[Federal Register Volume 69, Number 136 (Friday, July 16, 2004)]
[Proposed Rules]
[Pages 42616-42626]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-16010]


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FEDERAL TRADE COMMISSION

16 CFR Part 698

RIN 3084-AA94


Summaries of Rights and Notices of Duties Under the Fair Credit 
Reporting Act

AGENCY: Federal Trade Commission.

ACTION: Publication of proposed guidance for forms, and request for 
public comment.

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SUMMARY: The Federal Trade Commission (Commission) is publishing for 
public comment two summaries of rights under the Fair Credit Reporting 
Act (FCRA) and two notices of duties under the FCRA as required by FCRA 
Sections 609 and 607 respectively. Consumer reporting agencies (CRAs) 
will distribute these documents. The first summary is a summary of 
rights of identity theft victims required by Section 609(d) of the 
FCRA, which was added to the FCRA by the recently enacted Fair and 
Accurate Credit Transactions Act of 2003 (FACT Act). The Commission 
issued the other summary and the two notices in 1997 and is proposing 
revisions because of the extensive changes made to the FCRA in the FACT 
Act. These are a general summary of consumer rights under the FCRA, a 
notice of responsibilities under the FCRA of persons that furnish 
information to consumer reporting agencies, and a notice of 
responsibilities under the FCRA of persons that obtain consumer reports 
from consumer reporting agencies.

DATES: Written comments will be accepted until August 16, 2004.

ADDRESSES: Interested parties are invited to submit written comments. 
Comments should refer to ``FACTA Notices, Matter No. R411013'' 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 H-159 (Annex S), 600 
Pennsylvania Avenue, NW., Washington, DC 20580. The Commission is 
requesting that any comment filed in paper form be sent by courier or 
overnight service, if possible, because postal mail in the Washington 
area and at the Commission is subject to delay due to heightened 
security precautions. Commenters seeking confidential treatment for any 
portion of their comments must file their comments in paper form. An 
electronic comment can be filed using e-mail at [email protected].
    Comments on any proposed filing, recordkeeping, or disclosure 
requirements that are subject to paperwork burden review under the 
Paperwork Reduction Act should be submitted to: Office of Information 
and Regulatory Affairs, Office of Management and Budget, Attention: 
Desk Officer for Federal Trade Commission. Comments should be submitted 
via facsimile to (202) 395-6974 because postal mail at the Office of 
Management and Budget is subject to lengthy delays due to heightened 
security precautions. Such comments should also be sent to the 
following address: Federal Trade Commission/Office of the Secretary, 
Room H-159 (Annex S), 600 Pennsylvania Avenue, NW., Washington, DC 
20580.
    The Federal Trade Commission 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 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: For the summary of identity theft 
rights, contact Monique Einhorn, Attorney, Division of Planning and 
Information, Federal Trade Commission, 600 Pennsylvania Ave., NW., 
Washington, DC 20580, 202-326-3228; for the general summary of consumer 
rights and the furnisher and user notices, contact William Haynes, 
Attorney, Division of Financial Practices, Federal Trade Commission, 
600 Pennsylvania Ave. NW., Washington, DC 20580, (202) 326-3224.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Introduction
II. Overview of Proposed Summaries and Notices
III. Invitation To Comment
IV. Communications by Outside Parties to Commissioners and Their 
Advisors
V. Review Under the Paperwork Reduction Act
VI. Regulatory Flexibility Act Analysis
VII. Comment Questions

I. Introduction

    The Federal Trade Commission is issuing for public comment two 
proposed summaries of consumer rights under the FCRA and two notices of 
duties under the FCRA, 15 U.S.C. 1681 et seq. CRAs will distribute 
these documents. The first summary is a summary of the rights of 
identity theft victims under the FCRA that the Commission is required 
to issue by Section 609(d) of the FCRA. The second summary is a summary 
of general consumer rights under the FCRA that the Commission is 
required to issue by Section 609(c) of the FCRA. The two notices are 
(1) a notice of the FCRA duties of furnishers of information to CRAs 
and (2) a notice of the FCRA duties of users of information from CRAs. 
Section 607(d) requires the Commission to issue these notices.
    The requirement that the Commission issue the identity theft rights 
summary was added to the FCRA by the FACT Act, Public Law 108-159, 117 
Stat.1952. The remaining three documents are revised versions of 
documents first prescribed by the Commission in 1997. The Commission is 
issuing revised versions to reflect changes made to the FCRA by the 
FACT Act.

II. Overview of Proposed Summaries and Notices

    The FACT Act, which was signed into law on December 4, 2003, amends 
the FCRA in a number of significant ways. The Act contains provisions 
intended to reduce the occurrence of identity theft and confers certain 
rights on the victims of identity theft to assist them in resolving the 
problems caused by identity theft. The Act also contains provisions 
designed to increase the accuracy of consumer reports and to

[[Page 42617]]

protect the rights of consumers whose personal information is collected 
by consumer reporting agencies and by businesses. Finally, the Act 
establishes uniform national standards in certain key areas. The 
summaries and notices being published for comment by this notice 
reflect the changes to the FCRA made by the FACT Act.

A. Summary of Rights of Identity Theft Victims (Appendix E)

    The FACT Act added Section 609(d) to the FCRA. This provision 
requires the Commission to issue a summary of the rights of fraud or 
identity theft victims under the FCRA that will be distributed by CRAs 
to victims of fraud or identity theft. This summary will complement the 
various new provisions relating to identity theft added to the FCRA by 
the FACT Act.
    The proposed summary, which will be Appendix E to 16 CFR part 698, 
discusses the major identity theft rights that consumers have under the 
FCRA. These are: the right to file fraud alerts (Section 605A); the 
right to block the reporting of information resulting from identity 
theft in the files of consumer reporting agencies (Section 605B); the 
right to prevent persons who furnish information to the CRAs from 
reporting information that is the result of identity theft (Section 
623(a)(6)(B)); the right to obtain free file disclosures (Sections 
612(c)(3) and 612(d)); and the right to obtain documents or information 
relating to accounts opened in the consumer's name or transactions made 
in the consumer's name (Sections 609(e) and 615(g)(2)). In addition, 
the summary informs consumers that a creditor may not sell, transfer, 
or place for collection a debt if the creditor has been notified that 
the debt is the result of identity theft (Section 615(f)(1)). The 
Commission has consulted with the Federal banking regulators and the 
National Credit Union Administration in crafting the proposed summary 
as required by Section 609(d).
    The only identity theft-specific rights that are not discussed in 
the proposed summary are duties that are directed at the business 
community. These are: the duty of debt collectors to notify the 
original creditor or owner of the debt if the debt collector is 
notified that information in the file of a consumer may be the result 
of identity theft (Section 615(g)(1)); the duty of CRAs to notify the 
furnisher that information in the file of the consumer may be the 
result of identity theft and that a block has been requested (Section 
605B(b)); and the duty of furnishers of information to CRAs to have in 
place procedures to prevent the re-furnishing of information which has 
been blocked under section 605B (Section 623(a)(6)(A)). Because these 
duties do not require any action by consumers in addition to the steps 
outlined in the proposed notice, the Commission believes that it is 
appropriate not to include these items. These duties are set forth in 
the ``furnisher'' and ``user'' notices discussed below. A discussion of 
these rights will also be on the Commission's Web site, to which the 
consumer summary will refer consumers.
    Finally, Section 609(d) of the FACT Act requires that any summary 
distributed by a CRA contain ``all of the information required by the 
Commission.'' The Commission reads the statute as providing CRAs with 
flexibility in creating summaries of identity theft rights and is 
proposing that any summary issued by a CRA display the Commission-
mandated information ``clearly and prominently'' in a form 
substantially similar to the Commission's model summary.

B. General Summary of Consumer Rights (Appendix F)

    As added to the FCRA in 1996, Section 609(c) required the 
Commission to issue a model summary of consumer rights under the FCRA. 
The summary had to include the following: (1) A description of the FCRA 
and all rights of consumers under the law; (2) an explanation of how a 
consumer could exercise his or her rights; (3) a list of all Federal 
agencies responsible for enforcing the FCRA and their addresses and 
telephone numbers; (4) a statement that the consumer might have 
additional rights under State law; and (5) a statement that CRAs are 
not required to remove current, accurate derogatory information from 
consumers' files. The 1996 amendments to the FCRA required CRAs to 
distribute consumer rights summaries that were ``substantially 
similar'' to the summary created by the Commission. The Commission 
issued its general summary of consumer rights in July 1997. 62 FR 35586 
(1997)
    The recently enacted FACT Act amended Section 609(c) in a number of 
ways. This provision now requires that the Commission prepare a model 
summary of consumer rights, and mandates that the summary include an 
explanation of the following: (1) The consumer's right to obtain a free 
file disclosure each twelve months under Section 612(a) of the FCRA; 
(2) the frequency and circumstances under which a consumer may receive 
additional free disclosures under the FCRA; (3) the right of consumers 
to dispute incorrect or outdated information in their files; and (4) 
the right of consumers to obtain credit scores for a fee.
    As amended by the FACT Act, Section 609(c) continues to require 
that CRAs notify consumers that they may have additional rights under 
state law and that the FCRA does not require accurate, current 
derogatory information to be removed from consumers' files. CRAs also 
must provide consumers with the list of Federal agencies responsible 
for enforcing the FCRA. These items are, however, no longer required to 
be included in the summary of rights prescribed by the Commission. 
Nonetheless, the Commission believes that including this information in 
its proposed summary would be helpful to consumers by providing in one 
place a description of consumer rights and the list of agencies charged 
with enforcing these rights. CRAs may, however, disclose the list of 
addresses and the two statements separately from the Commission's 
summary.
    The Commission's proposed summary, which will be Appendix F to 16 
CFR part 698, refers consumers to the FCRA portion of the Commission's 
Web site (www.ftc.gov/credit) where a more extensive discussion of the 
various provisions of the FCRA and consumers' rights will be set forth. 
The summary also provides an address where consumers may request a 
written copy of this additional information if they do not have access 
to a computer.
    Another issue raised by the FACT Act amendments is whether CRAs 
must distribute the summary in the exact form prescribed by the 
Commission. The 1996 amendments required only that CRAs distribute a 
summary ``substantially similar'' to the Commission's model. Although 
Section 609(c), as amended by the FACT Act, no longer contains the 
``substantially similar'' language, the provision now characterizes the 
Commission-prescribed disclosure as a ``model'' summary of rights. As a 
result, the Commission continues to read the statute to provide CRAs 
with flexibility to structure the disclosure as necessary and 
appropriate. Because the Commission's prescribed disclosure is simply a 
``model,'' CRAs need not adhere to it in every detail, and a summary 
that is ``substantially similar'' to the Commission's model summary 
complies with the statutory requirement.
    In addition, the Commission believes that all information must be 
clearly and prominently displayed. Finally, the Commission realizes 
that some information in the summary may change over time--for example, 
the permissible

[[Page 42618]]

charges for file disclosures and the addresses and telephone numbers of 
the Federal agencies. The Commission will periodically update this 
information on its Web site, and considers all notices with updated 
information to be in compliance with section 609(c).

C. Notice of Duties of Furnishers and Notice of Duties of Users 
(Appendix G and Appendix H)

    The FACT Act did not amend Section 607(d), which requires the 
Commission to issue a notice setting forth the duties of furnishers of 
information to CRAs, and a notice outlining the duties of users of 
consumer reports.
    The FACT Act did, however, amend Section 623 of the FCRA to add a 
number of new furnisher duties, including requiring compliance with 
``accuracy'' guidelines to be issued by the Commission and the banking 
and credit union regulators, procedures that must be followed to assist 
in preventing and correcting identity theft, and procedures relating to 
the furnishing of negative information and medical information. The 
Commission has revised the furnisher notice, which will be Appendix G 
to 16 CFR part 698, to reflect these changes.
    The FACT Act also amended many provisions of the FCRA that affect 
users. The most significant changes relate to the use of consumer 
reports for employment purposes, the use of medical information, the 
duties of resellers of consumer reports, and the procedures to be 
followed to protect against identity theft. The Commission has revised 
the user notice, which will be Appendix H to 16 CFR part 698, to 
reflect these changes. The ``users'' of consumer reports fall into a 
number of categories, and the duties imposed by the FCRA vary by user 
category. The Commission is proposing a single notice to be sent to all 
users, which specifies the general responsibilities that apply to all 
users of consumer reports from a CRA (Part I), and lists the 
responsibilities that are specific to the following categories of 
users: creditors and mortgage grantors (Part II); users of reports for 
employment purposes (Part III); users of investigative consumer reports 
(Part IV); users of medical information (Part VI); users of 
``prescreened'' lists (Part VII); and users who are resellers (Part 
VIII).
    Section 607(d) of the FCRA requires CRAs to provide to furnishers 
and users a notice of ``such person's responsibilities.'' The 
Commission interprets this provision as giving CRAs the option of 
providing notices that only list the duties that specifically apply to 
a particular furnisher or user. CRAs may, however, elect to provide the 
Commission's furnisher or user notices in their entirety to all 
furnishers and users.
    Section 607(d) also requires that CRAs provide furnishers and users 
notices that are ``substantially similar'' to the notices prescribed by 
the Commission. The Commission believes that the changes made to 
furnisher and user duties by the FACT Act are significant, and render 
the existing furnisher and user notices obsolete. Accordingly, the 
Commission concludes that CRAs will need to provide revised notices to 
all furnishers and users in order to comply with the statutory 
requirement that they provide to furnishers and users a notice that is 
substantially similar to the notice prescribed by the Commission.

D. Distribution of Summaries and Notices

    With respect to the general summary of rights, Section 609(c) makes 
clear that it must be provided every time a CRA makes a written file 
disclosure. The Commission will post minor changes in addresses, 
telephone numbers, and the cost of consumer reports on its Web site. 
CRAs may modify the summaries they distribute to reflect these changes.
    Section 609(d) requires that the summary of identity theft rights 
be provided when consumers contact CRAs to report fraud or identity 
theft. The statute requires CRAs to begin distributing the summary of 
identity theft rights 60 days after the Commission issues the summary 
in final form.
    The furnisher and user notices are required by Section 607(d) to be 
distributed on a one-time basis by CRAs. The Commission believes that 
the changes made by the FACT Act to the FCRA are so substantial that 
CRAs must distribute the revised user and furnisher notices to all 
current users and furnishers, as well as to all entities that become 
users or furnishers in the future.

III. Invitation to Comment

    The Commission invites interested members of the public to submit 
written data, views, facts, and arguments addressing the issues raised 
by this Notice. Specific issues that the Commission suggests be 
addressed are set forth in Part VII below. Written comments must be 
received on or before August 16, 2004. Comments should refer to ``FACTA 
Notices, Matter No. R411013'' 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 H-159 (Annex S), 600 Pennsylvania Avenue, NW., 
Washington, DC 20580. The Commission is requesting that any comment 
filed in paper form be sent by courier or overnight service, if 
possible, because postal mail in the Washington area and at the 
Commission is subject to delay due to heightened security precautions. 
Commenters seeking confidential treatment for any portion of their 
comments must file their comments in paper form. An electronic comment 
may be filed by e-mail by sending the comment to [email protected].
    Comments on any proposed filing, recordkeeping, or disclosure 
requirements that are subject to paperwork burden review under the 
Paperwork Reduction Act should be submitted to: Office of Information 
and Regulatory Affairs, Office of Management and Budget, Attention: 
Desk Officer for Federal Trade Commission. Comments should be submitted 
via facsimile to (202) 395-6974 because U.S. postal mail at the Office 
of Management and Budget is subject to lengthy delays due to heightened 
security precautions. Such comments should also be sent to the 
following address: Federal Trade Commission/Office of the Secretary, 
Room H-159 (Annex S), 600 Pennsylvania Avenue, NW., Washington, DC 
20580.
    The Federal Trade Commission 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 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.

IV. 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).

[[Page 42619]]

V. Review Under the Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
3506; 5 CFR 1320 Appendix A.1) (PRA), the Commission reviewed the 
general summary of rights and the furnisher and user notices for 
compliance with the PRA when it issued the summary and notices in 1997. 
At that time, the Commission concluded that the summary and notices 
consist of information that is supplied by the Federal government. 
Accordingly, the Commission determined that these do not constitute a 
``collection of information'' as this term is defined in the 
regulations implementing the PRA, nor do the financial resources 
expended in relation to the distribution of these documents constitute 
a paperwork burden. See 5 CFR 1320.3(c)(2). The Commission has reviewed 
the new identity theft summary of rights, as well as the changes to the 
existing summary and notices that are mandated by the FACT Act 
amendments to the FCRA. The Commission has concluded, consistent with 
its analysis in 1997, that the proposed summaries and notices do not 
fall within the definition of ``collection of information'' covered by 
the PRA because they are ``[t]he public disclosure of information 
originally supplied by the Federal government to the recipient for the 
purpose of disclosure to the public * * *.'' 5 CFR 1320.3(c)(2).

VI. Regulatory Flexibility Act Analysis

    The Regulatory Flexibility Act (RFA), 5 U.S.C. 601-612, requires 
that the Commission provide an Initial Regulatory Flexibility Analysis 
(IRFA) with any action that may constitute a rule unless the Commission 
certifies that the action will not have a significant economic impact 
on a substantial number of small entities. See 5 U.S.C. 603-605. The 
Commission concludes that the proposed summaries and notices will not 
have a significant economic impact on a substantial number of small 
entities, as discussed below. Accordingly, this document serves as 
notice to the Small Business Administration of the agency's 
certification of no effect.
    To ensure the accuracy of this certification, however, the 
Commission requests comment on whether the proposed notices will have a 
significant impact on a substantial number of small entities, including 
specific information on the number of entities that will be covered by 
the proposed rules, the number of these entities that are ``small'' 
(i.e., have average annual receipts of less than $6 million), and the 
average annual burden for each entity. The Commission has prepared the 
following analysis:

A. Description of the Reasons That Action by the Agency Is Being Taken

    The agency has undertaken this proceeding to implement several 
provisions of the FCRA, as amended by the FACT Act. Specifically, 
Section 609(c) of the FCRA requires the Commission to prepare a summary 
of the general rights that consumers have under the FCRA (general 
summary of consumer rights); Section 609(d) requires the Commission to 
prepare a model summary of the rights of consumers under the FCRA that 
relate to identity theft; and Section 607(d) requires the Commission to 
issue notices of the duties under the FCRA of persons that furnish 
information to CRAs and of persons that use information obtained from 
CRAs. All of these documents will be distributed by CRAs.

B. The Proposal's Objectives and Legal Basis

    The objective of the Commission's action is the issuance of 
proposed summaries and notices to educate consumers, furnishers of 
information to CRAs, and users of information from CRAs as to their 
rights or duties under the FCRA. As noted earlier, the legal bases for 
the proposed notices are Sections 607(d) (notices of duties of users 
and furnishers), 609(c) (general summary of consumer rights), and 
609(d) (summary of identity theft rights) of the FCRA.

C. Small Entities to Which the Proposed Rule Will Apply

    The proposed summaries and notices are to be distributed by CRAs. 
The definition of a ``small'' CRA is currently one with less than $6 
million in average annual receipts (see www.sba.gov/size).
    The consumer reporting industry is composed primarily of 
``nationwide'' CRAs and ``nationwide specialty'' CRAs, as defined in 
FCRA Sections 603(p) and 603(w), respectively. The Commission 
estimates, based on its own experience and knowledge of industry 
practices and members, that there are three nationwide CRAs and fewer 
than 50 nationwide specialty CRAs currently doing business in the U.S. 
The Commission believes that none of the nationwide CRAs are ``small'' 
entities. Further, the Commission believes it is likely, but has been 
unable to confirm, that none of the nationwide specialty CRAs are small 
entities.
    There are, however, small CRAs associated with the nationwide CRAs, 
and there are small independent CRAs. Based on the membership of the 
major CRA trade associations, the Commission believes that the total 
universe of entities potentially covered by the requirement to 
distribute summaries and notices is between 1000 and 1400. As is 
discussed below, the Commission believes that the nationwide and 
nationwide specialty CRAs will be responsible for much of the 
distribution of the summaries and notices. The Commission invites 
comments on the number of ``small'' entities that will be affected by 
its proposal.

D. Projected Reporting, Recordkeeping, and Other Compliance 
Requirements

    The proposed rule would impose no reporting or recordkeeping 
requirements. CRAs will be required, however, to distribute the 
prescribed summaries and notices. The summary of identity theft rights 
(Section 609(d)) will be distributed to all consumers who contact the 
CRAs to report that they may be the victim of fraud or identity theft. 
The general summary of consumer rights (Section 609(c)) will be 
distributed with each written disclosure made by CRAs. Both of these 
summaries will be distributed to large numbers of consumers each year. 
By contrast, the notices of user and furnisher duties (Section 607(d)) 
need be distributed only on a one-time basis to all of the entities 
that furnish information to a CRA or use information obtained from a 
CRA.
    As discussed above, CRAs have distributed the general summary of 
rights and the furnisher and user notices since 1997. The revised 
general summary and the revised furnisher and user notices will simply 
maintain, and not increase in any significant way, the burdens already 
imposed on CRAs by these notice requirements. The additional 
requirement to distribute a summary of identity theft rights, however, 
will impose some new burdens and costs on CRAs, although the Commission 
believes they will be minimal.
    CRAs must provide the required summary of identity theft rights to 
consumers when they contact CRAs to report fraud or identity theft. 
There should be few instances, however, in which this summary will be 
the only information the CRA is distributing to consumers. Rather, in 
most cases, when consumers report fraud or identity theft, CRAs will be 
responding either by sending a copy of their file or engaging in other 
ongoing communications with consumers in an attempt to resolve their 
identity theft problems. CRAs may be reasonably expected to economize 
on

[[Page 42620]]

the costs of transmitting the required summary of identity theft rights 
to consumers by including the summary as part of such communications 
with consumers.
    Thus, the Commission believes that the distribution costs for the 
identity theft rights summaries are likely to be a small increment to 
the overall cost of handling fraud and identity theft complaints from 
consumers. Moreover, because the Commission is providing the language 
for the summary, businesses need not incur legal or other professional 
costs to develop any written material. The cost of training employees, 
if any, should be minimal. When the document is distributed 
electronically, the Commission believes that the distribution costs 
will be negligible. The cost of distributing the summary will be 
greatest where the summary is mailed. Even here, however, the cost will 
be a small increment to the costs associated with handling the contact 
with the consumer, as explained earlier. The Commission estimates that 
the incremental cost of including the document in other material that 
is mailed to a consumer will be $.25 for each mailing, because 
including the summary with other material should require little 
clerical effort and no additional postage. In the rare instance where 
the summary is the only item mailed to the consumer, the Commission 
estimates the incremental cost at $.50 per mailing because of the cost 
of handling and postage. This estimate assumes that little staff time 
will be required to provide summaries in addition to the staff time 
that will be devoted to dealing with each consumer's problem. The 
Commission believes that the cost of preparing and printing notices 
will be minimal because the notice is very short and the content is 
being provided by the Commission.
    With respect to small entities, the total annual cost of complying 
with the requirement to distribute the summary of identity theft rights 
will ultimately depend upon the number of summaries that are 
distributed each year by ``small'' CRAs. The Commission is currently 
unaware of any comprehensive data showing how frequently consumers 
contact the small CRAs regarding fraud, identity theft, or other 
matters. Even without such data, however, the Commission believes that, 
overall, the burden of providing these summaries will fall upon the 
nationwide and nationwide specialty CRAs. In that regard, most of the 
government's consumer education efforts to date, as well as the 
Commission's proposed summary of identity theft rights, explains that 
the FCRA requires the nationwide CRAs, not the ``small'' CRAs, to place 
fraud alerts on consumers' files when consumers are victims of identity 
theft. As a result, the Commission believes that most consumers who 
suspect fraud or identity theft are likely to contact the nationwide 
CRAs, rather than the ``small'' CRAs. In those cases, the nationwide 
CRAs, which are not ``small'' for purposes of this analysis, would be 
providing consumers with their required summary of identity theft 
rights.\1\
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    \1\ Many local or regional CRAs are associated with the 
nationwide CRAs identified in the proposed summary of identity theft 
rights. It is possible some nationwide CRAs by contract may pass on 
to the small associated CRAs some or all of the cost of distributing 
summaries to consumers whose records are controlled by the small 
CRA. The Commission invites comments and information on this topic.
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    Accordingly, the Commission believes that the total incremental 
cost of the distribution of the consumer summary for small CRAs will be 
relatively minimal. These costs may be incurred by small CRAs 
associated with nationwide CRAs where, for some reason, the consumer 
contacts the small CRA and not the nationwide CRA, by resellers of 
reports from the nationwide CRAs, and by small regional or local 
entities providing criminal records, driving records, and tenant 
screening services. The Commission invites comments on its analysis and 
on the costs imposed on small entities by the requirement to distribute 
summaries of identity theft rights.

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 
proposed notices. The Commission invites comment and information on 
this issue.

F. Significant Alternatives to the Proposed Rule

    In some situations, the Commission has considered adopting a 
delayed effective date for small entities subject to new regulation in 
order to provide them with additional time to come into compliance. In 
this case, however, small entities will be given the texts of the 
proposed summaries and notices to be distributed. In the case of the 
summary of identity theft rights, the distribution of which is a new 
burden being imposed on small entities, the Commission believes that 
the impact of the distribution will be minimal. The Commission, 
however, seeks comment and information with regard to (1) the existence 
of small business entities for which distribution of the required 
summaries and notices would have a significant economic impact; and (2) 
suggested alternative methods of compliance that, consistent with the 
statutory requirements, would reduce the economic impact of the 
requirements of this proceeding on these entities. If the comments 
filed in response to this notice identify small entities that are 
significantly affected, as well as alternative methods of compliance 
that would reduce the economic impact on such entities, the Commission 
will consider the feasibility of such alternatives.

VII. Questions for Comment on the Proposed Summaries and Notices

    The Commission seeks comment on the proposed summaries and notices. 
The Commission is particularly interested in comments in the following 
areas:

A. Summary of Identity Theft Rights of Consumers (Appendix E)

    1. Completeness and Reference to Commission Web sites. The 
Commission has sought to include enough information in the summary to 
effectively assist consumers who are the victims of identity theft and 
to refer consumers to the Commission's Web site for more information. 
Is it appropriate and useful to refer consumers to the Commission's Web 
sites for more information?
    2. Statutorily-Required Items. Section 609(d) states only that the 
Commission must issue a model summary of rights, but does not identify 
specific items to be included. Has the Commission included all of the 
rights that should be included in the summary?
    3. Understandability of Summary. Since the identity theft summary 
is intended for consumers, the Commission has tried to use, as much as 
possible, non-technical terms that will be understood by consumers. Has 
the Commission succeeded? Are there areas where the understandability 
of the summary may be improved?

B. General Summary of Consumer Rights (Appendix F)

    1. Effectiveness of Current Notice. The current summary of consumer 
rights has been in place for nearly seven years. The Commission 
welcomes any comments as to whether the summary has been effective in 
informing consumers about their rights under the FCRA, and whether the 
effectiveness of the summary may be improved.
    2. Completeness and Reference to Commission Web site. The

[[Page 42621]]

Commission's goal is to have a summary that is both informative and 
user friendly for consumers. The proposed summary refers consumers to 
the Commission's Web site for additional information. An address is 
also provided for consumers to request additional information if they 
do not have access to a computer. Does the proposed summary meet the 
Commission's goal? Please identify any specific sections of the 
proposed summary that are too brief or incomplete to be understood by 
consumers. Is it useful to provide references to the Commission's Web 
site for more detailed information, and to provide an address to write 
to in order to request more information? Does this approach 
disadvantage any significant group of consumers? What alternative 
approaches are available?
    3. Statutorily-Required Items. Section 609(c) was significantly 
modified by Congress in the FACT Act. Some items of information that 
were required in the pre-FACT Act disclosure are no longer required to 
be included in the Commission's model summary, but CRAs nonetheless 
must continue to disclose this information. In addition, Congress 
required new items of information to be included in the Commission's 
model summary. The Commission has elected to include the new 
information required by the FACT Act in the proposed summary and to 
retain all of the information in the existing summary--even though some 
of the information may now be disclosed separately. Is this approach 
appropriate?
    4. Understandability of Notice. Because the summary is a document 
intended for consumers, the proposal is written in non-technical 
language. Are there sections that can be improved by simplifying the 
presentation to make it easier for consumers to understand? Are there 
sections where the language does not accurately convey the substance of 
the provision? How could such sections be improved? Should more 
information be included in the notice?
    5. Form and Distribution. Section 609(c)(2) requires CRAs to 
provide with each written file disclosure the Commission's summary of 
rights. The goal is to create a notice that sets forth all statutorily 
required items in a form that is readable, understandable, and 
attractive. Generally, is there a format that would better convey the 
same information to consumers? If so, what is it and what costs would 
it entail? Is there a format that would convey the same information to 
consumers in a less expensive manner? If so, what is it and what cost 
savings would it achieve?

C. Furnisher Notice (Appendix G)

    1. Content of Notice. The proposed furnisher notice summarizes the 
responsibilities imposed upon furnishers of information to CRAs by 
Section 623 of the FCRA. Is the presentation accurate and 
understandable? In what ways can it be improved? Is it sufficient for 
the notice to refer furnishers to the complete text of the FCRA at the 
Internet Web site maintained by the Commission? Would the notice be 
improved if the Commission added the complete text of Section 623?
    2. Terminology. The Commission's proposed notice is written in non-
technical language, but with the expectation that most regular 
providers of information to CRAs will be relatively sophisticated and 
will be able to understand both the language of the statute and the 
description of duties. Is the description accurate and understandable 
for this audience? What improvements can be made?

D. User Notice (Appendix H)

    1. Number of Notices. The Commission is proposing the content of a 
notice to be sent by CRAs to all users of information. CRAs will have 
the option of sending the notice in the form published by the 
Commission or sending a notice that lists only the duties of the user 
that will receive the notice. Should this procedure be followed? Can 
CRAs easily determine through the certifications they receive from 
users which portions of the proposed notice are applicable to which 
users?
    2. Content of Notice. The proposed notice discusses the principal 
portions of the FCRA that impose obligations upon all those who receive 
consumer reports. Should additional information be included in the 
notice? Will the length of the notice impose substantial burdens upon 
CRAs in distributing the notice? Are there ways to modify the notice to 
reduce this burden?
    3. Terminology. The Commission expects that user notices will be 
sent to a wide range of users and that these persons will have varying 
degrees of legal sophistication. Are the duties set forth in the 
proposed notice clear and understandable? Can the description of the 
duties be improved?

List of Subjects in 16 CFR Part 698

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

    Accordingly, pursuant to 15 U.S.C. 1681e, 1681g, and 1681j, and 
Public Law 108-159, sec. 211(d), the Federal Trade Commission hereby 
proposes to amend Part 698 of subchapter F of chapter I of title 16, 
Code of Federal Regulations (which was added at 69 FR 35500 (June 24, 
2004), and which becomes effective on December 1, 2004), as follows:
    1. Revise the authority to read as follows:

    Authority: 15 U.S.C. 1681e, 1681g, 1681s, and 1681j; 117 Stat. 
1952; Pub. L. 108-159, sections 151, 153, 211(c) and (d), 213, and 
311.
    2. Revise the heading of Part 698 to read as follows:

PART 698--SUMMARIES OF CONSUMER RIGHTS, NOTICE OF USER 
RESPONSIBILITIES, AND NOTICE OF FURNISHER RESPONSIBILITIES UNDER 
THE FAIR CREDIT REPORTING ACT

    3. Revise section 698.1 to read as follows:


Sec.  698.1  Authority and purpose.

    (a) Authority. This part is issued by the Commission pursuant to 
the provisions of the Fair Credit Reporting Act (15 U.S.C. 1681 et 
seq.), as amended by the Consumer Credit Reporting Reform Act of 1996 
(Title II, Subtitle D, Chapter 1, of the Omnibus Consolidated 
Appropriations Act for Fiscal Year 1997), Pub. L. 104-208, 110 Stat. 
3009-426 (Sept. 30, 1996), and the Fair and Accurate Credit 
Transactions Act of 2003, Pub. L. 108-159, 117 Stat. 1952 (Dec. 4, 
2003).
    (b) Purpose. The purpose of this part is to comply with sections 
607(d), 609(c), 609(d), and 612(a) of the Fair Credit Reporting Act, as 
amended by the Fair and Accurate Credit Transactions Act of 2003, and 
Section 211 of the Fair and Accurate Credit Transactions Act of 2003.
    4. Revise section 698.2 to read as follows:


Sec.  698.2  Legal effect.

    The issuance of the summaries and notices set forth below carries 
out the directive in the statute that the FTC prescribe these summaries 
and notices. Consumer reporting agencies that distribute summaries and 
notices as set forth below will be in compliance.
    5. Add Appendices E through H to read as follows:

Appendix E to Part 698--Summary of Consumer Identity Theft Rights

    The prescribed form for this summary is a disclosure that clearly 
and prominently contains the information set forth in the Commission's 
model summary. A summary may accurately reflect changes to those items 
(such as

[[Page 42622]]

telephone numbers) that may change over time and remain in compliance.

Remedying the Effects of Identity Theft: Summary of Consumer Rights 
Under the Fair Credit Reporting Act

    You are receiving this information because you have notified a 
consumer reporting agency that you believe you are a victim of 
identity theft. Identity theft occurs when someone uses your name, 
Social Security number, date of birth, or other identifying 
information, without lawful authority, to commit fraud, such as 
opening a credit card account or obtaining a loan in your name. For 
more information, visit www.consumer.gov/idtheft and www.ftc.gov/credit.
    The Fair Credit Reporting Act (FCRA) governs the collection and 
use of information about you, including how you pay your bills. 
Consumer reporting agencies, such as credit bureaus, collect this 
information and provide it to your creditors and other persons who 
have a right to the information. In 2003, Congress amended the FCRA 
to give you specific rights when you are, or believe that you are, 
the victim of identity theft. These rights are intended to help you 
recover from identity theft.
    Here's a brief overview of the FCRA rights, designed to help you 
deal with the problems that identity theft can cause:
    1. You have the right to a free copy of your consumer report if 
you believe it has inaccurate information due to fraud or identity 
theft. This report is in addition to the free report all consumers 
may obtain every twelve months under another provision of the FCRA. 
See www.ftc.gov/credit.
    2. You have the right to place a ``fraud alert'' on your 
consumer report to let potential creditors and others know that you 
may be a victim of identity theft. A fraud alert can make it more 
difficult for someone to get credit in your name because it tells 
creditors to follow certain procedures to protect you. It also may 
delay your ability to obtain credit. You may place a fraud alert in 
your file by calling one of the three nationwide consumer reporting 
agencies. As soon as that agency processes your fraud alert, it will 
notify the other two, which then also must place fraud alerts on 
your credit report.

 Equifax: 1-800-525-6285; www.equifax.com
 Experian: 1-888-397-3742; www.experian.com
 TransUnion: 1-800-680-7289; www.transunion.com

    An initial fraud alert stays in your file for 90 days and 
entitles you to a free copy of your consumer report. An extended 
alert stays in your file for seven years and entitles you to two 
free consumer reports in a 12-month period. The additional consumer 
reports may help you detect signs of fraud, like whether additional 
fraudulent accounts have been opened in your name or whether someone 
has reported a change in your address. A consumer reporting agency 
will require appropriate proof of your identity, which may include 
your Social Security number, to place either of these alerts on your 
report. In addition, you must provide an identity theft report--a 
copy of a report filed by you with a Federal, State, or local law 
enforcement agency--to place an extended alert on your consumer 
report. Be sure to include as many details as you can, such as 
dates, account numbers, or any logical details, if known to you, 
that would help document the suspected fraud.
    3. You have the right to obtain documents relating to accounts 
opened in your name. A creditor or other business must give you 
copies of applications and other business records relating to a 
transaction, or account in your name that you believe was the result 
of identity theft. The business may ask you for proof of your 
identity, a police report, and an affidavit before it gives you the 
documents.
    4. You have the right to obtain information from a debt 
collector. If you ask, a debt collector must provide you with 
certain information about the debt you believe was incurred in your 
name by an identity thief--like the name of the creditor and the 
amount of the debt.
    5. You have the right to block information from your consumer 
report that relates to accounts an identity thief opened in your 
name. An identity thief may run up bills in your name and not pay 
them. If that happens, information about the unpaid bills may appear 
on your consumer report. You can ask a consumer reporting agency to 
block this information from appearing on your consumer report. To do 
so, you must identify which information to block, and provide the 
consumer reporting agency with proof of your identity and a copy of 
the report you filed with law enforcement (the identity theft 
report). The consumer reporting agency can refuse or cancel your 
request for a block if, for example, you don't have the necessary 
supporting documentation, or where the block results from an error 
or a material misrepresentation of fact made by you. If the agency 
declines or rescinds the block, it must notify you. Once a debt 
resulting from identity theft has been blocked, a person or business 
with notice of the block may not sell, transfer, or place the debt 
for collection.
    6. You also may prevent businesses from reporting information to 
the consumer reporting agencies about an account in your name opened 
by an identity thief. To do so, you must send a request to the 
address specified by the business that reports the information to 
the consumer reporting agency. The business will expect you to 
document that you are an identity theft victim. You may do so by 
submitting an identity theft report.
    You can learn more about identity theft and how to undo the 
effects of this fraud at the FTC's identity theft Web site at 
www.consumer.gov/idtheft.
    In addition to the new rights and procedures to help consumers 
deal with the effects of indentity theft, the FCRA has a host of 
other important protections. Described in more detail at 
www.ftc.gov/credit, these include the right to dispute inaccurate 
information with a consumer reporting agency; the right to have 
inaccurate information deleted from your consumer report; the right 
to know you credit score; the right to a free consumer report every 
year; and the right to receive additional free consumer reports when 
appropriate.
    You will receive a summary of these rights from a consumer 
reporting agency every time you receive a consumer report.

Appendix F to Part 698--General Summary of Consumer Rights

    The prescribed form for this summary is a disclosure that is 
substantially similar to the Commission's model summary with all 
information clearly and prominently displayed. A summary may 
accurately reflect changes to those items that may change over time 
(e.g., dollar amounts, or phone numbers and addresses of Federal 
agencies) and remain in compliance.

A Summary of Your Rights Under the Fair Credit Reporting Act

    The Federal Fair Credit Reporting Act (FCRA) promotes the 
accuracy, fairness, and privacy of information in the files of 
consumer reporting agencies. There are many types of consumer 
reporting agencies, including credit bureaus that gather and sell 
information about your creditworthiness to creditors, employers, 
landlords, and other businesses. The FCRA gives you specific rights, 
which are summarized below. You may have additional rights under 
state law. For more information, go to www.ftc.gov/credit, or write 
to: Consumer Response Center, Federal Trade Commission, 600 
Pennsylvania Ave., NW., Washington, DC 20580.
    You must be told if information in your file has been used 
against you. Anyone who uses information from a consumer reporting 
agency to deny your application for credit, insurance, or 
employment--or take another adverse action against you--must tell 
you and give you the name, address, and phone number of the agency 
that provided the information.
    You can find out what is in your file. At any time, you may 
request and obtain your report from a consumer reporting agency. You 
will be asked to provide proper identification, which may include 
your Social Security number. In many cases the report will be free. 
You are entitled to free reports if a person has taken adverse 
action against you because of information in a report; if you are 
the victim of identify theft; if you are the victim of fraud; if you 
are on public assistance; or if you are unemployed but expect to 
apply for employment within 60 days. In addition, you are entitled 
to one free report every twelve months from each of the nationwide 
credit bureaus and from some specialized consumer reporting 
agencies. See www.ftc.gov/credit for details about how to obtain 
your free report.
    You have a right to know your credit score. Credit scores are 
numerical summaries of a consumer's creditworthiness based on 
information from consumer reports. For a fee, you may get your 
credit score. For more information, click on www.ftc.gov/credit. In 
some mortgage transactions, you will get credit score information 
without charge.
    You can dispute inaccurate information with the consumer 
reporting agency. If you tell a consumer reporting agency that your 
file has inaccurate information, the agency must take certain steps 
to investigate unless

[[Page 42623]]

your dispute is frivolous. For an explanation of dispute procedures, 
go to www.ftc.gov/credit.
    Inaccurate information must be corrected or deleted. A consumer 
reporting agency or furnisher must remove or correct information 
verified as inaccurate, usually within 30 days after you dispute it. 
However, a consumer reporting agency may continue to report negative 
data that it verifies as being accurate.
    Outdated negative information may not be reported. In most 
cases, a consumer reporting agency may not report negative 
information that is more than seven years old, or bankruptcies that 
are more than 10 years old.
    Access to your file is limited. A consumer reporting agency may 
provide information about you only to people with a valid need as 
determined by the FCRA--usually to consider an application with a 
creditor, insurer, employer, landlord, or other business.
    Your consent is required for reports that are provided to 
employers. A consumer reporting agency may not give out information 
about you to your employer, or potential employer, without your 
written consent. Blanket consent may be given at the time of 
employment or later.
    You may choose to remove your name from consumer reporting 
agency lists for unsolicited credit and insurance offers. These 
offers must include a toll-free phone number you can call if you 
choose to take your name and address off lists in the future. You 
may opt-out at the major credit bureaus by calling 1-800-XXXXXXX.
    You may seek damages from violators. If a consumer reporting 
agency, a user of consumer reports, or, in some cases, a furnisher 
of information to a consumer reporting agency violates the FCRA, you 
may sue them in State or Federal court.
    Identity theft victims and active duty military personnel have 
additional rights. Victims of identity theft have new rights under 
the FCRA. Active-duty military personnel who are away from their 
regular duty station may file ``active duty'' alerts to help prevent 
identity theft. For more information, visit www.ftc.gov/credit.
    The FCRA gives several federal agencies authority to enforce the 
FCRA:


------------------------------------------------------------------------
    To complain and for information               Please contact
------------------------------------------------------------------------
Consumer reporting agencies, creditors   Federal Trade Commission,
 and others not listed below.             Consumer Response Center--
                                          FCRA, Washington, DC 20580, 1-
                                          877-382-4367 (Toll-Free).
National banks, federal branches/        Office of the Comptroller of
 agencies of foreign banks (word          the Currency Compliance
 ``National'' or initials ``N.A.''        Management, Mail Stop 6-6,
 appear in or after bank's name).         Washington, DC 20219, 800-613-
                                          6743.
Federal Reserve System member banks      Federal Reserve Board, Division
 (except national banks, and federal      of Consumer & Community
 branches/agencies of foreign banks).     Affairs, Washington, DC 20551,
                                          202-452-3693.
Savings associations and federally       Office of Thrift Supervision,
 chartered savings banks (word            Consumer Programs Washington,
 ``Federal'' or initials ``F.S.B.''       DC 20552, 800-842-6929.
 appear in federal institution's name).
Federal credit unions (words ``Federal   National Credit Union
 Credit Union'' appear in institution's   Administration, 1775 Duke
 name).                                   Street, Alexandria, VA 22314,
                                          703-518-6360.
State-chartered banks that are not       Federal Deposit Insurance
 members of the Federal Reserve System.   Corporation, Division of
                                          Compliance & Consumer Affairs,
                                          Washington, DC 20429, 800-934-
                                          FDIC.
Air, surface, or rail common carriers    Department of Transportation,
 regulated by former Civil Aeronautics    Office of Financial
 Board or Interstate Commerce             Management, Washington, DC
 Commission.                              20590, 202-366-1306.
Activities subject to the Packers and    Department of Agriculture,
 Stockyards Act, 1921.                    Office of Deputy
                                          Administrator--GIPSA,
                                          Washington, DC 20250, 202-720-
                                          7051.
------------------------------------------------------------------------

Appendix G to Part 698--Notice of Furnisher Responsibilities

    The prescribed form for this disclosure is a separate document that 
is substantially similar to the Commission's notice with all 
information clearly and prominently displayed. Consumer reporting 
agencies may limit the disclosure to only those items that they know 
are relevant to the furnisher that will receive the notice.

Notice to Furnishers of Information: Obligations of Furnishers Under 
the FCRA

    The Federal Fair Credit Reporting Act (FCRA),15 U.S.C. 1681-
1681y, imposes responsibilities on all persons who furnish 
information to consumer reporting agencies (CRAs). These 
responsibilities are found in Section 623 of the FCRA. State law may 
impose additional requirements. All furnishers of information to 
CRAs should become familiar with the applicable laws and may want to 
consult with their counsel to ensure that they are in compliance. 
The text of the FCRA is set forth in full at the Federal Trade 
Commission's Internet Web site at www.ftc/credit.
    Section 623 imposes the following duties upon furnishers:

Accuracy Guidelines

    The banking and credit union regulators and the Federal Trade 
Commission (FTC) will promulgate guidelines and regulations dealing 
with the accuracy of information provided to CRAs by furnishers. The 
regulations and guidelines issued by the FTC will be available at 
www.ftc.gov/credit when they are issued. Section 623(e).

General Prohibition on Reporting Inaccurate Information

    The FCRA prohibits information furnishers from providing 
information to a CRA that they know or have reasonable cause to 
believe is inaccurate. However, the furnisher is not subject to this 
general prohibition if it clearly and conspicuously specifies an 
address to which consumers may write to notify the furnisher that 
certain information is inaccurate. Sections 623(a)(1)(A) and 
(a)(1)(C).

Duty to Correct and Update Information

    If at any time a person who regularly and in the ordinary course 
of business furnishes information to one or more CRAs determines 
that the information provided is not complete or accurate, the 
furnisher must provide complete and accurate information to the CRA. 
In addition, the furnisher must notify all CRAs that received the 
information of any corrections, and must thereafter report only the 
complete and accurate information. Section 623(a)(2).

Duties After Notice of Dispute From Consumer

    The Federal banking and credit union regulators and the FTC will 
issue regulations that will identify when an information furnisher 
must investigate a dispute made directly to the furnisher by a 
consumer. Once these regulations are issued, furnishers must comply 
with them and complete an investigation within 30 days (or 45 days, 
if the consumer later provides relevant additional information) 
unless the dispute is frivolous or irrelevant or comes from a 
``credit repair'' organization. The FTC regulations will be 
available at www.ftc.gov/credit. Section 623(a)(8).
    If a consumer notifies a furnisher that the consumer disputes 
the completeness or accuracy of any information reported by the 
furnisher, the furnisher may not subsequently report that 
information to a CRA without providing notice of the dispute. 
Section 623(a)(3).

Duties After Notice of Dispute From Consumer Reporting Agency

    If a CRA notifies a furnisher that a consumer disputes the 
completeness or accuracy of information provided by the furnisher, 
the furnisher has a duty to follow certain procedures. The furnisher 
must:
     Conduct an investigation and review all relevant 
information provided by the CRA, including information given to the 
CRA by the consumer. Sections 623(b)(1)(A) and (b)(1)(B).
     Report the results to the CRA that referred the 
dispute, and, if the investigation establishes that the information 
was, in fact, incomplete or inaccurate, report the results to all 
CRAs to which the furnisher provided the information that compile 
and maintain files

[[Page 42624]]

on a nationwide basis. Section 623(b)(1)(c) and (b)(1)(D).
     Promptly modify or delete the information, or block its 
transmission in the future. Sections 623(b)(1)(E).
     Complete the above steps within 30 days from the date 
the CRA receives the dispute (or 45 days, if the consumer later 
provides relevant additional information to the CRA). Section 
623(b)(2).

Duty to Report Voluntary Closing of Credit Accounts

    If a consumer voluntarily closes a credit account, any person 
who regularly and in the ordinary course of business furnishes 
information to one or more CRAs must report this fact when it 
provides information to CRAs for the time period in which the 
account was closed. Section 623(a)(4).

Duty to Report Dates of Delinquencies

    If a furnisher reports information concerning a delinquent 
account placed for collection, charged to profit or loss, or subject 
to any similar action, the furnisher must, within 90 days after 
reporting the information, provide the CRA with the month and the 
year of the commencement of the delinquency that immediately 
preceded the action, so that the agency will know how long to keep 
the information in the consumer's file. Section 623(a)(5).
    Debt collectors that report information to CRAs comply with the 
requirements of Section 623(a)(5) (until there is a consumer 
dispute) if they report the same delinquency date previously 
reported by the creditor. If they do not have this, they comply with 
the FCRA if they establish reasonable procedures to obtain and 
report delinquency dates, or, if the delinquency dates cannot be 
reasonably obtained, they follow reasonable procedures to ensure 
that the dates reported precede the date the account was placed for 
collection, charged to profit or loss, or subjected to any similar 
action. Section 623(a)(5).

Duties of Financial Institutions When Reporting Negative 
Information

    Furnishers who are financial institutions must notify consumers 
in writing if they furnish negative information to a CRA. Section 
623(a)(7). The Federal Reserve Board has prescribed a model 
disclosure, 12 CFR Part 222, App. B.

Duties When Furnishing Medical Information

    A furnisher whose primary business is providing medical 
services, products, or devices (and the furnisher's agents or 
assignees) is a medical information furnisher for the purposes of 
the FCRA and must notify all CRAs that it reports to of this fact. 
Section 623(a)(9). This will enable CRAs to comply with their duties 
under Section 604(g) when reporting medical information.

Duties When ID Theft Occurs

    All furnishers must have in place reasonable procedures to 
respond to notifications from CRAs that information furnished is the 
result of identity theft and to prevent refurnishing the information 
in the future. Furnishers must also establish procedures so that 
information reported directly to the furnisher by consumers about 
accounts that are linked to identity theft will not be furnished to 
any CRA unless the furnisher subsequently knows or is informed by 
the consumer that the information is correct. Section 623(a)(6). 
When any furnisher of information is notified pursuant to the 
procedures set forth in Section 605B that a debt has resulted from 
identity theft, the furnisher may not sell, transfer, or place for 
collection the debt. Section 615(f).

Appendix H to Part 698--Notice of User Responsibilities

    The prescribed form for this disclosure is a separate document that 
is substantially similar to the Commission's notice with all 
information clearly and prominently displayed. Consumer reporting 
agencies may limit the disclosure to only those items that they know 
are relevant to the user that will receive the notice.

Notice to Users of Consumer Reports: Obligations of Users Under the 
FCRA

    The Fair Credit Reporting Act (FCRA), 15 U.S.C. 1681-1681y, 
requires that this notice be provided to inform users of consumer 
reports of their legal obligations. State law may impose additional 
requirements. The text of the FCRA is set forth in full at the 
Federal Trade Commission's Internet Web site at www.ftc.gov/credit.
    The first section of this summary sets forth the 
responsibilities imposed by the FCRA on all users of consumer 
reports. The subsequent sections discuss the duties of users of 
reports that contain specific types of information, or that are used 
for certain purposes, and the legal consequences of violations. If 
you are a furnisher of information to a consumer reporting agency 
(CRA), you have additional obligations and will receive a separate 
notice from the CRA describing your duties as a furnisher.

I. Obligations of All Users of Consumer Reports

A. Users Must Have a Permissible Purpose

    Congress has limited the use of consumer reports to protect 
consumers' privacy. All users must have a permissible purpose under 
the FCRA to obtain a consumer report. Section 604 of the FCRA 
contains a list of the permissible purposes under the law. These 
are:
     As ordered by a court or a Federal grand jury subpoena. 
Section 604(a)(1)
     As instructed by the consumer in writing. Section 
604(a)(2)
     For the extension of credit as a result of an 
application from a consumer, or the review or collection of a 
consumer's account. Section 604(a)(3)(A)
     For employment purposes, including hiring and promotion 
decisions, where the consumer has given written permission. Sections 
604(a)(3)(B) and 604(b)
     For the underwriting of insurance as a result of an 
application from a consumer. Section 604(a)(3)(C)
     When there is a legitimate business need, in connection 
with a business transaction that is initiated by the consumer. 
Section 604(a)(3)(F)(i)
     To review a consumer's account to determine whether the 
consumer continues to meet the terms of the account. Section 
604(a)(3)(F)(ii)
     To determine a consumer's eligibility for a license or 
other benefit granted by a governmental instrumentality required by 
law to consider an applicant's financial responsibility or status. 
Section 604(a)(3)(D)
     For use by a potential investor or servicer, or current 
insurer, in a valuation or assessment of the credit or prepayment 
risks associated with an existing credit obligation. Section 
604(a)(3)(E)
     For use by State and local officials in connection with 
the determination of child support payments, or modifications and 
enforcement thereof. Sections 604(a)(4) and 604(a)(5)
    In addition, creditors and insurers may obtain certain consumer 
report information for the purpose of making unsolicited offers of 
credit or insurance. Section 604(c). The particular obligations of 
users of ``prescreened'' information are described in Section VII 
below.

B. Users Must Provide Certifications

    Section 604(f) of the FCRA prohibits any person from obtaining a 
consumer report from a consumer reporting agency (CRA) unless the 
person has certified to the CRA (by a general or specific 
certification, as appropriate) the permissible purpose(s) for which 
the report is being obtained and certifies that the report will not 
be used for any other purpose.

C. Users Must Notify Consumers When Adverse Actions Are Taken

    The term ``adverse action'' is defined very broadly by Section 
603 of the FCRA. ``Adverse actions'' include all business, credit, 
and employment actions affecting consumers that can be considered to 
have a negative impact--such as unfavorably changing credit or 
contract terms or conditions, denying or canceling credit or 
insurance, offering credit on less favorable terms than requested, 
or denying employment or promotion.

1. Adverse Actions Based on Information Obtained From a CRA

    If a user takes any type of adverse action that is based at 
least in part on information contained in a consumer report, the 
user is required by Section 615(a) of the FCRA to notify the 
consumer. The notification may be done in writing, orally, or by 
electronic means. It must include the following:
     The name, address, and telephone number of the CRA 
(including a toll-free telephone number, if it is a nationwide CRA) 
that provided the report.
     A statement that the CRA did not make the adverse 
decision and is not able to explain why the decision was made.
     A statement setting forth the consumer's right to 
obtain a free disclosure of the consumer's file from the CRA if the 
consumer requests the report within 60 days.
     A statement setting forth the consumer's right to 
dispute directly with the CRA the accuracy or completeness of any 
information provided by the CRA.

[[Page 42625]]

2. Adverse Actions Based on Information Obtained From Third Parties Who 
Are Not Consumer Reporting Agencies

    If a person denies (or increases the charge for) credit for 
personal, family, or household purposes based either wholly or 
partly upon information from a person other than a CRA, and the 
information is the type of consumer information covered by the FCRA, 
Section 615(b)(1) of the FCRA requires that the user clearly and 
accurately disclose to the consumer his or her right to obtain 
disclosure of the nature of the information that was relied upon by 
making a written request within 60 days of notification. The user 
must provide the disclosure within a reasonable period of time 
following the consumer's written request.

3. Adverse Actions Based on Information Obtained From Affiliates

    If a person takes an adverse action involving insurance, 
employment, or a credit transaction initiated by the consumer, based 
on information of the type covered by the FCRA, and this information 
was obtained from an entity affiliated with the user of the 
information by common ownership or control, Section 615(b)(2) 
requires the user to notify the consumer of the adverse action. The 
notification must inform the consumer that he or she may obtain a 
disclosure of the nature of the information relied upon by making a 
written request within 60 days of receiving the adverse action 
notice. If the consumer makes such a request, the user must disclose 
the nature of the information not later than 30 days after receiving 
the request. (Information that is obtained directly from an 
affiliated entity relating solely to its transactions or experiences 
with the consumer, and information from a consumer report obtained 
from an affiliate are not covered by Section 615(b)(2). If consumer 
report information is used, the procedures discussed above for 
consumer reports apply.)

D. Users Have Obligations When Fraud and Active Duty Military 
Alerts Are in Files

    When a consumer has placed a fraud alert, including one relating 
to identity theft, or an active duty military alert in his or her 
consumer report, Section 605A(h) imposes limitations on users of the 
reports. For initial fraud alerts and active duty alerts, the user 
must have reasonable policies and procedures in place to form a 
belief that the user knows the identity of the applicant or contact 
the consumer at a telephone number specified by the consumer; in the 
case of extended fraud alerts, the user must contact the consumer in 
accordance with the contact information provided in the consumer's 
alert.

E. Users Have Obligations When Notified of an Address Discrepancy

    CRAs will notify users that request reports when the address for 
a consumer provided by the user in requesting the report is 
different from the address in the consumer's file. Users must comply 
with regulations specifying the procedures to be followed when this 
occurs to be issued by the Federal Trade Commission and the banking 
and credit union regulators. The Federal Trade Commission's 
regulations will be available at www.ftc.gov/credit.

F. Users Have Obligations When Disposing of Records

    Section 628 of the FCRA requires that all users of consumer 
report information have in place procedures to properly dispose of 
records containing this information. The Federal Trade Commission, 
the Securities and Exchange Commission, and the banking and credit 
union regulators have issued regulations covering disposal. The 
Federal Trade Commission's regulations may be found at www.ftc.gov/credit.

II. Creditors Must Make Additional Disclosures

    If a person makes credit decisions using a risk-based model--
i.e., the credit grantor offers some consumers interest rates and 
terms less favorable than those offered to other consumers based on 
the consumer's credit risk profile derived using consumer report 
information and makes a credit offer to a consumer ``on material 
terms that are materially less favorable than the most favorable 
terms available to a substantial proportion of consumers,'' Section 
615(h) of the FCRA requires the credit grantor to disclose this fact 
to the consumer and to provide certain information. Consumers who 
receive a notice will be entitled to a free copy of their consumer 
report. The Federal Trade Commission and the Federal Reserve Board 
will jointly prescribe rules implementing Section 615(h).
    Section 609(g) requires a disclosure by all persons that make or 
arrange loans secured by residential real property (one to four 
units) and that use credit scores. These credit grantors must 
provide credit scores to applicants and make the disclosure set 
forth in Section 609(g)(1)(D) (''Notice to the Home Loan 
Applicant'').

III. Obligations of Users When Consumer Reports Are Obtained for 
Employment Purposes

A. Employment Other Than in the Trucking Industry

    If information from a CRA is used for employment purposes, the 
user has specific duties, which are set forth in Section 604(b) of 
the FCRA. The user must:
     Make a clear and conspicuous written disclosure to the 
consumer before the report is obtained, in a document that consists 
solely of the disclosure, that a consumer report may be obtained.
     Obtain prior written authorization from the consumer.
     Certify to the CRA that the above steps have been 
followed, that the information being obtained will not be used in 
violation of any Federal or State equal opportunity law or 
regulation, and that, if any adverse action is to be taken based on 
the consumer report, a copy of the report and a summary of the 
consumer's rights will be provided to the consumer.
     Before taking an adverse action, the user must provide 
a copy of the report to the consumer as well as the summary of 
consumer's rights. (The user should receive this summary from the 
CRA.) A Section 615(a) adverse action notice should be sent after 
the adverse action is taken.
    An adverse action notice also is required in employment 
situations if credit information (other than transactions and 
experience data) obtained from an affiliate is used to deny 
employment. Section 615(b)(2)
    The procedures for investigative consumer reports and post-
employment misconduct investigations are set forth below.

B. Employment in the Trucking Industry

    Special rules apply for truck drivers where the only interaction 
between the consumer and the potential employer is by mail, 
telephone, or computer. In this case, the consumer may provide 
consent orally or electronically, and an adverse action may be made 
orally, in writing, or electronically. The consumer may obtain a 
copy of any report relied upon by the trucking company by contacting 
the company.

IV. Obligations When Investigative Consumer Reports Are Used

    Investigative consumer reports are a special type of consumer 
report in which information about a consumer's character, general 
reputation, personal characteristics, and mode of living is obtained 
through personal interviews. Consumers who are the subjects of such 
reports are given special rights under the FCRA. If a user intends 
to obtain an investigative consumer report, Section 606 of the FCRA 
requires the following:
     The user must disclose to the consumer that an 
investigative consumer report may be obtained. This must be done in 
a written disclosure that is mailed, or otherwise delivered, to the 
consumer at some time before or not later than three days after the 
date on which the report was first requested. The disclosure must 
include a statement informing the consumer of his or her right to 
request additional disclosures of the nature and scope of the 
investigation as described below, and the summary of consumer rights 
required by Section 609 of the FCRA. (The summary of consumer rights 
will be provided by the CRA that conducts the investigation.)
     The user must certify to the CRA that the disclosures 
set forth above have been made and that the user will make the 
disclosure described below.
     Upon the written request of a consumer made within a 
reasonable period of time after the disclosures required above, the 
user must make a complete disclosure of the nature and scope of the 
investigation. This must be made in a written statement that is 
mailed, or otherwise delivered, to the consumer no later than five 
days after the date on which the request was received from the 
consumer or the report was first requested, whichever is later in 
time.

V. Special Proceedures for Employee Investigations

    Section 603(x) of the FCRA provides special procedures for 
investigations of suspected misconduct by an employee or for 
compliance with Federal, State or local laws and regulations or the 
rules of a self-regulatory organization, and compliance with written 
policies of the employer. These investigations are not treated as 
consumer reports so long as the employer or its agent complies with 
the procedures set forth in

[[Page 42626]]

Section 603(x), and a summary describing the nature and scope of the 
inquiry is made to the employee if an adverse action is taken based 
on the investigation.

VI. Obligations of Users of Medical Information

    Section 604(g) of the FCRA limits the use of medical information 
obtained from consumer reporting agencies (other than payment 
information that appears in a coded form that does not identify the 
medical provider). If the information is to be used for an insurance 
transaction, the consumer must consent to the furnishing of the 
report or the information must be coded. If the report is to be used 
for employment purposes or in connection with a credit transaction, 
the consumer must provide specific written consent and the medical 
information must be relevant. Any user who receives medical 
information shall not disclose the information to any other person 
(except where necessary to carry out the purpose for which the 
information was disclosed, or as permitted by statute, regulation, 
or order). The banking and credit union regulators have authority to 
issue regulations in this area.

VII. Obligations of Users of ``Prescreened'' Lists

    The FCRA permits creditors and insurers to obtain limited 
consumer report information for use in connection with unsolicited 
offers of credit or insurance under certain circumstances. Sections 
603(l), 604(c), 604(e), and 615(d). This practice is known as 
``prescreening'' and typically involves obtaining a list of 
consumers from a CRA who meet certain preestablished criteria. If 
any person intends to use prescreened lists, that person must (1) 
before the offer is made, establish the criteria that will be relied 
upon to make the offer and to grant credit or insurance, and (2) 
maintain such criteria on file for a three-year period beginning on 
the date on which the offer is made to each consumer. In addition, 
any user must provide with each written solicitation a clear and 
conspicuous statement that:
     Information contained in a consumer's CRA file was used 
in connection with the transaction.
     The consumer received the offer because he or she 
satisfied the criteria for credit worthiness or insurability used to 
screen for the offer.
     Credit or insurance may not be extended if, after the 
consumer responds, it is determined that the consumer does not meet 
the criteria used for screening or any applicable criteria bearing 
on credit worthiness or insurability, or the consumer does not 
furnish required collateral.
     The consumer may prohibit the use of information in his 
or her file in connection with future prescreened offers of credit 
or insurance by contacting the notification system established by 
the CRA that provided the report. The statement must include the 
address and toll-free telephone number of the appropriate 
notification system.
    The Federal Trade Commission will by rule establish the format, 
type size, and manner of the disclosure required by Section 615(d). 
The FTC's regulations will be at www.ftc.gov/credit. There also are 
special procedures that must be followed with using information 
obtained from affiliates. These procedures are found in Section 624 
of the FCRA.

VIII. Obligations of Resellers

A. Disclosure and Certification Requirements

    Section 607(e) of the FCRA requires any person who obtains a 
consumer report for resale to take the following steps:
     Disclose the identity of the end-user to the source 
CRA.
     Identify to the source CRA each permissible purpose for 
which the report will be furnished to the end-user.
     Establish and follow reasonable procedures to ensure 
that reports are resold only for permissible purposes, including 
procedures to obtain: (1) the identity of all end-users; (2) 
certifications from all users of each purpose for which reports will 
be used; and (3) certifications that reports will not be used for 
any purpose other than the purpose(s) specified to the reseller. 
Resellers must make reasonable efforts to verify this information 
before selling the report.

B. Reinvestigations by Resellers

    Section 611(f) exempts resellers from the general 
reinvestigation duties that apply to CRAs, but requires resellers to 
investigate errors for which they are responsible and to refer other 
errors to the consumer reporting agencies that provided the reseller 
with the information that is the subject of the dispute. When any of 
those CRAs notify the reseller of the results of their 
investigation, the reseller shall immediately reconvey the 
information to the consumer.

C. Fraud Alerts and Resellers

    Section 605A(f) requires resellers who receive fraud alerts or 
active duty alerts from another consumer reporting agency to include 
these in their reports.

IX. Liability for Violations of the FCRA

    Failure to comply with the FCRA can result in state or federal 
enforcement actions, as well as private lawsuits. Sections 616, 617, 
and 621. In addition, any person who knowingly and willfully obtains 
a consumer report under false pretenses may face criminal 
prosecution. Section 619.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 04-16010 Filed 7-15-04; 8:45 am]
BILLING CODE 6750-01-P