[Federal Register Volume 68, Number 247 (Wednesday, December 24, 2003)]
[Proposed Rules]
[Pages 74529-74532]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-31360]


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FEDERAL RESERVE SYSTEM

12 CFR Part 222

FEDERAL TRADE COMMISSION

16 CFR Part 602

[Regulation V; Docket No. R-1175]
RIN 3084-AA94 Project No. P044804


Effective Dates for the Fair and Accurate Credit Transactions Act 
of 2003

AGENCIES: Board of Governors of the Federal Reserve System (Board) and 
Federal Trade Commission (FTC).

ACTION: Joint notice of proposed rulemaking.

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SUMMARY: The recently enacted Fair and Accurate Credit Transactions Act 
of 2003 (FACT Act or the Act) requires the Board and the FTC (the 
Agencies) jointly to adopt rules establishing the effective dates for 
provisions of the Act that do not contain specific effective dates. The 
Agencies are taking two related actions to comply with this 
requirement. In this action, the Agencies are proposing rules that 
would establish a schedule of effective dates for many of the 
provisions of the FACT Act for which the Act itself does not 
specifically provide an effective date. In the second action, published 
elsewhere in today's Federal Register, the Agencies are jointly 
adopting interim final rules that establish December 31, 2003, as the 
effective date for provisions of the Act that determine the 
relationship between the Fair Credit Reporting Act (FCRA) and state 
laws and provisions that authorize rulemakings and other implementing 
action by various agencies.

DATES: Comments must be submitted on or before January 12, 2004.

ADDRESSES: Because the Agencies will jointly review all of the comments 
submitted, interested parties may send comments to either of the 
Agencies and need not send comments (or copies) to both of the 
Agencies. Because paper mail in the Washington area and at the Agencies 
is subject to delay, please consider submitting your comments by e-
mail. Commenters are encouraged to use the title ``Proposed Effective 
Dates for the FACT Act'' to facilitate the organization and 
distribution of comments among the Agencies. Interested parties are 
invited to submit written comments to:
    Board of Governors of the Federal Reserve System: Comments should 
refer to Docket No. R-1175 and may be mailed to Ms. Jennifer J. 
Johnson, Secretary, Board of Governors of the Federal Reserve System, 
20th Street and Constitution Avenue NW., Washington, DC 20551. Please 
consider submitting your comments by e-mail to 
[email protected], or faxing them to the Office of the 
Secretary at (202) 452-3819 or (202) 452-3102. Members of the public 
may inspect comments in Room MP-500 between 9 a.m. and 5 p.m. on 
weekdays pursuant to section 261.12, except as provided in section 
261.14, of the Board's Rules Regarding Availability of Information, 12 
CFR 261.12 and 261.14.
    Federal Trade Commission: Comments should refer to ``Proposed 
Effective Dates for the FACT Act, Project No. P044804.'' Comments filed 
in paper form should be mailed or delivered to: Federal Trade 
Commission/Office of the Secretary, Room 159-H, 600 Pennsylvania 
Avenue, NW., Washington, DC 20580. Comments filed in electronic form 
(in ASCII format, WordPerfect, or Microsoft Word) should be sent to: 
[email protected]. If the comment contains any material for which 
confidential treatment is requested, it must be filed in paper (rather 
than electronic) form, and the first page of the document must be 
clearly labeled ``Confidential.'' \1\ Regardless of the form in which 
they are filed, the Commission will consider all timely comments, and 
will make the comments available (with confidential material redacted) 
for public inspection and copying at the Commission's principal office 
and on the Commission Web site at www.ftc.gov. As a matter of 
discretion, the Commission makes every effort to remove home contact 
information for individuals from the public comments it receives before 
placing those comments on the FTC Web site.
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    \1\ Commission Rule 4.2(d), 16 CFR 4.2(d). The comment must also 
be accompanied by an explicit request for confidential treatment, 
including the factual and legal basis for the request, and must 
identify the specific portions of the comment to be withheld from 
the public record. The request will be granted or denied by the 
Commission's General Counsel, consistent with applicable law and the 
public interest. See Commission Rule 4.9(c), 16 CFR 4.9(c).

FOR FURTHER INFORMATION CONTACT:
    Board: Thomas E. Scanlon, Counsel, Legal Division, (202) 452-3594; 
David A. Stein, Counsel, Minh-Duc T. Le, Ky Tran-Trong, Senior 
Attorneys, Krista P. DeLargy, Attorney, Division of Consumer and 
Community Affairs, (202) 452-3667 or (202) 452-2412; for users of 
Telecommunications Device for the Deaf (``TDD'') only, contact (202) 
263-4869.
    FTC: Christopher Keller or Katherine Armstrong, Attorneys, Division 
of Financial Practices, (202) 326-3224.

SUPPLEMENTARY INFORMATION: 

Background and Discussion

    Congress enacted the FACT Act, which the President signed into law 
on December 4, 2003. Pub. L. 108-159, 117 Stat. 1952. In general, the 
Act amends the FCRA to enhance the ability of consumers to combat 
identity theft, to increase the accuracy of consumer reports, and to 
allow consumers to exercise greater control regarding the type and 
amount of marketing solicitations they receive. The FACT Act also 
restricts the use and disclosure of sensitive medical information that 
is contained in a consumer report. To bolster efforts to improve 
financial literacy among consumers, title V of the Act (entitled the 
``Financial Literacy and Education Improvement Act'') creates a new 
Financial Literacy and Education Commission empowered to take 
appropriate actions to improve the financial literacy and education 
programs, grants, and materials of the Federal government. Lastly, to 
promote increasingly efficient national credit markets, the FACT Act 
establishes uniform national standards in key areas of regulation 
regarding consumer report information.
    The Act includes effective dates for many of its sections that vary 
to take account of the need for rulemaking, implementation efforts by 
industry, and other policy concerns. Section 3 of the FACT Act requires 
the Agencies to prescribe joint regulations establishing an effective 
date for each provision of the Act for which the Act itself does not 
specifically provide an effective date. The FACT Act requires that the 
Agencies jointly adopt final rules establishing the effective dates 
within two months of the date of enactment of the Act. Thus, by law, 
the Agencies must complete these rulemaking efforts by February 4, 
2004. The Act also provides that each of these effective dates must be 
``as early as possible, while allowing a reasonable time for the 
implementation'' of that provision, but

[[Page 74530]]

in no case later than ten months after the date of issuance of the 
Agencies' joint final rules establishing the effective dates for the 
Act (117 Stat. 1953).
    In this action, the Agencies are proposing rules that would 
establish a schedule of effective dates for certain provisions of the 
FACT Act for which the Act itself does not specifically provide an 
effective date. In a separate notice published in conjunction with this 
action, the Agencies are jointly adopting interim final regulations to 
establish effective dates for provisions of the FACT Act that relate to 
state laws and to implementing authority for the agencies. The Agencies 
seek comment on the issues associated with the schedule of effective 
dates set forth in both the proposed and interim final joint 
regulations.

Schedule of Effective Dates

    The FACT Act contains a number of provisions that clarify or 
address rights and requirements under the FCRA that are self-
effectuating but that do not contain a specific effective date. These 
provisions are: section 156 (statute of limitations); sections 312(d) 
(furnisher liability exception), (e) (liability and enforcement), and 
(f) (rule of construction); section 313(a) (action concerning 
complaints); section 611 (communications for employee investigations); 
and section 811 (clerical amendments). Section 111 (amendment to 
definitions) contains definitions that are self-effectuating but that 
do not contain specific effective dates. The Agencies propose to 
establish March 31, 2004, as the effective date for each of the 
provisions of the Act listed above. With respect to each of these 
provisions, the Agencies consider that the ``reasonable time to 
implement'' standard of section 3 of the Act permits an early effective 
date because these provisions do not require significant changes to 
business procedures. Each of these provisions furnishes important 
benefits to consumers and affected businesses. March 31, 2004, is 
therefore an appropriate date that balances the statutory mandate to 
effectuate provisions of the Act ``as early as possible'' and the 
Agencies'' desire to obtain and consider comment prior to 
implementation.
    The FACT Act contains a number of other provisions without 
effective dates that would require changes in systems, disclosure forms 
or practices, or implementing regulations to be administered 
effectively. The Agencies propose December 1, 2004, as the effective 
date for these provisions. This will allow industry and the various 
agencies a reasonable time to establish systems and rules to implement 
these sections effectively. These sections are listed in the proposed 
rules.
    As explained in the preamble to the Interim Final Rules published 
concurrently with this Notice (and set forth in section (1)(B) of the 
applicable interim final rule), the Agencies note that with respect to 
any provision of the Act that provides for a rulemaking proceeding or 
other agency action, the proposed rules establishing effective dates do 
not affect the substantive provisions of the FACT Act implemented by 
agency rule. The substantive provisions of the Act become effective as 
provided in the Act, as provided in the Agencies' joint effective date 
rules, or as provided by the substantive rules promulgated by the 
various agencies, as appropriate.

Request for Comments

    The Agencies invite comment on the proposal. In particular, the 
Agencies seek comment on whether the proposed schedule of effective 
dates would allow affected entities a reasonable period of time to 
comply with or act on the newly-enacted provision(s). The Agencies also 
invite comment on whether a different effective date is appropriate for 
any provision. In addition, the Agencies seek comment on whether it is 
necessary to establish an effective date for any provision not listed 
(or specifically listed) on the proposed schedule.

Regulatory Analysis

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
3506; 5 CFR 1320 Appendix A.1), the Agencies have reviewed the proposed 
joint rules. (The Board has done so under authority delegated to the 
Board by the Office of Management and Budget.) The proposed joint rules 
contain no collections of information pursuant to the Paperwork 
Reduction Act.

Regulatory Flexibility Act

    In accordance with section 3(a) of the Regulatory Flexibility Act 
(5 U.S.C. 603(a)), the Agencies must publish an initial regulatory 
flexibility analysis with the joint proposed rules.
    The joint proposed rules, if adopted, would establish effective 
dates for several provisions of the FACT Act. Prior to the enactment of 
the FACT Act, the FCRA imposed various duties on parties that furnish 
information to consumer reporting agencies, on parties that use 
consumer reports, and on consumer reporting agencies themselves. The 
FACT Act modifies and extends some of these existing duties and imposes 
new duties on these respective parties. The schedule of effective dates 
proposed by the Agencies would make the newly-enacted statutory 
provisions applicable with respect to these parties. The Agencies seek 
comment on the extent to which the proposed time periods for compliance 
may affect the scope or nature of the burdens that affected parties are 
likely to face in complying with the applicable provisions of the FACT 
Act, if at all. A description of the reasons for the Agencies' 
decisions and a statement of the objectives of, and legal basis for, 
the joint interim final and proposed regulations, respectively, are set 
forth in the supplementary information provided above. The types of 
entities, if any, to be affected by these rules is also described 
above, although the agencies do not presently have a basis for 
estimating the number of small entities to which these rules will 
apply. Because the rules merely establish effective dates, the rules 
themselves impose no reporting, recordkeeping or other requirements, 
which would arise either from obligations imposed by the statute itself 
or as a result of rulemakings or other implementing actions that may be 
taken by agencies under the statute. Nonetheless, the Agencies 
specifically seek comment on the likely burden the joint proposed rule 
would have on small entities, such as small creditors that furnish 
information to consumer reporting agencies or use consumer reports, and 
how the Agencies' proposed rules might minimize this burden, to the 
extent consistent with the requirements and intent of the FACT Act.

Communications by Outside Parties to Commissioners and Their Advisors

    Written communications and summaries or transcripts of oral 
communications respecting the merits of this proceeding from any 
outside party to any Commissioner or Commissioner's advisor will be 
placed on the public record. 16 CFR 1.26(b)(5).

Solicitation of Comments on Use of Plain Language

    Section 722(a) of the Gramm-Leach-Bliley Act requires the Federal 
banking agencies to use plain language in all proposed and final rules 
published after January 1, 2000.\2\ In light of this requirement, the 
Board has sought to present the proposed rule in a simple

[[Page 74531]]

and straightforward manner. The Board invites your comments on how to 
make the rule easier to understand. For example:
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    \2\ Pub. L. 106-102, 113 Stat. 1338 (1999), codified at 12 
U.S.C. 4809.
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    [sbull] Have we organized the material to suit your needs? If not, 
how could this material be better organized?
    [sbull] Do the regulations contain technical language or jargon 
that is not clear? If so, which language requires clarification?
    [sbull] Would a different format (grouping and order of sections, 
use of headings, paragraphing) make the regulation easier to 
understand? If so, what changes to the format would make the regulation 
easier to understand?
    [sbull] What else could we do to make the regulation easier to 
understand?

List of Subjects

12 CFR Part 222

    Banks, banking, Holding companies, state member banks.

16 CFR Part 602

    Consumer reports, Consumer reporting agencies, Credit, Trade 
practices.

12 CFR Chapter II--Federal Reserve System

Authority and Issuance

    For the reasons set forth in the preamble, the Board proposes to 
amend 12 CFR part 222 as follows:

PART 222--FAIR CREDIT REPORTING (REGULATION V)

    1.The authority citation for 12 CFR part 222 continues to read as 
follows:

    Authority: 15 U.S.C. 1681a; Sec.3, Pub. L. 108-159, 117 Stat. 
1953.

    2. In Sec.  222.1, paragraphs (c)(2) and (c)(3) are added to read 
as follows:

Subpart A--General Provisions


Sec.  222.1  Purpose, scope, and effective dates.

* * * * *
    (c) Effective dates. * * *
    (2) Provisions effective March 31, 2004.
    (i) Section 111, concerning the definitions;
    (ii) Section 156, concerning the statute of limitations;
    (iii) Sections 312(d), (e), and (f), concerning the furnisher 
liability exception, liability and enforcement, and rule of 
construction, respectively;
    (iv) Section 313(a), concerning action regarding complaints;
    (v) Section 611, concerning communications for employee 
investigations; and
    (vi) Section 811, concerning clerical amendments.
    (3) Provisions effective December 1, 2004.
    (i) Section 112, concerning fraud alerts and active duty alerts;
    (ii) Section 114, concerning procedures for the identification of 
possible instances of identity theft;
    (iii) Section 115, concerning truncation of the social security 
number in a consumer report;
    (iv) Section 151(a)(1), concerning the summary of rights of 
identity theft victims;
    (v) Section 152, concerning blocking of information resulting from 
identity theft;
    (vi) Section 153, concerning the coordination of identity theft 
complaint investigations;
    (vii) Section 154, concerning the prevention of repollution of 
consumer reports;
    (viii) Section 155, concerning notice by debt collectors with 
respect to fraudulent information;
    (ix) Section 211(a) and (c), concerning free consumer reports;
    (x) Section 212(a)-(d), concerning the disclosure of credit scores;
    (xi) Section 213(c), concerning enhanced disclosure of the means 
available to opt out of prescreened lists;
    (xii) Section 214(a), concerning affiliate sharing;
    (xiii) Section 216, concerning the disposal of consumer report 
information and records;
    (xiv) Section 217(a), concerning the duty to provide notice to a 
consumer;
    (xv) Section 311(a), concerning the risk-based pricing notice;
    (xvi) Section 312(a)-(c), concerning procedures to enhance the 
accuracy and integrity of information furnished to consumer reporting 
agencies;
    (xvii) Section 314, concerning improved disclosure of the results 
of reinvestigation;
    (xviii) Section 315, concerning reconciling addresses;
    (xix) Section 316, concerning notice of dispute through reseller; 
and
    (xx) Section 317, concerning the duty to conduct a reasonable 
reinvestigation.

16 CFR Chapter 1--Federal Trade Commission

Authority and Issuance

    For the reasons set forth in the preamble, the FTC proposes to 
amend 16 CFR part 602 as follows:

PART 602--FAIR CREDIT REPORTING

    1. The authority citation for 16 CFR part 602 continues to read as 
follows:

    Authority: 15 U.S.C. 1681a; Sec. 3, Pub. L. 108-159, 117 Stat. 
1953.

    2. In Sec.  602.1, paragraphs (c)(2) and (c)(3) are added to read 
as follows:

Subpart A--General Provisions


Sec.  602.1  Purpose, scope, and effective dates.

* * * * *
    (c) Effective dates. * * *
    (2) Provisions effective March 31, 2004.
    (i) Section 111, concerning the definitions;
    (ii) Section 156, concerning the statute of limitations;
    (iii) Sections 312(d), (e), and (f), concerning the furnisher 
liability exception, liability and enforcement, and rule of 
construction, respectively;
    (iv) Section 313(a), concerning action regarding complaints;
    (v) Section 611, concerning communications for employee 
investigations; and
    (vi) Section 811, concerning clerical amendments.
    (3) Provisions effective December 1, 2004.
    (i) Section 112, concerning fraud alerts and active duty alerts;
    (ii) Section 114, concerning procedures for the identification of 
possible instances of identity theft;
    (iii) Section 115, concerning truncation of the social security 
number in a consumer report;
    (iv) Section 151(a)(1), concerning the summary of rights of 
identity theft victims;
    (v) Section 152, concerning blocking of information resulting from 
identity theft;
    (vi) Section 153, concerning the coordination of identity theft 
complaint investigations;
    (vii) Section 154, concerning the prevention of repollution of 
consumer reports;
    (viii) Section 155, concerning notice by debt collectors with 
respect to fraudulent information;
    (ix) Section 211(a) and (c), concerning free consumer reports;
    (x) Section 212(a)-(d), concerning the disclosure of credit scores;
    (xi) Section 213(c), concerning enhanced disclosure of the means 
available to opt out of prescreened lists;
    (xii) Section 214(a), concerning affiliate sharing;
    (xiii) Section 216, concerning the disposal of consumer report 
information and records;
    (xiv) Section 217(a), concerning the duty to provide notice to a 
consumer;
    (xv) Section 311(a), concerning the risk-based pricing notice;
    (xvi) Section 312(a)-(c), concerning procedures to enhance the 
accuracy and integrity of information furnished to consumer reporting 
agencies;

[[Page 74532]]

    (xvii) Section 314, concerning improved disclosure of the results 
of reinvestigation;
    (xviii) Section 315, concerning reconciling addresses;
    (xix) Section 316, concerning notice of dispute through reseller; 
and
    (xx) Section 317, concerning the duty to conduct a reasonable 
reinvestigation.

    By order of the Board of Governors of the Federal Reserve 
System, December 16, 2003.
Jennifer J. Johnson,
Secretary of the Board.
    Dated: December 15, 2003.

    By Direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 03-31360 Filed 12-23-03; 8:45 am]
BILLING CODE 6210-01-P, 6750-01-P,