[Federal Register Volume 69, Number 215 (Monday, November 8, 2004)]
[Proposed Rules]
[Pages 64698-64702]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-24841]



[[Page 64698]]

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FEDERAL TRADE COMMISSION

16 CFR Chapter I

[RIN 3084-AA94]


Fair and Reasonable Fee for Credit Score Disclosure

AGENCY: Federal Trade Commission (FTC).

ACTION: Advance notice of proposed rulemaking, request for comment.

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SUMMARY: Section 212(b) of the Fair and Accurate Credit Transactions 
Act of 2003 (``FACT Act'') amends the Fair Credit Reporting Act 
(``FCRA'') by adding a new section 609(f), which mandates that consumer 
reporting agencies make available upon request a consumer's credit 
score, together with other information. Section 609(f)(8) provides that 
a consumer reporting agency may charge a ``fair and reasonable fee, as 
determined by the [Federal Trade] Commission'' for such disclosure.
    In this document, the Federal Trade Commission (``FTC'' or 
``Commission'') is publishing for comment an advance notice of proposed 
rulemaking that would implement the requirement in section 609(f)(8) of 
the FCRA that it determine a fair and reasonable fee to be charged by a 
consumer reporting agency for providing the information required under 
FCRA section 609(f).

DATES: Comments must be received by January 5, 2005.

ADDRESSES: Interested parties are invited to submit written comments. 
Comments should refer to ``FACTA Credit Score Fee, Project No. 
R411004'' 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 to the following address: Federal Trade 
Commission/Office of the Secretary, Room H-159 (Annex O), 600 
Pennsylvania Avenue, NW., Washington, DC 20580. The FTC is requesting 
that any comment filed in paper form be sent by courier or overnight 
service, if possible, because U.S. postal mail in the Washington area 
and at the Commission is subject to delay due to heightened security 
precautions.
    Comments containing confidential material must be filed in paper 
form, must be clearly labeled ``Confidential,'' and must comply with 
Commission Rule 4.9(c). 16 CFR 4.9(c) (2004).\1\
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    \1\ The comment must be accompanied by an explicit request for 
confidential treatment, including the factual and legal basis for 
the request, and must identify the specific portions of the comment 
to be withheld from the public record. The request will be granted 
or denied by the Commission's General Counsel, consistent with 
applicable law and the public interest. See Commission rule 4.9(c), 
16 CFR 4.9(c).
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    Comments filed in electronic form should be submitted by clicking 
on the following Web link: https://secure.commentworks.com/ftc-CreditScoreFee and following the instructions on the Web-based form. To 
ensure that the Commission considers an electronic comment, you must 
file it on the Web-based form at the https://secure.commentworks.com/ftc-CreditScoreFee weblink. You may also visit http://www.regulations.gov to read this advance notice of proposed rulemaking, 
and may file an electronic comment through that Web site. The 
Commission will consider all comments that regulations.gov forwards to 
it.
    The FTC 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 received by the 
Commission, whether filed in paper or in 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 http://www.ftc.gov. As 
a matter of discretion, the FTC makes every effort to remove home 
contact information for individuals from 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/privacy.htm.

FOR FURTHER INFORMATION CONTACT: Christopher Keller, Attorney, (202) 
326-3224, Division of Financial Practices, Federal Trade Commission, 
601 New Jersey Avenue, NW., Washington, DC 20580.

SUPPLEMENTARY INFORMATION:

I. Background

    The FCRA, enacted in 1970, sets standards for the collection, 
communication, and use of information bearing on a consumer's credit 
worthiness, credit standing, credit capacity, character, general 
reputation, personal characteristics, or mode of living that is 
collected and communicated by consumer reporting agencies. 15 U.S.C. 
1681-1681x. Since its inception in 1970, the FCRA has provided 
generally that a consumer may learn of the information that consumer 
reporting agencies maintain concerning the consumer. As originally 
enacted, the FCRA provided that a consumer could obtain disclosure of 
the ``nature and substance'' of the information in his or her file at 
the consumer reporting agency.
    In 1996, the Consumer Credit Reporting Reform Act, Pub. L. 104-208, 
110 Stat. 3009, amended the FCRA to provide that a consumer may obtain 
disclosure of ``[a]ll information in the consumer's file at the time of 
the request * * *,'' as well as a summary of consumer rights under the 
FCRA. However, the 1996 amendment specifically excluded from the 
information required to be disclosed to consumers ``any information 
concerning credit scores or any other risk scores or predictors 
relating to the consumer.''
    The Fair and Accurate Credit Transactions Act of 2003, Pub. L. 108-
159, 117 Stat. 1952, amends the FCRA to add a new subsection 609(f) to 
the FCRA, giving consumers the right to obtain disclosure of credit 
scores and related information.\2\ The requirement to disclose a credit 
score applies to consumer reporting agencies that ``distribute scores 
that are used in connection with residential real property loans,'' or 
``develop scores that assist credit providers in understanding the 
general credit behavior of a consumer and predicting the future credit 
behavior of the consumer.''\3\ The provision requires only the 
disclosure of a ``mortgage score'' or ``educational score,'' and does 
not require disclosure of other risk scores based on credit 
information, such as those used to underwrite auto loans, personal 
loans, credit cards, or insurance products.\4\

[[Page 64699]]

New subsection 609(f)(8) provides that the consumer reporting agency 
may charge a ``fair and reasonable fee, as determined by the 
Commission'' for such disclosure.
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    \2\ In relevant part, Section 212(b) of the FACT Act provides:
    (b) DISCLOSURE OF CREDIT SCORES--Section 609 of the Fair Credit 
Reporting Act (15 U.S.C. 1681g), as amended by this Act, is amended 
by adding at the end the following:
    ``(f) DISCLOSURE OF CREDIT SCORES--
    ``(1) IN GENERAL--Upon the request of a consumer for a credit 
score, a consumer reporting agency shall supply to the consumer a 
statement indicating that the information and credit scoring model 
may be different than the credit score that may be used by the 
lender, and a notice which shall include--
    ``(A) the current credit score of the consumer or the most 
recent credit score of the consumer that was previously calculated 
by the credit reporting agency for a purpose related to the 
extension of credit;
    ``(B) the range of possible credit scores under the model used;
    ``(C) all of the key factors that adversely affected the credit 
score of the consumer in the model used, the total number of which 
shall not exceed 4 * * *;
    ``(D) the date on which the credit score was created; and
    ``(E) the name of the person or entity that provided the credit 
score or credit file upon which the credit score was created.''
    \3\ FCRA section 609(f)(4).
    \4\ Section 609(f)(7)(A) provides that ``In complying with this 
subsection, a consumer reporting agency shall supply the consumer 
with [1] a credit score that is derived from a credit scoring model 
that is widely distributed to users by that consumer reporting 
agency in connection with residential real property loans or [2] 
with a credit score that assists the consumer in understanding the 
credit scoring assessment of the credit behavior of the consumer and 
predictions about the future credit behavior of the consumer.'' 
Section 609(f)(7), 15 U.S.C. 1681g(f)(7). Thus, consumer reporting 
agencies may provide consumers with a score derived from an actual 
model used to calculate scores for mortgage underwriting, or may opt 
to provide consumers with a so-called ``educational score,'' which 
shows a consumer how scoring works and the perceived credit risk 
that the consumer presents relative to other consumers.
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    New section 609(f)(2)(A) of the FCRA defines a credit score as ``a 
numerical value or a categorization derived from a statistical tool or 
modeling system used by a person who makes or arranges a loan to 
predict the likelihood of certain credit behaviors, including 
default.'' Generally, the higher the score, the lower the predicted 
risk.\5\
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    \5\ See http://www.ftc.gov/bcp/creditscoring/present/index.htm 
(describing the development and application of scoring models). 
Section 212(c) of the FACT Act (``Disclosure of Credit Scores by 
Certain Mortgage Lenders''), which adds subsection (g) to section 
609 of the FCRA, specifies the text of an educational disclosure 
notice that mortgage lenders are required to supply to consumers. 
The notice describes how scores are derived and explains their 
significance to the consumer. Section 609(g)(1)(A) and (D); 15 
U.S.C. 1681g(g)(1)(A), (D).
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    Currently, there appears to be an extensive and dynamic market for 
credit score products. In addition, several sellers are developing and 
introducing diverse new scoring products. Many of these sellers are not 
consumer reporting agencies, and thus would not be subject to the 
Commission's fee determination under FCRA section 609(f)(8). Consumers 
can buy scores from several companies, including subsidiaries of 
nationwide consumer reporting agencies and Fair Isaac and Company 
(FICO), the company that initially developed credit scoring. Other 
companies have also entered the market.\6\
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    \6\ For example, in April 2004, Intersections, Inc., a company 
specializing in providing various credit information products direct 
to consumers, made an initial public offering of common stock. See 
American Banker, ``Young Credit Monitoring Firm Gets Cap One Feather 
in Cap,'' Sept. 15, 2004.
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    Scores are available to consumers in a wide variety of forms and 
delivery methods, both directly from the companies that provide the 
scores and score products themselves, and indirectly through entities 
that have existing relationships with consumers (e.g., credit card 
issuers) who ``partner'' with the score suppliers. Some companies that 
offer consumer credit scores also provide a variety of educational 
material, including tutorials and interactive exercises that allow 
consumers to see how modifications in credit behavior (such as closing 
an account or making a larger payment) might affect their credit 
score.\7\
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    \7\ See, e.g., http://www.myfico.com/.
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    Most credit score products available to consumers include not only 
a score, but also a copy of the consumer's complete credit report and 
educational materials.\8\ Some products include additional features, 
such as a monitoring function--e.g., a service that alerts the consumer 
when new or negative information is added to the consumer's file or new 
accounts are opened in the consumer's name.\9\ The ``bundled'' services 
are available at prices that range from $14 to $90, depending on the 
duration of the service and the range of options offered with the 
package. For those packages that include only the consumer's full 
report plus a score, the incremental cost of the score component of the 
product appears to be in the range of $4 to $7.\10\
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    \8\ See, e.g., http://www.transunion.com/; http://www.experian.com/; https://www.econsumer.equifax.com/; http://www.freecreditadvice.com/; http://www.consumerinfo.com/; http://www.truecredit.com/.
    \9\ See, e.g., http://www.freecreditreport.com/.
    \10\ We look only at report-plus-score products because where 
the ``bundle'' includes added services or products, the cost of the 
additional items would be difficult to ascertain. The score 
component calculation is based on an assumption that, of the total 
fee for the package, the basic cost of the full credit report 
accounts for approximately $9, which is the price generally charged 
by consumer reporting agencies for a stand-alone copy of a consumer 
report.
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    Stand-alone scores, such as those required by section 609(f), 
appear to be available in those states that mandate free credit 
reports, and particularly in California and Colorado, where state laws 
require the disclosure of credit scores.\11\ In California and 
Colorado, the laws requiring disclosure of scores also permit a 
consumer reporting agency to charge a ``reasonable'' fee.\12\ In those 
states where a score-only product is available, the cost range is 
approximately $5 to $8.\13\
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    \11\ Sections 1785.10 and 1785.15.1 of the California Civil 
Code, effective July 1, 2001; Section 12-14.3-104.3 of the Colorado 
Revised Statues. Section 212(b) of the FACT Act is based on the 
California statute.
    \12\ Section 1785.15.2(b) of the California Civil Code, and 
section 12-14.3-104.3(5) of the Colorado Revised Statutes, 
respectively. Although the statutes permit consumer reporting 
agencies to charge a ``reasonable fee,'' they do not specify a fee 
or a mechanism for determining one.
    \13\ TransUnion offers a stand-alone score for $4.95 through its 
Web site. See http://www.transunion.com/ Personal/
CreditReportandScoreFees.jsp. Based on telephone inquiries in 
California made in mid-2004, Experian sells a score alone for $6, 
and Equifax charges $8.
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II. Possible Approaches for Commission Determination

    Section 609(f)(8) of the FCRA states that consumer reporting 
agencies may charge a fair and reasonable fee ``as determined by the 
Commission.'' The law does not specify the manner in which that fee is 
to be determined. The Commission invites comments from all interested 
parties on any aspect of a proposed determination of a fair and 
reasonable fee for score disclosure. In setting out its background 
discussion above, and in reviewing various potential approaches to its 
determination below, the Commission does not wish to preclude comment 
on any alternatives, or the submission of appropriate background 
information. The Commission invites comment on approaches and factors 
that should be considered in determining a fee for the disclosures 
required under FCRA section 609(f), as well as comment on underlying 
premises that it should employ in considering various approaches and 
factors.
    There are several possible approaches that the Commission could 
take to make the required determination. One approach would be to 
establish a single mandatory price that regulated entities must charge 
for a score disclosure. Such an approach could provide clarity and 
certainty for both the industry and consumers. On the other hand, a 
fixed price might result in a higher fee than a consumer would be asked 
to pay in a competitive market; where the price is set above the level 
the regulated seller would otherwise charge, consumers could pay more 
than they would without intervention. If the fee is set too low, 
however, it may discourage competition on other terms of the 
transaction. For example, the seller may choose to cut corners 
elsewhere, such as quality, service, or willingness to innovate. In a 
market such as this--with both regulated sellers (consumer reporting 
agencies who distribute mortgage scores or develop their own scoring 
models) and unregulated sellers (non-consumer reporting agencies and 
consumer reporting agencies that do not sell mortgage scores or develop 
proprietary scores)--a fixed price may place regulated sellers at a 
competitive disadvantage to unregulated sellers.
    A maximum fee is another potential approach (setting a ``cap'' or 
upper limit on the fee that could be charged). A maximum fee may be 
preferable to a mandatory fee because it would allow

[[Page 64700]]

regulated entities to compete on price.\14\ If the price cap is set 
below the level the regulated seller would otherwise charge, however, 
it shares many of the drawbacks of a mandatory price. Furthermore, as 
academic commenters have recognized, a maximum price can become a de 
facto mandatory price.\15\ For example, the nine-dollar maximum fee 
specified in the Fair Credit Reporting Act's section 609(f) for the 
disclosure of consumer report information to consumers has become, in 
practice, the industry norm: the three major nationwide consumer 
reporting agencies all charge $9 for consumer file disclosures, despite 
the opportunity to compete on price below the statutory limit.
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    \14\ ``[C]utting prices in order to increase business is often 
the very essence of competition.'' Matsushita Elec. Industrial Co. 
v. Zenith Radio Corp., 475 U.S. 574, 594 (1986).
    \15\ See, e.g., Scherer, Industrial Market Structure and 
Economic Performance at 190-93, 204 (1980); Scherer, ``Focal Point 
Pricing and Conscious Parallelism,'' in Scherer, Competition Policy, 
Domestic and International, at 89-97 (2000). Although uniform prices 
might be the result of collusion, the outcome also can be due more 
innocently to a phenomenon sometimes referred to as ``focal point 
pricing.'' In this situation, competitors in a market coalesce 
around an externally imposed ``focal point,'' such as a government 
price control. See also Arizona v. Maricopa County Med. Soc., 457 
U.S. 332, 348 (1982) (stating that a maximum price fixing agreement 
``may be a masquerade for an agreement to fix uniform prices, or it 
may in the future take on that character'').
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    Moreover, any set fee, whether mandatory or maximum, runs the risk 
of becoming obsolete.\16\ A set fee may become too low--e.g., if the 
costs of producing or delivering a score rise; or it may become too 
high--e.g., if new technology lowers the costs of selling a score or if 
market participants would compete on price absent the regulation.
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    \16\ 'The reasonable price fixed today may through economic and 
business changes become the unreasonable price of tomorrow.'' United 
States v. Trenton Potteries Co., 273 U.S. 392, 397 (1927).
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    Some of these problems may be addressed by adjusting the set price 
periodically by a preannounced external factor--e.g., the consumer 
price index. There is a variety of ways in which such adjustments might 
be undertaken--they could be automatic and required within any rule 
that the Commission adopts as its determination, or they could be 
initiated by the Commission in the context of periodic review of its 
determination. If the adjustments were automatic, the Commission could 
itself make the adjustment based on preannounced criteria,\17\ or it 
could provide a formula for periodic adjustment that those subject to 
the rule would be required to apply and implement.
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    \17\ Such an adjustment procedure would be analogous to the 
statutory adjustment, undertaken annually by the Commission, to the 
fee that consumer reporting agencies can charge consumers for 
disclosure of their credit files. (In 1996, Congress specified an $8 
``cap'' on the fee that consumer reporting agencies can charge for 
full-file disclosure to consumers. Section 612(a)(1)(A)(i) of the 
FCRA, 15 U.S.C. 1681j(f)(1)(A)(i). FCRA section 612(f)(2) provides 
that the Federal Trade Commission shall increase the amount based 
proportionally on changes in the Consumer Price Index. The current 
limit is $9. See http://www.ftc.gov/os/2002/12/fedcreditstatutesfrn.htm.).
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    One limitation to the usefulness of an externally-derived price 
adjustment is the fact that it would not take into account possible 
changes, e.g., in technology or costs, that are internal to a specific 
firm or the industry. In order to account for such changes, the 
Commission could readjust fees based on an examination of the internal 
operations of each individual firm. In the public utility context, this 
is typically done by a detailed examination of a firm's operating costs 
and profits, capital employed, cost of capital, and rate of return on 
capital. Of course, this would be a potentially difficult and complex 
inquiry for the Commission to undertake in this proceeding, especially 
because it may be difficult to specify which cost elements should be 
included in the calculations or how to allocate fixed costs, such as 
the cost of developing the scoring model.
    Another approach that the Commission might consider would be to 
make a determination that looks to those charges produced by a 
competitive market as the basis for a fair and reasonable fee. Such a 
determination might be done with varying degrees of Commission 
involvement. For example, the Commission might conduct a periodic 
market survey to determine the range of prices charged and whether 
those prices are the product of competition, and set a price or a range 
of prices.
    A market-based approach is attractive because a competitive market 
generally provides the most rational, responsive, and efficient form of 
pricing. Typically, the market is able to produce and account for 
relevant factors: prices, quality, service, costs, encouragement of 
investment, and promotion of competition. The government often sets 
cost-based fees in the public utility context, because regulators often 
have no competitive market to which they can refer. In the case of 
direct-to-consumer credit scores, however, there currently exists a 
market with many buyers and sellers on which the Commission might base 
a determination. In its consideration of whether a market-based 
determination is appropriate and feasible, the Commission seeks comment 
on whether there is reason to believe that the fees being charged 
consumers for credit scores today are not fair and reasonable, that 
there is not active price competition, or that the market is not 
producing appropriate pricing incentives.\18\
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    \18\ While there seems to be little variation in the price of 
the underlying consumer credit file that is being scored, which as 
noted is capped currently at $9, the several participants in the 
market appear to compete vigorously in other aspects of the direct-
to-consumer score package (e.g., the score itself, accompanying 
educational materials, and follow-up services). Furthermore, there 
is price dispersion in the market for bundled scores, as well as the 
market for stand-alone scores. See supra notes 7-13 and accompanying 
text (the current range for bundled scores is $4 to $7 and the 
current range for stand-alone scores is $5 to $8).
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    More specifically, the Commission seeks comment on an appropriate 
methodology for determining a fair and reasonable fee if it elected a 
market-based approach. One method that the Commission might consider 
would take advantage of the market in credit scores by determining a 
fee that fluctuates based on that market. For example, the Commission's 
survey of the market to be regulated shows that prices between $5 and 
$8 currently are charged.\19\ A determination that reflects a dynamic, 
competitive market might include a set or maximum fee based on a 
calculated weighted mean figure. This approach could require the fee to 
be readjusted as the weighted mean price for credit scores rises and 
falls. If the Commission adopted such an approach, it would need to 
specify whether the Commission itself would make such market-based 
readjustments, or whether affected parties would be required to 
determine and apply readjustments based on a Commission-supplied 
formula.
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    \19\ Prices for credit scores appear to range between $4 and $7 
in the unregulated market.
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    The Commission also seeks comment on whether a fee determination 
based on ongoing assessment of the market might be an appropriate 
method on which to base its determination, and also whether such an 
approach might have drawbacks. Any market-based approach assumes that 
the market in direct-to-consumer credit scores will persist. The 
Commission seeks comment on both the current state of the market for 
credit scores and anticipated changes in the market. For example, a 
factor that could lead to changes in market forces is consumers' new 
right under the FACT Act to obtain a free annual copy of their consumer 
reports from each of the nationwide consumer

[[Page 64701]]

reporting agencies through a ``centralized source.''\20\ Nationwide 
consumer reporting agencies may choose to market scores to consumers 
(and may choose to fulfill their statutory obligation under section 
609(f)) through the centralized source.\21\ The centralized source may 
increase demand for scores by promoting consumer awareness of score 
availability, and might further competition among the nationwide 
consumer reporting agencies that sell scores through the centralized 
source. On the other hand, the centralized source might provide a 
competitive advantage to these consumer reporting agencies vis-a-vis 
other sellers of scores due to the ``captive'' audience of consumers 
that it supplies.\22\
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    \20\ Section 211(d) of the FACT Act. Under the Commission's rule 
implementing this requirement, this centralized source will first be 
available to some consumers beginning December 1, 2004, with full 
implementation by September 1, 2005. See 16 CFR 610, 69 FR 35468 
(June 24, 2004). See also http://www.ftc.gov/os/2004/05/040520factafrn.pdf and http://www.ftc.gov/os/2004/06/040624factafreeannualfrn.pdf.
    \21\ Id.
    \22\ The FACT Act also contains a new requirement that mortgage 
lenders disclose a credit score to home loan applicants, along with 
an explanatory notice. Section 212(c) of the FACT Act adds new FCRA 
section 609(g), effective December 1, 2004, mandating score 
disclosure and providing the text of the educational ``Notice to the 
home loan applicant.'' This mandated disclosure and notice may 
increase consumer awareness of credit scores, which might increase 
consumer demand for scores, but also could diminish demand for score 
purchases, because those consumers who apply for home loans will 
receive scores for free.
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    The Commission is seeking to make a determination that would 
preserve for consumers the benefits of competition in both the 
regulated and unregulated market, while protecting consumers from the 
non-competitive prices that might occur in these markets in the event 
that competition deteriorates. Optimally, the Commission seeks to 
identify and implement an approach that will result in a fee that is 
fair to consumers; will provide regulated entities with a sufficient 
level of certainty; will encourage regulated entities to compete on 
price, quality, and service; will encourage innovation and cost-
cutting; will avoid unduly interfering with the unregulated market for 
credit scores; and does not involve a lengthy rate-making proceeding or 
reliance upon proprietary cost or revenue data.
    The Commission seeks comment on the relative merits of each 
approach, as well as comments and suggestions on other appropriate 
factors to take into account in determining a fair and reasonable fee 
or periodically adjusting that fee.

Effective Date

    The Commission proposes an effective date of thirty days after 
promulgation of its final determination.
    The Commission recognizes that the provisions of FCRA section 
609(f) will become effective on December 1, 2004 without regard to 
whether the Commission has made a determination or given guidance on 
how it will determine whether a particular fee is fair and 
reasonable.\23\ Although Congress has directed credit scores be 
available for a fair and reasonable fee as determined by the 
Commission, it did not impose a deadline for a determination nor has it 
required that the determination be made in any particular manner. 
Furthermore, there is no indication that Congress meant to require 
regulated entities to make the required disclosures free of charge. For 
these reasons, the Commission interprets section 609(f) to allow 
regulated entities to charge a fee for required disclosures in advance 
of any specific Commission determination or other guidance, so long as 
that fee is fair and reasonable. Thus, absent additional Commission 
action on or before December 1, 2004, consumer reporting agencies must 
disclose mortgage or educational scores to consumers and may charge a 
fair and reasonable fee for those disclosures. Indeed, this process is 
currently used in the states that require similar disclosure.
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    \23\ See 16 CFR 602.1(c)(3)(x) (establishing December 1, 2004 as 
the effective date for FACTA Section 212(b)).
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    The Commission's enforcement of the ``fair and reasonable'' 
requirement will be by reference to the extant market in credit scores. 
Thus, at present the Commission may question any fee that significantly 
exceeds the current market rates for credit scores, which are currently 
in the range of $4 to $8.

III. Request for Comments

    The Commission welcomes comment on all aspects of the determination 
it will make, including policy and pragmatic considerations associated 
with any potential approach to determining a fair and reasonable fee 
for credit score disclosure, costs and benefits to all affected 
parties, implementation considerations, and any other issues bearing on 
the Commission's determination. Specifically, the Commission seeks 
comment on the range of approaches outlined above, as well as 
suggestions for alternative approaches to fee determination, and 
comments prompted by the following considerations and questions. All 
comments should be filed as prescribed in the ADDRESSES section above, 
and must be received by January 5, 2005.
    (1) The Commission believes that the current market in direct-to-
consumer scores is competitive and healthy--there appears to be price 
dispersion, innovation, and a variety of products and sellers. Is this 
an accurate characterization of the market? If so, why? If not, why? 
The Commission believes that one nationwide consumer reporting agency--
TransUnion--sells stand-alone credit scores to consumers for $4.95 in 
states that mandate free file disclosures. Three nationwide consumer 
reporting agencies sell stand-alone scores in California and Colorado 
for prices ranging from $4.95 to $8. Is this accurate? Are these the 
only circumstances under which consumers can obtain stand-alone credit 
scores? The Commission believes that most scores are sold as part of a 
package or are bundled with a consumer report and other information or 
services. Is this accurate? What is the range of prices for these 
products? By what method should the score component of a package or 
bundle or goods and services be valued?
    (2) The Commission recognizes that its determination under FCRA 
Section 609(f) will apply only to a portion of the market--consumer 
reporting agencies that distribute ``mortgage'' scores or develop their 
own credit scores--and only to two scoring products currently offered 
to consumers--``mortgage'' scores and ``educational'' scores. How many 
consumer reporting agencies would be subject to this requirement? What 
percentage of the credit score market would be regulated, and what 
percentage unregulated?
    (3) The Commission is aware that many non-consumer reporting 
agencies offer scores and related products to consumers. What is the 
relevant market for purposes of the Commission determination? What 
would be the competitive effects of the imposition of a maximum price 
requirement that applies only to a part of the market for scores? Would 
a maximum price requirement in the limited market for ``statutory'' 
scores (i.e., mortgage or educational scores provided by consumer 
reporting agencies) have effects on the broader, unregulated market for 
scores?
    (4) It is the Commission's understanding that many consumer 
reporting agencies do not currently provide scores directly to 
consumers, but do so through non-consumer reporting agency 
subsidiaries. Will consumer reporting agencies choose to fulfill the 
statutory requirement in

[[Page 64702]]

FCRA Section 609 through non-consumer reporting agency subsidiaries?
    (5) Consumer reporting agencies can fulfill FCRA Section 609's 
requirement by providing consumers with mortgage or educational scores. 
How will consumer reporting agencies choose to fulfill this requirement 
and what type of score are they most likely to provide to consumers? 
Why?
    (6) Among the potential approaches available to the Commission is 
determining a fee based on the market for scores. In that context, what 
is the appropriate market to consider: the market for stand-alone 
mortgage and educational scores sold by consumer reporting agencies, or 
the market for all credit scores sold by consumer reporting agencies 
and non-consumer reporting agencies? If a market-based approach is 
appropriate, are these two markets appropriate reference points? Are 
there other markets that should be considered? Overall, what is the 
appropriate market, and what are the factors that the Commission should 
consider in determining the appropriate market?
    (7) The Commission welcomes comment on whether other factors, in 
addition to prices charged in a competitive market, should be taken 
into account in determining a fair and reasonable fee for required 
disclosures (e.g., cost data, revenue data, other market conditions). 
Comments should discuss the pragmatic aspects of each factor advanced 
for consideration; for example, whether data underlying a given factor 
are readily available or difficult to obtain.
    (8) For any determination involving a specified dollar amount for a 
fair and reasonable fee, should the Commission include within a final 
determination a mechanism for periodic adjustment of the specified 
amount? If so, what approach is desirable for such adjustment and what 
entity or entities should determine the specific adjustment? Should the 
Commission initiate new assessments of all of the factors underlying 
its determination at a fixed time interval, or only when a factor 
changes significantly? Should the Commission's determination include an 
``automatic'' adjustment keyed to the consumer price index or similar 
economic index? Should periodic adjustments be required to be both 
determined and implemented by the regulated entities based on a formula 
set forth within the Commission's determination? Are there other bases 
for periodic adjustment that might be appropriate?

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 04-24841 Filed 11-5-04; 8:45 am]
BILLING CODE 6750-01-P