
          (1) in paragraph (2), by inserting ``, including addresses of 
        the sources, and (if provided by the sources of information) 
        the telephone numbers identified for customer service for the 
        sources of information'' after ``sources of information'' the 
        1st place such term appears in such paragraph; and
          (2) in paragraph (3)(B) by striking clause (ii) and inserting 
        the following new clause:
                          ``(ii) the address and (if provided) the 
                        telephone numbers identified for customer 
                        service of the person.''.

SEC. 405. FTC STUDY OF THE ACCURACY OF CONSUMER REPORTS.

  (a) Study Required.--Until the final report is submitted under 
subsection (b)(2), the Federal Trade Commission shall conduct an 
ongoing study of the accuracy and completeness of information contained 
in consumer reports prepared or maintained by consumer reporting 
agencies and methods for improving the accuracy and completeness of 
such information.
  (b) Biennial Reports Required.--
          (1) Interim reports.--The Federal Trade Commission shall 
        submit an interim report to the Congress on the study conducted 
        under subsection (a) at the end of the 6-month period beginning 
        on the date of the enactment of this Act and biennially 
        thereafter for 8 years.
          (2) Final report.--The Federal Trade Commission shall submit 
        a final report to the Congress on the study conducted under 
        subsection (a) at the end of the 2-year period beginning on the 
        date the final interim report is submitted to the Congress 
        under paragraph (1).
          (3) Contents.--Each report submitted under this subsection 
        shall contain a detailed summary of the findings and 
        conclusions of the Commission with respect to the study 
        required under subsection (a) and such recommendations for 
        legislative and administrative action as the Commission may 
        determine to be appropriate.

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

SEC. 501. FREE REPORTS ANNUALLY.

  (a) Free Reports Annually From Nationwide Consumer Reporting 
Agencies.--Section 612 of the Fair Credit Reporting Act (15 U.S.C. 
1681j) is amended by adding at the end the following new subsection:
  ``(e) Free Annual Disclosure.--Upon the direct request of the 
consumer, a consumer reporting agency described in section 603(p) shall 
make all disclosures pursuant to section 609 once during any 12-month 
period without charge to the consumer.''.
  (b) Technical and Conforming Amendment.--Section 612(c) of the Fair 
Credit Reporting Act (15 U.S.C. 1681j(c)) is amended by inserting 
``that is not a consumer reporting agency described in section 603(p)'' 
after ``consumer reporting agency''.

SEC. 502. DISCLOSURE OF CREDIT SCORES.

  (a) Statement on Availability of Credit Scores.--Section 609(a) of 
the Fair Credit Reporting Act (15 U.S.C. 1681g(a)) is amended by adding 
at the end the following new paragraph:
          ``(6) If the consumer requests the credit file and not the 
        credit score, a statement that the consumer may request and 
        obtain a credit score.''.
  (b) Disclosure of Credit Scores.--Section 609 of the Fair Credit 
Reporting Act (15 U.S.C. 1681g) is amended by inserting after 
subsection (d) (as added by section 204 of this Act) the following new 
subsection:
  ``(e) Disclosure of Credit Scores.--
          ``(1) In general.--Upon the consumer's request for a credit 
        score, a consumer reporting agency shall supply to a consumer a 
        statement indicating that the information and credit scoring 
        model may be different than the credit score that may be used 
        by the lender, and a notice which shall include the following 
        information:
                  ``(A) The consumer's current credit score or the 
                consumer's most recent credit score that was previously 
                calculated by the credit reporting agency for a purpose 
                related to the extension of credit.
                  ``(B) The range of possible credit scores under the 
                model used.
                  ``(C) All the key factors that adversely affected the 
                consumer's credit score in the model used, the total 
                number of which shall not exceed four, subject to 
                paragraph (9).
                  ``(D) The date the credit score was created.
                  ``(E) The name of the person or entity that provided 
                the credit score or credit file upon which the credit 
                score was created.
          ``(2) Definitions.--For purposes of this section, the 
        following definitions shall apply:
                  ``(A) Credit score.--The term `credit score'--
                          ``(i) means a numerical value or a 
                        categorization derived from a statistical tool 
                        or modeling system used by a person who makes 
                        or arranges a loan to predict the likelihood of 
                        certain credit behaviors, including default 
                        (and the numerical value or the categorization 
                        derived from this analysis may also be referred 
                        to as a `risk predictor' or `risk score'); and
                          ``(ii) does not include--
                                  ``(I) any mortgage score or rating of 
                                an automated underwriting system that 
                                considers one or more factors in 
                                addition to credit information, 
                                including the loan to value ratio, the 
                                amount of down payment, or a consumer's 
                                financial assets; or
                                  ``(II) any other elements of the 
                                underwriting process or underwriting 
                                decision.
                  ``(B) Key factors.--The term `key factors' means all 
                relevant elements or reasons adversely affecting the 
                credit score for the particular individual listed in 
                the order of their importance based on their effect on 
                the credit score.
          ``(3) Timeframe and manner of disclosure.--The information 
        required by this subsection shall be provided in the same 
        timeframe and manner as the information described in subsection 
        (a).
          ``(4) Applicability to certain uses.--This subsection shall 
        not be construed so as to compel a consumer reporting agency to 
        develop or disclose a score if the agency does not--
                  ``(A) distribute scores that are used in connection 
                with residential real property loans; or
                  ``(B) develop scores that assist credit providers in 
                understanding a consumer's general credit behavior and 
                predicting the future credit behavior of the consumer.
          ``(5) Applicability to credit scores developed by another 
        person.--
                  ``(A) In general.--This subsection shall not be 
                construed to require a consumer reporting agency that 
                distributes credit scores developed by another person 
                or entity to provide a further explanation of them, or 
                to process a dispute arising pursuant to section 611, 
                except that the consumer reporting agency shall provide 
                the consumer with the name and address and website for 
                contacting the person or entity who developed the score 
                or developed the methodology of the score.
                  ``(B) Exception.--This paragraph shall not apply to a 
                consumer reporting agency that develops or modifies 
                scores that are developed by another person or entity.
          ``(6) Maintenance of credit scores not required.--This 
        subsection shall not be construed to require a consumer 
        reporting agency to maintain credit scores in its files.
          ``(7) Compliance in certain cases.--In complying with this 
        subsection, a consumer reporting agency shall--
                  ``(A) supply the consumer with a credit score that is 
                derived from a credit scoring model that is widely 
                distributed to users by that consumer reporting agency 
                in connection with residential real property loans or 
                with a credit score that assists the consumer in 
                understanding the credit scoring assessment of the 
                credit behavior of the consumer and predictions about 
                the future credit behavior of the consumer; and
                  ``(B) a statement indicating that the information and 
                credit scoring model may be different than that used by 
                the lender.
          ``(8) Reasonable fee.--A consumer reporting agency may charge 
        a reasonable fee for providing the information required under 
        this subsection.
          ``(9) Use of enquiries as a key factor.--If a key factor that 
        adversely affects a consumer's credit score consists of the 
        number of enquiries made with respect to a consumer report, 
        that factor shall be included in the disclosure pursuant to 
        paragraph (1)(C) without regard to the numerical limitation in 
        such paragraph.''.
  (c) Disclosure of Credit Scores by Certain Mortgage Lenders.--Section 
609 of the Fair Credit Reporting Act (15 U.S.C. 1681g) is amended by 
inserting after subsection (e) (as added by subsection (b) of this 
section) the following new subsection:
  ``(f) Disclosure of Credit Scores by Certain Mortgage Lenders.--
          ``(1) In general.--Any person who makes or arranges loans and 
        who uses a consumer credit score as defined in subsection (e) 
        in connection with an application initiated or sought by a 
        consumer for a closed end loan or establishment of an open end 
        loan for a consumer purpose that is secured by 1 to 4 units of 
        residential real property (hereafter in this subsection 
        referred to as the `lender') shall provide the following to the 
        consumer as soon as reasonably practicable:
                  ``(A) Information required under subsection(e).--
                          ``(i) In general.--A copy of the information 
                        identified in subsection (e) that was obtained 
                        from a consumer reporting agency or was 
                        developed and used by the user of the 
                        information.
                          ``(ii) Notice under subparagraph (D).--In 
                        addition to the information provided to it by a 
                        third party that provided the credit score or 
                        scores, a lender is only required to provide 
                        the notice contained in subparagraph (D).
                  ``(B) Disclosures in case of automated underwriting 
                system.--
                          ``(i) In general.--If a person who is subject 
                        to this section uses an automated underwriting 
                        system to underwrite a loan, that person may 
                        satisfy the obligation to provide a credit 
                        score by disclosing a credit score and 
                        associated key factors supplied by a consumer 
                        reporting agency.
                          ``(ii) Numerical credit score.--However, if a 
                        numerical credit score is generated by an 
                        automated underwriting system used by an 
                        enterprise, and that score is disclosed to the 
                        person, the score shall be disclosed to the 
                        consumer consistent with subparagraph (C).
                          ``(iii) Enterprise defined.--For purposes of 
                        this subparagraph, the term `enterprise' shall 
                        have the same meaning as in paragraph (6) of 
                        section 1303 of the Federal Housing Enterprises 
                        Financial Safety and Soundness Act of 1992.
                  ``(C) Disclosures of credit scores not obtained from 
                a consumer reporting agency.--A person subject to the 
                provisions of this subsection who uses a credit score 
                other than a credit score provided by a consumer 
                reporting agency may satisfy the obligation to provide 
                a credit score by disclosing a credit score and 
                associated key factors supplied by a consumer reporting 
                agency.
                  ``(D) Notice to home loan applicants.--A copy of the 
                following notice, which shall include the name, 
                address, and telephone number of each consumer 
                reporting agency providing a credit score that was 
                used:

                   `notice to the home loan applicant

  `In connection with your application for a home loan, the lender must 
disclose to you the score that a consumer reporting agency distributed 
to users and the lender used in connection with your home loan, and the 
key factors affecting your credit scores.
  `The credit score is a computer generated summary calculated at the 
time of the request and based on information a consumer reporting 
agency or lender has on file. The scores are based on data about your 
credit history and payment patterns. Credit scores are important 
because they are used to assist the lender in determining whether you 
will obtain a loan. They may also be used to determine what interest 
rate you may be offered on the mortgage. Credit scores can change over 
time, depending on your conduct, how your credit history and payment 
patterns change, and how credit scoring technologies change.
  `Because the score is based on information in your credit history, it 
is very important that you review the credit-related information that 
is being furnished to make sure it is accurate. Credit records may vary 
from one company to another.
  `If you have questions about your credit score or the credit 
information that is furnished to you, contact the consumer reporting 
agency at the address and telephone number provided with this notice, 
or contact the lender, if the lender developed or generated the credit 
score. The consumer reporting agency plays no part in the decision to 
take any action on the loan application and is unable to provide you 
with specific reasons for the decision on a loan application.
          `If you have questions concerning the terms of the loan, 
        contact the lender.'.
                  ``(E) Actions not required under this subsection.--
                This subsection shall not require any person to do any 
                of the following:
                          ``(i) Explain the information provided 
                        pursuant to subsection (e).
                          ``(ii) Disclose any information other than a 
                        credit score or key factor, as defined in 
                        subsection (e).
                          ``(iii) Disclose any credit score or related 
                        information obtained by the user after a loan 
                        has closed.
                          ``(iv) Provide more than 1 disclosure per 
                        loan transaction.
                          ``(v) Provide the disclosure required by this 
                        subsection when another person has made the 
                        disclosure to the consumer for that loan 
                        transaction.
                  ``(F) No obligation for content.--
                          ``(i) In general.--Any person's obligation 
                        pursuant to this subsection shall be limited 
                        solely to providing a copy of the information 
                        that was received from the consumer reporting 
                        agency.
                          ``(ii) Limit on liability.--No person has 
                        liability under this subsection for the content 
                        of that information or for the omission of any 
                        information within the report provided by the 
                        consumer reporting agency.
                  ``(G) Person defined as excluding enterprise.--As 
                used in this subsection, the term `person' does not 
                include an enterprise (as defined in paragraph (6) of 
                section 1303 of the Federal Housing Enterprises 
                Financial Safety and Soundness Act of 1992).
          ``(2) Prohibition on disclosure clauses null and void.--
                  ``(A) In general.--Any provision in a contract that 
                prohibits the disclosure of a credit score by a person 
                who makes or arranges loans or a consumer reporting 
                agency is void.
                  ``(B) No liability for disclosure under this 
                subsection.--A lender shall not have liability under 
                any contractual provision for disclosure of a credit 
                score pursuant to this subsection.''.
  (d) Inclusion of Key Factor in Credit Score Information in Consumer 
Report.--Section 605(d) of the Fair Credit Reporting Act (15 U.S.C. 
1681c(d)) is amended--
          (1) by striking ``Disclosed.--Any consumer reporting agency'' 
        and inserting ``Disclosed.--
          ``(1) Title 11 information.--Any consumer reporting agency''; 
        and
          (2) by adding at the end the following new paragraph:
          ``(2) Key factor in credit score information.--Any consumer 
        reporting agency that furnishes a consumer report that contains 
        any credit score or any other risk score or predictor on any 
        consumer shall include in the report a clear and conspicuous 
        statement that a key factor (as defined in section 
        609(e)(2)(B)) that adversely affected such score or predictor 
        was the number of enquiries, if such a predictor was in fact a 
        key factor that adversely affected such score.''.

SEC. 503. SIMPLER AND EASIER METHOD FOR CONSUMERS TO USE NOTIFICATION 
                    SYSTEM.

  (a) In General.--Section 604(e)(5)(A)(i) of the Fair Credit Reporting 
Act (15 U.S.C. 1681b(e)(5)(A)(i)) is amended by inserting ``in a simple 
and easy manner and'' after ``notify the agency,''.
  (b) Simplified Notice and Response Format For Users.--Section 615(d) 
of the Fair Credit Reporting Act (15 U.S.C. 1681m(d)) is amended--
          (1) by redesignating paragraphs (2), (3), and (4), as 
        paragraphs (3), (4) and (5); and
          (2) by inserting after paragraph (1) the following new 
        paragraph:
          ``(2) Simple and easy notification.--Any statement given the 
        consumer under paragraph (1)(E) shall be in a simple and easy 
        to understand format and shall describe the simple and easy 
        method established under section 604(e)(5)(A)(i) for the 
        consumer to respond.''.

SEC. 504. REQUIREMENT TO DISCLOSE COMMUNICATIONS TO A CONSUMER 
                    REPORTING AGENCY.

  (a) In General.--Section 623(a) of the Fair Credit Reporting Act (15 
U.S.C. 1681s-2(a)) is amended by inserting after paragraph (6) (as 
added by section 304(3)) the following new paragraph:
          ``(7) Negative Information.--
                  ``(A) Notice to consumer required.--
                          ``(i) In general.--If any financial 
                        institution that extends credit and regularly 
                        and in the ordinary course of business 
                        furnishes information to a consumer reporting 
                        agency described in section 603(p) furnishes 
                        negative information to such an agency 
                        regarding credit extended to a customer, the 
                        financial institution shall provide a notice of 
                        such furnishing of negative information, in 
                        writing, to the customer.
                          ``(ii) Notice effective for subsequent 
                        submissions.--After providing such notice, the 
                        financial institution may submit additional 
                        negative information to a consumer reporting 
                        agency described in section 603(p) with respect 
                        to the same transaction, extension of credit, 
                        account, or customer without providing 
                        additional notice to the customer.
                  ``(B) Time of notice.--
                          ``(i) In general.--The notice required under 
                        subparagraph (A) shall be provided to the 
                        customer prior to, or no later than 30 days 
                        after, furnishing the negative information to a 
                        consumer reporting agency described in section 
                        603(p).
                          ``(ii) Coordination with new account 
                        disclosures.--If the notice is provided to the 
                        customer prior to furnishing the negative 
                        information to a consumer reporting agency, the 
                        notice may not be included in the initial 
                        disclosures provided under section 127(a) of 
                        the Truth in Lending Act.
                  ``(C) Coordination with other disclosures.--The 
                notice required under subparagraph (A)--
                          ``(i) may be included on or with any notice 
                        of default, any billing statement, or any other 
                        materials provided to the customer; and
                          ``(ii) must be clear and conspicuous.
                  ``(D) Model disclosure.--
                          ``(i) Duty of board to prepare.--The Board 
                        shall prescribe a brief model disclosure a 
                        financial institution may use to comply with 
                        subparagraph (A), which shall not exceed 30 
                        words.
                          ``(ii) Use of model not required.--No 
                        provision of this paragraph shall be construed 
                        as requiring a financial institution to use any 
                        such model form prescribed by the Board.
                          ``(iii) Compliance using model.--A financial 
                        institution shall be deemed to be in compliance 
                        with subparagraph (A) if the financial 
                        institution uses any such model form prescribed 
                        by the Board, or the financial institution uses 
                        any such model form and rearranges its format.
                  ``(E) Use of notice without submitting negative 
                information.--No provision of this paragraph shall be 
                construed as requiring a financial institution that has 
                provided a customer with a notice described in 
                subparagraph (A) to furnish negative information about 
                the customer to a consumer reporting agency.
                  ``(F) Safe harbor.--A financial institution shall not 
                be liable for failure to perform the duties required by 
                this paragraph if, at the time of the failure, the 
                financial institution maintained reasonable policies 
                and procedures to comply with this paragraph.
                  ``(G) Definitions.--For purposes of this paragraph, 
                the following definitions shall apply:
                          ``(i) Negative information.--The term 
                        `negative information' means information 
                        concerning a customer's delinquencies, late 
                        payments, insolvency, or any form of default.
                          ``(ii) Customer; financial institution.--The 
                        terms `customer' and `financial institution' 
                        have the same meaning as in section 509 of the 
                        Gramm-Leach-Bliley Act.''.
  (b) Model Disclosure Form.--Before the end of the 6-month period 
beginning on the date of the enactment of this Act, the Board of 
Governors of the Federal Reserve System shall adopt the model 
disclosure required under the amendment made by subsection (a) after 
notice duly given in the Federal Register and an opportunity for public 
comment in accordance with section 553 of title 5, United States Code.

SEC. 505. STUDY OF EFFECTS OF CREDIT SCORES AND CREDIT-BASED INSURANCE 
                    SCORES ON AVAILABILITY AND AFFORDABILITY OF 
                    FINANCIAL PRODUCTS.

  (a) Study Required.--The Federal Trade Commission, in consultation 
with the Office of Fair Housing and Equal Opportunity of the Department 
of Housing and Urban Development, shall conduct a study of--
          (1) the effects of the use of credit scores and credit-based 
        insurance scores on the availability and affordability of 
        financial products and services, including credit cards, 
        mortgages, auto loans, and property and casualty insurance;
          (2) the degree of causality between the factors considered by 
        credit score systems and the quantifiable risks and actual 
        losses experienced by businesses, including the extent to 
        which, if any, each of the factors considered or otherwise 
        taken into account by such systems are accurate predictors of 
        risk or loss, and where the means square error of a scoring 
        model's predictions are considered in the evaluation of 
        accuracy;
          (3) the extent to which, if any, the use of credit scoring 
        models, credit scores and credit-based insurance scores result 
        in disparate impact by geography, income, ethnicity, race, 
        color, religion, national origin, age, sex or marital status, 
        and creed, including the extent to which the consideration or 
        lack of consideration of certain factors by credit scoring 
        systems could result in disparate effects and the extent to 
        which, if any, the use of underwriting systems relying on these 
        models could achieve comparable results through the use of 
        factors with less disparate impact; and
          (4) the extent to which credit scoring systems are used by 
        businesses, the factors considered by such systems, and the 
        effects of variables which are not considered by such systems.
  (b) Public Participation.--The Commission shall seek public input 
about the prescribed methodology and research design of the study 
required in subsection (a).
  (c) Report Required.--
          (1) In general.--Before the end of the 18-month period 
        beginning on the date of the enactment of this Act, the Federal 
        Trade Commission shall submit a detailed report on the study 
        conducted pursuant to subsection (a) to the Committee on 
        Financial Services of the House of Representatives and the 
        Committee on Banking, Housing, and Urban Affairs of the Senate.
          (2) Contents of report.--The report submitted under paragraph 
        (1) shall include the findings and conclusions of the 
        Commission, together with such recommendations for legislative 
        or administrative action as the Commission may determine to be 
        necessary to ensure that credit and credit-based insurances 
        score are used appropriately and fairly to avoid disparate 
        effects.
  (d) Credit score defined.--For purposes of this section, the term 
``credit score'' means a numerical value or a categorization derived 
from a statistical tool or modeling system used to predict the 
likelihood of certain credit or insurance behaviors, including default.

SEC. 506. GAO STUDY ON DISPARATE IMPACT OF CREDIT SYSTEM.

  (a) Study Required.--The Comptroller General shall conduct a study of 
the credit system to determine the extent to which, if any, 
discrimination exists with regard to the availability and the terms of 
credit which has a disparate impact on the basis of race, color, income 
and education level, geographic location, age, sex, sexual orientation, 
national origin, or marital status and the nature of any such 
discriminatory effect.
  (b) Report Required.--Before the end of the 2-year period beginning 
on the date of the enactment of this Act, the Comptroller General shall 
submit a report to the Congress on the findings and conclusions of the 
Comptroller General pursuant to the study conducted under subsection 
(a), together with such recommendations for legislative or 
administrative action as the Comptroller General may determine to be 
appropriate.

SEC. 507. ANALYSIS OF FURTHER RESTRICTIONS ON OFFERS OF CREDIT OR 
                    INSURANCE.

  (a) In General.--The Board of Governors of the Federal Reserve System 
shall conduct a study of--
          (1) the ability of consumers to avoid receiving written 
        offers of credit or insurance in connection with transactions 
        not initiated by the consumer; and
          (2) the potential impact any further restrictions on 
        providing consumers with such written offers of credit or 
        insurance would have on consumers.
  (b) Report.--The Board of Governors of the Federal Reserve System 
shall submit a report summarizing the results of the study required 
under subsection (a) to the Congress no later than 12 months after the 
date of the enactment of this Act, together with such recommendatioons 
for legislative or administrative action as the Board may determine to 
be appropriate.
  (c) Content of Report.--The report described in subsection (b) shall 
address the following issues:
          (1) The current statutory or voluntary mechanisms that are 
        available to a consumer to notify lenders and insurance 
        providers that the consumer does not wish to receive written 
        offers of credit or insurance.
          (2) The extent to which consumers are currently utilizing 
        existing statutory and voluntary mechanisms to avoid receiving 
        offers of credit or insurance.
          (3) The benefits provided to consumers as a result of 
        receiving written offers of credit or insurance.
          (4) Whether consumers incur significant costs or are 
        otherwise adversely affected by the receipt of written offers 
        of credit or insurance.
          (5) Whether further restricting the ability of lenders and 
        insurers to provide written offers of credit or insurance to 
        consumers would affect--
                  (A) the cost consumers pay to obtain credit or 
                insurance;
                  (B) the availability of credit or insurance;
                  (C) consumers' knowledge about new or alternative 
                products and services;
                  (D) the ability of lenders or insurers to compete 
                with one another; and
                  (E) the ability to offer credit or insurance products 
                to consumers who have been traditionally underserved.

SEC. 508. STUDY ON THE NEED AND THE MEANS FOR IMPROVING FINANCIAL 
                    LITERACY AMONG CONSUMERS.

  (a) Study Required.--The Comptroller General shall conduct a 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 among consumers.
  (b) Factors to Be Included.--The study required under subsection (a) 
shall include the following issues:
          (1) The number of consumers who view their credit reports.
          (2) Under what conditions and for what purposes do consumers 
        primarily obtain a copy of their consumer report (such as for 
        the purpose of ensuring the completeness and accuracy of the 
        contents, to protect against fraud, in response to an adverse 
        action based on the report, or in response to suspected 
        identity theft) and approximately what percentage of the total 
        number of consumers who obtain a copy of their consumer report 
        do so for each such primary purpose.
          (3) The extent of consumers' knowledge of the data collection 
        process.
          (4) The extent to which consumers know how to get a copy of a 
        consumer report.
          (5) The extent to which consumers know and understand the 
        factors that positively or negatively impact credit scores.
  (c) Report Required.--Before the end of the 9-month period beginning 
on the date of the enactment of this Act, the Comptroller General shall 
submit a report to the Congress on the findings and conclusions of the 
Comptroller General pursuant to the study conducted under subsection 
(a), together with such recommendations for legislative or 
administrative action as the Comptroller General may determine to be 
appropriate, including recommendations on methods for improving 
financial literacy among consumers.

SEC. 509. DISCLOSURE OF INCREASE IN APR UNDER CERTAIN CIRCUMSTANCES.

  Section 609 of the Fair Credit Reporting Act (15 U.S.C. 1681m) is 
amended by inserting after subsection (f) (as added by section 502(c) 
of this title) the following new subsection:
  ``(g) Disclosure to Consumer.--
          ``(1) In general.--The ability of a credit card issuer to 
        increase any annual percentage rate applicable to a credit card 
        account, or to remove or increase any introductory annual 
        percentage rate of interest applicable to such account, for 
        reasons other than actions or omissions of the card holder that 
        are directly related to such account shall be clearly and 
        conspicuously disclosed to the consumer by the credit card 
        issuer in any disclosure or statement required to be made to 
        the consumer under this title in connection with a credit card 
        solicitation that is not initiated by the consumer.
          ``(2) Regulations and model statements.--The Board, in 
        consultation with the Federal banking agencies and the National 
        Credit Union Administration, shall develop such guidelines in 
        regulations as necessary to assure that the information to be 
        disclosed to consumers pursuant to paragraph (1) is clearly and 
        conspicuously provided in a prominent location in any credit 
        card solicitation that is not initiated by the consumer, and 
        shall include model disclosure statements to be used by credit 
        card issuers in making the disclosures required to be provided 
        to the consumer by paragraph (1).''.

        TITLE VI--PROTECTING EMPLOYEE MISCONDUCT INVESTIGATIONS

SEC. 601. CERTAIN EMPLOYEE INVESTIGATION COMMUNICATIONS EXCLUDED FROM 
                    DEFINITION OF CONSUMER REPORT.

  (a) In General.--Section 603 of the Fair Credit Reporting Act (15 
U.S.C. 1681a) is amended by inserting after subsection (p) the 
following new subsection:
  ``(q) Exclusion of Certain Communications for Employee 
Investigations.--
          ``(1) Communications described in this subsection.--A 
        communication is described in this subsection if--
                  ``(A) but for subsection (d)(2)(D), the communication 
                would be a consumer report;
                  ``(B) the communication is made to an employer in 
                connection with an investigation of--
                          ``(i) suspected misconduct relating to 
                        employment; or
                          ``(ii) compliance with Federal, State, or 
                        local laws and regulations, the rules of a 
                        self-regulatory organization, or any 
                        preexisting written policies of the employer;
                  ``(C) the communication is not made for the purpose 
                of investigating a consumer's credit worthiness, credit 
                standing, or credit capacity; and
                  ``(D) the communication is not provided to any person 
                except--
                          ``(i) to the employer or an agent of the 
                        employer;
                          ``(ii) to any Federal or State officer, 
                        agency, or department, or any officer, agency, 
                        or department of a unit of general local 
                        government;
                          ``(iii) to any self-regulatory organization 
                        with regulatory authority over the activities 
                        of the employer or employee;
                          ``(iv) as otherwise required by law; or
                          ``(v) pursuant to section 608.
          ``(2) Subsequent disclosure.--After taking any adverse action 
        based in whole or in part on a communication described in 
        paragraph (1), the employer shall disclose to the consumer a 
        summary containing the nature and substance of the 
        communication upon which the adverse action is based, except 
        that the sources of information acquired solely for use in 
        preparing what would be but for subsection (d)(2)(D) an 
        investigative consumer report need not be disclosed.
          ``(3) Self-regulatory organization defined.--For purposes of 
        this subsection, the term `self-regulatory organization' 
        includes any self-regulatory organization (as defined in 
        section 3(a)(26) of the Securities Exchange Act of 1934), any 
        entity established under Title I of the Sarbanes-Oxley Act of 
        2002, any board of trade designated by the Commodity Futures 
        Trading Commission, and any futures association registered with 
        such Commission.''.
  (b) Technical and Conforming Amendment.--Section 603(d)(2)(D) of the 
Fair Credit Reporting Act (15 U.S.C. 1681a(d)(2)(D)) is amended by 
inserting ``or (q)'' after ``subsection (o)''.

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

SEC. 701. PROTECTION OF MEDICAL INFORMATION IN THE FINANCIAL SYSTEM

  (a) In General.--Section 604(g) of the Fair Credit Reporting Act (15 
U.S.C. 1681b(g)) is amended to read as follows:
  ``(g) Protection of Medical Information.--
          ``(1) Limitation on consumer reporting agencies.--A consumer 
        reporting agency shall not furnish for employment purposes, or 
        in connection with a credit or insurance transaction, a 
        consumer report that contains medical information about a 
        consumer, unless--
                  ``(A) if furnished in connection with an insurance 
                transaction, the consumer affirmatively consents to the 
                furnishing of the report;
                  ``(B) if furnished for employment purposes or in 
                connection with a credit transaction--
                          ``(i) the information to be furnished is 
                        relevant to process or effect the employment or 
                        credit transaction; and
                          ``(ii) the consumer provides specific written 
                        consent for the furnishing of the report that 
                        describes in clear and conspicuous language the 
                        use for which the information will be 
                        furnished; or
                  ``(C) such information is restricted or reported 
                using codes that do not identify, or provide 
                information sufficient to infer, the specific provider 
                or the nature of such services, products, or devices to 
                a person other than the consumer, unless the report is 
                being provided to an insurance company for a purpose 
                relating to engaging in the business of insurance other 
                than property and casualty insurance.
          ``(2) Limitation on creditors.--Except as permitted pursuant 
        to paragraph (3)(C) or regulations prescribed under paragraph 
        (5)(A), a creditor shall not obtain or use medical information 
        pertaining to a consumer in connection with any determination 
        of the consumer's eligibility, or continued eligibility, for 
        credit.
          ``(3) Actions authorized by federal law, insurance activities 
        and regulatory determinations.--Section 603(d)(3) shall not be 
        construed so as to treat information or any communication of 
        information as a consumer report if the information or 
        communication is disclosed--
                  ``(A) in connection with the business of insurance or 
                annuities, including the activities described in 
                section 18B of the model Privacy of Consumer Financial 
                and Health Information Regulation issued by the 
                National Association of Insurance Commissioners (as in 
                effect on January 1, 2003);
                  ``(B) for any purpose permitted without authorization 
                under the Standards for Individually Identifiable 
                Health Information promulgated by the Department of 
                Health and Human Services pursuant to the Health 
                Insurance Portability and Accountability Act of 1996, 
                or referred to under section 1179 of such Act, or 
                described in section 502(e) of Public Law 106-102; or
                  ``(C) as otherwise determined to be necessary and 
                appropriate, by regulation or order and subject to 
                paragraph (6), by the Commission, any Federal banking 
                agency or the National Credit Union Administration 
                (with respect to any financial institution subject to 
                the jurisdiction of such agency or Administration under 
                paragraph (1), (2), or (3) of section 621(b), or the 
                applicable State insurance authority (with respect to 
                any person engaged in providing insurance or 
                annuities).
          ``(4) Limitation on redisclosure of medical information.--Any 
        person that receives medical information pursuant to paragraphs 
        (1) or (3) shall not disclose such information to any other 
        person except as necessary to carry out the purpose for which 
        the information was initially disclosed, or as otherwise 
        permitted by statute, regulation, or order.
          ``(5) Regulations and effective date for paragraph (2).--
                  ``(A) Regulations required.--Each Federal banking 
                agency and the National Credit Union Administration 
                shall, subject to paragraph (6) and after notice and 
                opportunity for comment, prescribe regulations that 
                permit transactions under paragraph (2) that are 
                determined to be necessary and appropriate to protect 
                legitimate operational, transactional, risk, consumer, 
                and other needs, consistent with the intent of 
                paragraph (2) to restrict the use of medical 
                information for inappropriate purposes.
                  ``(B) Final regulations required.--The Federal 
                banking agencies and the National Credit Union 
                Administration shall prescribe the regulations required 
                under subparagraph (A) in final form before the end of 
                the 6-month period beginning on the date of the 
                enactment of the Fair and Accurate Credit Transactions 
                Act of 2003.
          ``(6) Coordination with other laws.--No provision of this 
        subsection shall be construed as altering, affecting, or 
        superseding the applicability of any other provision of Federal 
        law relating to medical confidentiality.''.
  (b) Restriction on Sharing of Medical Information.--Section 603(d) of 
the Fair Credit Reporting Act (15 U.S.C. 1681a(d)) is amended--
          (1) in paragraph (2), by striking ``The term'' and inserting 
        ``Except as provided in paragraph (3), the term''; and
          (2) by adding at the end the following new paragraph:
          ``(3) Restriction on sharing of medical information.--Except 
        for information or any communication of information disclosed 
        as provided in section 604(g)(3), the exclusions in paragraph 
        (2) shall not apply with respect to information disclosed to 
        any person related by common ownership or affiliated by 
        corporate control if--
                  ``(A) the information is medical information; or
                  ``(B) the information is an individualized list or 
                description based on a consumer's payment transactions 
                for medical products or services, or an aggregate list 
                of identified consumers based on payment transactions 
                for medical products or services.''.

SEC. 702. CONFIDENTIALITY OF MEDICAL CONTACT INFORMATION IN CREDIT 
                    REPORTS.

  (a) Duties of Medical Information Furnishers.--Section 623(a) of the 
Fair Credit Reporting Act (15 U.S.C. 1681s-2(a)) is amended by 
inserting after paragraph (7) (as added by section 504(a)) the 
following new paragraph:
          ``(8) Duty to provide notice of status as medical information 
        furnisher.--A person whose primary business is providing 
        medical services, products, or devices, or the person's agent 
        or assignee, who furnishes information to a consumer reporting 
        agency on a consumer shall be considered a medical information 
        furnisher for the purposes of this title and shall notify the 
        agency of such status.''.
  (b) Restriction of Dissemination of Medical Contact Information.--
Section 605(a) of the Fair Credit Reporting Act (15 U.S.C. 1681c(a)) is 
amended by adding the following new paragraph:
          ``(6) The name, address, and telephone number of any medical 
        information furnisher that has notified the agency of its 
        status, unless--
                  ``(A) such name, address, and telephone number are 
                restricted or reported using codes that do not 
                identify, or provide information sufficient to infer, 
                the specific provider or the nature of such services, 
                products, or devices to a person other than the 
                consumer; or
                  ``(B) the report is being provided to an insurance 
                company for a purpose relating to engaging in the 
                business of insurance other than property and casualty 
                insurance.''.
  (c) No Exceptions Allowed For Dollar Amounts.--Section 605(b) of the 
Fair Credit Reporting Act (15 U.S.C. 1681c(b)) is amended by striking 
``The provisions of subsection (a)'' and inserting ``The provisions of 
paragraphs (1) through (5) of subsection (a)''.
  (d) Coordination With Other Laws.--No provision of any amendment made 
by this section shall be construed as altering, affecting, or 
superseding the applicability of any other provision of Federal law 
relating to medical confidentiality.
  (e) FTC Regulation of Coding of Trade Names.--Section 621 of the Fair 
Credit Reporting Act (15 U.S.C. 1681s) is amended by inserting after 
subsection (f) (as added by section 301 of this Act) the following new 
subsection:
  ``(g) FTC Regulation of Coding of Trade Names.--If the Commission 
determines that a person described in paragraph (8) of section 623(a) 
has not met the requirements of such paragraph, the Commission shall 
take action to ensure the person's compliance with such paragraph, 
which may include issuing model guidance or prescribing reasonable 
policies and procedures as necessary to ensure that such person 
complies with such paragraph.''.
  (f) Technical and Conforming Amendments.--Section 604(g) of the Fair 
Credit Reporting Act (15 U.S.C. 1681b(g)) (as amended by section 701) 
is amended--
          (1) in paragraph (1) by inserting ``(other than medical 
        contact information treated in the manner required under 
        section 605(a)(6))'' after ``a consumer report that contains 
        medical information''; and
          (2) in paragraph (2) by inserting ``(other than medical 
        information treated in the manner required under section 
        605(a)(6))'' after ``a creditor shall not obtain or use medical 
        information''.
  (g) Effective Date.--The amendments made by this section shall take 
effect at the end of the 15-month period beginning on the date of the 
enactment of this Act.

                          Purpose and Summary

    H.R. 2622, the ``Fair and Accurate Credit Transactions Act 
of 2003,'' provides consumers with the tools they need to fight 
identity theft and to ensure the accuracy of their credit 
reports while establishing permanent national credit reporting 
standards by removing the sunset from the expiring national 
consumer protection standards. H.R. 2622 empowers consumers to 
guard against identity theft by increasing the effectiveness of 
consumer initiated fraud alerts and enabling consumers to block 
fraudulent information in their personal credit records after 
filing a police report. The legislation increases consumer 
awareness of their rights if they believe they may be victims 
of fraud or identity theft by directing the Federal Trade 
Commission (FTC or Commission) to prepare, and consumer 
reporting agencies to disseminate, a summary of rights of 
identity theft victims. The legislation enlists financial 
institutions' support in fighting identity theft by requiring 
them to develop procedures to ``red flag'' identity theft, and 
to investigate certain changes in customer addresses. In 
addition, merchants will be required to truncate credit and 
debit card information.
    H.R. 2622 also improves the accuracy of consumer records 
and the resolution of consumer disputes. The legislation 
expands consumer access to credit information to ensure 
accuracy by giving consumers the right to review their credit 
scores and request a free credit report annually. H.R. 2622 
provides consumers with important new rights for correcting 
inaccurate information on their credit reports and discourages 
the reintroduction of fraudulent information into the credit 
reporting system. The legislation prohibits furnishers of 
information from forwarding information on a consumer to credit 
reporting agencies if the furnisher has reasonable cause to 
believe the information is inaccurate. In addition, the bill 
directs regulators to determine how best to ensure the prompt 
investigation and correction of disputed information in a 
consumer's credit file.
    H.R. 2622 also provides significant new protections of 
consumers' medical information by limiting the disclosure of 
certain medical information in the preparation and 
dissemination of credit reports, prohibiting the use of medical 
information in connection with any determination of consumers' 
eligibility for credit, and requiring credit reporting agencies 
to code certain sensitive medical information to avoid unwanted 
disclosure. Other provisions of the bill simplify consumers' 
ability to limit unsolicited offers of credit, require credit 
card issuers to disclose risk based pricing practices when 
making unsolicited offers of credit to consumers, and require 
various studies to ensure the fairness of the credit granting 
process.

                  Background and Need for Legislation

    One of the hallmarks of the modern U.S. economy is quick 
and convenient access to consumer credit. Although it would 
have seemed unimaginable a generation ago, consumers can now 
qualify for a mortgage over the telephone, walk into a showroom 
and finance the purchase of a car in less than an hour, and get 
department store credit within minutes. Over the last 30 years, 
the availability of non-mortgage credit to households in the 
lowest quintile of income has increased by nearly 70 percent--
including a nearly three-fold increase in the number of low-
income households owning credit cards just in the last decade. 
American families' ability to buy a home has also increased, 
with homeownership levels now approaching 70 percent, again 
with the largest gains achieved by lower income and minority 
groups. These improvements in the credit and mortgage systems 
have saved consumers nearly $100 billion annually, according to 
some estimates.
    This unprecedented ``democratization'' in the availability 
of credit to low- and moderate-income consumers has been made 
possible in significant measure by the emergence of a national 
credit reporting system. The Federal statute governing the 
operation of the national credit reporting system is the Fair 
Credit Reporting Act (FCRA), landmark consumer protection 
legislation enacted in 1970 to bring the consumer credit 
reporting industry under Federal regulation for the first time. 
In establishing this statutory framework, Congress recognized 
that ``an elaborate mechanism [had] been developed for 
investigating and evaluating the credit worthiness, credit 
standing, credit capacity, character, and general reputation of 
consumers,'' and that ``consumer reporting agencies [had] 
assumed a vital role in assembling and evaluating consumer 
credit and other information on consumers.'' (15 U.S.C. Sec.  
1681.) The stated congressional purpose for the FCRA was ``to 
require that consumer reporting agencies adopt reasonable 
procedures for meeting the needs of commerce for consumer 
credit, personnel, insurance, and other information in a manner 
which is fair and equitable to the consumer, with regard to the 
confidentiality, accuracy, relevancy, and proper utilization of 
such information.'' (Id.)
    The FCRA applies to files maintained by consumer reporting 
agencies, also commonly referred to as credit bureaus, which 
are broadly defined to include anyone in the business of 
furnishing reports on the creditworthiness of consumers to 
third parties. Credit bureaus collect information voluntarily 
supplied by credit grantors, collection agencies, and other 
``furnishers,'' as well as information from public records. The 
information included in a consumer credit report typically 
consists of a consumer's name, Social Security number, address, 
telephone number, employment information, credit and payment 
history (including credit previously obtained, available, or 
outstanding), and other pertinent information (such as arrests, 
bankruptcies, and legal judgments).
    The FCRA outlines certain ``permissible purposes'' for 
which a consumer credit report may be supplied to a requester. 
A consumer reporting agency may furnish a copy of a consumer's 
report to a person the agency has reason to believe intends to 
use the information for the purpose of extending credit or 
offering insurance to a consumer who has initiated the 
transaction, or for review or collection of the customer's 
account. Reports may also be provided in connection with 
unsolicited (or ``prescreened'') offers of credit or insurance, 
if the consumer has not requested otherwise and certain other 
notice and disclosure requirements are met; for determining 
eligibility for a government license or benefit; or for 
employment purposes (with the consumer's consent).
    Any person with information related to consumers' financial 
activities or other relevant information may furnish data to a 
consumer reporting agency. Reporting is voluntary, but those 
who do furnish information have a duty to ensure its accuracy 
and to investigate disputes. The most common users and 
furnishers of information are credit card issuers, auto 
dealers, department and grocery stores, lenders, utilities, 
insurers, collection agencies, and government agencies.
    In 1996, Congress amended the FCRA to impose new legal 
duties on credit bureaus, as well as on furnishers and users of 
credit reporting data, and to create a uniform national 
standard for consumer protections governing credit 
transactions. According to the Congressional Research Service, 
the legislative history of the 1996 amendments indicates a 
congressional intent to ``establish a national standard for the 
consumer credit industry,'' and to create ``operational 
efficiency for industry * * * and competitive prices for 
consumers in the credit reporting and credit granting 
[industries that are] in many aspects, national in scope.'' The 
1996 amendments allowed for the continued evolution of a 
national credit system by establishing uniform national 
standards in a number of key areas, including the form of the 
notice that consumers are entitled to receive when adverse 
action (such as a denial of credit) is taken against them based 
upon credit reporting information; the procedures for consumers 
to dispute the accuracy of information on their credit reports 
and remove or correct any inaccurate or unverified information; 
the obsolescence periods for reporting of negative information, 
such as delinquencies and bankruptcies; and the
circumstance under which credit-related information may be 
shared among affiliated entities.
    Absent congressional action, the uniform national standards 
established by the 1996 amendments to the FCRA will sunset on 
January 1, 2004, permitting States that are so inclined to 
enact differing additional requirements. Numerous witnesses at 
hearings on the FCRA held by the Subcommittee on Financial 
Institutions and Consumer Credit testified in favor of 
extending the statute's uniform national standards. On June 4, 
2003, Ms. Dolores Smith, Director of the Federal Reserve 
Board's Division of Consumer and Community Affairs, outlined 
the benefits of the credit reporting system to lenders and 
their customers as follows:

        The ready availability of accurate, up-to-date credit 
        information from consumer reporting agencies benefits 
        both creditors and consumers. Information from consumer 
        credit reports gives creditors the ability to make 
        credit decisions quickly and in a fair, safe and sound, 
        and cost-effective manner. Consumers benefit from the 
        access to credit from different sources, vigorous 
        competition among creditors, quick decisions on credit 
        applications, and reasonable costs for credit.

    In testimony before the full Committee on July 9, 2003, 
Treasury Secretary John Snow strongly endorsed making the 
FCRA's uniform national standards permanent, characterizing 
them as ``essential to the way [that] credit gets made 
available in this country,'' and going on to explain: ``[W]e 
have the best credit markets and the most available credit and 
the lowest cost credit in the world, and that is, in large 
part, due to these [national] standards.'' Testifying on April 
30, 2003, Federal Reserve Board Chairman Alan Greenspan 
stressed the importance of preserving the FCRA's uniform 
treatment of key aspects of the credit reporting system:

        There is just no question that unless we have some 
        major sophisticated system of credit evaluation 
        continuously updated, we will have great difficulty in 
        maintaining the level of consumer credit currently 
        available, because clearly without the information that 
        comes from credit bureaus and other sources, lenders 
        would have to impose an additional risk premium.

    While American consumers have realized undeniable benefits 
from the free flow of credit reporting information to lenders 
and other financial services providers, they have also become 
increasingly concerned about the risk of their personal 
financial information falling into the wrong hands. The crime 
of identity theft--in which a perpetrator assumes the identity 
of a victim in order to obtain financial products and services 
or other benefits in the victim's name--has reached almost 
epidemic proportions in recent years. A hotline established by 
the Federal Trade Commission to field consumer complaints and 
questions about identity theft logged over 160,000 calls in 
2002 alone.
    Although it is the financial institution, and not the 
individual victim, that generally absorbs the financial losses 
from an identity theft, victims may have to expend considerable 
time and energy clearing up their credit histories and other 
financial records. Indeed, the Committee heard compelling 
testimony from victims of identity theft that they felt, in 
some sense, twice victimized--once by the criminal who 
fraudulently assumed their identity, and again by a system that 
conspired against prompt redress and repair of their damaged 
credit history.
    The FCRA contains provisions intended to facilitate the 
prompt correction of inaccurate or fraudulent information on a 
consumer's credit report. For example, any individual who 
believes that he or she has been victimized by identity theft 
is entitled to obtain a free report from each credit bureau 
that maintains a file on the individual. When an individual 
discovers that he or she has been victimized and an account 
created by an identity thief is being included in the victim's 
credit history, the FCRA enables the victim to demand 
correction. Once the victim disputes the information with the 
credit bureau, the credit bureau must, within 5 business days, 
contact the entity that furnished the account information to 
the bureau. The entity then must investigate the matter and 
report back to the bureau with its findings within 30 days 
after the victim's initial complaint. If the entity responds 
with a correction, the bureau must promptly delete the 
information from the victim's credit history. The information 
may not be reinserted in the victim's file unless the entity 
furnishing the information certifies that it is correct and the 
victim is notified of the reinsertion.

Committee Oversight of the FCRA

    The Committee's review of the FCRA's expiring uniform 
national standards included extensive consideration of 
proposals for assisting consumers in preventing identity theft 
and for mitigating its consequences once the crime has 
occurred. The starting point for the Committee's analysis was 
bipartisan legislation co-authored by Members of the Committee. 
H.R. 2035, the ``Identity Theft and Financial Privacy 
Protection Act of 2003,'' included provisions imposing new 
requirements on credit card issuers and credit bureaus to 
identify potential identity theft; codifying the use of ``fraud 
alerts'' in credit reports; requiring the truncation of account 
numbers and expiration dates on credit and debit card receipts; 
and providing consumers with the right to obtain a free credit 
report annually from each consumer reporting agency.
    The Committee began its series of hearings reviewing the 
FCRA and identity theft with a joint hearing of the 
Subcommittee on Oversight and Investigations and the 
Subcommittee on Financial Institutions and Consumer Credit 
entitled ``Fighting Fraud: Improving Information Security''. On 
April 3, 2003, the subcommittees heard testimony from witnesses 
on three specific case studies to review how credit issuers, 
third-party vendors that process transactions, credit bureaus, 
and law enforcement coordinate efforts to limit harm to 
consumers when data security is breached.
    On May 8, 2003, the Subcommittee on Financial Institutions 
and Consumer Credit held a hearing on the importance of the 
national credit reporting system to consumers and the U.S. 
economy. The hearing focused on how a national uniform credit 
system in the United States benefits consumers. The 
Subcommittee reviewed the economic benefits of a uniform credit 
system and current consumer protections under the FCRA, as well 
as the importance of a uniform national credit system to the 
retail operations of commercial users and furnishers of credit 
reporting data.
    The Subcommittee took a closer look at the FCRA itself on 
June 4, 2003, with a hearing entitled ``Fair Credit Reporting 
Act: How it Functions for Consumers and the Economy''. The 
hearing reviewed the mechanics of the national credit reporting 
system and focused on the role of the States in FCRA; how 
credit reports, credit scores, and prescreened information are 
used by the lending, mortgage, consumer finance, insurance, and 
non-financial industries; the accuracy of credit reports; and 
the role of national uniform standards in improving markets for 
consumers, including how such uniformity affects the 
availability, affordability, and timeliness of products and 
services.
    The Committee continued its series of hearings on the FCRA 
on June 12, 2003, when the Subcommittee on Financial 
Institutions and Consumer Credit held a hearing entitled ``The 
Role of FCRA in the Credit Granting Process''. The hearing 
examined the use of credit reports in the mortgage lending 
process as well as other forms of consumer lending, including 
credit cards and bank loans.
    On June 17, 2003, the Subcommittee on Financial 
Institutions and Consumer Credit examined the role of FCRA in 
employee background checks and the collection of medical 
information. The first panel focused on the application of FCRA 
to employee screening and other background checks, while the 
second panel examined how medical information is collected and 
used for various financial products, including a discussion of 
the prohibition on the use of health information in the credit 
granting process. Witnesses on the first panel focused on 
opinion letters issued in 1999 and 2000 by the staff of the 
FTC, which essentially state that if an employer hires outside 
organizations to investigate suspected workplace misconduct, 
such as sexual or racial harassment or workplace violence, the 
investigation is an ``investigative consumer report'' under the 
FCRA and the employer and the investigator must therefore 
comply with the FCRA's notice and disclosure requirements. even 
though the investigation does not pertain to credit or credit 
related matters. The panel established that the FTC position 
would deter employers from using outside investigators, which, 
because of their objectivity and expertise, are generally 
preferred, and in many cases, legally required. For example, 
the technical nature of the alleged misconduct may require 
investigators with particular expertise. Similarly, allegations 
of misconduct by high-level officials may require investigators 
with outside objectivity. The FTC has acknowledged the issue 
created by the letters, but contends that a legislative fix is 
necessary.
    In the 106th, 107th and 108th congresses, bipartisan 
legislation was introduced that would remedy the problems 
created by the FTC letters. H.R. 1543, the ``Civil Rights and 
Employee Investigation Clarification Act,'' was included as 
title VI of H.R. 2622. Title VI addresses the issue created by 
the FTC's opinion letters by excluding employment 
investigations that are not for the purpose of investigating 
the employee's credit worthiness from the FCRA definition of a 
consumer report.
    The Subcommittee on Financial Institutions and Consumer 
Credit held its sixth and final background hearing on the FCRA 
on June 24, 2003, when it focused specifically on the issue of 
identity theft with a hearing entitled ``Fighting Identity 
Theft--The Role of FCRA''. The hearing consisted of three 
panels, the first focusing on current enforcement efforts to 
apprehend and prosecute identity thieves, the second describing 
the experiences of consumers victimized by identity theft, and 
the third addressing private sector efforts to prevent identity 
theft and assist victims.

Conclusion

    As noted above, much of the Nation's economic growth over 
the last 20 years has been driven by the wide availability of 
credit, and the relative ease with which it can be obtained. 
This is due in large part to the existence of the national 
credit reporting system which gives the United States firms a 
concrete advantage over their competitors in Europe and 
elsewhere.
    H.R. 2622 ensures that the national credit reporting system 
will continue to provide benefits to consumers and the economy, 
while adding important consumer protections to ensure that 
criminals cannot turn the system's greatest strengths into 
weaknesses.

                                Hearings

    The House Committee on Financial Services held a hearing on 
Wednesday, July 9, 2003, on H.R. 2622, the ``Fair and Accurate 
Credit Transactions Act of 2003''. The Committee received 
testimony from: the Honorable John W. Snow, Secretary of the 
Treasury; the Honorable Timothy J. Muris, Chairman, Federal 
Trade Commission; Mr. Mallory Duncan, Senior Vice President, 
General Counsel, National Retail Federation; Mr. Michael F. 
McEneney, Partner, Sidley Austin Brown & Wood LLP, on behalf of 
the U.S. Chamber of Commerce; Dr. William E. Spriggs, Executive 
Director, National Urban League Institute for Opportunity and 
Equality; Mr. Stephen Brobeck, Executive Director, Consumer 
Federation of America; Mr. John C. Dugan, Partner, Covington & 
Burling, on behalf of the Financial Services Coordinating 
Council; Mr. Stuart K. Pratt, President, Consumer Data Industry 
Association; Mr. Joe Belew, President, Consumer Bankers 
Association; Ms. Kayce Bell, Chief Operating Officer, Alabama 
Credit Union, on behalf of the Credit Union National 
Association; Mr. Hilary O. Shelton, Director, NAACP, Washington 
Bureau; Mr. D. Russell Taylor, Chairman, America's Community 
Bankers; Mr. Chris Jay Hoofnagle, Deputy Counsel, Electronic 
Privacy Information Center; and Mr. L. Richard Fischer, on 
behalf of Visa U.S.A.

                        Committee Consideration

    On July 16, 2003, the Subcommittee on Financial 
Institutions and Consumer Credit met in open session and 
approved H.R. 2622, the Fair and Accurate Credit Transactions 
Act of 2003, for full Committee consideration, as amended, by a 
record vote of 41 yeas and no nays.
    On July 24, 2003, the Committee on Financial Services met 
in open session and ordered H.R. 2622 reported to the House 
with a favorable recommendation, with an amendment, by a record 
vote of 61 yeas and 3 nays.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. A 
motion by Mr. Oxley to report the bill to the House with a 
favorable recommendation, with an amendment, was agreed to by a 
record vote of 61 yeas and 3 nays (Record vote no. FC-14). The 
names of Members voting for and against follow:

                                              Record vote no. FC-14
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Oxley......................        X   ........  .........   Mr. Frank (MA)..        X   ........  .........
Mr. Leach......................  ........  ........  .........   Mr. Kanjorski...        X   ........  .........
Mr. Bereuter...................        X   ........  .........   Ms. Waters......  ........        X   .........
Mr. Baker......................        X   ........  .........   Mr. Sanders*....  ........        X   .........
Mr. Bachus.....................        X   ........  .........   Mrs. Maloney....        X   ........  .........
Mr. Castle.....................        X   ........  .........   Mr. Gutierrez...        X   ........  .........
Mr. King.......................        X   ........  .........   Ms. Velazquez...        X   ........  .........
Mr. Royce......................        X   ........  .........   Mr. Watt........        X   ........  .........
Mr. Lucas (OK).................        X   ........  .........   Mr. Ackerman....        X   ........  .........
Mr. Ney........................        X   ........  .........   Ms. Hooley (OR).        X   ........  .........
Mrs. Kelly.....................        X   ........  .........   Ms. Carson (IN).        X   ........  .........
Mr. Paul.......................  ........  ........  .........   Mr. Sherman.....        X   ........  .........
Mr. Gillmor....................        X   ........  .........   Mr. Meeks (NY)..        X   ........  .........
Mr. Ryun (KS)..................        X   ........  .........   Ms. Lee.........  ........        X   .........
Mr. LaTourette.................        X   ........  .........   Mr. Inslee......        X   ........  .........
Mr. Manzullo...................        X   ........  .........  Mr. Moore........        X   ........  .........
Mr. Jones (NC).................        X   ........  .........   Mr. Gonzalez....        X   ........  .........
Mr. Ose........................        X   ........  .........   Mr. Capuano.....        X   ........  .........
Mrs. Biggert...................        X   ........  .........  Mr. Ford.........        X   ........  .........
Mr. Green (WI).................  ........  ........  .........   Mr. Hinojosa....  ........  ........  .........
Mr. Toomey.....................        X   ........  .........   Mr. Lucas (KY)..        X   ........  .........
Mr. Shays......................  ........  ........  .........   Mr. Crowley.....        X   ........  .........
Mr. Shadegg....................        X   ........  .........   Mr. Clay........        X   ........  .........
Mr. Fossella...................        X   ........  .........   Mr. Israel......        X   ........  .........
Mr. Gary G. Miller (CA)........        X   ........  .........   Mr. Ross........        X   ........  .........
Ms. Hart.......................        X   ........  .........   Mrs. McCarthy           X   ........  .........
                                                                 (NY).
Mrs. Capito....................        X   ........  .........   Mr. Baca........        X   ........  .........
Mr. Tiberi.....................        X   ........  .........   Mr. Matheson....        X   ........  .........
Mr. Kennedy (MN)...............        X   ........  .........   Mr. Lynch.......        X   ........  .........
Mr. Feeney.....................        X   ........  .........   Mr. Miller (NC).        X   ........  .........
Mr. Hensarling.................        X   ........  .........   Mr. Emanuel.....        X   ........  .........
Mr. Garrett (NJ)...............        X   ........  .........   Mr. Scott (GA)..        X   ........  .........
Mr. Murphy.....................        X   ........  .........   Mr. Davis (AL)..        X   ........  .........
Ms. Ginny Brown-Waite (FL).....        X   ........  .........  .................  ........  ........  .........
Mr. Barrett (SC)...............        X   ........  .........  .................  ........  ........  .........
Ms. Harris.....................        X   ........  .........  .................  ........  ........  .........
Mr. Renzi......................        X   ........  .........  .................  ........  ........  .........
----------------------------------------------------------------------------------------------------------------
*Mr. Sanders is an independent, but caucuses with the Democratic Caucus.

    The following amendments were considered by record votes. 
The names of Members voting for and against follow:

          An amendment to the amendment in the nature of a 
        substitute offered by Ms. Waters, no. 1a, striking 
        uniform national consumer protection standards, was not 
        agreed to by a record vote of 6 yeas and 56 nays 
        (Record vote no. FC-11).

                                              Record vote no. FC-11
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Oxley......................  ........        X   .........   Mr. Frank (MA)..  ........        X   .........
Mr. Leach......................  ........  ........  .........   Mr. Kanjorski...  ........        X   .........
Mr. Bereuter...................  ........        X   .........   Ms. Waters......        X   ........  .........
Mr. Baker......................  ........        X   .........   Mr. Sanders*....        X   ........  .........
Mr. Bachus.....................  ........        X   .........   Mrs. Maloney....  ........        X   .........
Mr. Castle.....................  ........  ........  .........   Mr. Gutierrez...  ........        X   .........
Mr. King.......................  ........        X   .........   Ms. Velazquez...  ........        X   .........
Mr. Royce......................  ........        X   .........   Mr. Watt........        X   ........  .........
Mr. Lucas (OK).................  ........        X   .........   Mr. Ackerman....  ........        X   .........
Mr. Ney........................  ........        X   .........   Ms. Hooley (OR).  ........        X   .........
Mrs. Kelly.....................  ........        X   .........   Ms. Carson (IN).  ........        X   .........
Mr. Paul.......................        X   ........  .........   Mr. Sherman.....  ........        X   .........
Mr. Gillmor....................  ........        X   .........   Mr. Meeks (NY)..  ........        X   .........
Mr. Ryun (KS)..................  ........        X   .........   Ms. Lee.........        X   ........  .........
Mr. LaTourette.................  ........        X   .........   Mr. Inslee......  ........  ........  .........
Mr. Manzullo...................  ........  ........  .........  Mr. Moore........  ........        X   .........
Mr. Jones (NC).................  ........        X   .........   Mr. Gonzalez....  ........        X   .........
Mr. Ose........................  ........        X   .........   Mr. Capuano.....  ........        X   .........
Mrs. Biggert...................  ........        X   .........  Mr. Ford.........  ........  ........  .........
Mr. Green (WI).................  ........        X   .........   Mr. Hinojosa....  ........  ........  .........
Mr. Toomey.....................  ........        X   .........   Mr. Lucas (KY)..  ........        X   .........
Mr. Shays......................  ........        X   .........   Mr. Crowley.....  ........        X   .........
Mr. Shadegg....................  ........        X   .........   Mr. Clay........        X   ........  .........
Mr. Fossella...................  ........  ........  .........   Mr. Israel......  ........        X   .........
Mr. Gary G. Miller (CA)........  ........        X   .........   Mr. Ross........  ........        X   .........
Ms. Hart.......................  ........        X   .........   Mrs. McCarthy     ........        X   .........
                                                                 (NY).
Mrs. Capito....................  ........        X   .........   Mr. Baca........  ........        X   .........
Mr. Tiberi.....................  ........        X   .........   Mr. Matheson....  ........        X   .........
Mr. Kennedy (MN)...............  ........        X   .........   Mr. Lynch.......  ........  ........  .........
Mr. Feeney.....................  ........        X   .........   Mr. Miller (NC).  ........        X   .........
Mr. Hensarling.................  ........        X   .........   Mr. Emanuel.....  ........        X   .........
Mr. Garrett (NJ)...............  ........        X   .........   Mr. Scott (GA)..  ........        X   .........
Mr. Murphy.....................  ........        X   .........   Mr. Davis (AL)..  ........        X   .........
Ms. Ginny Brown-Waite (FL).....  ........        X   .........  .................  ........  ........  .........
Mr. Barrett (SC)...............  ........        X   .........  .................  ........  ........  .........
Ms. Harris.....................  ........        X   .........  .................  ........  ........  .........
Mr. Renzi......................  ........        X   .........  .................  ........  ........  .........
----------------------------------------------------------------------------------------------------------------
*Mr. Sanders is an independent, but caucuses with the Democratic Caucus.

          An amendment to the amendment in the nature of a 
        substitute offered by Mr. Sanders, no. 1c, prohibiting 
        ``bait and switch'' practices, was not agreed to by a 
        record vote of 22 yeas and 44 nays (Record vote no. FC-
        12).

                                              Record vote no. FC-12
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Oxley......................  ........        X   .........   Mr. Frank (MA)..  ........        X   .........
Mr. Leach......................  ........        X   .........   Mr. Kanjorski...  ........        X   .........
Mr. Bereuter...................        X   ........  .........   Ms. Waters......        X   ........  .........
Mr. Baker......................  ........        X   .........   Mr. Sanders*....        X   ........  .........
Mr. Bachus.....................        X   ........  .........   Mrs. Maloney....        X   ........  .........
Mr. Castle.....................  ........        X   .........   Mr. Gutierrez...        X   ........  .........
Mr. King.......................  ........        X   .........   Ms. Velazquez...        X   ........  .........
Mr. Royce......................  ........        X   .........   Mr. Watt........        X   ........  .........
Mr. Lucas (OK).................  ........        X   .........   Mr. Ackerman....        X   ........  .........
Mr. Ney........................  ........        X   .........   Ms. Hooley (OR).  ........        X   .........
Mrs. Kelly.....................  ........        X   .........   Ms. Carson (IN).        X   ........  .........
Mr. Paul.......................  ........        X   .........   Mr. Sherman.....  ........        X   .........
Mr. Gillmor....................  ........        X   .........   Mr. Meeks (NY)..        X   ........  .........
Mr. Ryun (KS)..................  ........        X   .........   Ms. Lee.........        X   ........  .........
Mr. LaTourette.................        X   ........  .........   Mr. Inslee......        X   ........  .........
Mr. Manzullo...................  ........        X   .........  Mr. Moore........  ........        X   .........
Mr. Jones (NC).................        X   ........  .........   Mr. Gonzalez....        X   ........  .........
Mr. Ose........................  ........        X   .........   Mr. Capuano.....        X   ........  .........
Mrs. Biggert...................  ........        X   .........  Mr. Ford.........  ........  ........  .........
Mr. Green (WI).................  ........        X   .........   Mr. Hinojosa....  ........  ........  .........
Mr. Toomey.....................  ........        X   .........   Mr. Lucas (KY)..  ........        X   .........
Mr. Shays......................        X   ........  .........   Mr. Crowley.....  ........        X   .........
Mr. Shadegg....................        X   ........  .........   Mr. Clay........        X   ........  .........
Mr. Fossella...................  ........  ........  .........   Mr. Israel......  ........        X   .........
Mr. Gary G. Miller (CA)........  ........        X   .........   Mr. Ross........  ........        X   .........
Ms. Hart.......................  ........        X   .........   Mrs. McCarthy     ........        X   .........
                                                                 (NY).
Mrs. Capito....................  ........        X   .........   Mr. Baca........  ........        X   .........
Mr. Tiberi.....................  ........        X   .........   Mr. Matheson....  ........        X   .........
Mr. Kennedy (MN)...............  ........        X   .........   Mr. Lynch.......  ........  ........  .........
Mr. Feeney.....................  ........        X   .........   Mr. Miller (NC).  ........        X   .........
Mr. Hensarling.................  ........        X   .........   Mr. Emanuel.....  ........        X   .........
Mr. Garrett (NJ)...............  ........        X   .........   Mr. Scott (GA)..        X   ........  .........
Mr. Murphy.....................  ........        X   .........   Mr. Davis (AL)..        X   ........  .........
Ms. Ginny Brown-Waite (FL).....  ........        X   .........  .................  ........  ........  .........
Mr. Barrett (SC)...............  ........        X   .........  .................  ........  ........  .........
Ms. Harris.....................  ........        X   .........  .................  ........  ........  .........
Mr. Renzi......................  ........        X   .........  .................  ........  ........  .........
----------------------------------------------------------------------------------------------------------------
*Mr. Sanders is an independent, but caucuses with the Democratic Caucus.

          An amendment to the amendment in the nature of a 
        substitute offered by Ms. Lee, no. 1s, prohibiting 
        credit reporting agencies from treating the number of 
        enquiries as a negative when calculating the credit 
        score, was not agreed to by a record vote of 14 yeas 
        and 48 nays (Record vote no. FC-13).

                                              Record vote no. FC-13
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Oxley......................  ........        X   .........   Mr. Frank (MA)..        X   ........  .........
Mr. Leach......................  ........  ........  .........   Mr. Kanjorski...  ........        X   .........
Mr. Bereuter...................        X   ........  .........   Ms. Waters......        X   ........  .........
Mr. Baker......................  ........        X   .........   Mr. Sanders*....        X   ........  .........
Mr. Bachus.....................  ........        X   .........   Mrs. Maloney....  ........  ........  .........
Mr. Castle.....................  ........  ........  .........   Mr. Gutierrez...        X   ........  .........
Mr. King.......................  ........        X   .........   Ms. Velazquez...  ........        X   .........
Mr. Royce......................  ........        X   .........   Mr. Watt........        X   ........  .........
Mr. Lucas (OK).................  ........        X   .........   Mr. Ackerman....  ........        X   .........
Mr. Ney........................  ........        X   .........   Ms. Hooley (OR).  ........        X   .........
Mrs. Kelly.....................  ........        X   .........   Ms. Carson (IN).        X   ........  .........
Mr. Paul.......................  ........  ........  .........   Mr. Sherman.....  ........  ........  .........
Mr. Gillmor....................  ........        X   .........   Mr. Meeks (NY)..  ........        X   .........
Mr. Ryun (KS)..................  ........        X   .........   Ms. Lee.........        X   ........  .........
Mr. LaTourette.................  ........        X   .........   Mr. Inslee......        X   ........  .........
Mr. Manzullo...................  ........        X   .........  Mr. Moore........  ........        X   .........
Mr. Jones (NC).................  ........        X   .........   Mr. Gonzalez....        X   ........  .........
Mr. Ose........................  ........        X   .........   Mr. Capuano.....  ........        X   .........
Mrs. Biggert...................  ........        X   .........  Mr. Ford.........        X   ........  .........
Mr. Green (WI).................  ........  ........  .........   Mr. Hinojosa....  ........  ........  .........
Mr. Toomey.....................  ........        X   .........   Mr. Lucas (KY)..  ........        X   .........
Mr. Shays......................  ........  ........  .........   Mr. Crowley.....  ........        X   .........
Mr. Shadegg....................  ........        X   .........   Mr. Clay........        X   ........  .........
Mr. Fossella...................  ........        X   .........   Mr. Israel......  ........        X   .........
Mr. Gary G. Miller (CA)........  ........        X   .........   Mr. Ross........  ........        X   .........
Ms. Hart.......................  ........        X   .........   Mrs. McCarthy     ........        X   .........
                                                                 (NY).
Mrs. Capito....................  ........        X   .........   Mr. Baca........        X   ........  .........
Mr. Tiberi.....................  ........        X   .........   Mr. Matheson....  ........        X   .........
Mr. Kennedy (MN)...............  ........        X   .........   Mr. Lynch.......  ........        X   .........
Mr. Feeney.....................  ........        X   .........   Mr. Miller (NC).        X   ........  .........
Mr. Hensarling.................  ........        X   .........   Mr. Emanuel.....        X   ........  .........
Mr. Garrett (NJ)...............  ........        X   .........   Mr. Scott (GA)..  ........        X   .........
Mr. Murphy.....................  ........        X   .........   Mr. Davis (AL)..  ........        X   .........
Ms. Ginny Brown-Waite (FL).....  ........        X   .........  .................  ........  ........  .........
Mr. Barrett (SC)...............  ........        X   .........  .................  ........  ........  .........
Ms. Harris.....................  ........        X   .........  .................  ........  ........  .........
Mr. Renzi......................  ........        X   .........  .................  ........  ........  .........
----------------------------------------------------------------------------------------------------------------
*Mr. Sanders is an independent, but caucuses with the Democratic Caucus.

    The following other amendments were also considered by the 
Committee:

          An amendment in the nature of a substitute offered by 
        Mr. Oxley, no.1, limiting the disclosure of certain 
        medical information, establishing a three-tier system 
        for victims of identity theft to ensure credit is not 
        extended to identity thieves, prohibiting a business 
        from sharing negative information about a consumer if 
        they have received a copy of a police report indicating 
        an illegal transaction, and requiring GAO to report on 
        the role of race and gender in the credit granting 
        process, was agreed to by a voice vote, as amended.
          An amendment to the amendment in the nature of a 
        substitute offered by Mrs. Biggert, no. 1b, requiring 
        credit reporting agencies to notify users of consumer 
        report address discrepancies and directing the Federal 
        banking regulators to establish guidance regarding 
        reasonable policies for lenders' use of a consumer 
        reports when an address discrepancy exists, was agreed 
        to by a voice vote.
          An amendment to the amendment in the nature of a 
        substitute offered by Mrs. Kelly, no. 1d, requiring 
        credit reporting agencies to code sensitive medical 
        information, was agreed to by a voice vote.
          An amendment to the amendment in the nature of a 
        substitute offered by Mr. Frank, 1e, requiring the 
        credit reporting agencies conduct a reasonable 
        reinvestigation to determine whether the disputed 
        information is inaccurate and prohibiting furnishers 
        from forwarding information to the credit reporting 
        agencies if the furnisher has substantial doubts as to 
        its accuracy, was agreed to by a voice vote.
          An amendment to the amendment in the nature of a 
        substitute offered by Mr. Gillmor, no. 1f, requiring 
        notification of a consumer in the event that the number 
        of enquires made with respect to the consumer's report 
        was a key factor that adversely affected a consumer's 
        credit score, was agreed to by a voice vote.
          An amendment to the amendment in the nature of a 
        substitute offered by Mr. Baker, no. 1g, clarifying 
        consumers' ability to obtain one free credit report 
        annually from each of the nationwide consumer credit 
        reporting agencies, was agreed to by a voice vote.
          An amendment to the amendment in the nature of a 
        substitute offered by Mr. Toomey, no. 1h, requiring the 
        Treasury Department to conduct a study on the role of 
        technology in fighting identity theft, was agreed to by 
        a voice vote.
          An amendment to the amendment in the nature of a 
        substitute offered by Mr. Frank of Massachusetts, no. 
        1i, requiring implementation of the legislation within 
        4 months instead of 10 months after the date of 
        issuance of final regulations, was withdrawn.
          An amendment to the amendment in the nature of a 
        substitute offered by Mr. Frank of Massachusetts, no. 
        1j, permitting employees against whom an adverse action 
        has been taken based upon an investigation of workplace 
        misconduct conducted by an outside third party to 
        demand a reinvestigation of any information disputed by 
        the employee, was not agreed to by a voice vote.
          An amendment to the amendment in the nature of a 
        substitute offered by Mr. Meeks of New York, no. 1k, 
        requiring that the Federal Reserve conduct a study of 
        further restrictions on offers of credit or insurance 
        not initiated by consumers, was agreed to by a voice 
        vote.
          An amendment to the amendment in the nature of a 
        substitute offered by Mr. Meeks of New York, no. 1l, 
        requiring that a telephone number be included with any 
        solicitation for a credit transaction not initiated by 
        the consumer, was withdrawn.
          An amendment to the amendment in the nature of a 
        substitute offered by Ms. Lee, no. 1m, requiring the 
        Comptroller General conduct a study on methods for 
        improving consumers' financial literacy, was agreed to 
        by a voice vote.
          An amendment to the amendment in the nature of a 
        substitute offered by Ms. Carson of Indiana, no. 1n, 
        protecting consumers' rights to obtain a 
        reinvestigation of a consumer dispute directly through 
        resellers of consumer reporting information, was agreed 
        to by a voice vote.
          An amendment to the amendment in the nature of a 
        substitute offered by Mr. Shadegg, no. 1o, restricting 
        the display and dissemination of a social security 
        numbers, was withdrawn.
          An amendment to the amendment in the nature of a 
        substitute offered by Mr. Kanjorski, no. 1p, extending 
        the uniform national consumer protection standards by 9 
        years, was not agreed to by a voice vote.
          An amendment to the amendment in the nature of a 
        substitute offered by Mrs. Maloney, no. 1q, requiring 
        disclosure of an increase in annual percentage rate 
        under certain circumstances, was agreed to by a voice 
        vote.
          An amendment to the Maloney amendment to the 
        amendment in the nature of a substitute offered by Mr. 
        Bachus, no. 1q(1), requiring the disclosure to include 
        a good faith enumeration, was withdrawn.
          An amendment to the amendment in the nature of a 
        substitute offered by Mr. Davis of Alabama, no. 1r, 
        requiring furnishers to conduct reinvestigations within 
        a reasonable time in case of alleged identity theft, 
        was not agreed to by a voice vote.
          An amendment to the amendment in the nature of a 
        substitute offered by Mrs. Kelly, no. 1t, extending the 
        phase-in period for credit agencies to provide a free 
        report, was withdrawn.
          An amendment to the amendment in the nature of a 
        substitute offered by Mr. Inslee, no. 1u, amending 
        sections 625 and 626 of the Fair Credit Reporting Act, 
        was ruled nongermane by the Chair.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee made findings that are 
reflected in this report.

                    Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee establishes the 
following performance related goals and objectives for this 
legislation:
    The appropriate Federal regulators will use the authority 
granted in this bill to combat the growing problem of identity 
theft by assisting consumers in preventing identify theft and 
in mitigating its consequences once the crime has occurred. 
Federal regulators will also make every effort to ensure the 
smooth operation of the national uniform credit reporting 
system established by the Fair Credit Reporting Act that has 
lowered costs and increased choice and convenience for American 
consumers and has created operational efficiencies for 
industry.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of budget authority, entitlement authority, or 
tax expenditures or revenues contained in the cost estimate 
prepared by the Director of the Congressional Budget Office 
pursuant to section 402 of the Congressional Budget Act of 
1974.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                 Washington, DC, September 3, 2003.
Hon. Michael G. Oxley,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2622, the Fair and 
Accurate Credit Transactions Act of 2003.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Susanne S. 
Mehlman.
            Sincerely,
                                       Douglas Holtz-Eakin,
                                                          Director.
    Enclosure.

H.R. 2622--Fair and Accurate Credit Transactions Act of 2003

    Summary: CBO estimates that implementing this legislation 
would cost about $7 million over the next five years, assuming 
appropriation of the necessary amounts. The bill could affect 
direct spending and revenues, but CBO estimates that any such 
impact would not be significant.
    H.R. 2622 would provide new consumer protections against 
identity theft (that is, fraud committed using another person's 
identifying information) and would permanently extend the 
provisions in the Fair Credit Reporting Act (FCRA) that prevent 
states from imposing new restrictions on how financial 
institutions share consumer information. In 1996, FCRA was 
amended to create a uniform national standard for consumer 
protections governing credit transactions, and it is scheduled 
to expire on January 1, 2004. H.R. 2622 also would give 
consumers access to certain financial records, ensure the 
accuracy of credit reports, and provide protections of 
consumers' medical information.
    H.R. 2622 contains an intergovernmental mandate as defined 
in the Unfunded Mandates Reform Act (UMRA), but CBO estimates 
the costs would not exceed the threshold established in UMRA 
($59 million in 2003, adjusted annually for inflation).
    CBO's assessment of the bill's impact on the private sector 
will be provided later in a separate report.
    Estimated cost to the Federal Government: CBO estimates 
that implementing this legislation would cost about $7 million 
over the next five years, assuming appropriation of the 
necessary amounts. The bill could affect direct spending and 
revenues, but CBO estimates that any such impact would not be 
significant.This legislation would require the Federal Trade 
Commission (FTC) to prepare a model summary of rights for consumers who 
believe that they may be the victims of fraud or identity theft. The 
FTC also would be responsible for developing procedures and forms to be 
used by consumers to report identity theft to creditors and credit 
reporting agencies and for conducting various studies on such topics as 
the accuracy of information contained in credit reports and the impact 
of credit scores and credit-based insurance scores on the availability 
and affordability of financial products.
    H.R. 2622 would require the federal banking agencies (which 
includes the Office of the Comptroller of the Currency (OGC), 
the Federal Deposit Insurance Corporation (FDIC), and the 
Office of Thrift Supervision (OTS)) and the National Credit 
Union Administration (NCUA) to issue various guidelines and 
regulations concerning identity theft, credit reporting, and 
use of consumers' medical information by financial 
institutions. Finally, this legislation would require the 
Federal Reserve to create a disclosure form for financial 
companies to use when notifying a consumer that negative 
information has been furnished to a credit reporting agency and 
to study the ability of consumers to avoid unsolicited offers 
of credit and insurance.

Spending subject to appropriation

    Based on information from the FTC, CBO estimates that the 
studies and additional enforcement effort required under H.R. 
2622 would cost that agency $2 million in 2004 and $6 million 
over the 2004-2008 period, assuming appropriation of the 
necessary amounts. In addition, this legislation would require 
the General Accounting Office (GAO) to study the role of 
discrimination in obtaining credit and to study methods for 
improving financial literacy among consumers. CBO estimates 
that the two GAO studies required under the bill would cost 
about $1 million in 2004.

Direct spending and revenues

    The NCUA, the OTS, and the OGC charge fees to cover all 
their administrative costs; therefore, any additional spending 
by those agencies to implement the bill would have no net 
budgetary effect. That is not the case with FDIC, however, 
which uses deposit insurance premiums paid by banks to cover 
the expenses it incurs to supervise state-chartered 
institutions. (Under current law, CBO estimates that the vast 
majority of thrift institutions insured by the FDIC would not 
pay any premiums for most of the 2004-2013 period.)
    The bill would cause a small increase in FDIC spending but 
would not affect its premium income. Based on information from 
the FDIC, implementing the bill would have a minor impact on 
the agency's workload. Budgetary effects on the Federal Reserve 
are recorded as changes in revenues (governmental receipts). 
CBO estimates that enacting H.R. 2622 would reduce such 
revenues by less than $500,000 a year.
    Impact on state, local, and tribal governments: Title I of 
H.R. 2622 would permanently prohibit state and local 
governments from enacting laws that are different from FCRA in 
certain specified cases. Such a preemption of state law is an 
intergovernmental mandate as defined in UMRA, but CBO estimates 
that it would not impose significant costs on state and local 
governments. Therefore, the cost of the preemption would not 
exceed the threshold established in UMRA ($59 million in 2003 
adjusted for inflation).
    Impact on the private sector: CBO's assessment of the 
bill's impact on the private sector will be provided later in a 
separate report.
    Estimate prepared by: Federal Costs: Susanne Mehlman. 
Impact on State, Local, and Tribal Governments: Sarah Puro. 
Impact on the Private Sector: Paige Piper/Bach.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 424 of the Congressional Budget Act.

                    Private Sector Mandates Estimate

    The estimate of private sector mandates provided by the 
Congressional Budget Office pursuant to section 424(b) of the 
Congressional Budget Act was not timely filed with the 
Committee. Pursuant to section 423(f)(2) of the Congressional 
Budget Act, the Chairman of the Committee shall cause the 
statement to be published in the Congressional Record in 
advance of floor consideration of the bill.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional Authority of Congress to enact this legislation 
is provided by Article 1, section 8, clause 1 (relating to the 
defense and general welfare of the United States), and clause 3 
(relating to the power to regulate foreign and interstate 
commerce).

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             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), and provides a table of contents.

Section 2. Definitions

    This section adds several new defined terms to section 603 
of the Fair Credit Reporting Act, including ``reseller,'' 
``Board,'' ``credit,'' ``creditor,'' ``credit card,'' 
``Commission,'' ``debit card,'' ``electronic fund transfer,'' 
``Federal banking agency,'' ``identity theft,'' and ``police 
report.''
    With respect to the term ``identity theft,'' the section 
includes a general definition (i.e., ``a fraud committed using 
another person's identifying information'') and gives joint 
rulemaking authority to the Federal Reserve Board and the 
Federal Trade Commission to further define the term. The 
Committee has granted this authority in order to allow for the 
Board and the Commission to ensure that the term remains 
relevant in light of the continuing evolution of identity theft 
as a crime and the wide variety of techniques employed by 
identity thieves. The Committee does not intend for the Board 
or the Commission to define the term for other purposes.
    Further, the Committee does not intend for the term 
``consumer report'' to be interpreted to include a report to be 
used in the consideration of an individual's purchase of 
insurance primarily for business, commercial or agricultural 
purposes.

Section 3. Effective dates

    This section specifies effective dates for the provisions 
of the legislation. Within two months of the date of enactment, 
the Federal Reserve and the Federal Trade Commission are 
required to jointly prescribe final regulations for each 
provision of the bill, except as otherwise specified. In 
exercising their authority under this section, the regulators 
are directed to establish effective dates that are as early as 
possible while also allowing a reasonable time for 
implementation of the bill's provisions. No provision of the 
bill may take effect later than 10 months after the date that 
the regulations required by this section are issued in final 
form. The section provides for a separate effective date for 
section 701 of the bill, relating to the protection of medical 
information in the financial system.

        title i--uniform national consumer protection standards


Section 101. Uniform national consumer protection standards made 
        permanent

    This section amends section 624 of the Fair Credit 
Reporting Act to remove the January 1, 2004 sunset of the 
uniform national consumer protection standards and make them 
permanent.

                  title ii--identity theft prevention


Section 201. Investigating changes of address and inactive accounts

    This section amends section 605 of the Fair Credit 
Reporting Act to direct the Federal banking agencies and the 
National Credit Union Administration (NCUA), as part of their 
guidance to depository institutions on identity theft ``red 
flags'' (section 206, infra), to jointly prescribe regulations 
requiring credit and debit card issuers that receive a request 
for additional or replacement cards on an existing account 
shortly after receiving a change of address request to notify 
the cardholder at the former address or as otherwise agreed to, 
or to use other means of validating the address change. The 
section outlines three alternative procedures the card issuer 
may follow in order to provide the cardholder with the 
additional or replacement card if the request for such a card 
comes shortly after a change of address. First, the issuer can 
notify the cardholder of the request for an additional or 
replacement card at the former address and provide the 
cardholder a means of promptly reporting incorrect address 
changes. Second, the card issuer can notify the cardholder of 
the request for additional or replacement cards by other means 
of communication to which the cardholder and the card issuer 
previously agreed. Third, a card issuer can assess the validity 
of the change of address request in accordance with reasonable 
policies and procedures established by the card issuer pursuant 
to regulations prescribed by the Federal banking agencies and 
the NCUA pursuant to section 605(k) of the FCRA (as added by 
section 206).
    Because the nature of identity theft and credit card fraud 
continues to evolve, the Committee believes that responses to 
identity theft must be flexible so that they can be modified as 
the criminals alter their schemes. Accordingly, the Committee 
has declined to specify a period of time between the request 
for a new card and a change of address request that would 
trigger an issuer's duty to take the steps outlined in this 
section. The Committee believes that 30 days would be 
appropriate under current circumstances, although the Federal 
banking agencies may find evidence suggesting a somewhat 
shorter or longer time period is more appropriate in the 
future. The Committee does not believe that the card issuer 
should be required to take the additional precautions outlined 
in this section if, despite receiving a request for an address 
change, the issuer did not actually change the cardholder's 
address for any reason (e.g. the card issuer had previously 
determined that the request for an address change was invalid) 
or the issuer did not actually issue a replacement card.
    Section 201 also instructs the Federal banking agencies and 
the NCUA to consider, as part of their duties under section 
605(k) of the FCRA (as added by section 206, infra), whether 
transactions on a credit or deposit account that has been 
inactive for more than two years present a potential ``red 
flag'' for identity theft. Should that activity be deemed to be 
a ``red flag,'' the creditor or depository institution will be 
required to follow reasonable policies and procedures that 
provide for notice to be given to a consumer in a manner 
reasonably designed to reduce the likelihood of identity theft 
with respect to such account.
    Finally, the section amends section 624(b)(1)(E) of the 
Fair Credit Reporting Act to clarify that the identity theft 
prevention protections added to section 605 of the FCRA by this 
bill are preemptive of State law.

Section 202. Fraud alerts

    This section amends section 605 of the Fair Credit 
Reporting Act to require consumer reporting agencies that 
operate on a nationwide basis (as defined in section 603(p) of 
the FCRA) to place fraud alerts on consumers' files in the 
three circumstances described below. A fraud alert is a 
statement in the consumer's file that notifies all users that 
the consumer does not want credit extended without special 
permission through a preauthorized procedure. Fraud alerts may 
be placed on consumer reports in the following three 
situations:
    (1) Upon the direct request of a consumer who asserts in 
good faith a suspicion that the consumer has been or is about 
to become a victim of fraud or a related crime, such as 
identity theft, a nationwide consumer reporting agency that 
maintains a file on the consumer and has a reasonable belief 
that it knows the identity of the consumer must: (i) include a 
fraud alert in the consumer's file for at least 90 days (unless 
the consumer requests that it be removed sooner); (ii) disclose 
to the consumer that the consumer may request a free copy of 
his or her consumer report within three business days of 
requesting the fraud alert; (iii) exclude the consumer from 
prescreened offers of credit or insurance for two years (unless 
the consumer requests that such exclusion be rescinded sooner); 
and (iv) refer the information regarding the fraud alert to 
each of the other nationwide consumer reporting agencies, which 
must then fulfill the obligations described in (i), (ii), and 
(iii) above.
    (2) Upon the direct request of a consumer who contacts a 
nationwide consumer reporting agency to report details of an 
identity theft and submits evidence that provides the agency 
with reasonable cause to believe that such identity theft has 
occurred, the agency must, if it maintains a file on the 
consumer and has a reasonable belief that it knows the identity 
of the consumer: (i) include a fraud alert in the file of the 
consumer and provide an opportunity for the consumer to extend 
the alert for a period of up to seven years (unless the 
consumer requests that it be removed sooner); (ii) provide the 
consumer with the option of including more complete information 
in the consumer's file, including a telephone number or other 
reasonable means of communication that any person who requests 
the consumer's report may utilize for authorization before 
establishing a new credit plan in the name of the consumer; and 
(iii) provide the consumer with at least two free disclosures 
of his or her consumer report during the 12-month period 
beginning on the date of the consumer's request. Or,
    (3) Upon the direct request of an active duty military 
consumer who contacts a nationwide consumer reporting agency 
that maintains a file on the consumer and has a reasonable 
belief that it knows the identity of the consumer, the agency 
must: (i) include an active duty alert in the consumer's file 
for a period of at least 12 months (unless the consumer 
requests that it be removed sooner); (ii) exclude the consumer 
from prescreened offers of credit or insurance for two years 
(unless the consumer requests that such exclusion be rescinded 
sooner); and (iii) refer the information regarding the active 
duty alert to each of the other nationwide consumer reporting 
agencies (which must then fulfill the obligations described in 
(i) and (ii) above). An ``active duty military consumer'' is 
defined as a consumer in military service who is on active duty 
or is a reservist performing duty under a call or order to 
active duty, and is assigned to service away from the 
consumer's usual duty station.
    A request for a fraud alert must be made directly by the 
consumer, or directly by an individual acting on behalf of or 
as a personal representative of the consumer. The Committee 
used the word ``individual'' instead of ``person'' to ensure 
that the provision would only apply to specific individuals 
such as a consumer's authorized family members or guardians (or 
attorneys acting as personal representatives), authorized 
representatives from bona fide military service organizations, 
and not to companies and entities such as credit repair 
clinics.
    Each nationwide consumer reporting agency must establish 
policies and procedures to comply with the obligations imposed 
by this section, including procedures that allow consumers to 
request fraud alerts in a simple and easy manner, including by 
telephone. The nationwide consumer reporting agencies already 
provide many of these services to consumers on a voluntary 
basis, and the Committee does not believe that significant 
changes, if any, to the current policies and procedures will be 
necessary for purposes of complying with this requirement.
    Any person who obtains a consumer's consumer report that 
includes a fraud alert inserted in the consumer's file pursuant 
to section 605(i) of the FCRA (as added by section 202 of this 
legislation) may not establish a new credit plan in the name of 
the consumer for a person other than the consumer without 
utilizing reasonable policies and procedures to form a 
reasonable belief that the user of the report knows the 
identity of the person for whom such new plan is established, 
which may include obtaining authorization or preauthorization 
of the consumer at a telephone number designated by the 
consumer or by such other reasonable means agreed to. The 
Committee does not intend for the presence of a fraud alert to 
interfere with transactions on an existing credit account, such 
as an authorization request in connection with the consumer's 
use of an existing credit card. The Committee notes that it has 
specifically declined to specify what a user's reasonable 
policies and procedures should be with respect to verifying the 
consumer's identity. The Committee expects that, in developing 
their policies and procedures, users will examine a variety of 
mechanisms, including those required by other existing laws, 
such as the relevant portions of the regulations issued under 
section 326 of the USA PATRIOT Act, relating to customer 
identification programs.
    A reseller that is notified of the existence of a fraud 
alert in a consumer report must communicate to each person 
procuring a consumer report with respect to such consumer the 
existence of the fraud alert.
    The Committee notes that the obligations described above 
apply only to those consumer reporting agencies that compile 
and maintain files on consumers on a nationwide basis. However, 
if a consumer contacts a consumer reporting agency that does 
not maintain files on a nationwide basis to communicate a 
suspicion that the consumer has been or is about to become a 
victim of fraud or related crime, that agency must provide the 
consumer with information on how to contact the Federal Trade 
Commission and the nationwide consumer reporting agencies to 
obtain more detailed information and request a fraud alert.
    Consumer reporting agencies are required to transmit the 
fraud alert information to users of consumer reports in a 
manner that facilitates clear and conspicuous viewing of the 
alert by the user.

Section 203. Truncation of credit card and debit card account numbers

    This section amends section 605 of the Fair Credit 
Reporting Act to prohibit companies that accept credit or debit 
cards from printing expiration dates or more than the last 5 
digits of a card number on any electronically printed receipt 
provided to the cardholder at the point of sale or transaction, 
with certain exceptions. This limitation 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. This section becomes effective 
three years from the date of enactment with respect to any 
device for processing credit and debit card transactions that 
is in use before January 1, 2005, and one year from date of 
enactment for devices that are first put into use on or after 
January 1, 2005. These effective dates are designed to allow 
merchants to make an orderly transition to meet the 
requirements imposed by this section.

Section 204. Summary of rights of identity theft victims

    This section amends section 609 of the Fair Credit 
Reporting Act to direct the FTC, in consultation with the 
Federal banking agencies and the NCUA, to prepare a model 
summary of rights under the FCRA for consumers who believe they 
may be victims of fraud or identity theft involving credit, 
electronic fund transfers, or accounts or transactions at or 
with a financial institution, detailing the procedures for 
remedying the effects of the fraud. When a consumer contacts a 
consumer reporting agency to report a suspicion of applicable 
fraud or identity theft, the consumer reporting agency is 
required to provide the consumer with the FTC's model summary 
of rights, and information on how to contact the FTC for more 
information.

Section 205. Blocking of information resulting from identity theft

    This section amends section 605 of the Fair Credit 
Reporting Act to require consumer reporting agencies to block 
certain information on a consumer credit report resulting from 
an alleged identity theft. To obtain a block, a consumer must 
provide the consumer reporting agency with appropriate proof of 
identity; a police report (as defined in section 2 of the bill) 
evidencing the consumer's identity theft claim; an 
identification of the information on the consumer credit report 
that arises out of the alleged identity theft; and confirmation 
that the information is not information relating to any 
transaction by the consumer. Within 5 business days of 
receiving this information, the consumer reporting agency must 
block the information. The consumer reporting agency is also 
required to notify promptly the entity that furnished the 
blocked information that the information may be the result of 
identity theft, that a police report has been filed, that a 
block has been requested, and the effective date of the block.
    If a consumer reporting agency that has placed a block on a 
consumer's file reasonably determines that (1) the information 
was blocked in error or a block was requested by the consumer 
in error; (2) the information was blocked (or requested to be 
blocked) on the basis of a misrepresentation of fact by the 
consumer; or (3) the consumer knowingly obtained goods, 
services or money as a result of the block, then the consumer 
reporting agency may decline to block, or may rescind a block 
of the information. If a block is declined or rescinded, the 
consumer reporting agency must notify the affected consumer 
promptly.
    The blocking provisions of this section do not apply to 
check services companies, deposit account information service 
companies, and resellers of consumer credit reports under 
certain conditions.
    Nothing in this section requires a consumer reporting 
agency to prevent a Federal, State or local law enforcement 
agency from accessing blocked information in a consumer credit 
file to which the law enforcement agency could otherwise obtain 
access under the FCRA.

Section 206. Establishment of procedures for depository institutions to 
        identify possible instances of identity theft

    This section amends section 605 of the Fair Credit 
Reporting Act to direct the Federal banking agencies and the 
NCUA, in consultation with the FTC, to jointly establish, and 
update as necessary, guidelines for insured depository 
institutions to identify and ``red flag'' patterns, practices, 
and specific forms of activity that indicate the possible 
existence of identity theft. The section also directs the same 
regulators to jointly prescribe regulations requiring insured 
depository institutions to adopt reasonable policies and 
procedures for implementing the ``red flag'' guidelines to 
identify possible risks to customer accounts or to the 
institutions' safety and soundness. Those policies and 
procedures may not be inconsistent with, or duplicative of, the 
customer identification procedures required under section 326 
of the USA PATRIOT Act (31 U.S.C. Sec.  5318(l)).
    The Committee intends the guidelines required by this 
section to provide flexibility given the ever changing nature 
of identity theft and related crimes. The Committee believes 
that the Federal banking agencies and the NCUA are equipped to 
establish broad parameters for such guidelines, but that 
individual insured depository institutions are most 
appropriately situated to determine how best to develop and 
implement the required policies and procedures. The Committee 
believes that, in the case of account opening procedures, 
insured depository institution's policies and procedures 
pursuant to section 326 of the USA PATRIOT Act should be 
sufficient for purposes of this section.

Section 207. 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. The section includes 
a one-year authorization of appropriations needed to carry out 
the study, and directs the Treasury Department to submit a 
report to Congress within 6 months of the date of enactment of 
the legislation containing the findings of the study and any 
recommendations for legislative or administrative action.

          title iii--improving resolution of consumer disputes


Section 301. Coordination of consumer complaint investigations

    This section amends section 621 of the Fair Credit 
Reporting Act to direct those consumer reporting agencies that 
conduct business on a nationwide basis 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. The 
Committee believes that consultations with the Federal banking 
agencies and the NCUA in developing the form and procedures is 
important in light of the fact that depository institutions 
will likely receive the forms from consumers. The Committee 
notes that the model form will not be a substitute for a police 
report if a police report is required in order for the consumer 
to exercise his or her rights under the provisions of this 
legislation.

Section 302. Notice of dispute through reseller

    This section amends section 611 of the Fair Credit 
Reporting Act to require that consumer reporting agencies 
reinvestigate consumer disputes forwarded to them by resellers 
of credit reports (such as intermediaries who consolidate 
reports for mortgage lenders). The Committee notes that a 
consumer reporting agency has no obligation to reinvestigate 
information if the reseller submitting the request did not 
obtain the information in question from the consumer reporting 
agency.
    Section 302 also imposes a reinvestigation obligation on 
resellers. If a reseller receives a notice from a consumer of a 
dispute concerning the completeness or accuracy of any item of 
information contained in a consumer report on the consumer 
produced by the reseller, the reseller must, within 5 business 
days and free of charge, determine the completeness or accuracy 
of the information in question and either correct it (if the 
error is the reseller's), or convey the notice of dispute with 
any relevant information to the consumer reporting agency that 
provided the information (if the error is not the reseller's).

Section 303. Reasonable reinvestigation required

    This section amends section 611 of the Fair Credit 
Reporting Act to provide that when a consumer disputes the 
accuracy of information contained in a consumer credit report, 
the consumer reporting agency that prepared the report must 
conduct a reasonable reinvestigation to determine whether the 
disputed information is inaccurate.

Section 304. Duties of furnishers of information

    This section makes several changes to section 623(a) of the 
Fair Credit Reporting Act, which governs the legal duties of 
persons that furnish information to consumer reporting 
agencies.
    First, the section modifies the standard of care applicable 
to furnishers of information, to provide that they may not 
report information to a consumer reporting agency if they know 
or have reasonable cause to believe that the information is 
inaccurate. The term ``reasonable cause to believe that the 
information is inaccurate'' means, based on the furnisher's 
procedures designed to report accurate information, that the 
furnisher has actual knowledge, other than solely allegations 
by the consumer, which would cause a reasonable person to have 
substantial doubts about the accuracy of the information. This 
``reasonable cause to believe'' standard is based on actual 
knowledge of the furnisher of factual information that would 
cause a reasonable person to believe that the information is 
not accurate. It is the Committee's view that if a furnisher 
has followed reasonable practices to ensure the accuracy of 
information, it need take no further action unless the consumer 
provides factual information to the furnisher that, upon review 
by the furnisher, raise substantial doubt regarding the 
information's accuracy.
    Second, this section requires a person that regularly 
furnishes information to nationwide consumer reporting agencies 
to maintain reasonable procedures designed to ensure that the 
information furnished is accurate. While this section is 
intended to promote the accuracy of information reported to 
consumer reporting agencies, it does not require furnishers to 
guarantee the accuracy of each piece of information provided to 
a nationwide consumer reporting agency. Rather, it requires 
that the furnisher have a reasonable belief that the 
information is accurate, based on the furnisher's regular 
business practices and procedures. This is a similar standard 
to that adopted by the Treasury and the Federal banking 
agencies for customer identification under section 326 of the 
USA PATRIOT Act.
    Third, this section provides consumers with the ability to 
request a reinvestigation of information contained in a 
consumer report directly with the furnisher of information. A 
consumer who seeks to dispute the accuracy of information 
contained in a report provided by a nationwide consumer 
reporting agency directly with a furnisher must provide a 
dispute notice to the address specified by the furnisher for 
those notices. The furnisher may specify such address in any 
materials provided to the consumer in connection with the 
consumer's relationship with the furnisher, or upon the request 
of the consumer. The notice of dispute must clearly identify 
the specific information being disputed and explain the basis 
for the dispute. The furnisher must then conduct an 
investigation with respect to the disputed information, review 
all relevant information provided by the consumer with the 
notice of dispute, 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 
investigation if the dispute were initiated through such 
agency. The furnisher may report the results to the consumer in 
writing, orally, or electronically (if the consumer has 
provided an electronic address to the furnisher). If the 
investigation discloses that the information reported was 
inaccurate, the furnisher must promptly thereafter report the 
accurate information found as a result of the investigation to 
each nationwide consumer reporting agency to which the 
furnisher provided the inaccurate information.
    The purpose of the provision addressing the ability of a 
consumer to dispute information with the furnisher is to permit 
a consumer to raise disputes directly with the furnisher with 
which the consumer has a relationship, rather than raising 
those disputes initially with a consumer reporting agency with 
which the consumer does not have an ongoing relationship. A 
consumer seeking to dispute the accuracy of information with a 
furnisher must ``directly provide a dispute notice to the 
address specified by the person for such notices.'' The notice 
must be provided by the consumer and not by a third party, such 
as a credit repair clinic, and the dispute must be submitted to 
the address specified by the furnisher for this purpose. 
Nothing in this provision is intended to preclude a consumer's 
authorized family member or guardian (or attorneys acting as 
personal representatives), or authorized representatives from 
bona fide military service organizations, from submitting a 
dispute notice on behalf of the consumer, nor is it intended to 
preclude a furnisher from using a service organization to 
process disputes on the furnisher's behalf.
    This section is intended to emphasize the importance of 
furnishing accurate information to consumer reporting agencies 
without imposing unreasonable burdens on those that furnish 
that information. The Committee intends that the new duties 
imposed by this section will be interpreted and enforced in a 
manner that enhances the accuracy of credit reports but does 
not discourage or impede the furnishing of information to 
consumer reporting agencies.

Section 305. Prompt investigation of disputed consumer information

    This section requires the FTC and the Federal Reserve to 
jointly study the performance of consumer reporting agencies 
and furnishers of credit reporting information in complying 
with the Fair Credit Reporting Act's procedures and timelines 
for the prompt investigation and correction of disputed 
information in a consumer's credit file, as well as the 
completeness of information furnished, and report to Congress 
within 6 months of the date of enactment of this legislation 
with any appropriate recommendations to ensure promptness and 
full compliance.

            title iv--improving accuracy of consumer records


Section 401. Reconciling addresses

    This section amends section 605 of the Fair Credit 
Reporting Act to require a nationwide consumer reporting agency 
that receives and processes a request for a consumer credit 
report that includes an address for the consumer that 
substantially differs from the addresses in the consumer's file 
to notify the requester of the discrepancy. The notification 
need not include any additional information other than that a 
discrepancy exists. Nothing in this section is to be construed 
as requiring a requester of a consumer report to provide a 
consumer's address to a consumer reporting agency.
    The Federal banking agencies and the NCUA are directed to 
jointly prescribe regulations providing guidance to users of 
consumer credit reports on reasonable policies and procedures 
they should follow after receiving a notice of address 
discrepancy from a consumer reporting agency. The regulations 
must also describe reasonable policies and procedures for use 
by a user of a consumer report who receives a notice of 
discrepancy if the user establishes a continuing relationship 
with the consumer, and the user regularly and in the ordinary 
course of business furnishes information to the consumer 
reporting agency from which the notice of discrepancy was 
obtained, to reconcile the consumer's address with the consumer 
reporting agency by furnishing such address to such agency as 
part of information regularly furnished by the user for the 
period in which the relationship was established. This section 
is intended to require consumer reporting agencies to notify a 
user of a discrepancy, with a further obligation for that user 
to utilize reasonable policies and procedures to resolve those 
discrepancies. The Committee does not intend to place an 
obligation on consumer reporting agencies to affirmatively 
resolve discrepancies directly with the consumers.

Section 402. Prevention of repollution of consumer reports

    This section amends section 623 of the Fair Credit 
Reporting Act to provide that if a consumer submits a police 
report to a person who furnishes information to a consumer 
reporting agency, and the consumer states that information 
maintained by the furnisher resulted from identity theft, the 
furnisher may not furnish the information to any consumer 
reporting agency, unless the person subsequently knows or is 
informed by the consumer that the information is correct.

Section 403. Notice by users with respect to fraudulent information

    This section amends section 615 of the Fair Credit 
Reporting Act to require debt collection agents who learn that 
information in a consumer credit report is the result of 
identity theft or is otherwise fraudulent to either notify its 
principal (if the principal is the source of the relevant 
information) or, if the information originated from a source 
other than the debt collector's principal, the consumer 
reporting agency that prepared the report. Upon the request of 
the consumer, the debt collector must provide the consumer with 
all the information which the consumer would be entitled to 
receive if the information related to the consumer other than 
by reason of identity theft.

Section 404. Disclosure to consumers of contact information for users 
        and furnishers of information in consumer reports

    This section amends section 609 of the Fair Credit 
Reporting Act to require that a credit report provided to a 
consumer at the consumer's request include the addresses of 
entities that have either furnished information appearing on 
the report or have recently requested copies of the consumer's 
report, as well as customer service phone numbers if provided 
by the entity to the consumer reporting agency.

Section 405. 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 biennial reports to Congress on 
its findings and conclusions--together with such 
recommendations for legislative and administrative action as 
the FTC deems appropriate--over an eight-year period, beginning 
six months from the date of enactment of this bill. Within two 
years of the submission of the final periodic report, the FTC 
is required to submit a final report to Congress on the study.

     title v--improvements in use of and consumer access to credit 
                              information


Section 501. Free reports annually

    This section amends section 612 of the Fair Credit 
Reporting Act to allow consumers to request annually a free 
copy of their credit report. All consumers may directly request 
a free copy of their credit report annually from each consumer 
reporting agency that compiles and maintains files on consumers 
on a nationwide basis. Consumers who are unemployed, on 
welfare, or believe their files contain inaccurate information 
due to fraud may request a free credit report once every year 
from each regional and local consumer reporting agency in 
addition to a credit report from each national consumer 
reporting agency.

Section 502. Disclosure of credit scores

    This section amends section 609 of the Fair Credit 
Reporting Act to require consumer reporting agencies to make 
available to consumers (for a reasonable fee) upon request the 
consumer's current or most recently calculated credit score, as 
well as 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. If a 
consumer requests a credit file, then the agency must notify 
the consumer that the consumer may request and obtain a credit 
score. The disclosure of the key 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.
    Consumer reporting agencies that do not distribute credit 
scores in connection with residential real property loans or 
develop scores to assist 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.
    The credit score provided to the consumer by the consumer 
reporting agency must be derived from a credit scoring model 
that is widely distributed by the agency in connection with 
mortgage loans or credit risk analysis and the agency 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.
    While the consumer reporting agency may charge a reasonable 
fee for the score, the Committee intends that this reasonable 
fee not be used to cover profits and costs for developing and 
providing the free credit report required to be made available 
under section 501. In disclosing the top negative key factors 
affecting a consumer's credit score, if a negative key factor 
is the number of enquiries made (the number of times the agency 
provided the consumer's report to various users), then that 
factor must be included in the disclosure even if it is not 
among the top 4 negative key factors.
    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. Beyond this 
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 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 Fair Credit 
Reporting Act 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 consumers 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.

Section 503. Simpler and easier method for consumers to use 
        notification system

    This section amends the requirements contained in sections 
604 and 615 of the Fair Credit Reporting Act that consumer 
reporting agencies establish and maintain a notification system 
for consumers to exclude themselves from lists used for 
unsolicited pre-screened offers or credit or insurance to 
require additionally that the notification system be simple and 
easy to use. Anyone using a consumer report in connection with 
an unsolicited insurance or credit transaction must include, in 
the required disclosure statement to the consumer, a 
description in a simple and easy to understand format of how 
the consumer can prohibit his file from being used for 
unsolicited insurance and credit offers including the simple 
and easy-to-use method for notifying the consumer reporting 
agencies. The Committee believes that most current notification 
systems (such as toll-free phone numbers with straightforward 
choices) and disclosures permit consumers to notify consumer 
reporting agencies of their desire to limit pre-screened offers 
in a simple and easy manner. This section is intended to ensure 
that as technology evolves and different notification and 
disclosure methods are experimented with that consumers will be 
protected by a standard requiring that any new system continue 
to be simple and easy to understand and use.

Section 504. Requirement to disclose communications to a consumer 
        reporting agency

    This section amends section 623(a) of the Fair Credit 
Reporting Act to provide that if any financial institution that 
extends credit and regularly and in the ordinary course of 
business furnishes information to a nationwide consumer 
reporting agency (as described in section 603(p) of the FCRA) 
furnishes negative information to a consumer reporting agency 
regarding credit extended to the consumer, then the financial 
institution must provide a written notice to the consumer that 
they have done so. The notice must be provided to the customer 
prior to, or no later than 30 days after, furnishing negative 
information to the nationwide consumer reporting agency. The 
required notice must be clear and conspicuous and may be 
included on or with any materials provided to the customer, 
including a billing statement or notice of default. If the 
notice is provided to the customer prior to the furnishing of 
the negative information, the notice may not be included in the 
initial disclosures required under section 127(a) of the Truth 
in Lending Act, but may be included in other communications 
with the customer. Once the financial institution provides a 
notice to the customer, the financial institution may submit 
additional negative information to a nationwide consumer 
reporting agency with respect to the same transaction, 
extension of credit, account, or customer without providing an 
additional notice to the customer.
    The Federal Reserve Board must prescribe a brief model 
disclosure, not to exceed 30 words, for financial institutions 
to use in their efforts to comply with this requirement. If a 
financial institution uses the model developed by the Board it 
shall be deemed to be in compliance with the requirement of 
this section. However, a financial institution is not required 
to use the model disclosure. This section does not require a 
financial institution that has provided a customer with a 
disclosure to furnish negative information to a consumer 
reporting agency.
    A financial institution is not liable for failure to 
perform the duties required by this section if, at the time of 
the failure, the financial institution maintained reasonable 
policies and procedures to comply with the requirement. For 
example, a financial institution would not be liable for a 
failure to provide the disclosure if the financial institution 
maintained reasonable policies and procedures to comply, but 
was prohibited by law from contacting the consumer.

Section 505. Study of effects of credit scores and credit-based 
        insurance scores on availability and affordability of financial 
        products

    This section requires the FTC, in consultation with the 
Office of Fair Housing and Equal Opportunity of the Department 
of Housing and Urban Development, to study the effects of the 
use of credit scores and insurance scores on the availability 
and affordability of financial products and services, the 
accuracy of the causality of the score factors and historical 
losses, whether the use of those scores results in any 
disparate impact and whether financial underwriting systems 
could achieve comparable results through factors with less 
disparate impact, the factors used in credit scoring systems, 
and the effects of variables that are not considered. The FTC 
must seek public participation and report on its study with 
legislative recommendations within 18 months of the date of 
enactment of this bill. The Committee expects that the 
Commission and HUD will seek assistance from the Federal and 
State financial regulators that have jurisdiction over 
financial services providers and shall take into account 
currently existing studies and legal analysis.

Section 506. GAO study on disparate impact of credit system

    This section requires the General Accounting Office to 
study the credit system to determine the extent to which, if 
any, discrimination exists with regard to the availability and 
the terms of credit which has a disparate impact on the basis 
of race, color, income and education level, geographic 
location, age, sex, sexual orientation, national origin, or 
marital status and the nature of any discriminatory effect. The 
Committee intends that the GAO will seek assistance from the 
Board and other Federal and State financial regulators that 
have jurisdiction over credit providers for the relevant 
portions of the study. The GAO must submit a report to Congress 
on the findings of the study before the end of the two-year 
period beginning on the date of enactment of this legislation.

Section 507. Analysis of further restrictions on offers of credit or 
        insurance

    This section directs the Federal Reserve Board to study the 
ability of consumers to opt out of receiving unsolicited 
written offers of credit or insurance and the impact further 
restrictions on those offers would have on consumers. The Board 
is required to report to Congress within 12 months of the date 
of enactment of this legislation on the current statutory or 
voluntary mechanisms for consumers to opt out of receiving 
unsolicited credit and insurance offers, the extent to which 
the mechanisms are being used, the benefits to consumers of 
receiving the offers, whether consumers incur significant costs 
as a result of the offers and whether further restrictions on 
the offers would affect consumers' costs, the availability of 
credit or insurance, consumers' knowledge about new products 
and services, competition among lenders and insurers, and the 
ability of lenders and insurers to offer products to 
traditionally underserved consumers.

Section 508. Study on the need and the means for improving financial 
        literacy among consumers

    This section directs the General Accounting Office to study 
consumer knowledge of credit reports, credit scores, the credit 
dispute resolution process, and methods for improving consumer 
financial literacy. The GAO is directed to report its findings 
to Congress within 9 months of the date of enactment of this 
legislation. The study will examine the number of consumers who 
view their credit reports, under what conditions consumers 
obtain their reports, the extent of consumer knowledge of the 
credit system data collection process and how to obtain a 
credit report, and consumer understanding of factors that 
positively or negatively affect credit scores.

Section 509. Disclosure of increase in APR under certain circumstances

    This section requires that credit card issuers, in any 
disclosure or statement required under the Fair Credit 
Reporting Act for unsolicited credit card offers (a 
prescreening disclosure to a consumer under section 615(d) of 
the FCRA), clearly and conspicuously disclose the ability of 
the issuer to increase any annual percentage rate applicable to 
a credit card account, or to remove or increase any 
introductory annual percentage rate applicable to the account, 
for reasons other than actions or omissions of the cardholder 
that are directly related to such account. The Federal Reserve 
Board, in consultation with the other Federal banking agencies 
and the NCUA, may develop any guidelines necessary to assure 
that the required clear and conspicuous disclosure is provided 
in a prominent location and that it includes appropriate model 
disclosure statements.

        title vi--protecting employee misconduct investigations


Section 601. Certain employee investigation communications excluded 
        from definition of consumer report

    This section amends section 603 of the Fair Credit 
Reporting Act to provide that communications to an employer by 
outside third parties hired to investigate employee misconduct 
or compliance with the employer's preexisting written policies 
will not be considered ``consumer reports'' (meaning that 
advance notice or permission would be required). If any adverse 
action is taken based on the communication, the employer is 
required to disclose to the employee a summary containing the 
nature and substance of the communication (although certain 
sources of information are protected).

 title vii--limiting the use and sharing of medical information in the 
                            financial system


Section 701. Protection of medical information in the financial system

    This section amends section 604 of the Fair Credit 
Reporting Act 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 (except for certain insurance purposes).
    The section establishes that creditors are not allowed to 
obtain or use medical information for credit granting purposes. 
Certain exceptions are provided where authorized by Federal 
law, for insurance activities (including annuities), and where 
determined to be necessary and appropriate by the financial 
regulators. The Committee recognizes that there are limited 
circumstances in which a creditor may require medical 
information in determining a consumer's eligibility or 
continued eligibility for credit, for example, to confirm the 
use of loan proceeds in connection with loans to finance a 
specific medical procedure or device, or to verify a consumer's 
death or disability in connection with credit-related debt 
cancellation agreements, and considers the limited use of 
medical information in these circumstances and any similar 
circumstances the financial regulators may identify, to be a 
necessary and appropriate use of medical information for 
purposes of this section.
    Additional restrictions are imposed to limit the 
redisclosure of any medical information received in connection 
with certain insurance or credit transactions furnished by a 
consumer reporting agency or authorized under certain laws or 
regulations pursuant to the provisions of subsection (g) added 
by this section. Companies that receive medical information 
through any of the exceptions provided by subsection (g) are 
prohibited from further disclosure of the information to any 
other person except as necessary to carry out the original 
purpose for which the information was initially provided or as 
otherwise permitted by statute, regulation, or order.
    This section further amends section 603(d) of the Fair 
Credit Reporting Act to restrict the disclosure of certain 
medical-related information among companies affiliated by 
common ownership or corporate control. Except as authorized 
under certain Federal law, regulation, or order, or under 
certain applicable State insurance authority, the exclusions 
permitted in section 603(d)(2) from the definition of a 
``consumer report'' shall not apply with respect to information 
disclosed among affiliates or companies related by common 
ownership if the information is either medical information or 
information that is based on payments for medical products or 
services, or any aggregate list of identified consumers based 
on payment transactions for medical products or services.

Section 702. Confidentiality of medical contact information in credit 
        reports

    This section amends section 623 of the Fair Credit 
Reporting Act to establish that companies (including their 
agents or assignees) whose primary business is providing 
medical services, products, or devices to consumers and who 
furnish information to a consumer reporting agency are deemed 
to be a ``medical information furnisher''. Medical information 
furnishers must identify themselves as such before furnishing 
information on a consumer to a consumer reporting agency. If a 
medical information furnisher is furnishing information to a 
consumer reporting agency on a consumer but not notifying the 
agency as required of its status, then the FTC is directed to 
take action as necessary, within its jurisdiction, to ensure 
the company's compliance.
    This section also amends section 605 of the Fair Credit 
Reporting Act to provide that where a medical information 
furnisher has notified the consumer reporting agency of its 
status with respect to a consumer, the consumer reporting 
agency may not include in a consumer report on that consumer 
the name, address, or telephone number of the furnisher 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.
    The Committee does not intend to prohibit the inclusion in 
a consumer report of information relating to the consumer's 
place of employment. Rather, this section is intended to ensure 
that consumers who have medical transactions in their credit 
files are protected by requiring that the contact information 
be encoded so that third parties can not infer any health 
implications relating to the consumer.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

CONSUMER CREDIT PROTECTION ACT

           *       *       *       *       *       *       *



                  TITLE VI--CONSUMER CREDIT REPORTING

Sec.
601. Short title.
     * * * * * * *
[605. Requirements relating to information contained in consumer 
          reports.]
605. Requirements relating to information contained in consumer reports 
          and to identity theft prevention

           *       *       *       *       *       *       *


Sec. 601. Short title

  This title may be cited as the Fair Credit Reporting Act.

           *       *       *       *       *       *       *


Sec. 603.  Definitions and rules of construction

  (a)  * * *

           *       *       *       *       *       *       *

  (d) Consumer Report.--
          (1)  * * *
          (2) Exclusions.--[The term] Except as provided in 
        paragraph (3), the term ``consumer report'' does not 
        include--
                  (A)  * * *

           *       *       *       *       *       *       *

                  (D) a communication described in subsection 
                (o) or (q).

           *       *       *       *       *       *       *

          (3) Restriction on sharing of medical information.--
        Except for information or any communication of 
        information disclosed as provided in section 604(g)(3), 
        the exclusions in paragraph (2) shall not apply with 
        respect to information disclosed to any person related 
        by common ownership or affiliated by corporate control 
        if--
                  (A) the information is medical information; 
                or
                  (B) the information is an individualized list 
                or description based on a consumer's payment 
                transactions for medical products or services, 
                or an aggregate list of identified consumers 
                based on payment transactions for medical 
                products or services.

           *       *       *       *       *       *       *

  (q) Exclusion of Certain Communications for Employee 
Investigations.--
          (1) Communications described in this subsection.--A 
        communication is described in this subsection if--
                  (A) but for subsection (d)(2)(D), the 
                communication would be a consumer report;
                  (B) the communication is made to an employer 
                in connection with an investigation of--
                          (i) suspected misconduct relating to 
                        employment; or
                          (ii) compliance with Federal, State, 
                        or local laws and regulations, the 
                        rules of a self-regulatory 
                        organization, or any preexisting 
                        written policies of the employer;
                  (C) the communication is not made for the 
                purpose of investigating a consumer's credit 
                worthiness, credit standing, or credit 
                capacity; and
                  (D) the communication is not provided to any 
                person except--
                          (i) to the employer or an agent of 
                        the employer;
                          (ii) to any Federal or State officer, 
                        agency, or department, or any officer, 
                        agency, or department of a unit of 
                        general local government;
                          (iii) to any self-regulatory 
                        organization with regulatory authority 
                        over the activities of the employer or 
                        employee;
                          (iv) as otherwise required by law; or
                          (v) pursuant to section 608.
          (2) Subsequent disclosure.--After taking any adverse 
        action based in whole or in part on a communication 
        described in paragraph (1), the employer shall disclose 
        to the consumer a summary containing the nature and 
        substance of the communication upon which the adverse 
        action is based, except that the sources of information 
        acquired solely for use in preparing what would be but 
        for subsection (d)(2)(D) an investigative consumer 
        report need not be disclosed.
          (3) Self-regulatory organization defined.--For 
        purposes of this subsection, the term ``self-regulatory 
        organization'' includes any self-regulatory 
        organization (as defined in section 3(a)(26) of the 
        Securities Exchange Act of 1934), any entity 
        established under Title I of the Sarbanes-Oxley Act of 
        2002, any board of trade designated by the Commodity 
        Futures Trading Commission, and any futures association 
        registered with such Commission.
  (r) Reseller.--The term ``reseller'' means a consumer 
reporting agency that--
          (1) assembles and merges information contained in the 
        database of another consumer reporting agency or 
        multiple consumer reporting agencies concerning any 
        consumer for purposes of furnishing such information to 
        any third party, to the extent of such activities; and
          (2) does not maintain a database of the assembled or 
        merged information from which new consumer reports are 
        produced.
  (s) Other Definitions.--
          (1) Board; credit; creditor, credit card.--The terms 
        ``Board'', ``credit'', ``creditor'', and ``credit 
        card'' have the same meanings as in section 103 of the 
        Truth in Lending Act.
          (2) Commission.--The term ``Commission'' means the 
        Federal Trade Commission.
          (3) Debit card.--The term ``debit card'' means any 
        card issued by a financial institution to a consumer 
        for use in initiating electronic fund transfers (as 
        defined in section 903(6) of the Electronic Fund 
        Transfer Act) from the account (as defined in such Act) 
        of the consumer at such financial institution for the 
        purpose of transferring money between accounts or 
        obtaining money, property, labor, or services.
          (4) Electronic fund transfer.--The term ``electronic 
        fund transfer'' has the same meaning as in section 903 
        of the Electronic Fund Transfer Act.
          (5) Federal banking agency.--The term ``Federal 
        banking agency'' has the same meaning as in section 3 
        of the Federal Deposit Insurance Act.
          (6) Identity theft.--The term ``identity theft'' 
        means a fraud committed using another person's 
        identifying information, subject to such further 
        definition as the Commission and the Board may 
        prescribe, jointly, by regulation.
          (7) Police report.--The term ``police report'' means 
        a copy of any official valid report filed by a consumer 
        with any appropriate Federal, State, or local 
        government law enforcement agency, or any comparable 
        official government document that the Board and the 
        Commission shall jointly prescribe in regulations, that 
        is subject to a criminal penalty for false statements.

Sec. 604. Permissible purposes of reports

  (a)  * * *

           *       *       *       *       *       *       *

  (e) Election of Consumer To Be Excluded From Lists.--
          (1)  * * *

           *       *       *       *       *       *       *

          (5) Notification system.--
                  (A) In general.--Each consumer reporting 
                agency that, under subsection (c)(1)(B), 
                furnishes a consumer report in connection with 
                a credit or insurance transaction that is not 
                initiated by a consumer shall--
                          (i) establish and maintain a 
                        notification system, including a toll-
                        free telephone number, which permits 
                        any consumer whose consumer report is 
                        maintained by the agency to notify the 
                        agency, in a simple and easy manner and 
                        with appropriate identification, of the 
                        consumer's election to have the 
                        consumer's name and address excluded 
                        from any such list of names and 
                        addresses provided by the agency for 
                        such a transaction; and

           *       *       *       *       *       *       *

  [(g) Furnishing Reports Containing Medical Information.--A 
consumer reporting agency shall not furnish for employment 
purposes, or in connection with a credit or insurance 
transaction, a consumer report that contains medical 
information about a consumer, unless the consumer consents to 
the furnishing of the report.]
  (g) Protection of Medical Information.--
          (1) Limitation on consumer reporting agencies.--A 
        consumer reporting agency shall not furnish for 
        employment purposes, or in connection with a credit or 
        insurance transaction, a consumer report that contains 
        medical information (other than medical contact 
        information treated in the manner required under 
        section 605(a)(6)) about a consumer, unless--
                  (A) if furnished in connection with an 
                insurance transaction, the consumer 
                affirmatively consents to the furnishing of the 
                report;
                  (B) if furnished for employment purposes or 
                in connection with a credit transaction--
                          (i) the information to be furnished 
                        is relevant to process or effect the 
                        employment or credit transaction; and
                          (ii) the consumer provides specific 
                        written consent for the furnishing of 
                        the report that describes in clear and 
                        conspicuous language the use for which 
                        the information will be furnished; or
                  (C) such information is restricted or 
                reported using codes that do not identify, or 
                provide information sufficient to infer, the 
                specific provider or the nature of such 
                services, products, or devices to a person 
                other than the consumer, unless the report is 
                being provided to an insurance company for a 
                purpose relating to engaging in the business of 
                insurance other than property and casualty 
                insurance.
          (2) Limitation on creditors.--Except as permitted 
        pursuant to paragraph (3)(C) or regulations prescribed 
        under paragraph (5)(A), a creditor shall not obtain or 
        use medical information (other than medical information 
        treated in the manner required under section 605(a)(6)) 
        pertaining to a consumer in connection with any 
        determination of the consumer's eligibility, or 
        continued eligibility, for credit.
          (3) Actions authorized by federal law, insurance 
        activities and regulatory determinations.--Section 
        603(d)(3) shall not be construed so as to treat 
        information or any communication of information as a 
        consumer report if the information or communication is 
        disclosed--
                  (A) in connection with the business of 
                insurance or annuities, including the 
                activities described in section 18B of the 
                model Privacy of Consumer Financial and Health 
                Information Regulation issued by the National 
                Association of Insurance Commissioners (as in 
                effect on January 1, 2003);
                  (B) for any purpose permitted without 
                authorization under the Standards for 
                Individually Identifiable Health Information 
                promulgated by the Department of Health and 
                Human Services pursuant to the Health Insurance 
                Portability and Accountability Act of 1996, or 
                referred to under section 1179 of such Act, or 
                described in section 502(e) of Public Law 106-
                102; or
                  (C) as otherwise determined to be necessary 
                and appropriate, by regulation or order and 
                subject to paragraph (6), by the Commission, 
                any Federal banking agency or the National 
                Credit Union Administration (with respect to 
                any financial institution subject to the 
                jurisdiction of such agency or Administration 
                under paragraph (1), (2), or (3) of section 
                621(b), or the applicable State insurance 
                authority (with respect to any person engaged 
                in providing insurance or annuities).
          (4) Limitation on redisclosure of medical 
        information.--Any person that receives medical 
        information pursuant to paragraphs (1) or (3) shall not 
        disclose such information to any other person except as 
        necessary to carry out the purpose for which the 
        information was initially disclosed, or as otherwise 
        permitted by statute, regulation, or order.
          (5) Regulations and effective date for paragraph 
        (2).--
                  (A) Regulations required.--Each Federal 
                banking agency and the National Credit Union 
                Administration shall, subject to paragraph (6) 
                and after notice and opportunity for comment, 
                prescribe regulations that permit transactions 
                under paragraph (2) that are determined to be 
                necessary and appropriate to protect legitimate 
                operational, transactional, risk, consumer, and 
                other needs, consistent with the intent of 
                paragraph (2) to restrict the use of medical 
                information for inappropriate purposes.
                  (B) Final regulations required.--The Federal 
                banking agencies and the National Credit Union 
                Administration shall prescribe the regulations 
                required under subparagraph (A) in final form 
                before the end of the 6-month period beginning 
                on the date of the enactment of the Fair and 
                Accurate Credit Transactions Act of 2003.
          (6) Coordination with other laws.--No provision of 
        this subsection shall be construed as altering, 
        affecting, or superseding the applicability of any 
        other provision of Federal law relating to medical 
        confidentiality.

[Sec. 605. Requirements relating to information contained in consumer 
                    reports]

Sec. 605. Requirements relating to information contained in consumer 
                    reports and to identity theft prevention

  (a) Information Excluded From Consumer Reports.--Except as 
authorized under subsection (b), no consumer reporting agency 
may make any consumer report containing any of the following 
items of information:
  (1)  * * *

           *       *       *       *       *       *       *

          (6) The name, address, and telephone number of any 
        medical information furnisher that has notified the 
        agency of its status, unless--
                  (A) such name, address, and telephone number 
                are restricted or reported using codes that do 
                not identify, or provide information sufficient 
                to infer, the specific provider or the nature 
                of such services, products, or devices to a 
                person other than the consumer; or
                  (B) the report is being provided to an 
                insurance company for a purpose relating to 
                engaging in the business of insurance other 
                than property and casualty insurance.
  (b) [The provisions of subsection (a)] The provisions of 
paragraphs (1) through (5) of subsection (a) are not applicable 
in the case of any consumer credit report to be used in 
connection with--
          (1)  * * *

           *       *       *       *       *       *       *

  (d) Information Required To Be [Disclosed.--Any consumer 
reporting agency] Disclosed.--
          (1) Title 11 information.--Any consumer reporting 
        agency that furnishes a consumer report that contains 
        information regarding any case involving the consumer 
        that arises under title 11, United States Code, shall 
        include in the report an identification of the chapter 
        of such title 11 under which such case arises if 
        provided by the source of the information. If any case 
        arising or filed under title 11, United States Code, is 
        withdrawn by the consumer before a final judgment, the 
        consumer reporting agency shall include in the report 
        that such case or filing was withdrawn upon receipt of 
        documentation certifying such withdrawal.
          (2) Key factor in credit score information.--Any 
        consumer reporting agency that furnishes a consumer 
        report that contains any credit score or any other risk 
        score or predictor on any consumer shall include in the 
        report a clear and conspicuous statement that a key 
        factor (as defined in section 609(e)(2)(B)) that 
        adversely affected such score or predictor was the 
        number of enquiries, if such a predictor was in fact a 
        key factor that adversely affected such score.

           *       *       *       *       *       *       *

  (g) ``Red Flag'' Patterns of Possible Identity Theft.--
          (1) Investigation of changes of address.--The Federal 
        banking agencies and the National Credit Union 
        Administration, in carrying out the responsibilities of 
        such agencies and Administration under subsection (k), 
        shall jointly prescribe regulations for credit card and 
        debit card issuers to ensure that, if any such issuer 
        receives a request for an additional or replacement 
        card for an existing account within a short period of 
        time after the issuer has received notification of a 
        change of address for the same account, the issuer will 
        follow reasonable policies and procedures that require, 
        as appropriate, that the issuer not issue the 
        additional or replacement card unless the issuer--
                  (A) notifies the cardholder of the request at 
                the former address of the cardholder and 
                provides to the cardholder a means of promptly 
                reporting incorrect address changes;
                  (B) notifies the cardholder of the request by 
                such other means of communication as the 
                cardholder and the card issuer previously 
                agreed to; or
                  (C) uses other means of assessing the 
                validity of the change of address, in 
                accordance with reasonable policies and 
                procedures established by the card issuer in 
                accordance with the regulations prescribed 
                under subsection (k).
          (2) Inactive accounts.--The Federal banking agencies 
        and the National Credit Union Administration, in 
        carrying out the responsibilities of such agencies and 
        Administration under subsection (k), shall consider 
        including, as a possible ``red flag'' pattern, 
        reasonable guidelines providing that when a transaction 
        occurs with respect to a credit or deposit account that 
        has been inactive for more than 2 years, the creditor 
        or depository institution shall follow reasonable 
        policies and procedures that provide for notice to be 
        given to a consumer in a manner reasonably designed to 
        reduce the likelihood of identity theft with respect to 
        such account.
  (h) Notice of Discrepancy.--
          (1) In general.--If a person has requested a consumer 
        report relating to a consumer from a consumer reporting 
        agency described in section 603(p), the request 
        includes an address for the consumer that substantially 
        differs from the addresses in the file of the consumer, 
        and the agency provides a consumer report in response 
        to the request, the consumer reporting agency shall 
        notify the requester of the existence of the 
        discrepancy.
          (2) Regulations.--
                  (A) Regulations required.--The Federal 
                banking agencies and the National Credit Union 
                Administration shall jointly prescribe 
                regulations providing guidance regarding 
                reasonable policies and procedures a user of a 
                consumer report should employ when such user 
                has received a notice of discrepancy under 
                paragraph (1).
                  (B) Policies and procedures to be included.--
                The regulations prescribed under subparagraph 
                (A) shall describe reasonable policies and 
                procedures for use by a user of a consumer 
                report--
                          (i) to form a reasonable belief that 
                        the user knows the identity of the 
                        person to whom the consumer report 
                        pertains; and
                          (ii) if the user establishes a 
                        continuing relationship with the 
                        consumer, and the user regularly and in 
                        the ordinary course of business 
                        furnishes information to the consumer 
                        reporting agency from which the notice 
                        of discrepancy pertaining to the 
                        consumer was obtained, to reconcile the 
                        consumer's address with the consumer 
                        reporting agency by furnishing such 
                        address to such consumer reporting 
                        agency as part of information regularly 
                        furnished by the user for the period in 
                        which the relationship is established.
  (i) One-Call Fraud Alerts.--
          (1) Initial alerts.--Upon the direct request of a 
        consumer, or an individual acting on behalf of or as a 
        personal representative of a consumer, who asserts, in 
        good faith, a suspicion that the consumer has been or 
        is about to become a victim of fraud or related crime, 
        including identity theft, a consumer reporting agency 
        described in section 603(p) shall, if the agency 
        maintains a file on the consumer who is making the 
        request and has a reasonable belief that the agency 
        knows the identity of the consumer--
                  (A) include a fraud alert in the file of that 
                consumer for a period of not less than 90 days 
                beginning on the date of such request, unless 
                the consumer specifically requests that such 
                fraud alert be removed before the end of such 
                period;
                  (B) disclose to the consumer that the 
                consumer may request a free copy of the file of 
                the consumer and provide the consumer, upon 
                request, a free disclosure of the consumer's 
                file (as described in section 609(a)) within 3 
                business days after such request;
                  (C) for 2 years after the date of such 
                request, exclude the consumer from any list of 
                consumers prepared by the agency and provided 
                to any third party to offer credit or insurance 
                to the consumer as part of a transaction that 
                was not initiated by the consumer, unless the 
                consumer subsequently requests that such 
                exclusion be rescinded before the end of such 
                period; and
                  (D) refer the information regarding the fraud 
                alert to each of the other consumer reporting 
                agencies described in section 603(p), as 
                required under section 621(f)(1).
          (2) Extended alerts.--Upon the direct request of a 
        consumer, or an individual acting on behalf of or as a 
        personal representative of a consumer, who contacts a 
        consumer reporting agency described in section 603(p) 
        to report details of an identity theft and submits 
        evidence that provides the agency with reasonable cause 
        to believe that such identity theft has occurred, the 
        agency shall, if the agency maintains a file on the 
        consumer who is making the request and has a reasonable 
        belief that the agency knows the identity of the 
        consumer--
                  (A) include a fraud alert in the file of that 
                consumer and provide an opportunity for the 
                consumer to extend the alert for a period of up 
                to 7 years from the date of such request, 
                unless the consumer subsequently requests that 
                such fraud alert be removed before the end of 
                such period;
                  (B) provide the consumer with the option of 
                including more complete information in the 
                consumer's file, including a telephone number 
                or some other reasonable means of communication 
                that any person who requests the consumer's 
                report may utilize for authorization before 
                establishing a new credit plan in the name of 
                the consumer; and
                  (C) provide the consumer with at least 2 free 
                disclosures of the information described in 
                section 609(a) during the 12-month period 
                beginning on the date of such request.
          (3) Active duty alerts.--Upon the direct request of 
        an active duty military consumer, or an individual 
        acting on behalf of or as a personal representative of 
        an active duty military consumer, who contacts a 
        consumer reporting agency described in section 603(p), 
        the agency shall, if the agency maintains a file on the 
        consumer who is making the request and has a reasonable 
        belief that the agency knows the identity of the 
        consumer--
                  (A) include an active duty alert in the file 
                of that consumer during a period of not less 
                than 12 months beginning on the date of the 
                request, unless the consumer requests that such 
                active duty alert be removed before the end of 
                such period;
                  (B) for 2 years after the date of such 
                request, exclude the consumer from any list of 
                consumers prepared by the agency and provided 
                to any third party to offer credit or insurance 
                to the consumer as part of a transaction that 
                was not initiated by the consumer, unless the 
                consumer subsequently requests that such 
                exclusion be rescinded before the end of such 
                period; and
                  (C) refer the information regarding the 
                active duty alert to each of the other consumer 
                reporting agencies described in section 603(p), 
                as required under section 621(f)(1).
          (4) Procedures.--Each consumer reporting agency 
        described in section 603(p) shall establish policies 
        and procedures to comply with the obligations of 
        paragraphs (1), (2), and (3), including procedures that 
        allow consumers to request initial, extended, or active 
        duty alerts in a simple and easy manner, including by 
        telephone.
          (5) Notice to users.--No person who obtains any 
        information that includes a fraud alert under this 
        section from a file of any consumer from a consumer 
        reporting agency may establish a new credit plan in the 
        name of the consumer for a person other than the 
        consumer without utilizing reasonable policies and 
        procedures described in paragraph (9).
          (6) Referrals of fraud alerts.--Each consumer 
        reporting agency described in section 603(p) that 
        receives a referral of a fraud alert from another such 
        agency pursuant to paragraph (1)(D) or (3)(C) shall 
        follow the procedures required under subparagraphs (A), 
        (B), and (C) of paragraph (1), in the case of a 
        referral under paragraph (1)(D), and subparagraphs (A) 
        and (B), in the case of a referral under paragraph 
        (3)(C), as if the agency received the request from the 
        consumer directly.
          (7) Duty of reseller to reconvey alert.--A reseller 
        that is notified of the existence of a fraud alert in a 
        consumer's consumer report shall communicate to each 
        person procuring a consumer report with respect to such 
        consumer the existence of a fraud alert in effect for 
        such consumer.
          (8) Duty of other consumer reporting agencies to 
        provide contact information.--If a consumer contacts 
        any consumer reporting agency that is not a consumer 
        reporting agency described in section 603(p) to 
        communicate a suspicion that the consumer has been or 
        is about to become a victim of fraud or related crime, 
        including identity theft, the agency shall provide the 
        consumer with information on how to contact the 
        Commission and the consumer reporting agencies 
        described in section 603(p) to obtain more detailed 
        information and request alerts under this subsection.
          (9) Fraud alert.--
                  (A) Definition.--For purposes of this 
                subsection, the term ``fraud alert'' means, at 
                a minimum, a statement--
                          (i) in the file of a consumer that 
                        the consumer may be a victim of fraud, 
                        including identity theft, or is a 
                        consumer described in paragraph (3); 
                        and
                          (ii) that is transmitted in a manner 
                        that facilitates a clear and 
                        conspicuous view of the statement by 
                        any person requesting such file.
                  (B) Other information.--A fraud alert shall 
                include information that notifies all 
                prospective users of a consumer report on the 
                consumer to which the alert relates that the 
                consumer does not authorize establishing any 
                new credit plan in the name of the consumer, 
                unless the user utilizes reasonable policies 
                and procedures to form a reasonable belief that 
                the user knows the identity of the person for 
                whom such new plan is established, which may 
                include obtaining authorization or 
                preauthorization of the consumer at a telephone 
                number designated by the consumer or by such 
                other reasonable means agreed to.
          (10) Other definitions.--For purposes of this 
        subsection, the following definitions shall apply:
                  (A) Active duty military consumer.--The term 
                ``active duty military consumer'' means a 
                consumer in military service who--
                          (i) is on active duty (as defined in 
                        section 101(d)(1) of title 10, United 
                        States Code) or is a reservist 
                        performing duty under a call or order 
                        to active duty under a provision of law 
                        referred to in section 101(a)(13) of 
                        title 10, United States Code; and
                          (ii) is assigned to service away from 
                        the consumer's usual duty station.
                  (B) New credit plan.--The term ``new credit 
                plan'' means a new account under an open end 
                credit plan (as defined in section 103(i) of 
                this Act) or a new credit transaction not under 
                an open end credit plan.
  (j) Block of Information Resulting From Identity Theft.--
          (1) Block.--Except as provided in paragraph (3), a 
        consumer reporting agency shall block the reporting of 
        any information in the file of a consumer that the 
        consumer identifies as information that resulted from 
        an alleged identity theft and confirms is not 
        information relating to any transaction by the consumer 
        not later than 5 business days after the date of 
        receipt by such agency of--
                  (A) appropriate proof of the identity of a 
                consumer;
                  (B) a police report evidencing the claim of 
                the consumer of identity theft;
                  (C) the identification of the information by 
                the consumer; and
                  (D) confirmation by the consumer that the 
                information is not information relating to any 
                transaction by the consumer.
          (2) Notification.--A consumer reporting agency shall 
        promptly notify the furnisher of information identified 
        by the consumer under paragraph (1)--
                  (A) that the information may be a result of 
                identity theft;
                  (B) that a police report has been filed;
                  (C) that a block has been requested under 
                this subsection; and
                  (D) of the effective date of the block.
          (3) Authority to decline or rescind.--
                  (A) In general.--A consumer reporting agency 
                may decline to block, or may rescind any block, 
                of consumer information under this subsection 
                if the consumer reporting agency reasonably 
                determines that--
                          (i) the information was blocked in 
                        error or a block was requested by the 
                        consumer in error;
                          (ii) the information was blocked, or 
                        a block was requested by the consumer, 
                        on the basis of a misrepresentation of 
                        fact by the consumer relevant to the 
                        request to block; or
                          (iii) the consumer knowingly obtained 
                        possession of goods, services, or 
                        moneys as a result of the blocked 
                        transaction or transactions, or the 
                        consumer should have known that the 
                        consumer obtained possession of goods, 
                        services, or moneys as a result of the 
                        blocked transaction or transactions.
                  (B) Notification to consumer.--If the block 
                of information is declined or rescinded under 
                this paragraph, the affected consumer shall be 
                notified promptly, in the same manner as 
                consumers are notified of the reinsertion of 
                information under section 611(a)(5)(B).
                  (C) Significance of block.--For purposes of 
                this paragraph, if a consumer reporting agency 
                rescinds a block, the presence of information 
                in the file of a consumer prior to the blocking 
                of such information is not evidence of whether 
                the consumer knew or should have known that the 
                consumer obtained possession of any goods, 
                services, or monies as a result of the block.
          (4) Exceptions.--
                  (A) Verification companies.--This subsection 
                shall not apply to--
                          (i) a check services company, which 
                        issues authorizations for the purpose 
                        of approving or processing negotiable 
                        instruments, electronic funds 
                        transfers, or similar methods of 
                        payments; or
                          (ii) a deposit account information 
                        service company, which issues reports 
                        regarding account closures due to 
                        fraud, substantial overdrafts, 
                        automated teller machine abuse, or 
                        similar negative information regarding 
                        a consumer, to inquiring banks or other 
                        financial institutions for use only in 
                        reviewing a consumer request for a 
                        deposit account at the inquiring bank 
                        or financial institution.
                  (B) Resellers.--
                          (i) No reseller file.--This 
                        subsection shall not apply to a 
                        consumer reporting agency if the 
                        consumer reporting agency--
                                  (I) is a reseller;
                                  (II) is not, at the time of 
                                the request of the consumer 
                                under paragraph (1), otherwise 
                                furnishing or reselling a 
                                consumer report concerning the 
                                information identified by the 
                                consumer; and
                                  (III) informs the consumer, 
                                by any means, that the consumer 
                                may report the identity theft 
                                to the Commission to obtain 
                                consumer information regarding 
                                identity theft.
                          (ii) Reseller with file.--The sole 
                        obligation of the consumer reporting 
                        agency under this subsection, with 
                        regard to any request of a consumer 
                        under this subsection, shall be to 
                        block the consumer report maintained by 
                        the consumer reporting agency from any 
                        subsequent use if--
                                  (I) the consumer, in 
                                accordance with the provisions 
                                of paragraph (1), identifies, 
                                to a consumer reporting agency, 
                                information in the file of the 
                                consumer that resulted from 
                                identity theft; and
                                  (II) the consumer reporting 
                                agency is a reseller of the 
                                identified information.
                          (iii) Notice.--In carrying out its 
                        obligation under clause (ii), the 
                        reseller shall promptly provide a 
                        notice to the consumer of the decision 
                        to block the file. Such notice shall 
                        contain the name, address, and 
                        telephone number of each consumer 
                        reporting agency from which theconsumer 
information was obtained for resale.
          (5) Access to blocked information by law enforcement 
        agencies.--No provision of this subsection shall be 
        construed as requiring a consumer reporting agency to 
        prevent a Federal, State, or local law enforcement 
        agency from accessing blocked information in a consumer 
        file to which the agency could otherwise obtain access 
        under this title.
  (k) ``Red Flag'' Guidelines Required.--
          (1) In general.--The Federal banking agencies and the 
        National Credit Union Administration, in consultation 
        with the Commission, shall jointly establish and 
        maintain guidelines for use by insured depository 
        institutions in identifying patterns, practices, and 
        specific forms of activity that indicate the possible 
        existence of identity theft with respect to accounts, 
        and update such guidelines as often as necessary.
          (2) Regulations.--The Federal banking agencies and 
        the National Credit Union Administration, in 
        consultation with the Commission, shall jointly 
        prescribe regulations requiring insured depository 
        institutions to establish and adhere to reasonable 
        policies and procedures for implementing the guidelines 
        established pursuant to paragraph (1) to identify 
        possible risks to customer accounts or to the safety 
        and soundness of the institutions.
          (3) Consistency with verification requirements.--
        Policies and procedures established pursuant to 
        paragraph (2) shall not be inconsistent with, or 
        duplicative of, the policies and procedures required 
        under section 5318(l) of title 31, United States Code.
          (4) Insured depository institution defined.--For 
        purposes of this subsection, the term ``insured 
        depository institution''--
                  (A) has the meaning given to such term in 
                section 3 of the Federal Deposit Insurance Act; 
                and
                  (B) includes an insured credit union (as 
                defined in section 101 of the Federal Credit 
                Union Act).
  (l) Truncation of Credit Card and Debit Card Account 
Numbers.--
          (1) In general.--Except as provided in this 
        subsection, no person that accepts credit cards or 
        debit cards for the transaction of business shall print 
        the expiration date or more than the last 5 digits of 
        the card number upon any receipt provided to the 
        cardholder at the point of the sale or transaction.
          (2) Limitation.--This section shall apply only to 
        receipts that are electronically printed, and shall 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.

           *       *       *       *       *       *       *


Sec. 609. Disclosures to consumers

  (a) Every consumer reporting agency shall, upon request, and 
subject to section 610(a)(1), clearly and accurately disclose 
to the consumer:
          (1)  * * *
  (2) The sources of the information, including addresses of 
the sources, and (if provided by the sources of information) 
the telephone numbers identified for customer service for the 
sources of information; except that the sources of information 
acquired solely for use in preparing an investigative consumer 
report and actually used for no other purpose need not be 
disclosed: Provided, That in the event an action is brought 
under this title, such sources shall be available to the 
plaintiff under appropriate discovery procedures in the court 
in which the action is brought.
          (3)(A)  * * *
          (B) An identification of a person under subparagraph 
        (A) shall include--
                  (i)  * * *
                  [(ii) upon request of the consumer, the 
                address and telephone number of the person.]
                  (ii) the address and (if provided) the 
                telephone numbers identified for customer 
                service of the person.

           *       *       *       *       *       *       *

          (6) If the consumer requests the credit file and not 
        the credit score, a statement that the consumer may 
        request and obtain a credit score.

           *       *       *       *       *       *       *

  (d) Summary of Rights of Identity Theft Victims.--
          (1) In general.--The Commission, in consultation with 
        the Federal banking agencies and the National Credit 
        Union Administration, shall prepare a model summary of 
        the rights of consumers under this title with respect 
        to the procedures for remedying the effects of fraud or 
        identity theft involving credit, electronic fund 
        transfers, or accounts or transactions at or with a 
        financial institution.
          (2) Summary of rights and contact information.--If 
        any consumer contacts a consumer reporting agency and 
        expresses a belief that the consumer is a victim of 
        fraud or identity theft involving credit, electronic 
        fund transfers, or accounts or transactions at or with 
        a financial institution, the consumer reporting agency 
        shall, in addition to any other action the agency may 
        take, provide the consumer with the model summary of 
        rights prepared by the Commission under paragraph (1) 
        and information on how to contact the Commission to 
        obtain more detailed information.
  (e) Disclosure of Credit Scores.--
          (1) In general.--Upon the consumer's request for a 
        credit score, a consumer reporting agency shall supply 
        to a consumer a statement indicating that the 
        information and credit scoring model may be different 
        than the credit score that may be used by the lender, 
        and a notice which shall include the following 
        information:
                  (A) The consumer's current credit score or 
                the consumer's most recent credit score that 
                was previously calculated by the credit 
                reporting agency for a purpose related to the 
                extension of credit.
                  (B) The range of possible credit scores under 
                the model used.
                  (C) All the key factors that adversely 
                affected the consumer's credit score in the 
                model used, the total number of which shall not 
                exceed four, subject to paragraph (9).
                  (D) The date the credit score was created.
                  (E) The name of the person or entity that 
                provided the credit score or credit file upon 
                which the credit score was created.
          (2) Definitions.--For purposes of this section, the 
        following definitions shall apply:
                  (A) Credit score.--The term ``credit 
                score''--
                          (i) means a numerical value or a 
                        categorization derived from a 
                        statistical tool or modeling system 
                        used by a person who makes or arranges 
                        a loan to predict the likelihood of 
                        certain credit behaviors, including 
                        default (and the numerical value or the 
                        categorization derived from this 
                        analysis may also be referred to as a 
                        ``risk predictor'' or ``risk score''); 
                        and
                          (ii) does not include--
                                  (I) any mortgage score or 
                                rating of an automated 
                                underwriting system that 
                                considers one or more factors 
                                in addition to credit 
                                information, including the loan 
                                to value ratio, the amount of 
                                down payment, or a consumer's 
                                financial assets; or
                                  (II) any other elements of 
                                the underwriting process or 
                                underwriting decision.
                  (B) Key factors.--The term ``key factors'' 
                means all relevant elements or reasons 
                adversely affecting the credit score for the 
                particular individual listed in the order of 
                their importance based on their effect on the 
                credit score.
          (3) Timeframe and manner of disclosure.--The 
        information required by this subsection shall be 
        provided in the same timeframe and manner as the 
        information described in subsection (a).
          (4) Applicability to certain uses.--This subsection 
        shall not be construed so as to compel a consumer 
        reporting agency to develop or disclose a score if the 
        agency does not--
                  (A) distribute scores that are used in 
                connection with residential real property 
                loans; or
                  (B) develop scores that assist credit 
                providers in understanding a consumer's general 
                credit behavior and predicting the future 
                credit behavior of the consumer.
          (5) Applicability to credit scores developed by 
        another person.--
                  (A) In general.--This subsection shall not be 
                construed to require a consumer reporting 
                agency that distributes credit scores developed 
                by another person or entity to provide a 
                further explanation of them, or to process a 
                dispute arising pursuant to section 611, except 
                that the consumer reporting agency shall 
                provide the consumer with the name and address 
                and website for contacting the person or entity 
                who developed the score or developed the 
                methodology of the score.
                  (B) Exception.--This paragraph shall not 
                apply to a consumer reporting agency that 
                develops or modifies scores that are developed 
                by another person or entity.
          (6) Maintenance of credit scores not required.--This 
        subsection shall not be construed to require a consumer 
        reporting agency to maintain credit scores in its 
        files.
          (7) Compliance in certain cases.--In complying with 
        this subsection, a consumer reporting agency shall--
                  (A) supply the consumer with a credit score 
                that is derived from a credit scoring model 
                that is widely distributed to users by that 
                consumer reporting agency in connection with 
                residential real property loans or with a 
                credit score that assists the consumer in 
                understanding the credit scoring assessment of 
                the credit behavior of the consumer and 
                predictions about the future credit behavior of 
                the consumer; and
                  (B) a statement indicating that the 
                information and credit scoring model may be 
                different than that used by the lender.
          (8) Reasonable fee.--A consumer reporting agency may 
        charge a reasonable fee for providing the information 
        required under this subsection.
          (9) Use of enquiries as a key factor.--If a key 
        factor that adversely affects a consumer's credit score 
        consists of the number of enquiries made with respect 
        to a consumer report, that factor shall be included in 
        the disclosure pursuant to paragraph (1)(C) without 
        regard to the numerical limitation in such paragraph.
  (f) Disclosure of Credit Scores by Certain Mortgage 
Lenders.--
          (1) In general.--Any person who makes or arranges 
        loans and who uses a consumer credit score as defined 
        in subsection (e) in connection with an application 
        initiated or sought by a consumer for a closed end loan 
        or establishment of an open end loan for a consumer 
        purpose that is secured by 1 to 4 units of residential 
        real property (hereafter in this subsection referred to 
        as the ``lender'') shall provide the following to the 
        consumer as soon as reasonably practicable:
                  (A) Information required under 
                subsection(e).--
                          (i) In general.--A copy of the 
                        information identified in subsection 
                        (e) that was obtained from a consumer 
                        reporting agency or was developed and 
                        used by the user of the information.
                          (ii) Notice under subparagraph (D).--
                        In addition to the information provided 
                        to it by a third party that provided 
                        the credit score or scores, a lender is 
                        only required to provide the notice 
                        contained in subparagraph (D).
                  (B) Disclosures in case of automated 
                underwriting system.--
                          (i) In general.--If a person who is 
                        subject to this section uses an 
                        automated underwriting system to 
                        underwrite a loan, that person may 
                        satisfy the obligation to provide a 
                        credit score by disclosing a credit 
                        score and associated key factors 
                        supplied by a consumer reporting 
                        agency.
                          (ii) Numerical credit score.--
                        However, if a numerical credit score is 
                        generated by an automated underwriting 
                        system used by an enterprise, and that 
                        score is disclosed to the person, the 
                        score shall be disclosed to the 
                        consumer consistent with subparagraph 
                        (C).
                          (iii) Enterprise defined.--For 
                        purposes of this subparagraph, the term 
                        ``enterprise'' shall have the same 
                        meaning as in paragraph (6) of section 
                        1303 of the Federal Housing Enterprises 
                        Financial Safety and Soundness Act of 
                        1992.
                  (C) Disclosures of credit scores not obtained 
                from a consumer reporting agency.--A person 
                subject to the provisions of this subsection 
                who uses a credit score other than a credit 
                score provided by a consumer reporting agency 
                may satisfy the obligation to provide a credit 
                score by disclosing a credit score and 
                associated key factors supplied by a consumer 
                reporting agency.
                  (D) Notice to home loan applicants.--A copy 
                of the following notice, which shall include 
                the name, address, and telephone number of each 
                consumer reporting agency providing a credit 
                score that was used:

                  ``notice to the home loan applicant

  ``In connection with your application for a home loan, the 
lender must disclose to you the score that a consumer reporting 
agency distributed to users and the lender used in connection 
with your home loan, and the key factors affecting your credit 
scores.
  ``The credit score is a computer generated summary calculated 
at the time of the request and based on information a consumer 
reporting agency or lender has on file. The scores are based on 
data about your credit history and payment patterns. Credit 
scores are important because they are used to assist the lender 
in determining whether you will obtain a loan. They may also be 
used to determine what interest rate you may be offered on the 
mortgage. Credit scores can change over time, depending on your 
conduct, how your credit history and payment patterns change, 
and how credit scoring technologies change.
  ``Because the score is based on information in your credit 
history, it is very important that you review the credit-
related information that is being furnished to make sure it is 
accurate. Credit records may vary from one company to another.
  ``If you have questions about your credit score or the credit 
information that is furnished to you, contact the consumer 
reporting agency at the address and telephone number provided 
with this notice, or contact the lender, if the lender 
developed or generated the credit score. The consumer reporting 
agency plays no part in the decision to take any action on the 
loan application and is unable to provide you with specific 
reasons for the decision on a loan application.
          ``If you have questions concerning the terms of the 
        loan, contact the lender.''.
                  (E) Actions not required under this 
                subsection.--This subsection shall not require 
                any person to do any of the following:
                          (i) Explain the information provided 
                        pursuant to subsection (e).
                          (ii) Disclose any information other 
                        than a credit score or key factor, as 
                        defined in subsection (e).
                          (iii) Disclose any credit score or 
                        related information obtained by the 
                        user after a loan has closed.
                          (iv) Provide more than 1 disclosure 
                        per loan transaction.
                          (v) Provide the disclosure required 
                        by this subsection when another person 
                        has made the disclosure to the consumer 
                        for that loan transaction.
                  (F) No obligation for content.--
                          (i) In general.--Any person's 
                        obligation pursuant to this subsection 
                        shall be limited solely to providing a 
                        copy of the information that was 
                        received from the consumer reporting 
                        agency.
                          (ii) Limit on liability.--No person 
                        has liability under this subsection for 
                        the content of that information or for 
                        the omission of any information within 
                        the report provided by the consumer 
                        reporting agency.
                  (G) Person defined as excluding enterprise.--
                As used in this subsection, the term ``person'' 
                does not include an enterprise (as defined in 
                paragraph (6) of section 1303 of the Federal 
                Housing Enterprises Financial Safety and 
                Soundness Act of 1992).
          (2) Prohibition on disclosure clauses null and 
        void.--
                  (A) In general.--Any provision in a contract 
                that prohibits the disclosure of a credit score 
                by a person who makes or arranges loans or a 
                consumer reporting agency is void.
                  (B) No liability for disclosure under this 
                subsection.--A lender shall not have liability 
                under any contractual provision for disclosure 
                of a credit score pursuant to this subsection.
  (g) Disclosure to Consumer.--
          (1) In general.--The ability of a credit card issuer 
        to increase any annual percentage rate applicable to a 
        credit card account, or to remove or increase any 
        introductory annual percentage rate of interest 
        applicable to such account, for reasons other than 
        actions or omissions of the card holder that are 
        directly related to such account shall be clearly and 
        conspicuously disclosed to the consumer by the credit 
        card issuer in any disclosure or statement required to 
        be made to the consumer under this title in connection 
        with a credit card solicitation that is not initiated 
        by the consumer.
          (2) Regulations and model statements.--The Board, in 
        consultation with the Federal banking agencies and the 
        National Credit Union Administration, shall develop 
        such guidelines in regulations as necessary to assure 
        that the information to be disclosed to consumers 
        pursuant to paragraph (1) is clearly and conspicuously 
        provided in a prominent location in any credit card 
        solicitation that is not initiated by the consumer, and 
        shall include model disclosure statements to be used by 
        credit card issuers in making the disclosures required 
        to be provided to the consumer by paragraph (1).

           *       *       *       *       *       *       *


Sec. 611. Procedure in case of disputed accuracy

  (a) Reinvestigations of Disputed Information.--
          (1) Reinvestigation required.--
                  (A) In general.--[If the completeness] 
                Subject to subsection (e), if the completeness 
                or accuracy of any item of information 
                contained in a consumer's file at a consumer 
                reporting agency is disputed by the consumer 
                and the consumer notifies the agency directly, 
                or indirectly through a reseller, of such 
                dispute, the agency [shall reinvestigate free 
                of charge] shall, free of charge, conduct a 
                reasonable reinvestigation to determine whether 
                the disputed information is inaccurate and 
                record the current status of the disputed 
                information, or delete the item from the file 
                in accordance with paragraph (5), before the 
                end of the 30-day period beginning on the date 
                on which the agency receives the notice of the 
                dispute from the consumer or reseller.

           *       *       *       *       *       *       *

          (2) Prompt notice of dispute to furnisher of 
        information.--
                  (A) In general.--Before the expiration of the 
                5-business-day period beginning on the date on 
                which a consumer reporting agency receives 
                notice of a dispute from any consumer or a 
                reseller in accordance with paragraph (1), the 
                agency shall provide notification of the 
                dispute to any person who provided any item of 
                information in dispute, at the address and in 
                the manner established with the person. The 
                notice shall include all relevant information 
                regarding the dispute that the agency has 
                received from the consumer or reseller.
                  (B) Provision of other information [from 
                consumer].--The consumer reporting agency shall 
                promptly provide to the person who provided the 
                information in dispute all relevant information 
                regarding the dispute that is received by the 
                agency from the consumer or the reseller after 
                the period referred to in subparagraph (A) and 
                before the end of the period referred to in 
                paragraph (1)(A).

           *       *       *       *       *       *       *

  (e) Reinvestigation Requirement Applicable to Resellers.--
          (1) Exemption from general reinvestigation 
        requirement.--Except as provided in paragraph (2), a 
        reseller shall be exempt from the requirements of this 
        section.
          (2) Action required upon receiving notice of a 
        dispute.--If a reseller receives a notice from a 
        consumer of a dispute concerning the completeness or 
        accuracy of any item of information contained in a 
        consumer report on such consumer produced by the 
        reseller, the reseller shall, within 5 business days of 
        receiving the notice and free of charge--
                  (A) determine whether the item of information 
                is incomplete or inaccurate as a result of an 
                act or omission of the reseller; and
                  (B) if--
                          (i) the reseller determines that the 
                        item of information is incomplete or 
                        inaccurate as a result of an act or 
                        omission of the reseller, correct the 
                        information in the consumer report or 
                        delete it; or
                          (ii) if the reseller determines that 
                        the item of information is not 
                        incomplete or inaccurate as a result of 
                        an act or omission of the reseller, 
                        convey the notice of the dispute, 
                        together with all relevant information 
                        provided by the consumer, to each 
                        consumer reporting agency that provided 
                        the reseller with the information that 
                        is the subject of the dispute.
          (3) Reseller reinvestigations.--No provision of this 
        subsection shall be construed as prohibiting a reseller 
        from conducting a reinvestigation of a consumer dispute 
        directly.

SEC. 612. CHARGES FOR CERTAIN DISCLOSURES.

  (a)  * * *

           *       *       *       *       *       *       *

  (c) Free Disclosure Under Certain Other Circumstances.--Upon 
the request of the consumer, a consumer reporting agency that 
is not a consumer reporting agency described in section 603(p) 
shall make all disclosures pursuant to section 609 once during 
any 12-month period without charge to that consumer if the 
consumer certifies in writing that the consumer--
          (1) * * *

           *       *       *       *       *       *       *

  (e) Free Annual Disclosure.--Upon the direct request of the 
consumer, a consumer reporting agency described in section 
603(p) shall make all disclosures pursuant to section 609 once 
during any 12-month period without charge to the consumer.

           *       *       *       *       *       *       *


Sec. 615. Requirements on users of consumer reports

  (a)  * * *

           *       *       *       *       *       *       *

  (d) Duties of Users Making Written Credit or Insurance 
Solicitations on the Basis of Information Contained in Consumer 
Files.--
          (1)  * * *
          (2) Simple and easy notification.--Any statement 
        given the consumer under paragraph (1)(E) shall be in a 
        simple and easy to understand format and shall describe 
        the simple and easy method established under section 
        604(e)(5)(A)(i) for the consumer to respond.
          [(2)] (3) Disclosure of address and telephone 
        number.--A statement under paragraph (1) shall include 
        the address and toll-free telephone number of the 
        appropriate notification system established under 
        section 604(e).
          [(3)] (4) Maintaining criteria on file.--A person who 
        makes an offer of credit or insurance to a consumer 
        under a credit or insurance transaction described in 
        paragraph (1) shall maintain on file the criteria used 
        to select the consumer to receive the offer, all 
        criteria bearing on credit worthiness or insurability, 
        as applicable, that are the basis for determining 
        whether or not to extend credit or insurance pursuant 
        to the offer, and any requirement for the furnishing of 
        collateral as a condition of the extension of credit or 
        insurance, until the expiration of the 3-year period 
        beginning on the date on which the offer is made to the 
        consumer.
          [(4)] (5) Authority of federal agencies regarding 
        unfair or deceptive acts or practices not affected.--
        This section is not intended to affect the authority of 
        any Federal or State agency to enforce a prohibition 
        against unfair or deceptive acts or practices, 
        including the making of false or misleading statements 
        in connection with a credit or insurance transaction 
        that is not initiated by the consumer.
  (e) Notice of Fraudulent Information Relating to Identity 
Theft.--If an agent acting as a debt collector (as defined in 
title VIII) of a person who furnishes information to any 
consumer reporting agency uses information contained in a 
consumer report on any consumer and learns that any such 
information so used is the result of identity theft or 
otherwise is fraudulent, the agent shall--
          (1) if such information--
                  (A) originated from the person for whom the 
                debt collector is acting as agent, notify the 
                person of the fraudulent information; or
                  (B) originated from a person other than the 
                person for whom the debt collector is acting as 
                agent, notify the consumer reporting agency 
                (that provided the consumer report) of the 
                fraudulent information, either directly or 
                through the person for whom the debt collector 
                is acting as agent; and
          (2) upon the request of the consumer, provide the 
        consumer with all information which the consumer would 
        be entitled to receive if the information related to 
        the consumer other than by reason of identity theft.

           *       *       *       *       *       *       *


Sec. 621. Administrative enforcement

  (a) * * *

           *       *       *       *       *       *       *

  (c) State Action for Violations.--
          (1) * * *

           *       *       *       *       *       *       *

          (5) Limitations on state actions for [violation of 
        section 623(a)(1)] certain violations of section 
        623(a).--
                  (A) Violation of injunction required.--A 
                State may not bring an action against a person 
                under paragraph (1)(B) for a violation of 
                [section 623(a)(1)] paragraph (1) or (6) of 
                section 623(a), unless--
                          (i) * * *

           *       *       *       *       *       *       *

  (f) Coordination of Consumer Complaint Investigations.--
          (1) In general.--The consumer reporting agencies 
        described in section 603(p) shall develop and maintain 
        procedures for the referral, to each such agency, of 
        any consumer complaint received by any such agency 
        alleging any identity theft or requesting a block or a 
        fraud alert.
          (2) Model form and procedure for reporting identity 
        theft.--The Commission, in consultation with the 
        Federal banking agencies and the National Credit Union 
        Administration, shall develop a model form and model 
        procedures to be used by consumers who are victims of 
        identity theft for contacting and informing creditors 
        and consumer reporting agencies of the fraud.
          (3) Annual summary reports.--Each consumer reporting 
        agency described in section 603(p) shall submit an 
        annual summary report to the Commission on consumer 
        complaints received by the agency on identity theft or 
        fraud alerts.
  (g) FTC Regulation of Coding of Trade Names.--If the 
Commission determines that a person described in paragraph (8) 
of section 623(a) has not met the requirements of such 
paragraph, the Commission shall take action to ensure the 
person's compliance with such paragraph, which may include 
issuing model guidance or prescribing reasonable policies and 
procedures as necessary to ensure that such person complies 
with such paragraph.

           *       *       *       *       *       *       *


SEC. 623. RESPONSIBILITIES OF FURNISHERS OF INFORMATION TO CONSUMER 
                    REPORTING AGENCIES.

  (a) Duty of Furnishers of Information To Provide Accurate 
Information.--
          (1)  * * *
                  (A) Reporting information with actual 
                knowledge of errors.--A person shall not 
                furnish any information relating to a consumer 
                to any consumer reporting agency if the person 
                [knows or consciously avoids knowing that the 
                information is inaccurate] knows or has 
                reasonable cause to believe that the 
                information is inaccurate.
                  (B) Reasonable procedures to ensure 
                accuracy.--A person that regularly furnishes 
                information relating to consumers to a consumer 
                reporting agency described in section 603(p) 
                shall maintain reasonable procedures designed 
                to ensure that the information furnished is 
                accurate.
                  [(B)] (C) Reporting information after notice 
                and confirmation of errors.--A person shall not 
                furnish information relating to a consumer to 
                any consumer reporting agency if--
                          (i) * * *

           *       *       *       *       *       *       *

                  [(C)] (D) No address requirement.--A person 
                who clearly and conspicuously specifies to the 
                consumer an address for notices referred to in 
                subparagraph (B) shall not be subject to 
                subparagraph (A); however, nothing in 
                subparagraph (B) shall require a person to 
                specify such an address.
                  (E) Information alleged to result from 
                identity theft.--If a consumer submits a police 
                report to a person who furnishes information to 
                a consumer reporting agency that states that 
                information maintained by such person that 
                purports to relate to the consumer resulted 
                from identity theft, the person may not furnish 
                such information that purports to relate to the 
                consumer to any consumer reporting agency, 
                unless the person subsequently knows or is 
                informed by the consumer that the information 
                is correct.
                  (F) Definition.--For purposes of subparagraph 
                (A), the term ``reasonable cause to believe 
                that the information is inaccurate'' means, 
                based on the procedures described in 
                subparagraph (B), has knowledge, other than 
                solely allegations by the consumer, that would 
                cause a reasonable person to have substantial 
                doubts about the accuracy of the information.

           *       *       *       *       *       *       *

          (6) Ability of consumer to dispute information 
        directly with furnisher.--
                  (A) In general.--A consumer may dispute 
                directly with a person the accuracy of 
                information that--
                          (i) is contained in a consumer report 
                        on the consumer prepared by a consumer 
                        reporting agency described in section 
                        603(p); and
                          (ii) was provided by the person to 
                        that consumer reporting agency in 
                        accordance with paragraph (1)(B).
                  (B) Submitting a notice of dispute.--A 
                consumer who seeks to dispute the accuracy of 
                information with a person under subparagraph 
                (A) shall provide a dispute notice directly to 
                such person at the address specified by the 
                person for such notices that--
                          (i) identifies the specific 
                        information that is being disputed; and
                          (ii) explains the basis for the 
                        dispute.
                  (C) Duty of person after receiving notice of 
                dispute.--After receiving a notice of dispute 
                from a consumer pursuant to subparagraph (B), 
                the person that provided the information in 
                dispute to a consumer reporting agency referred 
                to in subparagraph (A) shall--
                          (i) conduct an investigation with 
                        respect to the disputed information;
                          (ii) review all relevant information 
                        provided by the consumer with the 
                        notice;
                          (iii) complete such person's 
                        investigation of the dispute and report 
                        the results of the investigation 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; and
                          (iv) if the investigation finds that 
                        the information reported was 
                        inaccurate, promptly thereafter report 
                        correct information to each consumer 
                        reporting agency described in section 
                        603(p) to which the person furnished 
                        the inaccurate information.
          (7) Negative Information.--
                  (A) Notice to consumer required.--
                          (i) In general.--If any financial 
                        institution that extends credit and 
                        regularly and in the ordinary course of 
                        business furnishes information to a 
                        consumer reporting agency described in 
                        section 603(p) furnishes negative 
                        information to such an agency regarding 
                        credit extended to a customer, the 
                        financial institution shall provide a 
                        notice of such furnishing of negative 
                        information, in writing, to the 
                        customer.
                          (ii) Notice effective for subsequent 
                        submissions.--After providing such 
                        notice, the financial institution may 
                        submit additional negative information 
                        to a consumer reporting agency 
                        described in section 603(p) with 
                        respect to the same transaction, 
                        extension of credit, account, or 
                        customer without providing additional 
                        notice to the customer.
                  (B) Time of notice.--
                          (i) In general.--The notice required 
                        under subparagraph (A) shall be 
                        provided to the customer prior to, or 
                        no later than 30 days after, furnishing 
                        the negative information to a consumer 
                        reporting agency described in section 
                        603(p).
                          (ii) Coordination with new account 
                        disclosures.--If the notice is provided 
                        to the customer prior to furnishing the 
                        negative information to a consumer 
                        reporting agency, the notice may not be 
                        included in the initial disclosures 
                        provided under section 127(a) of the 
                        Truth in Lending Act.
                  (C) Coordination with other disclosures.--The 
                notice required under subparagraph (A)--
                          (i) may be included on or with any 
                        notice of default, any billing 
                        statement, or any other materials 
                        provided to the customer; and
                          (ii) must be clear and conspicuous.
                  (D) Model disclosure.--
                          (i) Duty of board to prepare.--The 
                        Board shall prescribe a brief model 
                        disclosure a financial institution may 
                        use to comply with subparagraph (A), 
                        which shall not exceed 30 words.
                          (ii) Use of model not required.--No 
                        provision of this paragraph shall be 
                        construed as requiring a financial 
                        institution to use any such model form 
                        prescribed by the Board.
                          (iii) Compliance using model.--A 
                        financial institution shall be deemed 
                        to be in compliance with subparagraph 
                        (A) if the financial institution uses 
                        any such model form prescribed by the 
                        Board, or the financial institution 
                        uses any such model form and rearranges 
                        its format.
                  (E) Use of notice without submitting negative 
                information.--No provision of this paragraph 
                shall be construed as requiring a financial 
                institution that has provided a customer with a 
                notice described in subparagraph (A) to furnish 
                negative information about the customer to a 
                consumer reporting agency.
                  (F) Safe harbor.--A financial institution 
                shall not be liable for failure to perform the 
                duties required by this paragraph if, at the 
                time of the failure, the financial institution 
                maintained reasonable policies and procedures 
                to comply with this paragraph.
                  (G) Definitions.--For purposes of this 
                paragraph, the following definitions shall 
                apply:
                          (i) Negative information.--The term 
                        ``negative information'' means 
                        information concerning a customer's 
                        delinquencies, late payments, 
                        insolvency, or any form of default.
                          (ii) Customer; financial 
                        institution.--The terms ``customer'' 
                        and ``financial institution'' have the 
                        same meaning as in section 509 of the 
                        Gramm-Leach-Bliley Act.
          (8) Duty to provide notice of status as medical 
        information furnisher.--A person whose primary business 
        is providing medical services, products, or devices, or 
        the person's agent or assignee, who furnishes 
        information to a consumer reporting agency on a 
        consumer shall be considered a medical information 
        furnisher for the purposes of this title and shall 
        notify the agency of such status.

           *       *       *       *       *       *       *


Sec. 624. Relation to State laws

  (a)  * * *

           *       *       *       *       *       *       *

  (b) General Exceptions.--No requirement or prohibition may be 
imposed under the laws of any State--
          (1) with respect to any subject matter regulated 
        under--
                  (A)  * * *

           *       *       *       *       *       *       *

                  (E) section 605, relating to information 
                contained in consumer reports and to identity 
                theft prevention, except that this subparagraph 
                shall not apply to any State law in effect on 
                the date of enactment of the Consumer Credit 
                Reporting Reform Act of 1996; or

           *       *       *       *       *       *       *

          (3) with respect to the form and content of any 
        disclosure required to be made under [section 609(c)] 
        subsection (c) or (d) of section 609.

           *       *       *       *       *       *       *

  (d) Limitations.--[Subsections (b) and (c)--
          [(1) do not affect any settlement,]  Subsections (b) 
        and (c) do not affect any settlement, agreement, or 
        consent judgment between any State Attorney General and 
        any consumer reporting agency in effect on the date of 
        enactment of the [Consumer Credit Reporting Reform Act 
        of 1996; and
          [(2) do not apply to any provision of State law 
        (including any provision of a State constitution) 
        that--
                  [(A) is enacted after January 1, 2004;
                  [(B) states explicitly that the provision is 
                intended to supplement this title; and
                  [(C) gives greater protection to consumers 
                than is provided under this title.] Consumer 
                Credit Reporting Reform Act of 1996.

           *       *       *       *       *       *       *


                            ADDITIONAL VIEWS

    I appreciate that this committee has worked very hard to 
produce a bill that has garnered support on both sides of the 
aisle. Certainly, FCRA reauthorization had the potential to 
become a very difficult issue absent the leadership of Chairman 
Oxley and the leadership of many others in this committee.
    As the bill was put together over the past several weeks, 
compromises were made regarding different elements of the bill. 
Industry has made many concessions in order to help put strong 
consumer protections in the legislation. There are, however, 
new consumer protections contained in title V that are likely 
to cause lenders and consumer reporting agencies in our country 
to have great concern, and which I am concerned provide little 
benefit to consumers.
    Specifically, I have concerns about section 502 of the 
bill. As it is currently drafted, section 502 includes new 
requirements on mortgage lenders to disclose credit scores to 
borrowers. While I have no problem with the intent of this 
provision, I think that this language can be improved so that 
it is less burdensome and more workable.
    Borrowers should be able to see what scores their loans are 
being based off of, however, one problem I have with this 
language is that while it sets some clear disclosure standards, 
it does not make these standards uniform or national. We could 
be placing new disclosure requirements on lenders, but at the 
same time allowing states to place duplicative requirements on 
those companies. This gives me serious concerns because 
borrowers could be faced with a blizzard of duplicate 
requirements from both the state and federally governments. 
Section 502 must be made a national standard, not a duplicate 
mandate on lenders.
    I also have concerns that the language in section 502 is 
vague concerning when it is appropriate to make the credit 
score disclosures. As I said earlier, I have no problem with 
these disclosures, they will help prevent fraud, but we should 
work to minimize the burden they put on lenders. For example, 
one solution would be to allow lenders, when sending these 
scores, to do in it a way that minimizes costs, such as mailing 
the score with other documents. This could help significantly 
reduce costs for lenders and borrowers.
    I believe that as it moves forward with this important 
legislation, the committee should consider ways to make section 
502 more beneficial for consumers so that they get important 
information while not imposing new burdens on lenders. At the 
same time I think we should look at simplifying the disclosure 
that mortgage originators must make to consumers.
    Similarly, I have concerns about significant costs being 
imposed on consumer reporting agencies under section 501. I am 
concerned about he propriety of Congress mandating that any 
business give away its products for free. In this instance we 
are imposing a significant financial burden on consumer 
reporting agencies on the premise that it will provide 
increased consumer education. In the absence of a uniform 
standard under title V, section 501 could exacerbate the costs 
to the consumer reporting agencies. I believe that both 
Sections 501 and 502 should serve as a national standard for 
these consumer protections in order to assure the costs of 
these laws are not increased by virtue of inconsistent or 
duplicative State laws regarding reports being furnished.

                                                     Robert W. Ney.

                           SUPPLEMENTAL VIEWS

    Section 501 of the legislation requires consumer reporting 
agencies that compile and maintain files on consumers on a 
nationwide basis, upon direct request of the consumer, to 
provide the consumer with a copy of his or her credit report 
once annually at no charge. We have concerns about the impact 
of this provision as it is currently drafted.
    Congress has already provided consumers with complete 
access to their credit reports. In fact, consumers can obtain 
their credit reports for free, by law, in many instances such 
as if they have suffered adverse action as a result of 
information in their credit reports, if they are unemployed and 
seeking employment, if they are on public assistance, or if 
they believe false information may be in their files as a 
result of fraud (e.g. identity theft). In all other instances, 
the price of a credit report is capped by law--the current cap 
is $9 and it is adjusted annually for inflation. We note that 
the $9 fee is not prohibitively expensive and is less than what 
many public sector entities charge consumers for a copy of 
their records. The FBI, for example, charges an individual $18 
for a copy of his or her arrest record. The Department of Motor 
Vehicles in the District of Columbia charges consumers $13 for 
a copy of their 10-year driving record. We will spare the 
Committee a laundry list of other examples.
    Requiring nationwide credit bureaus to provide their 
product for free to consumers may have admirable goals. 
However, we fear that Section 501 will actually harm consumers 
in the long run. As noted above, consumers already have full 
access to their credit reports, and Section 501 does not expand 
consumers' rights in that regard. Yet, Section 501 will impose 
hundreds of millions of dollars in additional costs on 
nationwide consumer reporting agencies. It seems obvious that 
at least some of this cost may be passed on to consumers in the 
form of higher costs for credit and insurance. We are also 
concerned that nationwide credit bureaus will be at the mercy 
of unpredictable surges in demand for credit reports. A single 
story about "free" credit reports on a national news program, 
or a similar front page headline on a national newspaper or 
magazine, could result in millions of inquiries to the 
nationwide bureaus in a very short period of time. No business 
can adequately plan for such uncontrollable and unpredictable 
large scale spikes in demand for a product. As a result, 
consumers in most need of assistance, such as those seeking a 
reinvestigation of information so that they can close on a home 
mortgage, will certainly suffer as the credit bureaus shift 
resources in order to deal with the unpredictable spikes in 
demand for free credit reports. We strongly hope that the final 
form of this legislation will include reasonable measures that 
allow nationwide credit bureaus to manage the cost impact and 
consumer demand appropriately and fairly.
    Finally, in light of the burden Section 501 will place on 
nationwide credit bureaus, we have asked a noted constitutional 
scholar, Professor Douglas W. Kmiec, to apprise us of any 
constitutional questions that may arise if Section 501 is 
enacted as currently drafted. Judging by Professor Kmiec's 
response to us, we are concerned that Section 501 may not be 
constitutional. By way of background, Professor Kmiec is former 
dean of the Catholic University Law School and is now the 
Caruso Chair in Constitutional Law at Pepperdine University. 
Professor Kmiec also served President Ronald Reagan as head of 
the office of legal counsel in the Department of Justice. 
Professor Kmiec's detailed analysis is attached.
                                   Judy Biggert.
                                   Patrick J. Toomey.
                                   Jeb Hensarling.

                              ----------                              

                       Pepperdine University School of Law,
                                     Malibu, CA, September 4, 2003.
Re constitutional taking implications of H.R. 2622.

Hon. Judy Biggert,
U.S. Congress, Longworth Building,
Washington, DC.
    Dear Congresswoman Biggert: As a professor of 
constitutional law and the former head of the Office of Legal 
Counsel in the U.S. Department of Justice, I have been asked by 
the national consumer reporting agencies to review the 
constitutionality of certain proposed amendments to the Fair 
Credit Reporting Act, 15 U.S.C. Sec. Sec. 1681 et seq. 
(``FCRA'')--specifically, sections 501 and 502 of H.R. 2622, 
the Fair and Accurate Credit Transactions Act of 2003. I am 
pleased to share this analysis with you.
    Section 501 would require Credit Reporting Agencies 
(``CRAs'') ``upon the direct request of the consumer'' to 
provide each consumer with a copy of his or her credit report 
``once during any 12-month period without charge to the 
consumer.'' Section 502 would require CRAs to supply the 
consumer with his or her credit score and all of the key 
factors that adversely affected the credit score.\1\
---------------------------------------------------------------------------
    \1\ Section 502 has been modified to permit a reasonable charge for 
the provision of credit scores. Unlike the credit reports mandated to 
be provided for free under Section 501, this modification should 
eliminate any constitutional questions associated with the valuable 
property interests associated with credit scores, but of course, this 
important recognition of the private property interests at stake does 
nothing to address the more pervasive taking of the credit reports, 
themselves.
---------------------------------------------------------------------------
    While the desire of Congress to assist consumers in this 
context is admirable, these proposals, in my judgment, will 
likely operate to unconstitutionally deprive CRAs of property 
without just compensation in violation of the Fifth Amendment. 
In this regard, Justice Holmes admonition of more than three-
quarters of a century ago is apt: ``a strong public desire to 
improve the public condition is not enough to warrant achieving 
the desire by a shorter cut than the constitutional way of 
paying for the change.'' Pennsylvania Coal v. Mahon, 260 U.S. 
at 416 (1922).
    One final word before sharing with you the analysis in 
detail. The concerns like those raised by this letter are of 
such serious magnitude that they have merited the special 
attention of the Presidency, and an existing Executive Order 
(No. 12360) mandates that ``actions,'' including proposed 
federal legislation, that have takings implications, must 
``account for the obligations imposed by the Just Compensation 
Clause of the Fifth Amendment * * * so that they do not result 
in the imposition of unanticipated or undue additional burdens 
on the public fisc.'' Further, ``executive departments and 
agencies shall * * * identify the takings implications of 
proposed regulatory actions and address the merits of those 
actions in light of the identified takings implications, if 
any, in all required submissions made to the Office of 
Management and Budget.'' Insofar as the Executive Order directs 
the Attorney General, in particular, ``to ensure that the 
policies of the Executive Departments and agencies are 
consistent with this Order,'' it would certainly be appropriate 
before proceeding with the proposed amendments to the FCRA to 
seek the Attorney General's guidance on their constitutional 
implications.

Analysis

    Because of the importance of the legislative object sought 
to be achieved by H.R. 2622, I have sought to examine the 
question indulging whenever possible those standards of 
analysis that give the greatest latitude to Congress' 
legislative authority. In this respect, several things should 
be noted at the outset: first, there is not abundant judicial 
precedent applying the Constitution's protection against 
uncompensated regulatory takings in the context of intellectual 
property, though what there is (as directed below) is credibly 
supportive of the constitutional concerns of the CRAs; and 
second, as a matter of constitutional law, should a taking be 
found, it does not preclude Congress from acting, but it does 
obligate Congress to compensate the CRAs adversely affected.
    Of course, current provisions in the FCRA provide for the 
free provision of reports, but only under highly limited 
circumstances (such as a credit denial or fraud); otherwise, 
CRAs obtain the fair market value for their products. The 
proposed amendments envision a vastly expanded obligation for 
free reports. Should this not be legislatively addressed, the 
CRAs have a statutory right under the Tucker Act, 28 U.S.C. 
1346(a)(2) (1988) to seek compensation for the property taken--
specifically, for the fair market value of the millions of free 
credit reports that would literally be physically taken from 
the CRAs pursuant to the proposed language.\2\
---------------------------------------------------------------------------
    \2\ The damages suffered by CRAs are discussed more extensively 
below, but they consist, at a minimum, of the market value of the free 
credit reports that would be mandated as well as the increased 
servicing costs--a severe and singular after-investment liability not 
wholly dissimilar from the retroactive health insurance liability 
imposed and found to be unconstitutional in Eastern Enterprises v. 
Apfel, 524 U.S. 498 (1988). While it is true that the members of the 
Supreme Court disagreed in Eastern Enterprises over whether the takings 
clause or the due process clause was the appropriate source of monetary 
remedy, a plurality wrote unambiguously that if a law imposes ``severe 
retroactive liability on a limited class of parties that could not have 
anticipated the liability, and the extent of that liability is 
substantially disproportionate to the parties' experience,'' it 
transgresses the Constitution. Concurring in the judgment, Justice 
Kennedy relied upon both the severity of the loss and its retroactivity 
or unforeseeability to supply relief as a matter of substantive due 
process.
---------------------------------------------------------------------------

The property at issue

    Any taking analysis begins with the Fifth Amendment \3\ and 
a careful assessment of the property at issue. Property cannot 
be legislatively redefined at will. As the Supreme Court has 
held: ``property interests * * * are not created by the 
Constitution. Rather, they are created and their dimensions are 
defined by existing rules or understandings that stem from an 
independent source such as state law--rules or understandings 
that secure certain benefits and that support claims of 
entitlement to those benefits.'' \4\ Intellectual property 
(e.g., patents, copyrightable works or compilations of 
information, trade secrets) are clearly of importance to a 
modern, 21st century economy and they have not been, and cannot 
be, invisible to the Constitution's protections. In this 
instance, it is reasonable to conclude that there is a distinct 
property interest that is either taken outright or placed at 
risk of being taken by the proposed amendments.\5\
---------------------------------------------------------------------------
    \3\ Nor shall private property be taken for public use without the 
payment of just compensation. Amendment V.
    \4\ Board of Regents v. Roth, 408 U.S. 564, 577 (1972).
    \5\ While the proposal currently allows for a reasonable charge for 
credit scores, it is possible that the required score and factor 
disclosure could place the underlying proprietary algorithms at risk in 
a manner that would implicate the Takings Clause.
---------------------------------------------------------------------------
            The credit reports--A distinct property interest
    Credit reports are created when CRAs, employing years of 
training, labor, skill and judgment, collect and organize 
information about consumers and their credit history from 
public records, creditors and other reliable sources. Credit 
reports are then made available by CRAs to a consumer's current 
and prospective creditors and employers as allowed by law. 
Specific information contained in a typical credit report 
includes:
     The consumer's name, current and previous 
addresses, phone number, Social Security number, date of birth 
and current and previous employers.
     Specific information about each credit account 
held by the consumer, such as the date opened, credit limit or 
loan amount, balance, monthly payment and payment pattern 
during the past several years.
     Federal district bankruptcy records and state and 
county court records of tax liens and monetary judgments.
     Statements of dispute, which allow both consumers 
and creditors to report the factual history of an account.
    This information is obtained from many different sources, 
and each CRA may produce a report that varies for any given 
consumer, depending on the reporting sources to which it has 
access, and the frequency with which those sources provide the 
CRA with updated information. It is reasonable to treat the 
CRA's property interests in both the credit reports and the 
credit score reports as intellectual property interests in the 
nature of copyright. See Feist Publ'ns, Inc. v. Rural Tel. 
Svcs. Co., 499 U.S. 340, 348 (1991) (``Factual compilations, on 
the other hand, may possess the requisite originality [to be 
entitled to copyright protection.] The compilation author 
typically chooses which facts to include, in what order to 
place them, and how to arrange the collected data so that they 
may be used effectively by readers. These choices as to 
selection and arrangement, as long as they are made 
independently by the compiler and entail a minimal degree of 
creativity, are sufficiently original that Congress may protect 
such compilations through the copyright laws.''). See also CCC 
Info. Servs., Inc. v. MacLean Hunter Mkt. Reports, Inc., 44 
F.3d 61, 65 (2d Cir. 1994) (noting that ``the protection of 
compilations is consistent with the objectives of the copyright 
law * * *.'' and further that were a legislature or 
administrative body to adopt a rule abrogating by legislative 
fiat a party's copyright, it ``would raise very substantial 
problems under the Takings Clause of the Constitution.'') CCC 
Info. Svcs., 44 F.3d at 74.
    I am informed by the CRAs that the costs associated with 
the production of a credit report exceed $7.50 per credit 
report, and it is fair to surmise that the fair market value 
for a report is at least equal to the $9 per report authorized 
under the FCRA. The industry has not yet fully monetized the 
economic value of the millions of reports that would be taken 
or mandated to be provided for free under the proposed 
legislation, but it can be readily anticipated to be in the 
hundreds of millions of dollars, and if the unforeseen and 
imposed cost of servicing these reports are incorporated (see 
note 2, supra) and widespread consumer participation assumed, 
the ultimate sum may range as high as a billion dollars.

Applying the Fifth Amendment

    As noted, the Fifth Amendment forbids the taking of private 
property for public use without just compensation. It has long 
been recognized that this constitutional guarantee is 
``designed to bar Government from forcing some people alone to 
bear public burdens, which, in all fairness and justice, should 
be borne by the public as a whole.'' \6\ In the instant case, 
Congress seeks via the proposed FCRA amendments to ``prevent 
identity theft, improve resolution of consumer disputes, 
improve the accuracy of consumer records, [and] make 
improvements in the use of, and consumer access to, credit 
information * * *.'' \7\ These are worthy goals. Rather than 
providing for compensation for the property taken to accomplish 
these objectives, however, H.R. 2622 seeks to accomplish its 
purpose at the sole expense of the CRAs. Under existing law, it 
is fair to conclude that this rises to the level of an 
impermissible regulatory taking in violation of the Fifth 
Amendment.
---------------------------------------------------------------------------
    \6\ Palazzolo, 533 U.S. at 633 (2001) (quoting Armstrong v. United 
States, 364 U.S. 40, 49 (1960)).
    \7\ See Preamble to H.R. 2622.
---------------------------------------------------------------------------
    A regulatory taking occurs ``when some significant 
restriction is placed upon an owner's use of his property for 
which justice and fairness require that compensation be 
given.'' \8\ Regulatory takings can be analyzed either as per 
se takings, or under the balancing test established by the 
Supreme Court in Penn Central, depending on the nature of the 
alleged taking. Per se takings tests apply in two principal 
contexts: (1) where regulation results in a permanent physical 
occupation and thereby a denial of all rights to use, sell, or 
exclude others from the property in question;\9\ and (2) where 
a regulation denies all economically beneficial or productive 
use of land.\10\ It is hard not to understand the mandatory 
transfer of the physical credit reports from the CRAs to 
individual consumers, without qualification, as not falling 
within this per se physical taking standard. While the Supreme 
Court has permitted the limitation of the use and enjoyment of 
personal property,\11\ there is no precedent sustaining, 
without compensation, the outright confiscation of personal 
property, itself. Indeed, what little precedent is available 
supports the finding of a regulatory taking.\12\
---------------------------------------------------------------------------
    \8\ See Philip Morris, 312 F.3d at 33.
    \9\ See Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 
435 (1982).
    \10\ See Lucas v. S.C. Coastal Council, 505 U.S. 1003 (1992).
    \11\ Andrus v. Allard, 444 U.S. 51 (1979).
    \12\ Although there is no reported decision finding a per se taking 
in the case of abrogated intellectual property rights, Judge Selye, 
concurring in the Philip Morris decision, states that there should be 
``no principled reason to refrain from extending per se takings 
analysis to alleged takings of trade secrets. Indeed, the Supreme Court 
hinted at this result when it observed that the term ``property'' in 
the Takings Clause is meant in its more accurate sense to denote the 
group of rights inhering in the citizen's relation to the physical 
thing * * * the value of trade secrets, like the value of land, is 
inextricably tied to both the demand of others for access and the legal 
enforceability of the owner's right to exclude. In either case, if the 
sovereign effectively deprives the owner of the right to exclude, the 
value is destroyed--and the Constitution requires just compensation. 
Limiting per se taking analysis to cases involving real property is a 
crude boundary with no compelling basis in the law.'' See Philip 
Morris, 312 F.3d at 51 (Selye, J. concurring). See also Nixon v. United 
States, 978 F.2d 1269 (D.C. Cir. 1992) (applying per se takings 
analysis to alleged deprivation of presidential papers and finding that 
statutory enactment ``completely abrogated Mr. Nixon's right 
unilaterally to exclude others from [his presidential papers]--perhaps 
the quintessential property right.'').
---------------------------------------------------------------------------
    Yet, as I indicated at the start, it was my intent in 
reviewing this matter to apply the most generous possible 
taking standard to afford Congress the widest possible 
legislative authority. To that end, it is useful to examine the 
issue under the Supreme Court's balancing test articulated in 
Penn Central Transp. Co. v. City of New York, 438 U.S. 104 
(1978). This is not to suggest that the proposed physical 
expropriation of the reports is unrelated to the application of 
the Penn Central factors, discussed below. It is not. Supreme 
Court jurisprudence suggests that where, as here, a physical 
taking is present, the analysis of the ``character of the 
government's action'' (discussed below) will be more rigorous 
and judges will undertake a ``careful examination and weighing 
of all of the relevant circumstances.'' \13\
---------------------------------------------------------------------------
    \13\ See Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional 
Planning Agency, 532 U.S. 302 (2002).
---------------------------------------------------------------------------
    Under Penn Central,\14\ a regulatory taking is analyzed by 
examining: (1) What is the economic impact of the regulation; 
(2) whether the government action interferes with reasonable 
investment-backed expectations; and (3) what is the character 
of the government action. Id. Penn Central ``does not supply 
mathematically precise variables, but instead provides 
important guideposts that lead to the ultimate determination 
whether just compensation is required.'' \15\ Let us examine 
each individually:
---------------------------------------------------------------------------
    \14\ Penn. Central Transp. Co. v. New York City, 438 U.S. 104, 124 
(1978).
    \15\ See Palazzolo, 533 U.S. at 634.
---------------------------------------------------------------------------
            Reasonable investment-backed expectations
    There is no clear judicial consensus on what constitutes 
``reasonable investment-backed expectations,'' although in at 
least one case involving trade secrets, the Supreme Court has 
found the force of the deprivation of a party's reasonable 
investment-backed expectations to be ``so overwhelming'' as to 
be dispositive of the takings issue.\16\ That case, Monsanto, 
involved a taking challenge to several provisions of the 
Federal Insecticide, Fungicide and Rodenticide Act (``FIFRA''), 
which, among other things, required all pesticides sold in 
interstate or foreign commerce for use within the United States 
to be registered with the Secretary of Agriculture and 
appropriately labeled.\17\ FIFRA, first enacted in 1947, also 
empowered the Secretary to require applicants for registration 
to submit testing data, including pesticide formulae and data 
on the pesticide's health, safety and environmental impact.\18\ 
In 1978, FIFRA was amended to provide ``for disclosure of all 
health, safety, and environmental data * * * notwithstanding 
the prohibition against disclosure of trade secrets'' found 
elsewhere in the statute.\19\
---------------------------------------------------------------------------
    \16\ See Monsanto, 467 U.S. at 1005.
    \17\ Id. at 991.
    \18\ Id.
    \19\ Id. at 995-96.
---------------------------------------------------------------------------
    Monsanto challenged this amendment, arguing that the forced 
disclosure of trade secret information submitted by it to the 
Secretary of Agriculture constituted a regulatory taking in 
violation of the Fifth Amendment.\20\ The Court agreed in part. 
Stating that a reasonable investment-backed expectation must be 
more than a ``unilateral expectation than an abstract need,'' 
the Supreme Court held that as to information submitted by 
Monsanto after the 1978 amendment:
---------------------------------------------------------------------------
    \20\ Monsanto, 467 U.S. at 998-99.
---------------------------------------------------------------------------
         Monsanto could not have had a reasonable, investment-
        backed expectation that EPA would keep the data 
        confidential beyond the limits prescribed in the 
        amended statute itself. Monsanto was on notice of the 
        manner in which EPA was authorized to use and disclose 
        any data turned over to it by an applicant for 
        registration ***. If Monsanto chose to submit the 
        requisite data in order to receive a registration, it 
        can hardly be argued that its reasonable investment-
        backed expectations are disturbed when EPA acts to use 
        or disclose the data in a manner that was authorized by 
        law at the time of the submission.\21\
---------------------------------------------------------------------------
    \21\ Id. at 1006-07. See also Nollan v. Cal. Coastal Comm'n, 483 
U.S. 825, 833 n.2 (1987).
---------------------------------------------------------------------------
    For information submitted between 1972 and 1978, however, 
as to which the then-current FIFRA regulations gave Monsanto 
explicit assurances that the EPA was prohibited from disclosing 
publicly any data submitted by an applicant, the Court found 
that ``this explicit governmental guarantee formed the basis of 
a reasonable investment-backed expectation'' that submitted 
data, designated as trade secrets, would be protected.\22\ In 
rendering its decision, the Court noted that a trade secret's 
value lies in the ``right to exclude others.'' \23\ If others 
are given the trade secret the ``holder of the trade secret has 
lost his property interest,'' and the question becomes whether 
the party received adequate compensation for the taking of that 
interest.\24\
---------------------------------------------------------------------------
    \22\ Monsanto, 467 U.S. at 1101.
    \23\ Id.
    \24\ Id.
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    Similarly, in Philip Morris, the First Circuit considered 
whether Massachusetts' enactment of the Disclosure Act, Mass. 
Gen. Laws ch. 94, Sec. 307B, which required cigarette 
manufacturers to provide brand-specific ingredient lists in 
order to sell cigarettes within Massachusetts, and which 
provided that the state of Massachusetts could publicly 
disclose the precise formulas for these cigarettes whenever 
such disclosure ``could reduce the risks to public health,'' 
operated to unlawfully deprive cigarette manufacturers of 
property in violation of the Fifth Amendment.\25\ In holding 
that the Disclosure Act operated to deprive the cigarette 
manufacturers of their trade secrets in violation of the 
Takings Clause, the Court noted that, unlike Monsanto, the 
question before it was whether Massachusetts can force the 
tobacco companies to cede their trade secrets in exchange for 
doing business within its borders.\26\ Given the protection 
afforded trade secrets by the state of Massachusetts, the Court 
answered this question in the negative, holding that the 
tobacco companies had reasonable, investment-backed 
expectations that their trade secrets would remain secret.\27\
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    \25\ Philip Morris,, 312 F.3d at 26.
    \26\ Id. at 39.
    \27\ Id. at 41.
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    Applied to the facts at bar, in my judgment, the conclusion 
is inescapable: the CRAs have a colorable argument that the 
proposed FCRA amendments operate to deprive CRAs of their 
reasonable, investment-backed expectations. That said, and 
again to give every possible deference to Congress' authority, 
it is possible to argue that in light of the limited right of 
free reports under existing federal and state laws,\28\ CRAs no 
longer have any reasonable expectation of a return on 
investment for even a far broader taking of credit reports. To 
state the proposition, however, is to refute it since it defies 
economic reality. Moreover, supplying credit reports to a 
defined class of individuals denied credit or who have reason 
to believe that a report is in error, facilitates legislative 
goals that coincide with the best practices of the industry. It 
is quite another matter to be treated as the equivalent of a 
public utility, except that public utilities are guaranteed a 
reasonable rate of return.\29\ The Supreme Court has also made 
it clear that a taking claim is not defeated merely because one 
invests in property that has already been regulated. See 
Palazzolo v. Rhode Island, 533 U.S. 606, 634 (2001) 
(hereinafter ``Palazzolo'' (``[T]he state of regulatory affairs 
at the time [that the property interest was acquired] is not 
the only factor that may determine the state of reasonable 
investment-backed expectations ***. Courts instead must attend 
to those circumstances which are probative of what fairness 
requires in a given case.'').\30\
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    \28\ There are laws in ten states that allow the citizens of those 
states to obtain copies of their credit reports for free, or at a 
reduced cost, depending on the circumstances. See California, Cal. Civ. 
Code Sec. Sec. 1785.11.1, 1785.15, 1785.19 and 1785.19.5; Colorado, 
Colo. Rev. Stat. Sec. 12-14.3-104(2)(e); Connecticut, Conn. Gen. Stat. 
Sec. 36a-696(b); Georgia, O.C.G.A. Sec. Sec. 10-1-392, 10-393(29); 
Maine, Me. Rev. Stat. Ann. tit. 10, Sec. 1316(z); Maryland, Md. 
Commercial Law code Ann. Sec. 14-1209(a)(1); Massachusetts, Mass. Gen. 
Laws Ann. Ch 93, Sec. 59; Minnesota, Minn. Stat. Sec. 13C.01(a); New 
Jersey, N.F. Stat. Ann. Sec. 56:11-37(a); Vermont, Vt. Stat. Ann. tit. 
9, Sec. 2480(c). At least two of these states require CRAs to disclose 
credit scores if requested by the consumer. See Ca. Civ. Code 
Sec. 1785.15.1; Vt. Stat. Ann. tit. 9, Sec. 2480(c). As discussed in 
the text, these statutes--passed for different and narrower purposes--
are merely factors in the application of the taking analysis under Penn 
Central, as further applied in Palazzolo v. Rhode Island, 533 U.S. 606, 
634(2001) (hereinafter ``Palazzolo'').
    \29\ See Duquesne Light Co. v. Barasch, 488 U.S. 299, 310 (1989); 
FPC v. Hope Natural Gas Co., 320 U.S. 591, 603 (1944).
    \30\ Given that CRAs have accepted existing regulation that, in far 
less intrusive ways, resembles aspects of the proposed legislation is 
thus not dispositive. As the Court explained in Palazzolo at 626-27: 
``The theory underlying the argument that postenactment purchasers 
cannot challenge a regulation under the Takings Clause seems to run on 
these lines: Property rights are created by the State. See, e.g., 
Phillips v. Washington Legal Foundation, 524 U.S. 156, 163, 118 S. Ct. 
1925, 141 L.Ed.2d 174 (1998). So, the argument goes, by prospective 
legislation the State can shape and define property rights and 
reasonable investment-backed expectations, and subsequent owners cannot 
claim any injury from lost value. After all, they purchased or took 
title with notice of the limitation. The State may not put so potent a 
Hobbesian stick into the Lockean bundle. The right to improve property, 
of course, is subject to the reasonable exercise of state authority, 
including the enforcement of valid zoning and land-use restrictions. 
See Pennsylvania Coal Co., 260 U.S., at 413, 43 S. Ct. 158 
(``Government hardly could go on if to some extent values incident to 
property could not be diminished without paying for every such change 
in the general law''). The Takings Clause, however, in certain 
circumstances allows a landowner to assert that a particular exercise 
of the State's regulatory power is so unreasonable or onerous as to 
compel compensation. Just as a prospective enactment, such as a new 
zoning ordinance, can limit the value of land without effecting a 
taking because it can be understood as reasonable by all concerned, 
other enactments are unreasonable and do not become less so through 
passage of time or title. Were we to accept the State's rule, the 
postenactment transfer of title would absolve the State of its 
obligation to defend any action restricting land use, no matter how 
extreme or unreasonable. A State would be allowed, in effect, to put an 
expiration date on the Takings Clause. This ought not to be the rule. 
Future generations, too, have a right to challenge unreasonable 
limitations on the use and value of land.''
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    More than once, the Supreme Court has admonished 
legislative bodies that the constitutional protection for 
property, especially as it relates to a core, inherent aspect 
like the right to exclude, cannot simply be redefined away. In 
Monsanto, the Court held that disclosure of a trade secret 
could be required as a condition for receiving a valuable 
governmental benefit (there, a license to sell a pesticide in a 
highly regulated environment). However, as Justice Scalia 
explained for the Court in the later case of Nollan, v. 
California Coastal Commission, ``some core elements of 
property--like the right to build on one's own property * * * 
cannot remotely be described as a `government benefit.' And 
thus the announcement that the application for (or granting of) 
the permit will entail the yielding of a property interest 
cannot be regarded as establishing the voluntary `exchange' 
that we found to have occurred in Monsanto.'' \31\
---------------------------------------------------------------------------
    \31\ Nollan, 483 U.S. at 833 n.2.
---------------------------------------------------------------------------
    Likewise, the Philip Morris court determined, ``allowing a 
manufacturer to simply sell its legal product is more similar 
to building on one's land * * *.'' \32\ The sale of credit 
reports and the right to maintain the proprietary value of 
credit scores and underlying algorithms is much the same. The 
dissent in Philip Morris did not dispute the analysis of the 
lead opinion, but simply avoided the constitutional 
determination of a taking by pointing to available regulatory 
means under the Disclosure Act that allowed regulated companies 
to pursue a stay prior to disclosure of its valuable trade 
secrets. Thus, because of this regulatory escape hatch, the 
dissent did not think the Disclosure Act was ``unconstitutional 
in every application.'' Congress has not proposed a similarly 
tailored means to either compensate CRAs for their property or 
preserve it from governmental taking contrary to the 
Constitution.
---------------------------------------------------------------------------
    \32\ Philip Morris, 312 F.2d at 47.
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            Economic impact
    The law regarding economic impact is fairly 
straightforward. ``The inquiry is whether the regulation 
`impairs the value of use of the property' according to the 
owners' general use of their property.'' \33\ As the Philip 
Morris court noted, ``not only is the use to which the property 
owner puts her property important, but the economic impact 
needs to be considered in the context of other laws and 
regulatory schemes.'' \34\
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    \33\ Id. (quoting Pruneyard Shopping Ctr. v. Robins, 447 U.S. 74 
(1982)).
    \34\ Id. See also Connolly v. Pension Benefit Guar. Corp., 475 U.S. 
211, 225-26 (1986) (evaluating economic impact of imposing withdrawal 
fees on employers who have pension funds within the context of entire 
ERISA scheme).
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    In Philip Morris, the Court noted that economic impact was 
fairly evident. ``The [tobacco companies] have spent millions 
of dollars developing the formulas for different brands. The 
evidence shows that public disclosure of the   ingredients 
lists, even in part, will make it much easier to reverse 
engineer those formulas. If competitors can obtain these 
formulas, they can replicate [the tobacco companies'] products, 
undermining the value of the [tobacco companies'] brands.'' 
\35\
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    \35\ Philip Morris, 312 F.3d at 41.
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    I believe the argument is similarly straightforward here. 
Clearly, the CRAs can establish the fair market value of a 
credit report, and that deprivation, multiplied by the millions 
that would mandated to be supplied for free under the proposal 
yields a substantial sum.\36\ 
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    \36\ If disclosure of the key factors behind credit scores 
foreseeable results in the reverse engineering of those scores, it is 
possible that a separate taking related to the underlying property or 
trade secrets in the algorithms that give rise to credit scores would 
also be presented. This taking of trade secrets would fall squarely 
within the reasoning set forth in Philip Morris.
---------------------------------------------------------------------------
            Character of the government action
    In Penn Central, the Supreme Court offered only one example 
of how the character of the governmental action is relevant to 
its taking analysis. The one example, however, is manifest 
here. Said the Court, if the legislative action results in a 
physical invasion then a taking ``may more readily be found * * 
* then when interference arises from some public program 
adjusting the benefits and burdens of economic life to promote 
the common good.'' \37\ Scholarly commentators have noted that 
physical invasion or confiscation so resembles eminent domain 
that compensation should almost always be forthcoming. In such 
instances, the hallmark of property--the very right to 
exclude--is at issue.\38\
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    \37\ 438 U.S. at 124.
    \38\ Ruckleshaus, 467 U.S. 986, 1011 (1984).
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    Assessing the character of the governmental action may also 
require the Court to balance reasonable investment-backed 
expectations and economic impact against the purposes sought to 
be advanced by the legislation. Justice O'Connor who is 
acknowledged to be the lead judicial voice for the Court in 
this area, has suggested that assessment of the character of 
the government's action includes ``the purposes served, as well 
as the effects produced, by a particular regulation * * * [A 
regulation] may constitute a `taking' if not reasonably 
necessary to the effectuation of a substantial public purpose, 
[citations omitted], or perhaps if it has an unduly harsh 
impact upon the owner's use of the property.'' Palazzolo, 533 
U.S. at 633 (2001) (O'Connor, J., concurring).
    Following Justice O'Connor's instruction, the proposed FCRA 
amendments must also be balanced against the interests that 
Congress seeks to protect--namely, to ``prevent identity theft, 
improve resolution of consumer disputes, improve the accuracy 
of consumer records, [and] make improvements in the use of, and 
consumer access to, credit information * * *.'' \39\ From the 
outset of this analysis, these legislative purposes have been 
conceded to be meritorious, but as the appellate court's 
decision in Philip Morris reveals, this is not sufficient to 
dispose of the taking issue.
---------------------------------------------------------------------------
    \39\ See Preamble to H.R. 2622.
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    While the state of Massachusetts had in Philip Morris a 
compelling interest in protecting the health and welfare of its 
citizens, this interest ``must bear some reasonable 
relationship to the ends.'' \40\ The court concluded that ``for 
a state to be able to completely destroy valuable trade 
secrets, it should be required to show more than a possible 
beneficial effect.'' \41\ This balance was not found in Philip 
Morris, since the Court accepted as paradigmatic the tobacco 
companies' assertion that as a result of the Disclosure Act 
provisions, ``they [would] lose the right to exclude others 
from their trade secrets and, consequently, their trade secrets 
would lose all value.'' \42\ The Court noted that in Monsanto, 
the ``Supreme Court recognized that if an individual disclosed 
his trade secrets to others who are under no obligation to 
protect the confidentiality of the information, or otherwise 
publicly discloses the secret, his property right is 
extinguished.'' \43\ After discussing Armstrong v. United 
States,\44\ Andrus v. Allard,\45\ and Hodel v. Irving,\46\ the 
appellate court held that while the ``simple loss of economic 
value, alone, is probably not enough,'' the fact that the 
tobacco companies' rights had not just been devalued, but had 
been extinguished, caused the Disclosure Act to be 
unconstitutional.\47\ The court concluded by observing that 
``the tremendous individual loss is simply not justified by 
such a speculative public gain.'' \48\
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    \40\ Id.
    \41\ Id.
    \42\ Philip Morris, 312 F.3d at 41.
    \43\ Id.
    \44\ 364 U.S. 40 (1960). As noted by the Philip Morris court, in 
Armstrong, ``the Supreme Court considered the implications of 
government action that, as a secondary effect, destroyed a private 
party's lien. The Court held that this was a taking a not `a mere 
consequential incidence of a valid regulatory measure.' '' See Philip 
Morris, 312 F.3d at 42. Similarly, the proposed FCRA regulations, which 
in part would destroy the proprietary credit score algorithms developed 
by the CRAs, cannot be said to have as a ``consequential incidence'' 
the taking of the CRAs' property.
    \45\ 444 U.S. 51 (1979) (upholding government regulation banning 
the sale of items containing eagle parts--even though such artifacts 
essentially lost all economic value after the regulation as passed). 
``While this was a significant restriction, the Court noted that this 
destruction of one strand of the bundle of property rights did not 
constitute a taking. Rather, the substantial state interest in 
preserving eagles justified the regulation.'' Philip Morris, 312 F.3d 
at 43. As proposed, the FCRA amendments operate to deprive CRAs of far 
more than ``one strand'' of the bundle of their property rights, and 
thus the Supreme Court's reasoning in Andrus is not dispositive.
    \46\ 481 U.S. 704 (1987) (character of the government action 
involved dispositive when the government held that regulation 
destroying the rights of descent and devise which had previously 
attached to undivided fractionated interests in land created an 
unconstitutional taking).
    \47\ Philip Morris, 312 F.3d at 44.
    \48\Id.
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    The credit reports in the present matter are not merely 
extinguished, but transferred, and the disclosure of scores and 
factor analysis may undermine the value of proprietary 
algorithms as well. In light of this, as salutary as the 
objectives of the proposed amendments are, they do not 
constitutionally excuse placing the disproportionate burden of 
meeting them upon the CRAs.
    It bears repeating that the Philip Morris analysis does not 
second-guess the legislative objective--in that case, public 
health. Rather, in light of the totality of the reasonableness 
of the investment expectation, the economic impact, and the 
character of the government's action (viz., whether there was 
some related physical taking or not), the court inquired into 
how well-matched the regulatory means were to the presumed-to-
be reasonable legislative end. The lead opinion in Philip 
Morris determined that the Disclosure Act ``has not been shown 
to further the stated goal of promoting public health in such a 
way as to counterbalance the tremendous private loss 
involved.''
    Even under the most deferential analysis to Congress, the 
same is true here. With due respect to the objectives sought to 
be achieved and the legislative authority to fashion avenues 
for doing so, the conclusion that the proposed sections 
implicate the constitutional protections of property is 
inescapable.
            Respectfully submitted,
                                                  Douglas W. Kmiec.

                                
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