| Legal Update - FCRA Changes |
Legal Update - FCRA Changes
On December 4, 2003 President Bush signed into law the Fair and Accurate Credit Transactions Act, (H.R. 2622), which amends the Fair Credit Reporting Act. There are numerous changes to the FCRA, each with its own effective date and some requiring further promulgation of rules and regulations before becoming effective. The following bullets highlight the changes, providing a broad overview. Please consult with your attorney as to how the act may specifically affect your company.
Identity Theft Prevention and Credit History Restoration
Consumers are now empowered to guard against identity theft by increasing the effectiveness of consumer initiated fraud alerts and enabling consumers to block fraudulent information in their personal credit records after filing a police report.
The resolution of consumer disputes is improved by requiring greater coordination among credit bureaus in sharing consumer complaints of identity theft.
Consumer reporting agencies are required to provide consumers a summary of their rights as victims of identity theft upon a report that the consumer has been a victim of identity theft. (A model summary of rights will be prepared by the FTC.)
The statute of limitations for claims filed under the FCRA has been changed to the earlier of either (a) two years after the date of discovery of the violation, or (b) five years after the date of the violation. Credit card or debit card numbers are now required to be truncated on electronic receipts. Consumers may request that their social security numbers be truncated on any consumer report provided to them.
Improvements in Use of and Consumer Access to Credit Information
Consumers are now entitled to receive a free credit report annually from a nationwide consumer-reporting agency.
Free reports are also required to be provided upon request when the consumer is a victim of identity theft or fraud.
Consumers may also request copies of their credit scores and the key factors determining the credit score.
The FTC along with Federal banking agencies and the National Credit Union Administration (NCUA) will be required to issue regulations regarding the disposal of consumer information.
Enhancing the Accuracy of Consumer Report Information
The FTC, the Federal banking agencies, and the NCUA are to establish guidelines for providing information to consumer reporting agencies. Consumer reporting agencies are required to coordinate with other agencies so that information is consistent.
Consumers may dispute information directly with furnishers of information. Consumer reporting agencies are obligated to take certain actions should complaints be received from the FTC and to improve the disclosure of the results of a reinvestigation. If a consumer requests a consumer report from a consumer reporting agency and the request includes an address for the consumer that substantially differs from the addresses in the consumer's file, the consumer reporting agency must notify the consumer of the existence of the discrepancy.
Limiting the Use and Sharing of Medical Information in the Financial System
Access to consumers' sensitive health information for consumer reports is more specifically restricted.
Financial Literacy and Education Improvement
The Financial Literacy and Education Commission is tasked with the responsibility to develop a national strategy to promote financial literacy and education among consumers.
Protecting Employee Misconduct Investigations
The FTC's "Vail Opinion" that requires FCRA compliance for investigations into employee misconduct has been reversed. The provisions now define "communications" to be any information that would otherwise be a consumer report, but is not because it is obtained for the purpose of investigating suspected employee misconduct. Prior written consent will not be required for "communications" obtained for such an investigation. (Please consult with your attorney prior to making such an investigation. Please contact our Client Services Department to determine the availability of reports for this purpose.)
If an adverse action is made based upon such an investigation, the employer is required to disclose the nature and substance of the communications.
Relation to State Laws
The provision in the Fair Credit Reporting Act that preempts state law was set to expire on January 1, 2004. The new law extends this preemption permanently while specifically exempting certain state law provisions. There are more provisions not addressed in this overview - please consult with your attorney about such provisions, the specific effective dates and how the laws may affect your business prior to implementing changes. More specificity should be determined as the new regulations and rules are promulgated. |