Fair Credit, ID Theft bill advances to House floor

WASHINGTON (7/25/03)--The House Financial Services Committee yesterday approved and reported out of committee, by a vote of 61-3, the Fair and Accurate Credit Transaction Act of 2003 (H.R. 2622). The legislation makes permanent the uniform national credit reporting standards of the Fair Credit Reporting Act, currently set to expire Dec. 31.

CUNA testified in strong support of making the uniform national credit reporting system permanent at the committee's July 9 hearing. The committee accepted several changes CUNA suggested at this hearing when it adopted a "manager's amendment" offered by committee Chairman Michael Oxley (R-Ohio).

These changes include:

• Time frames when a consumer requests that a fraud alert be placed in his or her consumer report;

• A tighter definition of "police report" when the consumer files a police report alleging fraud for purposes of the blocking of information on his or her consumer credit report;

• The inclusion of NCUA with the federal banking agencies for the establishment of "red flag" guidelines in identifying patterns and practices that indicate the possible existence of identity theft;

• Including NCUA as a consultant to the Federal Trade Commission as it develops a model form and procedure for reporting identity theft by consumers to creditors and consumer reporting agencies.

The committee adopted several amendments during yesterday's markup session:

• A Rep. Richard Baker (R-La.) amendment to provide a safe harbor for regional and local credit reporting agencies with respect to the bill's requirement for a free annual credit report.

• A Rep. Barney Frank (D-Mass.) amendment, supported and encouraged by Chairman Oxley, provides consumers with a statutory right to go directly to a furnisher of information to dispute information that the furnisher had previously provided to a consumer reporting agency.

  This amendment requires furnishers, after receiving a notice of dispute from the consumer, to conduct an investigation, review all relevant information provided by the consumer, complete its investigation and report the results to the consumer within 30 days, and report the correct information (if that is the result of the investigation) to the consumer reporting agency.

  The amendment also imposes a new standard of care on furnishers, i.e., "knows or has reasonable cause to believe that the information is inaccurate," and requires the furnisher to put reasonable procedures in place to ensure that the information furnished to the credit reporting agency is accurate.

  This amendment was negotiated in a matter of hours and CUNA was involved in these negotiations, along with others in the financial services industry, with the committee.

• A Rep. Paul Gillmor (R-Ohio) amendment to require disclosure to consumers with the credit score when the consumer's number of inquiries has adversely affected his or her credit score.

• A Rep. Sue Kelly (R-N.Y.) amendment to provide consumers protection with respect to medical information by requiring such information to be encoded in consumer reports.

• A Rep. Barbara Lee (D-Calif.) amendment calling for a study on the need and the means for improving financial literacy among consumers.

• A Rep. Carolyn Maloney's (D-N.Y.) amendment requiring credit card issuers to clearly and conspicuously describe to consumers in credit card prescreening solicitations under what circumstances the issuer may increase the APR or remove or increase the introductory APR. NCUA is named as a consultant, along with the federal banking agencies, to the Federal Trade Commission for developing guidelines in regulations as well as model disclosure statements.

The committee did not adopt a Rep. Bernie Sanders (I-Vt.) amendment to prohibit credit card issuers from using any negative information contained in a consumer report to increase the APR on a credit card account or remove. It also would have prohibited increasing any introductory APR for reasons other than the card holder's actions that are directly related to such account or a late payment of 60 days or more on any other credit card or debt.

CUNA worked to defeat this Sanders amendment. The amendment was opposed for a variety of reasons because it restricts financial institutions to price its credit products. It could have forced lenders to investigate why their consumers may have been late on payments to other lenders. The committee ultimately adopted the Maloney amendment (described above) as a less burdensome alternative to the Sanders amendment.

The full House is expected to vote on the legislation in September.

In related news, the Senate Banking Committee is scheduled to hold a hearing on consumer awareness and understanding the credit granting process on Tuesday.

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