Letters to Congress
Letter to House of Representatives Committee on Financial Services Chairman Michael G. Oxley regarding FCRA
November 18, 2003
The Honorable Michael G. Oxley
U.S. House Committee on Financial Services
2129 Rayburn House Office Building
Washington, D.C. 20515
Dear Chairman Oxley:
On behalf of the Credit Union National Association (CUNA) and America's 84 million credit union members, I want to commend you for your outstanding leadership on the reauthorization of the Fair Credit Reporting Act (FCRA). We applaud your successful efforts to pass H.R. 2622, the "Fair and Accurate Credit Transactions Act of 2003," by an overwhelming bipartisan vote of 392 to 30. This landmark legislation provides for a permanent extension of our nation's national credit-granting standards under the FCRA. This provision is critically important for our economy and for consumers. The continuation of these uniform standards allows consumers to access credit in all states, be it for a home, a car, a college education, or a credit card, on an expedited and cost-efficient basis. H.R. 2622 also provides much-needed protections for consumers against identity theft, provides consumers with greater control of their finances, and protects employee misconduct investigations, all of which we strongly support.
However, we have very serious concerns with respect to Section 504 of the House-passed bill. This Section is entitled "Requirement to Disclose Communications To a Consumer Reporting Agency" and requires furnishers of information to provide a notice to the consumer when the furnisher has provided or will be providing negative information to a consumer reporting agency regarding credit extended to the consumer. Credit unions strive to work with their members continually to educate and inform them regarding their credit. This is all the more important when a problem with repayment develops. This Section will unnecessarily burden credit unions with a formal notice requirement and may interfere with the relationship that the credit union has with the member. We strongly urge that the House recede to the Senate on this provision.
We also have very serious concerns regarding three provisions in the Senate-passed bill. The first is Section 311 of S. 1753 which requires that a risk-based pricing notice
be provided to consumers who are given "a grant, extension or other provision of credit on material terms that are materially less favorable than the most favorable terms available to a substantial proportion of consumers from or through that person," based on a report. This requirement will have a detrimental effect on the risk-based lending as well as the indirect lending that our members do. These loan programs give consumers an opportunity to rebuild their credit profiles. If credit unions are discouraged from offering these programs, many consumers may ultimately pay much more for credit (e.g., higher interest rates, higher fees, longer loan terms, etc.). We strongly urge that this provision not be accepted by the House conferees.
Second, the Senate-passed bill does not include a federal preemption applicable to the identity theft provisions. There is such a pre-emption in the House-passed bill. Under the identity theft legislation in both bills, credit unions will be undertaking a number of new duties that will necessitate the hiring and training of staff to implement these requirements. Since credit unions typically have a number of members who reside in other states, it could quickly become a compliance nightmare to modify the operations for each such member according to the requirements of that state. This could be compounded if the federal and state requirements are inconsistent. We are also concerned that this could have the unintended effect of slowing down the response to identity theft acts, an outcome that will penalize consumers. As your hearings documented, the urgency of combating identity theft is very clear. It is critical to have uniform requirements that can be put into place and used with maximum speed and consistency to counter attack identity theft. We strongly urge the House conferees to insist on the House preemption provision relating to the identity theft provisions.
Third, the Senate-passed bill includes provisions that address the sharing of information among affiliates for purposes of marketing solicitations (Section 214). The legislation may interfere with credit unions' cooperative relationships and potentially restrict the ability of members to receive certain services. We strongly urge that the conferees maintain the ability of credit unions to provide services to their members through such relationships.
Fourth, we strongly urge that the House conferees insist on Title VI of the House bill entitled "Protecting Employee Misconduct Investigations" in the House-passed bill. This Title excludes certain employee investigation communications from the definition of a "consumer report". This addresses an interpretation of FCRA by the Federal Trade Commission, known as the "Vail letter," that prohibits employers from using outside third parties to investigate employee misconduct unless they first notify the wrongdoer of the investigation, get his or her consent and ultimately give him or her a copy of the investigative report. This seriously undermines the ability of credit unions to protect the safety of their employees and members in the workplace from acts of terrorism, from predators with criminal records, from sexual or racial harassment, and from white-collar criminals. Given the heightened security concerns since 9/11, it is imperative to include this Title in the conference report.
Fifth, we strongly support the establishment of the "Financial Literacy and Education Commission" in the Senate-passed bill. We also strongly support House legislation that would require the Secretary of the Treasury to establish a pilot national public service multimedia campaign to enhance the state of financial literacy in the United States and that would require the President to convene the Commission not later than January 31, 2005. These provisions would enhance the visibility of the Commission and expand the scope of the Commission's operations, all to the benefit of promoting financial literacy and education.
We also concur with the recommendation of the National Credit Union Administration (NCUA) that the identity theft provisions addressing the investigation of changes of address and inactive accounts (Section 201of the House bill) and the establishment of procedures for depository institutions to identify possible instances of identity theft (Section 206 of the House bill) incorrectly give jurisdiction to the NCUA over state chartered credit unions. This no doubt was an oversight. It is the Federal Trade Commission that would have jurisdiction over state-chartered credit unions in these matters. We urge that this be reflected in the conference report.
We commend you for your continued leadership on this critically important legislation and look forward to its enactment this year.
Daniel A. Mica
President & CEO