eGuide

IDENTITY THEFT

Status (5/26/04)

President Bush signed the Fair and Accurate Credit Transactions Act (“FACTA”) into law on December 4, 2003. In addition to permanently extending the preemption provisions of the Fair Credit Reporting Act, the legislation imposes several obligations on financial institutions with regard to identity theft prevention and mitigation. Regulations implementing the various provisions of the law are being issued throughout 2004. Many of the significant provisions of the Act that impact credit unions will have an effective date of December 1, 2004. This is generally the latest effective date permitted under the Act.

With regard to ID theft, credit unions should expect implementing regulations to include: developing policies and procedures to identity potential instances of identity theft; taking certain precautions before extending credit to consumers who have placed fraud alerts in their files; requiring financial institutions to reconcile potentially fraudulent consumer address information; requiring lenders to disclose their contact information on consumer reports; and requiring that consumers be notified when a financial institution (or merchant, finance company, etc.) reports negative information to a credit bureau.

Apart from addressing ID theft, the law also provides consumers with access to a free credit report every year, requires mortgage lenders to provide consumers with credit score information, grants medical privacy rights, mandates a financial literacy campaign, and gives consumers an ability to opt-out of information sharing between affiliated companies for marketing purposes.

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