[Federal Register Volume 69, Number 36 (Tuesday, February 24, 2004)]
[Rules and Regulations]
[Pages 8532-8536]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-3978]



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Part II





Federal Trade Commission





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16 CFR Part 603



Prohibition Against Circumventing Treatment as a Nationwide Consumer 
Reporting Agency; Interim Final Rule

  Federal Register / Vol. 69, No. 36 / Tuesday, February 24, 2004 / 
Rules and Regulations  

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FEDERAL TRADE COMMISSION

16 CFR Part 603

RIN 3084-AA94


Prohibition Against Circumventing Treatment as a Nationwide 
Consumer Reporting Agency

AGENCY: Federal Trade Commission (FTC or Commission).

ACTION: Interim final rule, request for comment.

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SUMMARY: The recently enacted Fair and Accurate Credit Transactions Act 
of 2003 (FACT Act or the Act) requires the FTC to adopt rules to 
prevent consumer reporting agencies from avoiding treatment as 
nationwide consumer reporting agencies. In this action, the FTC is 
adopting, and seeking comment on, an interim final rule that prohibits 
consumer reporting agencies from avoiding these obligations through any 
means, including corporate structuring or technological methods.

DATES: The interim final rule is effective on March 3, 2004. Comments 
must be received by April 23, 2004.

ADDRESSES: Interested parties are invited to submit written comments. 
Comments should refer to ``FACTA Interim Final Rule Prohibiting 
Circumvention, Project No. P044804'' to facilitate the organization of 
comments. A comment filed in paper form should include this reference 
both in the text and on the envelope, and should be mailed or delivered 
to the following address: Federal Trade Commission/Office of the 
Secretary, Room 159-H (Annex C), 600 Pennsylvania Avenue, NW., 
Washington, DC 20580. Comments containing confidential material must be 
filed in paper form, as explained in the Supplementary Information 
section. The FTC is requesting that any comment filed in paper form be 
sent by courier or overnight service, if possible, because U.S. postal 
mail in the Washington area and at the Commission is subject to delay 
due to heightened security precautions.
    An electronic comment can be filed by (1) clicking on http://www.regulations.gov; (2) selecting ``Federal Trade Commission'' at 
``Search for Open Regulations;'' (3) locating the summary of this 
Notice; (4) clicking on ``Submit a Comment on this Regulation;'' and 
(5) completing the form. For a given electronic comment, any 
information placed in the following fields--``Title,'' ``First Name,'' 
``Last Name,'' ``Organization Name,'' ``State,'' ``Comment,'' and 
``Attachment''--will be publicly available on the FTC Web site. The 
fields marked with an asterisk on the form are required in order for 
the FTC to fully consider a particular comment. Commenters may choose 
not to fill in one or more of those fields, but if they do so, their 
comments may not be considered.
    The FTC Act and other laws the Commission administers permit the 
collection of public comments to consider and use in this proceeding as 
appropriate. All timely and responsive public comments, whether filed 
in paper or electronic form, will be considered by the Commission, and 
will be available to the public on the FTC Web site, to the extent 
practicable, at http://www.ftc.gov. As a matter of discretion, the FTC 
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. More information, including routine uses permitted by 
the Privacy Act, may be found in the FTC's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.

FOR FURTHER INFORMATION CONTACT: Helen Foster or Sandra Farrington, 
Attorneys, Division of Financial Practices, Federal Trade Commission, 
600 Pennsylvania Avenue, NW., Washington, DC 20580, (202) 326-3224.

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Introduction
II. Overview of Rule
    A. Rule of Construction
    B. General Prohibition
    C. Limitation on Applicability
III. Good Cause for Interim Final Rule and Immediate Effective Date
IV. Invitation to Comment
V. Communications by Outside Parties to Commissioners and Their 
Advisors
VI. Paperwork Reduction Act
VII. Regulatory Flexibility Act
    A. Description of the Reasons That Action by the Agency Is Being 
Considered
    B. Statement of the Objectives of, and Legal Basis for, the 
Interim Final Rule
    C. Small Entities to Which the Interim Final Rule May Apply
    D. Projected Reporting, Recordkeeping and Other Compliance 
Requirements
    E. Duplicative, Overlapping, or Conflicting Federal Rules
    F. Significant Alternatives to the Interim Final Rule
VIII. Questions for Comment on the Interim Final Rule

I. Introduction

    The FACT Act was signed into law on December 4, 2003. Public Law 
108-159, 117 Stat. 1952. In part, the Act amends the Fair Credit 
Reporting Act, 15 U.S.C. 1681 et seq., (FCRA) by imposing new 
requirements on consumer reporting agencies that compile and maintain 
files on consumers nationwide (nationwide CRAs), as such entities are 
defined by section 603(p) of the FCRA, 15 U.S.C. 1681a(p). These 
additional requirements include the obligation to provide, upon 
request, one free file disclosure to the consumer annually.
    The FTC is adopting this interim final rule to implement section 
211(b) of the FACT Act, Public Law 108-159, 117 Stat. 1952, 15 U.S.C. 
1681y, (sec. 629 of the FCRA) which directs the FTC to issue 
regulations to prevent consumer reporting agencies from circumventing 
or evading the obligations imposed on nationwide CRAs. The interim 
final rule prohibits such circumvention through any means, including 
but not limited to corporate organization, reorganization, structuring, 
or restructuring, or by maintaining or merging public record and credit 
account information in a manner that is substantially equivalent to the 
manner described in section 603(p) of the FCRA.

II. Overview of Rule

A. Rule of Construction

    Section 603.1 of the interim final rule sets out a rule of 
construction to clarify the effect of the examples used in the interim 
final rule. Given the breadth of the statutory language, and the 
potential impact of the rule on a variety of entities and transactions, 
the Commission has elected to provide examples of conduct that would, 
and would not, comply with the interim final rule. This section 
provides that these examples are not intended to be exhaustive; rather 
they are intended to illustrate how the interim final rule would apply 
in specific circumstances. The Commission invites comment on whether 
including examples in the rule is useful and suggestions on additional 
or different examples that may be helpful.

B. General Prohibition

    Section 603.2 of the interim final rule prohibits consumer 
reporting agencies from using any means to circumvent or evade 
treatment as a nationwide CRA, and thereby avoiding the obligations 
that the FCRA and FACT Act impose on such entities. Nationwide CRAs are 
defined under the FCRA as consumer reporting agencies that ``regularly 
engage[] in the practice of assembling or evaluating, and maintaining, 
for the purpose of furnishing consumer reports to third parties bearing 
on a consumer's credit worthiness, credit standing, or credit 
capacity'' both public record information and ``credit account 
information from persons who furnish

[[Page 8533]]

that information regularly and in the ordinary course of business' 
regarding consumers residing nationwide. FCRA section 603(p), 15 U.S.C. 
1681a(p).
    Even prior to the FACT Act, nationwide CRAs were subject to special 
obligations in addition to the obligations placed on all consumer 
reporting agencies. Specifically, under the FCRA, prior to the FACT 
Act, nationwide CRAs were required to: (1) Participate in a joint opt-
out notification system for prescreened credit or insurance offers, 
FCRA section 604(e)(6), 15 U.S.C. 1681b(e)(6); (2) maintain a toll-free 
telephone number during normal business hours with personnel accessible 
to consumers who have received their file disclosures, FCRA section 
609(c)(1)(B), 15 U.S.C. 1681g(c)(1)(B); and (3) utilize an automated 
system through which furnishers of information may report 
reinvestigation results, FCRA section 611(a)(5)(D), 15 U.S.C. 
1681i(a)(5)(D). The FACT Act places several new obligations upon 
nationwide CRAs, including requirements to: Place fraud alerts in 
consumer files and communicate such alerts to other nationwide CRAs, 
Public Law 108-159, 117 Stat. 1952, section 112(a), FCRA section 
605A(a), 15 U.S.C. 1681j(a); provide free file disclosures once 
annually upon request through a centralized source, Public Law 108-159, 
117 Stat. 1952, section 211(a), FCRA section 612(a), 15 U.S.C. 
1681j(a); and participate in a process of consumer complaint sharing 
and review, Public Law 108-159, 117 Stat. 1952, section 313(a), FCRA 
section 611(e), 15 U.S.C. 1681i(e).
    Section 603.2 prohibits any method of circumvention or evasion of 
treatment as a nationwide CRA, including, but not limited to, a 
corporate organization, reorganization, structuring, or restructuring, 
or by maintaining or merging public record and credit account 
information in a manner that is substantially equivalent to the manner 
described in section 603(p) of the FCRA.
    The language of Sec. 603.2 closely tracks the language of the FACT 
Act, with two exceptions. First, the interim final rule prohibits 
circumvention ``by any means.'' The FACT Act describes two types of 
conduct that Congress sought to prevent when used as means of 
circumventing treatment as a nationwide CRA. The first type is 
``corporate reorganization or restructuring, including a merger, 
acquisition, dissolution, divestiture, or asset sale of a consumer 
reporting agency.'' The second is ``maintaining or merging public 
record and credit account information in a manner that is substantially 
equivalent to that described in paragraphs (1) and (2) of section 
603(p), in the manner described in section 603(p).'' The Act does not, 
however, limit the Commission's authority to prohibit circumvention to 
these two types. Accordingly, the Commission concludes that Congress 
has granted it broad authority to prevent all circumvention, by any 
means, including, but not limited to, the specific types of 
circumvention described in the FACT Act.
    Second, the FACT Act section 211(b)(1) includes ``reorganization or 
restructuring'' as examples of circumvention to be prevented. The 
interim final rule addresses ``organization'' and ``structuring'' as 
well as reorganization and restructuring. The references to 
``organization'' and ``structuring'' are included in the interim final 
rule to make it clear that the prohibition against circumvention 
applies not only to existing nationwide CRAs, but also to any new 
entrants into the marketplace. The Commission believes that, in order 
to ensure a level playing field in the industry, newly formed consumer 
reporting agencies should be prohibited from circumvention or evasion 
of nationwide CRA responsibilities in the initial organization and 
structuring of their entities, just as existing nationwide CRAs are 
prohibited from it in reorganization or restructuring.

C. Limitation on Applicability

    Section 603.3 clarifies the application of this interim final rule 
to entities that comply with all obligations of nationwide CRAs. It 
states that an entity that is otherwise in violation of the rule, but 
which complies with all obligations of nationwide CRAs, will be deemed 
in compliance with the interim final rule. The purpose of the 
circumvention provision of the FACT Act is to prevent evasion of the 
obligations of nationwide CRAs-if there is no evasion of these 
obligations, it would be anomalous to impose liability under the 
interim final rule.

III. Good Cause for Interim Final Rule and Immediate Effective Date

    The Administrative Procedure Act (APA), 5 U.S.C. 551 et seq., 
generally requires an agency to publish a notice of a proposed rule and 
afford interested persons an opportunity to provide comments prior to 
promulgation of the rule. Notice of the proposed rule and an 
opportunity for public comment are not required ``when the agency for 
good cause finds (and incorporates the finding and a brief statement of 
reasons therefore in the rules issued) that notice and public procedure 
thereon are impracticable, unnecessary, or contrary to the public 
interest.'' 5 U.S.C. 553(b)(3)(B). Furthermore, a rule may not be made 
effective fewer than thirty days after publication, unless otherwise 
provided by the agency for good cause found and published with the 
rule. 5 U.S.C. 553(d). See also 16 CFR 1.26(e).
    The Commission finds good cause for adopting this interim final 
rule and making it effective without advance public notice or comment 
and within thirty days of its publication. The FACT Act requires that 
the prohibition against circumventing the requirements imposed on 
nationwide consumer reporting agencies become effective ``not later 
than 90 days after the date of enactment of this section.'' Therefore, 
the prohibition must become effective on or before March 3, 2004. The 
90-day effective date requirement imposed upon this rulemaking is 
significantly shorter than the rulemaking timelines imposed by Congress 
in the FACT Act's other substantive provisions. See, e.g. Public Law 
108-159, 117 Stat. 1952. In imposing this deadline, Congress manifested 
an intent for the prohibition on circumventing the obligations imposed 
on nationwide consumer reporting agencies to be in place on an 
expedited basis, prior to the promulgation of the rules that will 
extend those obligations. To delay promulgation of an effective rule 
would frustrate Congress' purpose in imposing an accelerated rulemaking 
deadline for this provision.
    In addition, the other upcoming FACT Act rules that are to be 
promulgated by the Commission in a six-month or longer time frame, 
place significant new obligations on nationwide CRAs. Increased 
regulatory burden provides an incentive for organizations to avoid or 
minimize that burden. The FACT Act itself, however, does not prohibit 
circumvention directly, but rather only requires the promulgation of a 
rule. Without the rule, there is no prohibition on circumvention. Thus, 
it is in the public interest for the Commission to promulgate this as 
an effective interim final rule as quickly as possible, to prevent 
organizations from attempting to circumvent the new FACT Act 
obligations.
    For these reasons, the FTC finds that issuing this rule with prior 
notice and comment is impracticable, unnecessary, and contrary to the 
public interest. Accordingly, the Commission finds that there is good 
cause for adopting this interim final rule as effective less than 
thirty days from when it is published, on March 3, 2004, without prior 
public comment. Nonetheless, the FTC invites

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public comment on the interim final rule. Based on comments received, 
the FTC may adjust the interim final rule as necessary.

IV. Invitation to Comment

    All persons are hereby given notice of the opportunity to submit 
written data, views, facts, and arguments concerning the interim final 
rule. The Commission invites written comments to assist it in 
ascertaining the facts necessary to reach a determination as to whether 
to adopt as final the interim final rule. Written comments must be 
submitted on or before April 23, 2004. Comments should refer to ``FACTA 
Interim Final Rule Prohibiting Circumvention, Project No. P044804'' to 
facilitate the organization of comments. A comment filed in paper form 
should include this reference both in the text and on the envelope, and 
should be mailed or delivered to the following address: Federal Trade 
Commission/Office of the Secretary, Room 159-H (Annex C), 600 
Pennsylvania Avenue, NW., Washington, DC 20580. 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\ The FTC is 
requesting that any comment filed in paper form be sent by courier or 
overnight service, if possible, because U.S. postal mail in the 
Washington area and at the Commission is subject to delay due to 
heightened security precautions.
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    \1\ Commission Rule 4.2(d), 16 CFR 4.2(d). The comment must 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).
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    An electronic comment can be filed by (1) clicking on http://www.regulations.gov.; (2) selecting ``Federal Trade Commission'' at 
``Search for Open Regulations;'' (3) locating the summary of this 
Notice; (4) clicking on ``Submit a Comment on this Regulation;'' and 
(5) completing the form. For a given electronic comment, any 
information placed in the following fields--``Title,'' ``First Name,'' 
``Last Name,'' ``Organization Name,'' ``State,'' ``Comment,'' and 
``Attachment''--will be publicly available on the FTC Web site. The 
fields marked with an asterisk on the form are required in order for 
the FTC to fully consider a particular comment. Commenters may choose 
not to fill in one or more of those fields, but if they do so, their 
comments may not be considered.
    The FTC Act and other laws the Commission administers permit the 
collection of public comments to consider and use in this proceeding as 
appropriate. All timely and responsive public comments, whether filed 
in paper or electronic form, will be considered by the Commission, and 
will be available to the public on the FTC Web site, to the extent 
practicable, at http://www.ftc.gov. As a matter of discretion, the FTC 
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. More information, including routine uses permitted by 
the Privacy Act, may be found in the FTC's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.

V. 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).

VI. Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995, 44 U.S.C. 
3506; 5 CFR 1320 Appendix A.1, the FTC has reviewed the interim final 
rule. The Commission has determined that the interim final rule 
contains no collection of information requirements subject to Office of 
Management and Budget review under the Paperwork Reduction Act. The 
interim final rule does not require any entity to collect, maintain, 
disclose, or submit any records or other information.

VII. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA), 5 U.S.C. 601-612, requires an 
agency to provide an Initial Regulatory Flexibility Analysis (IRFA) 
with a proposed rule and a Final Regulatory Flexibility Analysis (FRFA) 
with the final rule, if any, unless the agency certifies that the rule 
will not have a significant economic impact on a substantial number of 
small entities. See 5 U.S.C. 603-605.
    The FTC does not anticipate that the interim final rule will have a 
significant economic impact on a substantial number of small entities. 
The interim final rule applies to only those entities that compile and 
maintain files on consumers on a nationwide basis, as defined under 
section 603(p) of the Fair Credit Reporting Act, 15 U.S.C. 1681a(p). 
The Commission believes that there are few, if any, small entities that 
meet this definition. This document serves as notice to the Small 
Business Administration of the agency's certification of no effect. 
Nonetheless, the Commission has determined that it is appropriate to 
publish an IRFA in order to inquire into the impact of the interim 
final rule on small entities. Therefore, the Commission has prepared 
the following analysis:
    A. Description of the Reasons That Action by the Agency Is Being 
Taken. The recently enacted Fair and Accurate Credit Transactions Act 
of 2003 (FACT Act or the Act) requires the FTC to adopt rules to 
prevent consumer reporting agencies from avoiding the statutory 
obligations imposed on nationwide consumer reporting agencies. In this 
action, the FTC is adopting an interim final rule that prohibits 
consumer reporting agencies from avoiding these obligations through any 
means, including corporate organization, reorganization, structuring, 
restructuring, and/or technological or data merging methods.
    B. Statement of the Objectives of, and Legal Basis for, the Interim 
Final Rule. The objective of the interim final rule is to prohibit 
entities from using any means of circumventing or evading treatment as 
a nationwide consumer reporting agency. It is authorized by and based 
upon section 211(b) of the FACT Act, which added new section 629 of the 
FCRA, 15 U.S.C. 1681y.
    C. Small Entities to Which the Interim Final Rule May Apply. The 
Commission has not identified any small entities that are subject to 
the interim final rule. The Commission invites comment and information 
on this issue.
    D. Projected Reporting, Recordkeeping and Other Compliance 
Requirements. The interim final rule contains no recordkeeping, filing, 
or disclosure requirements.
    E. Duplicative, Overlapping, or Conflicting Federal Rules. The 
Commission has not identified any other federal statutes, rules, or 
policies that would duplicate, overlap, or conflict with the interim 
final rule.
    F. Significant Alternatives to the Interim Final Rule. The interim 
final rule does not contain reporting requirements, timetables, or 
design standards. The Commission is not aware of any alternative method 
of compliance that would further reduce the impact (if any) of the 
interim final rule on small entities. The Commission invites comment 
and information on this issue.

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VIII. Questions for Comment on the Interim Final Rule

    The Commission seeks comment on all aspects of the interim final 
rule. Without limiting the scope of issues on which it seeks comment, 
the Commission is particularly interested in receiving comments on the 
questions that follow. Responses to these questions should include 
detailed, factual supporting information whenever possible.
    1. Is section 603.2(a) of the interim final rule adequate to 
prevent a consumer reporting agency from circumventing or evading 
treatment as a consumer reporting agency described in section 603(p) of 
the FCRA, 15 U.S.C. 1681a(p)? What other methods of possible 
circumvention or evasion, if any, should the Commission consider 
prohibiting in the final rule, consistent with the authority granted to 
it in section 629 of the FCRA, 15 U.S.C. 1681y?
    2. Do the examples provided offer helpful guidance for complying 
with the rule? What additional examples might be helpful if included?
    3. Please provide comment on any or all of the provisions in the 
interim final rule with regard to (a) the impact of the provision(s) 
(including any benefits and costs), if any, and (b) what alternatives, 
if any, the Commission should consider, as well as the costs and 
benefits of those alternatives, paying specific attention to the effect 
of the interim final rule on small entities in light of the above 
analysis. Costs to ``implement and comply'' with the interim final rule 
should include expenditures of time and money for any employee 
training, attorney, computer programmer or other professional time.
    4. Please describe ways in which the interim final rule could be 
modified, consistent with the FACT Act's mandated requirements, to 
reduce any costs or burdens for small entities.
    5. Please provide any information quantifying the economic costs 
and benefits of the interim final rule for regulated entities, 
including small entities.
    6. Please identify any relevant federal, state, or local rules that 
may duplicate, overlap or conflict with the interim final rule.

List of Subjects in 16 CFR Part 603

    Fair Credit Reporting Act, Consumer reports, Consumer reporting 
agencies, Credit, Trade practices.

0
Accordingly, for the reasons set forth in the preamble, the FTC adds 16 
CFR Part 603 as follows:

PART 603--PROHIBITION AGAINST CIRCUMVENTING TREATMENT AS A 
NATIONWIDE CONSUMER REPORTING AGENCY

Sec.
603.1 Rule of construction.
603.2 General prohibition.
603.3 Limitation on applicability.

    Authority: Pub. L. 108-159, sec. 211(b); 15 U.S.C. 1681y.


Sec.  603.1  Rule of construction.

    The examples in this part are illustrative and not exclusive. 
Compliance with an example, to the extent applicable, constitutes 
compliance with this part.


Sec.  603.2  General prohibition.

    (a) A consumer reporting agency shall not circumvent or evade 
treatment as a ``consumer reporting agency that compiles and maintains 
files on consumers on a nationwide basis'' as defined under section 
603(p) of the Fair Credit Reporting Act, 15 U.S.C. 1681a(p), by any 
means, including, but not limited to:
    (1) Corporate organization, reorganization, structure, or 
restructuring, including merger, acquisition, dissolution, divestiture, 
or asset sale of a consumer reporting agency; or
    (2) Maintaining or merging public record and credit account 
information in a manner that is substantially equivalent to that 
described in paragraphs (1) and (2) of section 603(p) of the Fair 
Credit Reporting Act, 15 U.S.C. 1681a(p).
    (b) Examples:
    (1) Circumvention Through Reorganization By Data Type. XYZ Inc. is 
a consumer reporting agency that compiles and maintains files on 
consumers on a nationwide basis. It restructures its operations so that 
public record information is assembled and maintained only by its 
corporate affiliate, ABC Inc. XYZ continues operating as a consumer 
reporting agency but ceases to comply with the FCRA obligations of a 
consumer reporting agency that compiles and maintains files on 
consumers on a nationwide basis, asserting that it no longer meets the 
definition found in FCRA section 603(p), because it no longer maintains 
public record information. XYZ's conduct is a circumvention or evasion 
of treatment as a consumer reporting agency that compiles and maintains 
files on consumers on a nationwide basis, and thus violates section 
603.2 of this part.
    (2) Circumvention Through Reorganization By Regional Operations. 
PDQ Inc. is a consumer reporting agency that compiles and maintains 
files on consumers on a nationwide basis. It restructures its 
operations so that corporate affiliates separately assemble and 
maintain all information on consumers residing in each state. PDQ 
continues to operate as a consumer reporting agency but ceases to 
comply with the FCRA obligations of a consumer reporting agency that 
compiles and maintains files on consumers on a nationwide basis, 
asserting that it no longer meets the definition found in FCRA section 
603(p), because it no longer operates on a nationwide basis. PDQ's 
conduct is a circumvention or evasion of treatment as a consumer 
reporting agency that compiles and maintains files on consumers on a 
nationwide basis, and thus violates section 603.2 of this part.
    (3) Circumvention By a Newly Formed Entity. Smith Co. is a new 
entrant in the marketplace for consumer reports that bear on a 
consumer's credit worthiness, standing and capacity. Smith Co. 
organizes itself into two affiliated companies: Smith Credit Co. and 
Smith Public Records Co. Smith Credit Co. assembles and maintains 
credit account information from persons who furnish that information 
regularly and in the ordinary course of business on consumers residing 
nationwide. Smith Public Records Co. assembles and maintains public 
record information on consumers nationwide. Neither Smith Co. nor its 
affiliated organizations comply with FCRA obligations of consumer 
reporting agencies that compile and maintain files on consumers on a 
nationwide basis. Smith Co.'s conduct is a circumvention or evasion of 
treatment as a consumer reporting agency that compiles and maintains 
files on consumers on a nationwide basis, and thus violates section 
603.2 of this part.
    (4) Bona Fide, Arms-Length Transaction With Unaffiliated Party. 
Foster Ltd. is a consumer reporting agency that compiles and maintains 
files on consumers on a nationwide basis. Foster Ltd. sells its public 
record information business to an unaffiliated company in a bona fide, 
arms-length transaction. Foster Ltd. ceases to assemble, evaluate and 
maintain public record information on consumers residing nationwide, 
and ceases to offer reports containing public record information. 
Foster Ltd.'s conduct is not a circumvention or evasion of treatment as 
a consumer reporting agency that compiles and maintains files on 
consumers on a nationwide basis. Foster Ltd.'s conduct does not violate 
this part.

[[Page 8536]]

Sec.  603.3  Limitation on applicability

    Any person who is otherwise in violation of Sec.  603.2 shall be 
deemed to be in compliance with this part if such person is in 
compliance with all obligations imposed upon consumer reporting 
agencies that compile and maintain files on consumers on a nationwide 
basis under the Fair Credit Reporting Act, 15 U.S.C. 1681 et seq.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 04-3978 Filed 2-23-04; 8:45 am]
BILLING CODE 6750-01-P