19–006

108TH CONGRESS REPORT " HOUSE OF REPRESENTATIVES ! 1st Session 108–263

FAIR AND ACCURATE CREDIT TRANSACTIONS ACT OF 

2003

SEPTEMBER 4, 2003.—Committed to the Committee of the Whole House on the State 

of the Union and ordered to be printed 

Mr. OXLEY, from the Committee on Financial Services, 

submitted the following 

R E P O R T 

together with 

ADDITIONAL AND SUPPLEMENTAL VIEWS 

[To accompany H.R. 2622] 

[Including cost estimate of the Congressional Budget Office]

The Committee on Financial Services, to whom was referred the 

bill (H.R. 2622) to amend the Fair Credit Reporting Act, to prevent 

identity theft, improve resolution of consumer disputes, improve 

the accuracy of consumer records, make improvements in the use 

of, and consumer access to, credit information, and for other purposes, having considered the same, report favorably thereon with 

an amendment and recommend that the bill as amended do pass.

CONTENTS 

Page 

Amendment .............................................................................................................. 2

Purpose and Summary ............................................................................................ 22

Background and Need for Legislation .................................................................... 23

Hearings ................................................................................................................... 27

Committee Consideration ........................................................................................ 28

Committee Votes ...................................................................................................... 28

Committee Oversight Findings ............................................................................... 34

Performance Goals and Objectives ......................................................................... 34

New Budget Authority, Entitlement Authority, and Tax Expenditures ............. 34

Committee Cost Estimate ....................................................................................... 34

Congressional Budget Office Cost Estimate .......................................................... 34

Federal Mandates Statement ................................................................................. 36

Private Sector Mandates Estimate ......................................................................... 36

Advisory Committee Statement .............................................................................. 37

2

Constitutional Authority Statement ...................................................................... 37

Applicability to Legislative Branch ........................................................................ 37

Section-by-Section Analysis .................................................................................... 37

Changes in Existing Law Made by the Bill, as Reported ..................................... 54

Additional and Supplemental Views ...................................................................... 79

AMENDMENT

The amendment is as follows: 

Strike all after the enacting clause and insert the following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

(a) SHORT TITLE.—This Act may be cited as the ‘‘Fair and Accurate Credit Transactions Act of 2003’’. 

(b) TABLE OF CONTENTS.—The table of contents for this Act are as follows:

Sec. 1. Short title; table of contents. 

Sec. 2. Definitions. 

Sec. 3. Effective dates. 

TITLE I—UNIFORM NATIONAL CONSUMER PROTECTION STANDARDS 

Sec. 101. Uniform national consumer protection standards made permanent. 

TITLE II—IDENTITY THEFT PREVENTION 

Sec. 201. Investigating changes of address and inactive accounts. 

Sec. 202. Fraud alerts. 

Sec. 203. Truncation of credit card and debit card account numbers. 

Sec. 204. Summary of rights of identity theft victims. 

Sec. 205. Blocking of information resulting from identity theft. 

Sec. 206. Establishment of procedures for depository institutions to identify possible instances of identity theft. 

Sec. 207. Study on the use of technology to combat identity theft. 

TITLE III—IMPROVING RESOLUTION OF CONSUMER DISPUTES 

Sec. 301. Coordination of consumer complaint investigations. 

Sec. 302. Notice of dispute through reseller. 

Sec. 303. Reasonable investigation required. 

Sec. 304. Duties of furnishers of information. 

Sec. 305. Prompt investigation of disputed consumer information. 

TITLE IV—IMPROVING ACCURACY OF CONSUMER RECORDS 

Sec. 401. Reconciling addresses. 

Sec. 402. Prevention of repollution of consumer reports. 

Sec. 403. Notice by users with respect to fraudulent information. 

Sec. 404. Disclosure to consumers of contact information for users and furnishers of information in consumer 

reports. 

Sec. 405. FTC study of the accuracy of consumer reports. 

TITLE V—IMPROVEMENTS IN USE OF AND CONSUMER ACCESS TO CREDIT INFORMATION 

Sec. 501. Free reports annually. 

Sec. 502. Disclosure of credit scores. 

Sec. 503. Simpler and easier method for consumers to use notification system. 

Sec. 504. Requirement to disclose communications to a consumer reporting agency. 

Sec. 505. Study of effects of credit scores and credit-based insurance scores on availability and affordability of 

financial products. 

Sec. 506. GAO study on disparate impact of credit system. 

Sec. 507. Analysis of further restrictions on offers of credit or insurance. 

Sec. 508. Study on the need and the means for improving financial literacy among consumers. 

Sec. 509. Disclosure of increase in APR under certain circumstances. 

TITLE VI—PROTECTING EMPLOYEE MISCONDUCT INVESTIGATIONS 

Sec. 601. Certain employee investigation communications excluded from definition of consumer report. 

TITLE VII—LIMITING THE USE AND SHARING OF MEDICAL INFORMATION IN THE FINANCIAL 

SYSTEM 

Sec. 701. Protection of medical information in the financial system. 

Sec. 702. Confidentiality of medical information in credit reports.

SEC. 2. DEFINITIONS. 

Section 603 of the Fair Credit Reporting Act (15 U.S.C. 1681a) is amended by adding at the end the following new subsections: 

‘‘(r) RESELLER.—The term ‘reseller’ means a consumer reporting agency that—

‘‘(1) assembles and merges information contained in the database of another 

consumer reporting agency or multiple consumer reporting agencies concerning 

any consumer for purposes of furnishing such information to any third party, 

to the extent of such activities; and 

‘‘(2) does not maintain a database of the assembled or merged information 

from which new consumer reports are produced. 

‘‘(s) OTHER DEFINITIONS.—

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‘‘(1) BOARD; CREDIT; CREDITOR, CREDIT CARD.—The terms ‘Board’, ‘credit’, 

‘creditor’, and ‘credit card’ have the same meanings as in section 103 of the 

Truth in Lending Act. 

‘‘(2) COMMISSION.—The term ‘Commission’ means the Federal Trade Commission. 

‘‘(3) DEBIT CARD.—The term ‘debit card’ means any card issued by a financial 

institution to a consumer for use in initiating electronic fund transfers (as defined in section 903(6) of the Electronic Fund Transfer Act) from the account 

(as defined in such Act) of the consumer at such financial institution for the 

purpose of transferring money between accounts or obtaining money, property, 

labor, or services. 

‘‘(4) ELECTRONIC FUND TRANSFER.—The term ‘electronic fund transfer’ has the 

same meaning as in section 903 of the Electronic Fund Transfer Act. 

‘‘(5) FEDERAL BANKING AGENCY.—The term ‘Federal banking agency’ has the 

same meaning as in section 3 of the Federal Deposit Insurance Act. 

‘‘(6) IDENTITY THEFT.—The term ‘identity theft’ means a fraud committed 

using another person’s identifying information, subject to such further definition 

as the Commission and the Board may prescribe, jointly, by regulation. 

‘‘(7) POLICE REPORT.—The term ‘police report’ means a copy of any official 

valid report filed by a consumer with any appropriate Federal, State, or local 

government law enforcement agency, or any comparable official government 

document that the Board and the Commission shall jointly prescribe in regulations, that is subject to a criminal penalty for false statements.’’.

SEC. 3. EFFECTIVE DATES. 

(a) IN GENERAL.—Except as provided in subsections (b) and (c)—

(1) before the end of the 2-month period beginning on the date of the enactment of this Act, the Board of Governors of the Federal Reserve System and 

the Federal Trade Commission shall jointly prescribe regulations in final form 

establishing effective dates for each provision of this Act (except as otherwise 

specified); and 

(2) the regulations prescribed under paragraph (1) shall establish effective 

dates that are as early as possible while allowing a reasonable time for the implementation of the provisions of this Act, but in no case shall the effective date 

be later than 10 months after the date of issuance of such regulations in final 

form. 

(b) IMMEDIATE EFFECTIVE DATE.—The following provisions shall take effect on the 

date of the enactment of this Act: 

(1) Title I. 

(2) Section 201. 

(3) Section 609(d)(1) of the Fair Credit Reporting Act (as added by the amendment in section 204(a)). 

(4) Section 305. 

(5) Section 505. 

(6) Section 506. 

(7) Title VI. 

(c) EFFECTIVE DATE FOR PROTECTION OF MEDICAL INFORMATION IN THE FINANCIAL

SYSTEM.—Section 701 shall take effect at the end of the 180-day period beginning 

on the date of the enactment of this Act, except that paragraph (2) of section 604(g) 

of the Fair Credit Reporting Act (as added by section 701) shall take effect on the 

later of—

(1) the end of the 90-day period beginning on the date the regulations required under paragraph (5)(B) of such section 604(g) (as added by section 701) 

are prescribed in final form; or 

(2) the date specified in the regulations referred to in paragraph (1). 

TITLE I—UNIFORM NATIONAL CONSUMER 

PROTECTION STANDARDS 

SEC. 101. UNIFORM NATIONAL CONSUMER PROTECTION STANDARDS MADE PERMANENT. 

Section 624(d) of the Fair Credit Reporting Act (15 U.S.C. 1681t(d)) is amended—

(1) by striking ‘‘Subsections (b) and (c)’’ and all that follows through ‘‘do not 

affect any settlement,’’ and inserting ‘‘Subsections (b) and (c) do not affect any 

settlement,’’; and 

(2) by striking ‘‘Consumer Credit Reporting Reform Act of 1996’’ and all that 

follows through the period at the end of paragraph (2) and inserting ‘‘Consumer 

Credit Reporting Reform Act of 1996.’’. 

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TITLE II—IDENTITY THEFT PREVENTION 

SEC. 201. INVESTIGATING CHANGES OF ADDRESS AND INACTIVE ACCOUNTS. 

(a) IN GENERAL.—Section 605 of the Fair Credit Reporting Act (15 U.S.C. 1681c) 

is amended by inserting after subsection (f), the following new subsection: 

‘‘(g) ‘RED FLAG’ PATTERNS OF POSSIBLE IDENTITY THEFT.— ‘‘(1) INVESTIGATION OF CHANGES OF ADDRESS.—The Federal banking agencies 

and the National Credit Union Administration, in carrying out the responsibilities of such agencies and Administration under subsection (k), shall jointly prescribe regulations for credit card and debit card issuers to ensure that, if any 

such issuer receives a request for an additional or replacement card for an existing account within a short period of time after the issuer has received notification of a change of address for the same account, the issuer will follow reasonable policies and procedures that require, as appropriate, that the issuer not 

issue the additional or replacement card unless the issuer—

‘‘(A) notifies the cardholder of the request at the former address of the 

cardholder and provides to the cardholder a means of promptly reporting 

incorrect address changes; 

‘‘(B) notifies the cardholder of the request by such other means of communication as the cardholder and the card issuer previously agreed to; or 

‘‘(C) uses other means of assessing the validity of the change of address, 

in accordance with reasonable policies and procedures established by the 

card issuer in accordance with the regulations prescribed under subsection 

(k). 

‘‘(2) INACTIVE ACCOUNTS.—The Federal banking agencies and the National 

Credit Union Administration, in carrying out the responsibilities of such agencies and Administration under subsection (k), shall consider including, as a possible ‘red flag’ pattern, reasonable guidelines providing that when a transaction 

occurs with respect to a credit or deposit account that has been inactive for 

more than 2 years, the creditor or depository institution shall follow reasonable 

policies and procedures that provide for notice to be given to a consumer in a 

manner reasonably designed to reduce the likelihood of identity theft with respect to such account.’’. 

(b) CLERICAL AMENDMENTS.— (1) The heading for section 605 of the Fair Credit Reporting Act is amended 

to read as follows: 

‘‘§ 605. Requirements relating to information contained in consumer reports 

and to identity theft prevention’’. 

(2) The table of sections for title VI of the Consumer Credit Protection Act 

is amended by striking the item relating to section 605 and inserting the following new item:

‘‘605. Requirements relating to information contained in consumer reports and to identity theft prevention’’.

(3) Section 624(b)(1)(E) of the Fair Credit Reporting Act (15 U.S.C. 

1681t(b)(1)(E)) is amended by inserting ‘‘and to identity theft prevention’’ after 

‘‘consumer reports’’. 

SEC. 202. FRAUD ALERTS. 

Section 605 of the Fair Credit Reporting Act (15 U.S.C. 1681c) is amended by adding at the end the following new subsection: 

‘‘(i) ONE-CALL FRAUD ALERTS.— ‘‘(1) INITIAL ALERTS.—Upon the direct request of a consumer, or an individual 

acting on behalf of or as a personal representative of a consumer, who asserts, 

in good faith, a suspicion that the consumer has been or is about to become a 

victim of fraud or related crime, including identity theft, a consumer reporting 

agency described in section 603(p) shall, if the agency maintains a file on the 

consumer who is making the request and has a reasonable belief that the agency knows the identity of the consumer—

‘‘(A) include a fraud alert in the file of that consumer for a period of not 

less than 90 days beginning on the date of such request, unless the consumer specifically requests that such fraud alert be removed before the end 

of such period; 

‘‘(B) disclose to the consumer that the consumer may request a free copy 

of the file of the consumer and provide the consumer, upon request, a free 

disclosure of the consumer’s file (as described in section 609(a)) within 3 

business days after such request; 

‘‘(C) for 2 years after the date of such request, exclude the consumer from 

any list of consumers prepared by the agency and provided to any third 

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party to offer credit or insurance to the consumer as part of a transaction 

that was not initiated by the consumer, unless the consumer subsequently 

requests that such exclusion be rescinded before the end of such period; and 

‘‘(D) refer the information regarding the fraud alert to each of the other 

consumer reporting agencies described in section 603(p), as required under 

section 621(f)(1). 

‘‘(2) EXTENDED ALERTS.—Upon the direct request of a consumer, or an individual acting on behalf of or as a personal representative of a consumer, who 

contacts a consumer reporting agency described in section 603(p) to report details of an identity theft and submits evidence that provides the agency with 

reasonable cause to believe that such identity theft has occurred, the agency 

shall, if the agency maintains a file on the consumer who is making the request 

and has a reasonable belief that the agency knows the identity of the consumer—‘‘(A) include a fraud alert in the file of that consumer and provide an opportunity for the consumer to extend the alert for a period of up to 7 years 

from the date of such request, unless the consumer subsequently requests 

that such fraud alert be removed before the end of such period; 

‘‘(B) provide the consumer with the option of including more complete information in the consumer’s file, including a telephone number or some 

other reasonable means of communication that any person who requests the 

consumer’s report may utilize for authorization before establishing a new 

credit plan in the name of the consumer; and 

‘‘(C) provide the consumer with at least 2 free disclosures of the information described in section 609(a) during the 12-month period beginning on 

the date of such request. 

‘‘(3) ACTIVE DUTY ALERTS.—Upon the direct request of an active duty military 

consumer, or an individual acting on behalf of or as a personal representative 

of an active duty military consumer, who contacts a consumer reporting agency 

described in section 603(p), the agency shall, if the agency maintains a file on 

the consumer who is making the request and has a reasonable belief that the 

agency knows the identity of the consumer—

‘‘(A) include an active duty alert in the file of that consumer during a period of not less than 12 months beginning on the date of the request, unless 

the consumer requests that such active duty alert be removed before the 

end of such period; 

‘‘(B) for 2 years after the date of such request, exclude the consumer from 

any list of consumers prepared by the agency and provided to any third 

party to offer credit or insurance to the consumer as part of a transaction 

that was not initiated by the consumer, unless the consumer subsequently 

requests that such exclusion be rescinded before the end of such period; and 

‘‘(C) refer the information regarding the active duty alert to each of the 

other consumer reporting agencies described in section 603(p), as required 

under section 621(f)(1). 

‘‘(4) PROCEDURES.—Each consumer reporting agency described in section 

603(p) shall establish policies and procedures to comply with the obligations of 

paragraphs (1), (2), and (3), including procedures that allow consumers to request initial, extended, or active duty alerts in a simple and easy manner, including by telephone. 

‘‘(5) NOTICE TO USERS.—No person who obtains any information that includes 

a fraud alert under this section from a file of any consumer from a consumer 

reporting agency may establish a new credit plan in the name of the consumer 

for a person other than the consumer without utilizing reasonable policies and 

procedures described in paragraph (9). 

‘‘(6) REFERRALS OF FRAUD ALERTS.—Each consumer reporting agency described in section 603(p) that receives a referral of a fraud alert from another 

such agency pursuant to paragraph (1)(D) or (3)(C) shall follow the procedures 

required under subparagraphs (A), (B), and (C) of paragraph (1), in the case of 

a referral under paragraph (1)(D), and subparagraphs (A) and (B), in the case 

of a referral under paragraph (3)(C), as if the agency received the request from 

the consumer directly. 

‘‘(7) DUTY OF RESELLER TO RECONVEY ALERT.—A reseller that is notified of the 

existence of a fraud alert in a consumer’s consumer report shall communicate 

to each person procuring a consumer report with respect to such consumer the 

existence of a fraud alert in effect for such consumer. 

‘‘(8) DUTY OF OTHER CONSUMER REPORTING AGENCIES TO PROVIDE CONTACT INFORMATION.—If a consumer contacts any consumer reporting agency that is not 

a consumer reporting agency described in section 603(p) to communicate a suspicion that the consumer has been or is about to become a victim of fraud or 

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related crime, including identity theft, the agency shall provide the consumer 

with information on how to contact the Commission and the consumer reporting 

agencies described in section 603(p) to obtain more detailed information and request alerts under this subsection. 

‘‘(9) FRAUD ALERT.—

‘‘(A) DEFINITION.—For purposes of this subsection, the term ‘fraud alert’ 

means, at a minimum, a statement—

‘‘(i) in the file of a consumer that the consumer may be a victim of 

fraud, including identity theft, or is a consumer described in paragraph 

(3); and 

‘‘(ii) that is transmitted in a manner that facilitates a clear and conspicuous view of the statement by any person requesting such file. 

‘‘(B) OTHER INFORMATION.—A fraud alert shall include information that 

notifies all prospective users of a consumer report on the consumer to which 

the alert relates that the consumer does not authorize establishing any new 

credit plan in the name of the consumer, unless the user utilizes reasonable 

policies and procedures to form a reasonable belief that the user knows the 

identity of the person for whom such new plan is established, which may 

include obtaining authorization or preauthorization of the consumer at a 

telephone number designated by the consumer or by such other reasonable 

means agreed to. 

‘‘(10) OTHER DEFINITIONS.—For purposes of this subsection, the following definitions shall apply: 

‘‘(A) ACTIVE DUTY MILITARY CONSUMER.—The term ‘active duty military 

consumer’ means a consumer in military service who—

‘‘(i) is on active duty (as defined in section 101(d)(1) of title 10, 

United States Code) or is a reservist performing duty under a call or 

order to active duty under a provision of law referred to in section 

101(a)(13) of title 10, United States Code; and 

‘‘(ii) is assigned to service away from the consumer’s usual duty station. 

‘‘(B) NEW CREDIT PLAN.—The term ‘new credit plan’ means a new account 

under an open end credit plan (as defined in section 103(i) of this Act) or 

a new credit transaction not under an open end credit plan.’’. 

SEC. 203. TRUNCATION OF CREDIT CARD AND DEBIT CARD ACCOUNT NUMBERS. 

(a) IN GENERAL.—Section 605 of the Fair Credit Reporting Act (15 U.S.C. 1681c) 

is amended by inserting after subsection (k) (as added by section 206 of this title) 

the following new subsection: 

‘‘(l) TRUNCATION OF CREDIT CARD AND DEBIT CARD ACCOUNT NUMBERS.—

‘‘(1) IN GENERAL.—Except as provided in this subsection, no person that accepts credit cards or debit cards for the transaction of business shall print the 

expiration date or more than the last 5 digits of the card number upon any receipt provided to the cardholder at the point of the sale or transaction. 

‘‘(2) LIMITATION.—This section shall apply only to receipts that are electronically printed, and shall not apply to transactions in which the sole means of 

recording the person’s credit card or debit card number is by handwriting or by 

an imprint or copy of the card.’’. 

(b) EFFECTIVE DATE.—The amendments made by subsection (a) shall apply after 

the end of—

(1) the 3-year period beginning on the date of the enactment of this Act, with 

respect to any cash register or other machine or device that electronically prints 

receipts for credit card or debit card transactions that is in use before January 

1, 2005; and 

(2) the 1-year period beginning on the date of the enactment of this Act, with 

respect to any cash register or other machine or device that electronically prints 

receipts for credit card or debit card transactions that is first put into use on 

or after January 1, 2005. 

SEC. 204. SUMMARY OF RIGHTS OF IDENTITY THEFT VICTIMS. 

(a) IN GENERAL.—Section 609 of the Fair Credit Reporting Act (15 U.S.C. 1681g) 

is amended by adding at the end the following new subsection: 

‘‘(d) SUMMARY OF RIGHTS OF IDENTITY THEFT VICTIMS.—

‘‘(1) IN GENERAL.—The Commission, in consultation with the Federal banking 

agencies and the National Credit Union Administration, shall prepare a model 

summary of the rights of consumers under this title with respect to the procedures for remedying the effects of fraud or identity theft involving credit, electronic fund transfers, or accounts or transactions at or with a financial institution. 

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‘‘(2) SUMMARY OF RIGHTS AND CONTACT INFORMATION.—If any consumer contacts a consumer reporting agency and expresses a belief that the consumer is 

a victim of fraud or identity theft involving credit, electronic fund transfers, or 

accounts or transactions at or with a financial institution, the consumer reporting agency shall, in addition to any other action the agency may take, provide 

the consumer with the model summary of rights prepared by the Commission 

under paragraph (1) and information on how to contact the Commission to obtain more detailed information.’’. 

(b) TECHNICAL AND CONFORMING AMENDMENT.—Section 624(b)(3) of the Fair 

Credit Reporting Act (15 U.S.C. 1681t(b)(3)) is amended by striking ‘‘section 609(c)’’ 

and inserting ‘‘subsection (c) or (d) of section 609’’. 

SEC. 205. BLOCKING OF INFORMATION RESULTING FROM IDENTITY THEFT. 

Section 605 of the Fair Credit Reporting Act (15 U.S.C. 1681c) is amended by inserting after subsection (i) (as added by section 202 of this title) the following new 

subsection: 

‘‘(j) BLOCK OF INFORMATION RESULTING FROM IDENTITY THEFT.—

‘‘(1) BLOCK.—Except as provided in paragraph (3), a consumer reporting agency shall block the reporting of any information in the file of a consumer that 

the consumer identifies as information that resulted from an alleged identity 

theft and confirms is not information relating to any transaction by the consumer not later than 5 business days after the date of receipt by such agency 

of—

‘‘(A) appropriate proof of the identity of a consumer; 

‘‘(B) a police report evidencing the claim of the consumer of identity theft; 

‘‘(C) the identification of the information by the consumer; and 

‘‘(D) confirmation by the consumer that the information is not information relating to any transaction by the consumer. 

‘‘(2) NOTIFICATION.—A consumer reporting agency shall promptly notify the 

furnisher of information identified by the consumer under paragraph (1)—

‘‘(A) that the information may be a result of identity theft; 

‘‘(B) that a police report has been filed; 

‘‘(C) that a block has been requested under this subsection; and 

‘‘(D) of the effective date of the block. 

‘‘(3) AUTHORITY TO DECLINE OR RESCIND.—

‘‘(A) IN GENERAL.—A consumer reporting agency may decline to block, or 

may rescind any block, of consumer information under this subsection if the 

consumer reporting agency reasonably determines that—

‘‘(i) the information was blocked in error or a block was requested by 

the consumer in error; 

‘‘(ii) the information was blocked, or a block was requested by the 

consumer, on the basis of a misrepresentation of fact by the consumer 

relevant to the request to block; or 

‘‘(iii) the consumer knowingly obtained possession of goods, services, 

or moneys as a result of the blocked transaction or transactions, or the 

consumer should have known that the consumer obtained possession of 

goods, services, or moneys as a result of the blocked transaction or 

transactions. 

‘‘(B) NOTIFICATION TO CONSUMER.—If the block of information is declined 

or rescinded under this paragraph, the affected consumer shall be notified 

promptly, in the same manner as consumers are notified of the reinsertion 

of information under section 611(a)(5)(B). 

‘‘(C) SIGNIFICANCE OF BLOCK.—For purposes of this paragraph, if a consumer reporting agency rescinds a block, the presence of information in the 

file of a consumer prior to the blocking of such information is not evidence 

of whether the consumer knew or should have known that the consumer 

obtained possession of any goods, services, or monies as a result of the 

block. 

‘‘(4) EXCEPTIONS.—

‘‘(A) VERIFICATION COMPANIES.—This subsection shall not apply to—

‘‘(i) a check services company, which issues authorizations for the 

purpose of approving or processing negotiable instruments, electronic 

funds transfers, or similar methods of payments; or 

‘‘(ii) a deposit account information service company, which issues reports regarding account closures due to fraud, substantial overdrafts, 

automated teller machine abuse, or similar negative information regarding a consumer, to inquiring banks or other financial institutions 

for use only in reviewing a consumer request for a deposit account at 

the inquiring bank or financial institution. 

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‘‘(B) RESELLERS.— ‘‘(i) NO RESELLER FILE.—This subsection shall not apply to a consumer reporting agency if the consumer reporting agency—

‘‘(I) is a reseller; 

‘‘(II) is not, at the time of the request of the consumer under 

paragraph (1), otherwise furnishing or reselling a consumer report 

concerning the information identified by the consumer; and 

‘‘(III) informs the consumer, by any means, that the consumer 

may report the identity theft to the Commission to obtain consumer information regarding identity theft. 

‘‘(ii) RESELLER WITH FILE.—The sole obligation of the consumer reporting agency under this subsection, with regard to any request of a 

consumer under this subsection, shall be to block the consumer report 

maintained by the consumer reporting agency from any subsequent use 

if—

‘‘(I) the consumer, in accordance with the provisions of paragraph 

(1), identifies, to a consumer reporting agency, information in the 

file of the consumer that resulted from identity theft; and 

‘‘(II) the consumer reporting agency is a reseller of the identified 

information. 

‘‘(iii) NOTICE.—In carrying out its obligation under clause (ii), the reseller shall promptly provide a notice to the consumer of the decision 

to block the file. Such notice shall contain the name, address, and telephone number of each consumer reporting agency from which the consumer information was obtained for resale. 

‘‘(5) ACCESS TO BLOCKED INFORMATION BY LAW ENFORCEMENT AGENCIES.—No 

provision of this subsection shall be construed as requiring a consumer reporting agency to prevent a Federal, State, or local law enforcement agency from 

accessing blocked information in a consumer file to which the agency could otherwise obtain access under this title.’’. 

SEC. 206. ESTABLISHMENT OF PROCEDURES FOR DEPOSITORY INSTITUTIONS TO IDENTIFY 

POSSIBLE INSTANCES OF IDENTITY THEFT. 

(a) IN GENERAL.—Section 605 of the Fair Credit Reporting Act (15 U.S.C. 1681c) 

is amended by inserting after subsection (j) (as added by section 205 of this title) 

the following new subsection: 

‘‘(k) ‘RED FLAG’ GUIDELINES REQUIRED.—

‘‘(1) IN GENERAL.—The Federal banking agencies and the National Credit 

Union Administration, in consultation with the Commission, shall jointly establish and maintain guidelines for use by insured depository institutions in identifying patterns, practices, and specific forms of activity that indicate the possible 

existence of identity theft with respect to accounts, and update such guidelines 

as often as necessary. 

‘‘(2) REGULATIONS.—The Federal banking agencies and the National Credit 

Union Administration, in consultation with the Commission, shall jointly prescribe regulations requiring insured depository institutions to establish and adhere to reasonable policies and procedures for implementing the guidelines established pursuant to paragraph (1) to identify possible risks to customer accounts or to the safety and soundness of the institutions. 

‘‘(3) CONSISTENCY WITH VERIFICATION REQUIREMENTS.—Policies and procedures established pursuant to paragraph (2) shall not be inconsistent with, or 

duplicative of, the policies and procedures required under section 5318(l) of title 

31, United States Code. 

‘‘(4) INSURED DEPOSITORY INSTITUTION DEFINED.—For purposes of this subsection, the term ‘insured depository institution’—

‘‘(A) has the meaning given to such term in section 3 of the Federal Deposit Insurance Act; and 

‘‘(B) includes an insured credit union (as defined in section 101 of the 

Federal Credit Union Act).’’. 

(b) EFFECTIVE DATE.—The amendment made by subsection (a) shall take effect at 

the end of the 1-year period beginning the date of the enactment of this Act. 

SEC. 207. STUDY ON THE USE OF TECHNOLOGY TO COMBAT IDENTITY THEFT. 

(a) STUDY REQUIRED.—The Secretary of the Treasury shall conduct a study of the 

use of biometrics and other similar technologies to reduce the incidence and costs 

of identity theft by providing convincing evidence of who actually performed a given 

financial transaction. 

(b) CONSULTATION.—The Secretary of the Treasury shall consult with Federal 

banking agencies, the Federal Trade Commission, and representatives of financial 

institutions, credit reporting agencies, Federal, State, and local government agencies 

9

that issue official forms or means of identification, State prosecutors, law enforcement agencies, and the biometric industry and other representatives of the general 

public, in formulating and conducting the study required by subsection (a). 

(c) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated 

to the Secretary of the Treasury for fiscal year 2004 such sums as may be necessary 

to carry out the provisions of this section. 

(d) REPORT REQUIRED.—Before the end of the 180-day period beginning on the 

date of the enactment of this Act, the Secretary shall submit a report to Congress 

containing the findings and conclusions of the study required under subsection (a), 

together with such recommendations for legislative or administrative actions as may 

be appropriate. 

TITLE III—IMPROVING RESOLUTION OF 

CONSUMER DISPUTES 

SEC. 301. COORDINATION OF CONSUMER COMPLAINT INVESTIGATIONS. 

Section 621 of the Fair Credit Reporting Act (15 U.S.C. 1681s) is amended by adding at the end the following new subsection: 

‘‘(f) COORDINATION OF CONSUMER COMPLAINT INVESTIGATIONS.—

‘‘(1) IN GENERAL.—The consumer reporting agencies described in section 

603(p) shall develop and maintain procedures for the referral, to each such 

agency, of any consumer complaint received by any such agency alleging any 

identity theft or requesting a block or a fraud alert. 

‘‘(2) MODEL FORM AND PROCEDURE FOR REPORTING IDENTITY THEFT.—The 

Commission, in consultation with the Federal banking agencies and the National Credit Union Administration, shall develop a model form and model procedures to be used by consumers who are victims of identity theft for contacting 

and informing creditors and consumer reporting agencies of the fraud. 

‘‘(3) ANNUAL SUMMARY REPORTS.—Each consumer reporting agency described 

in section 603(p) shall submit an annual summary report to the Commission on 

consumer complaints received by the agency on identity theft or fraud alerts.’’. 

SEC. 302. NOTICE OF DISPUTE THROUGH RESELLER. 

(a) REQUIREMENT FOR REINVESTIGATION OF DISPUTED INFORMATION UPON NOTICE

FROM A RESELLER.—Section 611(a) of the Fair Credit Reporting Act (15 U.S.C. 

1681i(a)(1)(A)) is amended—

(1) in subparagraph (A) of paragraph (1)—

(A) by striking ‘‘If the completeness’’ and inserting ‘‘Subject to subsection 

(e), if the completeness’’; 

(B) by inserting ‘‘, or indirectly through a reseller,’’ after ‘‘notifies the 

agency directly’’; and 

(C) by inserting ‘‘or reseller’’ before the period at the end of such subparagraph; 

(2) in subparagraph (A) of paragraph (2)—

(A) by inserting ‘‘or a reseller’’ after ‘‘dispute from any consumer’’; and 

(B) by inserting ‘‘or reseller’’ before the period at the end of such subparagraph; and 

(3) in subparagraph (B) of paragraph (2), by inserting ‘‘or the reseller’’ after 

‘‘from the consumer’’. 

(b) REINVESTIGATION REQUIREMENT APPLICABLE TO RESELLERS.—Section 611 of 

the Fair Credit Reporting Act (15 U.S.C. 1681i) is amended by adding at the end 

the following new subsection: 

‘‘(e) REINVESTIGATION REQUIREMENT APPLICABLE TO RESELLERS.—

‘‘(1) EXEMPTION FROM GENERAL REINVESTIGATION REQUIREMENT.—Except as 

provided in paragraph (2), a reseller shall be exempt from the requirements of 

this section. 

‘‘(2) ACTION REQUIRED UPON RECEIVING NOTICE OF A DISPUTE.—If a reseller receives a notice from a consumer of a dispute concerning the completeness or accuracy of any item of information contained in a consumer report on such consumer produced by the reseller, the reseller shall, within 5 business days of receiving the notice and free of charge—

‘‘(A) determine whether the item of information is incomplete or inaccurate as a result of an act or omission of the reseller; and 

‘‘(B) if—

‘‘(i) the reseller determines that the item of information is incomplete 

or inaccurate as a result of an act or omission of the reseller, correct 

the information in the consumer report or delete it; or 

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‘‘(ii) if the reseller determines that the item of information is not incomplete or inaccurate as a result of an act or omission of the reseller, 

convey the notice of the dispute, together with all relevant information 

provided by the consumer, to each consumer reporting agency that provided the reseller with the information that is the subject of the dispute. 

‘‘(3) RESELLER REINVESTIGATIONS.—No provision of this subsection shall be 

construed as prohibiting a reseller from conducting a reinvestigation of a consumer dispute directly.’’. 

(c) TECHNICAL AND CONFORMING AMENDMENT.—The heading for paragraph (2)(B) 

of section 611(a) of the Fair Credit Reporting Act (15 U.S.C. 1681i(a)(2)(B)) is 

amended by striking ‘‘FROM CONSUMER’’. 

SEC. 303. REASONABLE REINVESTIGATION REQUIRED. 

Section 611(a)(1)(A) of the Fair Credit Reporting Act (15 U.S.C. 1681i(a)(1)(A)) is 

amended by striking ‘‘shall reinvestigate free of charge’’ and inserting ‘‘shall, free 

of charge, conduct a reasonable reinvestigation to determine whether the disputed 

information is inaccurate’’. 

SEC. 304. DUTIES OF FURNISHERS OF INFORMATION. 

(a) IN GENERAL.—Section 623(a) of the Fair Credit Reporting Act (15 U.S.C. 

1681s-2(a)) is amended—

(1) in paragraph (1)(A), by striking ‘‘knows or consciously avoids knowing that 

the information is inaccurate’’ and inserting ‘‘knows or has reasonable cause to 

believe that the information is inaccurate’’; 

(2) in paragraph (1)—

(A) by redesignating subparagraphs (B) and (C) as subparagraphs (C) and 

(D), respectively; 

(B) by inserting after subparagraph (A), the following new subparagraph: 

‘‘(B) REASONABLE PROCEDURES TO ENSURE ACCURACY.—A person that regularly furnishes information relating to consumers to a consumer reporting 

agency described in section 603(p) shall maintain reasonable procedures designed to ensure that the information furnished is accurate.’’; and 

(C) by adding at the end the following new subparagraph: 

‘‘(F) DEFINITION.—For purposes of subparagraph (A), the term ‘reasonable 

cause to believe that the information is inaccurate’ means, based on the 

procedures described in subparagraph (B), has knowledge, other than solely 

allegations by the consumer, that would cause a reasonable person to have 

substantial doubts about the accuracy of the information.’’; and 

(3) by adding at the end the following new paragraph: 

‘‘(6) ABILITY OF CONSUMER TO DISPUTE INFORMATION DIRECTLY WITH FUR- NISHER.—

‘‘(A) IN GENERAL.—A consumer may dispute directly with a person the accuracy of information that—

‘‘(i) is contained in a consumer report on the consumer prepared by 

a consumer reporting agency described in section 603(p); and 

‘‘(ii) was provided by the person to that consumer reporting agency 

in accordance with paragraph (1)(B). 

‘‘(B) SUBMITTING A NOTICE OF DISPUTE.—A consumer who seeks to dispute 

the accuracy of information with a person under subparagraph (A) shall 

provide a dispute notice directly to such person at the address specified by 

the person for such notices that—

‘‘(i) identifies the specific information that is being disputed; and 

‘‘(ii) explains the basis for the dispute. 

‘‘(C) DUTY OF PERSON AFTER RECEIVING NOTICE OF DISPUTE.—After receiving a notice of dispute from a consumer pursuant to subparagraph (B), the 

person that provided the information in dispute to a consumer reporting 

agency referred to in subparagraph (A) shall—

‘‘(i) conduct an investigation with respect to the disputed information; 

‘‘(ii) review all relevant information provided by the consumer with 

the notice; 

‘‘(iii) complete such person’s investigation of the dispute and report 

the results of the investigation to the consumer before the expiration 

of the period under section 611(a)(1) within which a consumer reporting 

agency would be required to complete its action if the consumer had 

elected to dispute the information under that section; and 

‘‘(iv) if the investigation finds that the information reported was inaccurate, promptly thereafter report correct information to each consumer 

reporting agency described in section 603(p) to which the person furnished the inaccurate information.’’. 

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(b) TECHNICAL AND CONFORMING AMENDMENTS.—

(1) Section 621(c)(5)(A) of the Fair Credit Reporting Act (15 U.S.C. 

1681s(c)(5)(A)) is amended by striking ‘‘section 623(a)(1)’’ and inserting ‘‘paragraph (1) or (6) of section 623(a)’’. 

(2) The heading for section 621(c)(5) of the Fair Credit Reporting Act (15 

U.S.C. 1681s(c)(5)) is amended by striking ‘‘VIOLATION OF SECTION 623(a)(1)’’ and 

inserting ‘‘CERTAIN VIOLATIONS OF SECTION 623(a)’’. 

SEC. 305. PROMPT INVESTIGATION OF DISPUTED CONSUMER INFORMATION. 

(a) STUDY REQUIRED.—The Board of Governors of the Federal Reserve System and 

the Federal Trade Commission shall jointly study the extent to which, and the manner in which, consumer reporting agencies and furnishers of consumer information 

to consumer reporting agencies are complying with the procedures, time lines, and 

requirements under the Fair Credit Reporting Act for the prompt investigation of 

the disputed accuracy of any consumer information, the completeness of the information provided to consumer reporting agencies, and the prompt correction or deletion, in accordance with such Act, of any inaccurate or incomplete information or 

information that cannot be verified. 

(b) REPORT REQUIRED.—Before the end of the 6-month period beginning on the 

date of the enactment of this Act, the Board of Governors of the Federal Reserve 

System and the Federal Trade Commission shall jointly submit a progress report 

to the Congress on the results of the study required under subsection (a). 

(c) RECOMMENDATIONS.—The report under subsection (b) shall include such recommendations as the Board and the Commission jointly determine to be appropriate 

for legislative or administrative action to ensure that—

(1) consumer disputes with consumer reporting agencies over the accuracy or 

completeness of information in a consumer’s file are promptly and fully investigated and any incorrect, incomplete, or unverifiable information is corrected 

or deleted immediately thereafter; 

(2) furnishers of information to consumer reporting agencies maintain full and 

prompt compliance with the duties and responsibilities established under section 623 of the Fair Credit Reporting Act; and 

(3) consumer reporting agencies establish and maintain appropriate internal 

controls and management review procedures for maintaining full and continuous compliance with the procedures, time lines, and requirements under the 

Fair Credit Reporting Act for the prompt investigation of the disputed accuracy 

of any consumer information and the prompt correction or deletion, in accordance with such Act, of any inaccurate or incomplete information or information 

that cannot be verified. 

(d) DEFINITIONS.—For purposes of this section, the terms ‘‘consumer’’, ‘‘consumer 

report’’, and ‘‘consumer reporting agency’’ have the same meaning as in the Fair 

Credit Reporting Act. 

TITLE IV—IMPROVING ACCURACY OF 

CONSUMER RECORDS

SEC. 401. RECONCILING ADDRESSES. 

Section 605 of the Fair Credit Reporting Act (15 U.S.C. 1681c) is amended by inserting after subsection (g) (as added by section 201 of this Act) the following new 

subsection. 

‘‘(h) NOTICE OF DISCREPANCY.—

‘‘(1) IN GENERAL.—If a person has requested a consumer report relating to a 

consumer from a consumer reporting agency described in section 603(p), the request includes an address for the consumer that substantially differs from the 

addresses in the file of the consumer, and the agency provides a consumer report in response to the request, the consumer reporting agency shall notify the 

requester of the existence of the discrepancy. 

‘‘(2) REGULATIONS.—

‘‘(A) REGULATIONS REQUIRED.—The Federal banking agencies and the National Credit Union Administration shall jointly prescribe regulations providing guidance regarding reasonable policies and procedures a user of a 

consumer report should employ when such user has received a notice of discrepancy under paragraph (1). 

‘‘(B) POLICIES AND PROCEDURES TO BE INCLUDED.—The regulations prescribed under subparagraph (A) shall describe reasonable policies and procedures for use by a user of a consumer report—

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‘‘(i) to form a reasonable belief that the user knows the identity of 

the person to whom the consumer report pertains; and 

‘‘(ii) if the user establishes a continuing relationship with the consumer, and the user regularly and in the ordinary course of business 

furnishes information to the consumer reporting agency from which the 

notice of discrepancy pertaining to the consumer was obtained, to reconcile the consumer’s address with the consumer reporting agency by 

furnishing such address to such consumer reporting agency as part of 

information regularly furnished by the user for the period in which the 

relationship is established.’’.

SEC. 402. PREVENTION OF REPOLLUTION OF CONSUMER REPORTS. 

Section 623(a)(1) of the Fair Credit Reporting Act (15 U.S.C. 1681s–2(a)(1)) is 

amended by inserting after subparagraph (D) (as so redesignated by section 

304(2)(A)) the following new subparagraph: 

‘‘(E) INFORMATION ALLEGED TO RESULT FROM IDENTITY THEFT.—If a consumer submits a police report to a person who furnishes information to a 

consumer reporting agency that states that information maintained by such 

person that purports to relate to the consumer resulted from identity theft, 

the person may not furnish such information that purports to relate to the 

consumer to any consumer reporting agency, unless the person subsequently knows or is informed by the consumer that the information is correct.’’. 

SEC. 403. NOTICE BY USERS WITH RESPECT TO FRAUDULENT INFORMATION. 

Section 615 of the Fair Credit Reporting Act (15 U.S.C. 1681m) is amended by 

adding at the end the following new subsection: 

‘‘(e) NOTICE OF FRAUDULENT INFORMATION RELATING TO IDENTITY THEFT.—If an 

agent acting as a debt collector (as defined in title VIII) of a person who furnishes 

information to any consumer reporting agency uses information contained in a consumer report on any consumer and learns that any such information so used is the 

result of identity theft or otherwise is fraudulent, the agent shall—

‘‘(1) if such information—

‘‘(A) originated from the person for whom the debt collector is acting as 

agent, notify the person of the fraudulent information; or 

‘‘(B) originated from a person other than the person for whom the debt 

collector is acting as agent, notify the consumer reporting agency (that provided the consumer report) of the fraudulent information, either directly or 

through the person for whom the debt collector is acting as agent; and 

‘‘(2) upon the request of the consumer, provide the consumer with all information which the consumer would be entitled to receive if the information related 

to the consumer other than by reason of identity theft.’’.

SEC. 404. DISCLOSURE TO CONSUMERS OF CONTACT INFORMATION FOR USERS AND FURNISHERS OF INFORMATION IN CONSUMER REPORTS. 

Section 609(a) of the Fair Credit Reporting Act (15 U.S.C. 1681g(a)) is amended—

(1) in paragraph (2), by inserting ‘‘, including addresses of the sources, and 

(if provided by the sources of information) the telephone numbers identified for 

customer service for the sources of information’’ after ‘‘sources of information’’ 

the 1st place such term appears in such paragraph; and 

(2) in paragraph (3)(B) by striking clause (ii) and inserting the following new 

clause: 

‘‘(ii) the address and (if provided) the telephone numbers identified 

for customer service of the person.’’. 

SEC. 405. FTC STUDY OF THE ACCURACY OF CONSUMER REPORTS. 

(a) STUDY REQUIRED.—Until the final report is submitted under subsection (b)(2), 

the Federal Trade Commission shall conduct an ongoing study of the accuracy and 

completeness of information contained in consumer reports prepared or maintained 

by consumer reporting agencies and methods for improving the accuracy and completeness of such information. 

(b) BIENNIAL REPORTS REQUIRED.—

(1) INTERIM REPORTS.—The Federal Trade Commission shall submit an interim report to the Congress on the study conducted under subsection (a) at the 

end of the 6-month period beginning on the date of the enactment of this Act 

and biennially thereafter for 8 years. 

(2) FINAL REPORT.—The Federal Trade Commission shall submit a final report 

to the Congress on the study conducted under subsection (a) at the end of the 

2-year period beginning on the date the final interim report is submitted to the 

Congress under paragraph (1). 

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(3) CONTENTS.—Each report submitted under this subsection shall contain a 

detailed summary of the findings and conclusions of the Commission with respect to the study required under subsection (a) and such recommendations for 

legislative and administrative action as the Commission may determine to be 

appropriate. 

TITLE V—IMPROVEMENTS IN USE OF AND 

CONSUMER ACCESS TO CREDIT INFORMATION 

SEC. 501. FREE REPORTS ANNUALLY. 

(a) FREE REPORTS ANNUALLY FROM NATIONWIDE CONSUMER REPORTING AGENCIES.—Section 612 of the Fair Credit Reporting Act (15 U.S.C. 1681j) is amended 

by adding at the end the following new subsection: 

‘‘(e) FREE ANNUAL DISCLOSURE.—Upon the direct request of the consumer, a consumer reporting agency described in section 603(p) shall make all disclosures pursuant to section 609 once during any 12-month period without charge to the consumer.’’. 

(b) TECHNICAL AND CONFORMING AMENDMENT.—Section 612(c) of the Fair Credit 

Reporting Act (15 U.S.C. 1681j(c)) is amended by inserting ‘‘that is not a consumer 

reporting agency described in section 603(p)’’ after ‘‘consumer reporting agency’’.

SEC. 502. DISCLOSURE OF CREDIT SCORES. 

(a) STATEMENT ON AVAILABILITY OF CREDIT SCORES.—Section 609(a) of the Fair 

Credit Reporting Act (15 U.S.C. 1681g(a)) is amended by adding at the end the following new paragraph: 

‘‘(6) If the consumer requests the credit file and not the credit score, a statement that the consumer may request and obtain a credit score.’’. 

(b) DISCLOSURE OF CREDIT SCORES.—Section 609 of the Fair Credit Reporting Act 

(15 U.S.C. 1681g) is amended by inserting after subsection (d) (as added by section 

204 of this Act) the following new subsection: 

‘‘(e) DISCLOSURE OF CREDIT SCORES.—

‘‘(1) IN GENERAL.—Upon the consumer’s request for a credit score, a consumer 

reporting agency shall supply to a 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 the following information: 

‘‘(A) The consumer’s current credit score or the consumer’s most recent 

credit score 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 the key factors that adversely affected the consumer’s credit score 

in the model used, the total number of which shall not exceed four, subject 

to paragraph (9). 

‘‘(D) The date the credit score was created. 

‘‘(E) The name of the person or entity that provided the credit score or 

credit file upon which the credit score was created. 

‘‘(2) DEFINITIONS.—For purposes of this section, the following definitions shall 

apply: 

‘‘(A) CREDIT SCORE.—The term ‘credit score’—

‘‘(i) means 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 (and the numerical value or the categorization derived 

from this analysis may also be referred to as a ‘risk predictor’ or ‘risk 

score’); and 

‘‘(ii) does not include—

‘‘(I) any mortgage score or rating of an automated underwriting 

system that considers one or more factors in addition to credit information, including the loan to value ratio, the amount of down 

payment, or a consumer’s financial assets; or 

‘‘(II) any other elements of the underwriting process or underwriting decision. 

‘‘(B) KEY FACTORS.—The term ‘key factors’ means all relevant elements 

or reasons adversely affecting the credit score for the particular individual 

listed in the order of their importance based on their effect on the credit 

score. 

14

‘‘(3) TIMEFRAME AND MANNER OF DISCLOSURE.—The information required by 

this subsection shall be provided in the same timeframe and manner as the information described in subsection (a). 

‘‘(4) APPLICABILITY TO CERTAIN USES.—This subsection shall not be construed 

so as to compel a consumer reporting agency to develop or disclose a score if 

the agency does not—

‘‘(A) distribute scores that are used in connection with residential real 

property loans; or 

‘‘(B) develop scores that assist credit providers in understanding a consumer’s general credit behavior and predicting the future credit behavior of 

the consumer. 

‘‘(5) APPLICABILITY TO CREDIT SCORES DEVELOPED BY ANOTHER PERSON.— ‘‘(A) IN GENERAL.—This subsection shall not be construed to require a 

consumer reporting agency that distributes credit scores developed by another person or entity to provide a further explanation of them, or to process a dispute arising pursuant to section 611, except that the consumer reporting agency shall provide the consumer with the name and address and 

website for contacting the person or entity who developed the score or developed the methodology of the score. 

‘‘(B) EXCEPTION.—This paragraph shall not apply to a consumer reporting 

agency that develops or modifies scores that are developed by another person or entity. 

‘‘(6) MAINTENANCE OF CREDIT SCORES NOT REQUIRED.—This subsection shall 

not be construed to require a consumer reporting agency to maintain credit 

scores in its files. 

‘‘(7) COMPLIANCE IN CERTAIN CASES.—In complying with this subsection, a 

consumer reporting agency shall—

‘‘(A) supply the consumer with 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 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; and 

‘‘(B) a statement indicating that the information and credit scoring model 

may be different than that used by the lender. 

‘‘(8) REASONABLE FEE.—A consumer reporting agency may charge a reasonable fee for providing the information required under this subsection. 

‘‘(9) USE OF ENQUIRIES AS A KEY FACTOR.—If a key factor that adversely affects a consumer’s credit score consists of the number of enquiries made with 

respect to a consumer report, that factor shall be included in the disclosure pursuant to paragraph (1)(C) without regard to the numerical limitation in such 

paragraph.’’. 

(c) DISCLOSURE OF CREDIT SCORES BY CERTAIN MORTGAGE LENDERS.—Section 609 

of the Fair Credit Reporting Act (15 U.S.C. 1681g) is amended by inserting after 

subsection (e) (as added by subsection (b) of this section) the following new subsection: 

‘‘(f) DISCLOSURE OF CREDIT SCORES BY CERTAIN MORTGAGE LENDERS.—

‘‘(1) IN GENERAL.—Any person who makes or arranges loans and who uses a 

consumer credit score as defined in subsection (e) in connection with an application initiated or sought by a consumer for a closed end loan or establishment 

of an open end loan for a consumer purpose that is secured by 1 to 4 units of 

residential real property (hereafter in this subsection referred to as the ‘lender’) 

shall provide the following to the consumer as soon as reasonably practicable:

‘‘(A) INFORMATION REQUIRED UNDER SUBSECTION(e).—

‘‘(i) IN GENERAL.—A copy of the information identified in subsection 

(e) that was obtained from a consumer reporting agency or was developed and used by the user of the information. 

‘‘(ii) NOTICE UNDER SUBPARAGRAPH (D).—In addition to the information provided to it by a third party that provided the credit score or 

scores, a lender is only required to provide the notice contained in subparagraph (D). 

‘‘(B) DISCLOSURES IN CASE OF AUTOMATED UNDERWRITING SYSTEM.—

‘‘(i) IN GENERAL.—If a person who is subject to this section uses an 

automated underwriting system to underwrite a loan, that person may 

satisfy the obligation to provide a credit score by disclosing a credit 

score and associated key factors supplied by a consumer reporting 

agency. 

‘‘(ii) NUMERICAL CREDIT SCORE.—However, if a numerical credit score 

is generated by an automated underwriting system used by an enterVerDate jul 14 2003 07:24 Sep 05, 2003 Jkt 019006 PO 00000 Frm 00014 Fmt 6659 Sfmt 6621 E:\HR\OC\HR263.XXX HR263
15

prise, and that score is disclosed to the person, the score shall be disclosed to the consumer consistent with subparagraph (C). 

‘‘(iii) ENTERPRISE DEFINED.—For purposes of this subparagraph, the 

term ‘enterprise’ shall have the same meaning as in paragraph (6) of 

section 1303 of the Federal Housing Enterprises Financial Safety and 

Soundness Act of 1992. 

‘‘(C) DISCLOSURES OF CREDIT SCORES NOT OBTAINED FROM A CONSUMER

REPORTING AGENCY.—A person subject to the provisions of this subsection 

who uses a credit score other than a credit score provided by a consumer 

reporting agency may satisfy the obligation to provide a credit score by disclosing a credit score and associated key factors supplied by a consumer reporting agency. 

‘‘(D) NOTICE TO HOME LOAN APPLICANTS.—A copy of the following notice, 

which shall include the name, address, and telephone number of each consumer reporting agency providing a credit score that was used: 

‘NOTICE TO THE HOME LOAN APPLICANT

‘In connection with your application for a home loan, the lender must disclose to 

you the score that a consumer reporting agency distributed to users and the lender 

used in connection with your home loan, and the key factors affecting your credit 

scores. 

‘The credit score is a computer generated summary calculated at the time of the 

request and based on information a consumer reporting agency or lender has on file. 

The scores are based on data about your credit history and payment patterns. Credit scores are important because they are used to assist the lender in determining 

whether you will obtain a loan. They may also be used to determine what interest 

rate you may be offered on the mortgage. Credit scores can change over time, depending on your conduct, how your credit history and payment patterns change, and 

how credit scoring technologies change. 

‘Because the score is based on information in your credit history, it is very important that you review the credit-related information that is being furnished to make 

sure it is accurate. Credit records may vary from one company to another. 

‘If you have questions about your credit score or the credit information that is furnished to you, contact the consumer reporting agency at the address and telephone 

number provided with this notice, or contact the lender, if the lender developed or 

generated the credit score. The consumer reporting agency plays no part in the decision to take any action on the loan application and is unable to provide you with 

specific reasons for the decision on a loan application. 

‘If you have questions concerning the terms of the loan, contact the lender.’. 

‘‘(E) ACTIONS NOT REQUIRED UNDER THIS SUBSECTION.—This subsection 

shall not require any person to do any of the following: 

‘‘(i) Explain the information provided pursuant to subsection (e). 

‘‘(ii) Disclose any information other than a credit score or key factor, 

as defined in subsection (e). 

‘‘(iii) Disclose any credit score or related information obtained by the 

user after a loan has closed. 

‘‘(iv) Provide more than 1 disclosure per loan transaction. 

‘‘(v) Provide the disclosure required by this subsection when another 

person has made the disclosure to the consumer for that loan transaction. 

‘‘(F) NO OBLIGATION FOR CONTENT.—

‘‘(i) IN GENERAL.—Any person’s obligation pursuant to this subsection 

shall be limited solely to providing a copy of the information that was 

received from the consumer reporting agency. 

‘‘(ii) LIMIT ON LIABILITY.—No person has liability under this subsection for the content of that information or for the omission of any 

information within the report provided by the consumer reporting agency. 

‘‘(G) PERSON DEFINED AS EXCLUDING ENTERPRISE.—As used in this subsection, the term ‘person’ does not include an enterprise (as defined in paragraph (6) of section 1303 of the Federal Housing Enterprises Financial 

Safety and Soundness Act of 1992). 

‘‘(2) PROHIBITION ON DISCLOSURE CLAUSES NULL AND VOID.—

‘‘(A) IN GENERAL.—Any provision in a contract that prohibits the disclosure of a credit score by a person who makes or arranges loans or a consumer reporting agency is void. 

16

‘‘(B) NO LIABILITY FOR DISCLOSURE UNDER THIS SUBSECTION.—A lender 

shall not have liability under any contractual provision for disclosure of a 

credit score pursuant to this subsection.’’. 

(d) INCLUSION OF KEY FACTOR IN CREDIT SCORE INFORMATION IN CONSUMER REPORT.—Section 605(d) of the Fair Credit Reporting Act (15 U.S.C. 1681c(d)) is 

amended—

(1) by striking ‘‘DISCLOSED.—Any consumer reporting agency’’ and inserting 

‘‘DISCLOSED.—

‘‘(1) TITLE 11 INFORMATION.—Any consumer reporting agency’’; and 

(2) by adding at the end the following new paragraph: 

‘‘(2) KEY FACTOR IN CREDIT SCORE INFORMATION.—Any consumer reporting 

agency that furnishes a consumer report that contains any credit score or any 

other risk score or predictor on any consumer shall include in the report a clear 

and conspicuous statement that a key factor (as defined in section 609(e)(2)(B)) 

that adversely affected such score or predictor was the number of enquiries, if 

such a predictor was in fact a key factor that adversely affected such score.’’. 

SEC. 503. SIMPLER AND EASIER METHOD FOR CONSUMERS TO USE NOTIFICATION SYSTEM. 

(a) IN GENERAL.—Section 604(e)(5)(A)(i) of the Fair Credit Reporting Act (15 

U.S.C. 1681b(e)(5)(A)(i)) is amended by inserting ‘‘in a simple and easy manner and’’ 

after ‘‘notify the agency,’’. 

(b) SIMPLIFIED NOTICE AND RESPONSE FORMAT FOR USERS.—Section 615(d) of the 

Fair Credit Reporting Act (15 U.S.C. 1681m(d)) is amended—

(1) by redesignating paragraphs (2), (3), and (4), as paragraphs (3), (4) and 

(5); and 

(2) by inserting after paragraph (1) the following new paragraph: 

‘‘(2) SIMPLE AND EASY NOTIFICATION.—Any statement given the consumer 

under paragraph (1)(E) shall be in a simple and easy to understand format and 

shall describe the simple and easy method established under section 

604(e)(5)(A)(i) for the consumer to respond.’’.

SEC. 504. REQUIREMENT TO DISCLOSE COMMUNICATIONS TO A CONSUMER REPORTING 

AGENCY. 

(a) IN GENERAL.—Section 623(a) of the Fair Credit Reporting Act (15 U.S.C. 

1681s-2(a)) is amended by inserting after paragraph (6) (as added by section 304(3)) 

the following new paragraph: 

‘‘(7) NEGATIVE INFORMATION.—

‘‘(A) NOTICE TO CONSUMER REQUIRED.—

‘‘(i) IN GENERAL.—If any financial institution that extends credit and 

regularly and in the ordinary course of business furnishes information 

to a consumer reporting agency described in section 603(p) furnishes 

negative information to such an agency regarding credit extended to a 

customer, the financial institution shall provide a notice of such furnishing of negative information, in writing, to the customer. 

‘‘(ii) NOTICE EFFECTIVE FOR SUBSEQUENT SUBMISSIONS.—After providing such notice, the financial institution may submit additional negative information to a consumer reporting agency described in section 

603(p) with respect to the same transaction, extension of credit, account, or customer without providing additional notice to the customer. 

‘‘(B) TIME OF NOTICE.—

‘‘(i) IN GENERAL.—The notice required under subparagraph (A) shall 

be provided to the customer prior to, or no later than 30 days after, furnishing the negative information to a consumer reporting agency described in section 603(p). 

‘‘(ii) COORDINATION WITH NEW ACCOUNT DISCLOSURES.—If the notice 

is provided to the customer prior to furnishing the negative information 

to a consumer reporting agency, the notice may not be included in the 

initial disclosures provided under section 127(a) of the Truth in Lending Act. 

‘‘(C) COORDINATION WITH OTHER DISCLOSURES.—The notice required under 

subparagraph (A)—

‘‘(i) may be included on or with any notice of default, any billing 

statement, or any other materials provided to the customer; and 

‘‘(ii) must be clear and conspicuous. 

‘‘(D) MODEL DISCLOSURE.—

‘‘(i) DUTY OF BOARD TO PREPARE.—The Board shall prescribe a brief 

model disclosure a financial institution may use to comply with subparagraph (A), which shall not exceed 30 words. 

17

‘‘(ii) USE OF MODEL NOT REQUIRED.—No provision of this paragraph 

shall be construed as requiring a financial institution to use any such 

model form prescribed by the Board. 

‘‘(iii) COMPLIANCE USING MODEL.—A financial institution shall be 

deemed to be in compliance with subparagraph (A) if the financial institution uses any such model form prescribed by the Board, or the financial institution uses any such model form and rearranges its format. 

‘‘(E) USE OF NOTICE WITHOUT SUBMITTING NEGATIVE INFORMATION.—No 

provision of this paragraph shall be construed as requiring a financial institution that has provided a customer with a notice described in subparagraph (A) to furnish negative information about the customer to a consumer 

reporting agency. 

‘‘(F) SAFE HARBOR.—A financial institution shall not be liable for failure 

to perform the duties required by this paragraph if, at the time of the failure, the financial institution maintained reasonable policies and procedures 

to comply with this paragraph. 

‘‘(G) DEFINITIONS.—For purposes of this paragraph, the following definitions shall apply: 

‘‘(i) NEGATIVE INFORMATION.—The term ‘negative information’ means 

information concerning a customer’s delinquencies, late payments, insolvency, or any form of default. 

‘‘(ii) CUSTOMER; FINANCIAL INSTITUTION.—The terms ‘customer’ and 

‘financial institution’ have the same meaning as in section 509 of the 

Gramm-Leach-Bliley Act.’’. 

(b) MODEL DISCLOSURE FORM.—Before the end of the 6-month period beginning 

on the date of the enactment of this Act, the Board of Governors of the Federal Reserve System shall adopt the model disclosure required under the amendment made 

by subsection (a) after notice duly given in the Federal Register and an opportunity 

for public comment in accordance with section 553 of title 5, United States Code.

SEC. 505. STUDY OF EFFECTS OF CREDIT SCORES AND CREDIT-BASED INSURANCE SCORES 

ON AVAILABILITY AND AFFORDABILITY OF FINANCIAL PRODUCTS. 

(a) STUDY REQUIRED.—The Federal Trade Commission, in consultation with the 

Office of Fair Housing and Equal Opportunity of the Department of Housing and 

Urban Development, shall conduct a study of—

(1) the effects of the use of credit scores and credit-based insurance scores on 

the availability and affordability of financial products and services, including 

credit cards, mortgages, auto loans, and property and casualty insurance; 

(2) the degree of causality between the factors considered by credit score systems and the quantifiable risks and actual losses experienced by businesses, including the extent to which, if any, each of the factors considered or otherwise 

taken into account by such systems are accurate predictors of risk or loss, and 

where the means square error of a scoring model’s predictions are considered 

in the evaluation of accuracy; 

(3) the extent to which, if any, the use of credit scoring models, credit scores 

and credit-based insurance scores result in disparate impact by geography, income, ethnicity, race, color, religion, national origin, age, sex or marital status, 

and creed, including the extent to which the consideration or lack of consideration of certain factors by credit scoring systems could result in disparate effects 

and the extent to which, if any, the use of underwriting systems relying on 

these models could achieve comparable results through the use of factors with 

less disparate impact; and 

(4) the extent to which credit scoring systems are used by businesses, the factors considered by such systems, and the effects of variables which are not considered by such systems. 

(b) PUBLIC PARTICIPATION.—The Commission shall seek public input about the 

prescribed methodology and research design of the study required in subsection (a). 

(c) REPORT REQUIRED.—

(1) IN GENERAL.—Before the end of the 18-month period beginning on the date 

of the enactment of this Act, the Federal Trade Commission shall submit a detailed report on the study conducted pursuant to subsection (a) to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate. 

(2) CONTENTS OF REPORT.—The report submitted under paragraph (1) shall 

include the findings and conclusions of the Commission, together with such recommendations for legislative or administrative action as the Commission may 

determine to be necessary to ensure that credit and credit-based insurances 

score are used appropriately and fairly to avoid disparate effects. 

18

(d) CREDIT SCORE DEFINED.—For purposes of this section, the term ‘‘credit score’’ 

means a numerical value or a categorization derived from a statistical tool or modeling system used to predict the likelihood of certain credit or insurance behaviors, 

including default. 

SEC. 506. GAO STUDY ON DISPARATE IMPACT OF CREDIT SYSTEM. 

(a) STUDY REQUIRED.—The Comptroller General shall conduct a study of the credit system to determine the extent to which, if any, discrimination exists with regard 

to the availability and the terms of credit which has a disparate impact on the basis 

of race, color, income and education level, geographic location, age, sex, sexual orientation, national origin, or marital status and the nature of any such discriminatory effect. 

(b) REPORT REQUIRED.—Before the end of the 2-year period beginning on the date 

of the enactment of this Act, the Comptroller General shall submit a report to the 

Congress on the findings and conclusions of the Comptroller General pursuant to 

the study conducted under subsection (a), together with such recommendations for 

legislative or administrative action as the Comptroller General may determine to be 

appropriate. 

SEC. 507. ANALYSIS OF FURTHER RESTRICTIONS ON OFFERS OF CREDIT OR INSURANCE. 

(a) IN GENERAL.—The Board of Governors of the Federal Reserve System shall 

conduct a study of—

(1) the ability of consumers to avoid receiving written offers of credit or insurance in connection with transactions not initiated by the consumer; and 

(2) the potential impact any further restrictions on providing consumers with 

such written offers of credit or insurance would have on consumers. 

(b) REPORT.—The Board of Governors of the Federal Reserve System shall submit 

a report summarizing the results of the study required under subsection (a) to the 

Congress no later than 12 months after the date of the enactment of this Act, together with such recommendatioons for legislative or administrative action as the 

Board may determine to be appropriate. 

(c) CONTENT OF REPORT.—The report described in subsection (b) shall address the 

following issues: 

(1) The current statutory or voluntary mechanisms that are available to a 

consumer to notify lenders and insurance providers that the consumer does not 

wish to receive written offers of credit or insurance. 

(2) The extent to which consumers are currently utilizing existing statutory 

and voluntary mechanisms to avoid receiving offers of credit or insurance. 

(3) The benefits provided to consumers as a result of receiving written offers 

of credit or insurance. 

(4) Whether consumers incur significant costs or are otherwise adversely affected by the receipt of written offers of credit or insurance. 

(5) Whether further restricting the ability of lenders and insurers to provide 

written offers of credit or insurance to consumers would affect—

(A) the cost consumers pay to obtain credit or insurance; 

(B) the availability of credit or insurance; 

(C) consumers’ knowledge about new or alternative products and services; 

(D) the ability of lenders or insurers to compete with one another; and 

(E) the ability to offer credit or insurance products to consumers who 

have been traditionally underserved. 

SEC. 508. STUDY ON THE NEED AND THE MEANS FOR IMPROVING FINANCIAL LITERACY 

AMONG CONSUMERS. 

(a) STUDY REQUIRED.—The Comptroller General shall conduct a study to assess 

the extent of consumers’ knowledge and awareness of credit reports, credit scores, 

and the dispute resolution process, and on methods for improving financial literacy 

among consumers. 

(b) FACTORS TO BE INCLUDED.—The study required under subsection (a) shall include the following issues: 

(1) The number of consumers who view their credit reports. 

(2) Under what conditions and for what purposes do consumers primarily obtain a copy of their consumer report (such as for the purpose of ensuring the 

completeness and accuracy of the contents, to protect against fraud, in response 

to an adverse action based on the report, or in response to suspected identity 

theft) and approximately what percentage of the total number of consumers who 

obtain a copy of their consumer report do so for each such primary purpose. 

(3) The extent of consumers’ knowledge of the data collection process. 

(4) The extent to which consumers know how to get a copy of a consumer report. 

19

(5) The extent to which consumers know and understand the factors that 

positively or negatively impact credit scores. 

(c) REPORT REQUIRED.—Before the end of the 9-month period beginning on the 

date of the enactment of this Act, the Comptroller General shall submit a report 

to the Congress on the findings and conclusions of the Comptroller General pursuant to the study conducted under subsection (a), together with such recommendations for legislative or administrative action as the Comptroller General may determine to be appropriate, including recommendations on methods for improving financial literacy among consumers. 

SEC. 509. DISCLOSURE OF INCREASE IN APR UNDER CERTAIN CIRCUMSTANCES. 

Section 609 of the Fair Credit Reporting Act (15 U.S.C. 1681m) is amended by 

inserting after subsection (f) (as added by section 502(c) of this title) the following 

new subsection: 

‘‘(g) DISCLOSURE TO CONSUMER.— ‘‘(1) IN GENERAL.—The ability of a credit card issuer to increase any annual 

percentage rate applicable to a credit card account, or to remove or increase any 

introductory annual percentage rate of interest applicable to such account, for 

reasons other than actions or omissions of the card holder that are directly related to such account shall be clearly and conspicuously disclosed to the consumer by the credit card issuer in any disclosure or statement required to be 

made to the consumer under this title in connection with a credit card solicitation that is not initiated by the consumer. 

‘‘(2) REGULATIONS AND MODEL STATEMENTS.—The Board, in consultation with 

the Federal banking agencies and the National Credit Union Administration, 

shall develop such guidelines in regulations as necessary to assure that the information to be disclosed to consumers pursuant to paragraph (1) is clearly and 

conspicuously provided in a prominent location in any credit card solicitation 

that is not initiated by the consumer, and shall include model disclosure statements to be used by credit card issuers in making the disclosures required to 

be provided to the consumer by paragraph (1).’’. 

TITLE VI—PROTECTING EMPLOYEE 

MISCONDUCT INVESTIGATIONS 

SEC. 601. CERTAIN EMPLOYEE INVESTIGATION COMMUNICATIONS EXCLUDED FROM DEFINITION OF CONSUMER REPORT. 

(a) IN GENERAL.—Section 603 of the Fair Credit Reporting Act (15 U.S.C. 1681a) 

is amended by inserting after subsection (p) the following new subsection: 

‘‘(q) EXCLUSION OF CERTAIN COMMUNICATIONS FOR EMPLOYEE INVESTIGATIONS.— ‘‘(1) COMMUNICATIONS DESCRIBED IN THIS SUBSECTION.—A communication is 

described in this subsection if—

‘‘(A) but for subsection (d)(2)(D), the communication would be a consumer 

report; 

‘‘(B) the communication is made to an employer in connection with an investigation of—

‘‘(i) suspected misconduct relating to employment; or 

‘‘(ii) compliance with Federal, State, or local laws and regulations, 

the rules of a self-regulatory organization, or any preexisting written 

policies of the employer; 

‘‘(C) the communication is not made for the purpose of investigating a 

consumer’s credit worthiness, credit standing, or credit capacity; and 

‘‘(D) the communication is not provided to any person except—

‘‘(i) to the employer or an agent of the employer; 

‘‘(ii) to any Federal or State officer, agency, or department, or any officer, agency, or department of a unit of general local government; 

‘‘(iii) to any self-regulatory organization with regulatory authority 

over the activities of the employer or employee; 

‘‘(iv) as otherwise required by law; or 

‘‘(v) pursuant to section 608. 

‘‘(2) SUBSEQUENT DISCLOSURE.—After taking any adverse action based in 

whole or in part on a communication described in paragraph (1), the employer 

shall disclose to the consumer a summary containing the nature and substance 

of the communication upon which the adverse action is based, except that the 

sources of information acquired solely for use in preparing what would be but 

for subsection (d)(2)(D) an investigative consumer report need not be disclosed. 

‘‘(3) SELF-REGULATORY ORGANIZATION DEFINED.—For purposes of this subsection, the term ‘self-regulatory organization’ includes any self-regulatory orgaVerDate jul 14 2003 07:24 Sep 05, 2003 Jkt 019006 PO 00000 Frm 00019 Fmt 6659 Sfmt 6621 E:\HR\OC\HR263.XXX HR263
20

nization (as defined in section 3(a)(26) of the Securities Exchange Act of 1934), 

any entity established under Title I of the Sarbanes-Oxley Act of 2002, any 

board of trade designated by the Commodity Futures Trading Commission, and 

any futures association registered with such Commission.’’. 

(b) TECHNICAL AND CONFORMING AMENDMENT.—Section 603(d)(2)(D) of the Fair 

Credit Reporting Act (15 U.S.C. 1681a(d)(2)(D)) is amended by inserting ‘‘or (q)’’ 

after ‘‘subsection (o)’’. 

TITLE VII—LIMITING THE USE AND SHARING 

OF MEDICAL INFORMATION IN THE FINANCIAL SYSTEM 

SEC. 701. PROTECTION OF MEDICAL INFORMATION IN THE FINANCIAL SYSTEM 

(a) IN GENERAL.—Section 604(g) of the Fair Credit Reporting Act (15 U.S.C. 

1681b(g)) is amended to read as follows: 

‘‘(g) PROTECTION OF MEDICAL INFORMATION.—

‘‘(1) LIMITATION ON CONSUMER REPORTING AGENCIES.—A consumer reporting 

agency shall not furnish for employment purposes, or in connection with a credit or insurance transaction, a consumer report that contains medical information about a consumer, unless—

‘‘(A) if furnished in connection with an insurance transaction, the consumer affirmatively consents to the furnishing of the report; 

‘‘(B) if furnished for employment purposes or in connection with a credit 

transaction—

‘‘(i) the information to be furnished is relevant to process or effect the 

employment or credit transaction; and 

‘‘(ii) the consumer provides specific written consent for the furnishing 

of the report that describes in clear and conspicuous language the use 

for which the information will be furnished; or 

‘‘(C) such information is restricted or reported using codes that do not 

identify, or provide information sufficient to infer, the specific provider or 

the nature of such services, products, or devices to a person other than the 

consumer, unless the report is being provided to an insurance company for 

a purpose relating to engaging in the business of insurance other than 

property and casualty insurance. 

‘‘(2) LIMITATION ON CREDITORS.—Except as permitted pursuant to paragraph 

(3)(C) or regulations prescribed under paragraph (5)(A), a creditor shall not obtain or use medical information pertaining to a consumer in connection with 

any determination of the consumer’s eligibility, or continued eligibility, for credit. 

‘‘(3) ACTIONS AUTHORIZED BY FEDERAL LAW, INSURANCE ACTIVITIES AND REGULATORY DETERMINATIONS.—Section 603(d)(3) shall not be construed so as to 

treat information or any communication of information as a consumer report if 

the information or communication is disclosed—

‘‘(A) in connection with the business of insurance or annuities, including 

the activities described in section 18B of the model Privacy of Consumer Financial and Health Information Regulation issued by the National Association of Insurance Commissioners (as in effect on January 1, 2003); 

‘‘(B) for any purpose permitted without authorization under the Standards for Individually Identifiable Health Information promulgated by the 

Department of Health and Human Services pursuant to the Health Insurance Portability and Accountability Act of 1996, or referred to under section 

1179 of such Act, or described in section 502(e) of Public Law 106–102; or 

‘‘(C) as otherwise determined to be necessary and appropriate, by regulation or order and subject to paragraph (6), by the Commission, any Federal 

banking agency or the National Credit Union Administration (with respect 

to any financial institution subject to the jurisdiction of such agency or Administration under paragraph (1), (2), or (3) of section 621(b), or the applicable State insurance authority (with respect to any person engaged in providing insurance or annuities). 

‘‘(4) LIMITATION ON REDISCLOSURE OF MEDICAL INFORMATION.—Any person 

that receives medical information pursuant to paragraphs (1) or (3) shall not 

disclose such information to any other person except as necessary to carry out 

the purpose for which the information was initially disclosed, or as otherwise 

permitted by statute, regulation, or order. 

‘‘(5) REGULATIONS AND EFFECTIVE DATE FOR PARAGRAPH (2).—

21

‘‘(A) REGULATIONS REQUIRED.—Each Federal banking agency and the National Credit Union Administration shall, subject to paragraph (6) and after 

notice and opportunity for comment, prescribe regulations that permit 

transactions under paragraph (2) that are determined to be necessary and 

appropriate to protect legitimate operational, transactional, risk, consumer, 

and other needs, consistent with the intent of paragraph (2) to restrict the 

use of medical information for inappropriate purposes. 

‘‘(B) FINAL REGULATIONS REQUIRED.—The Federal banking agencies and 

the National Credit Union Administration shall prescribe the regulations 

required under subparagraph (A) in final form before the end of the 6-

month period beginning on the date of the enactment of the Fair and Accurate Credit Transactions Act of 2003. 

‘‘(6) COORDINATION WITH OTHER LAWS.—No provision of this subsection shall 

be construed as altering, affecting, or superseding the applicability of any other 

provision of Federal law relating to medical confidentiality.’’. 

(b) RESTRICTION ON SHARING OF MEDICAL INFORMATION.—Section 603(d) of the 

Fair Credit Reporting Act (15 U.S.C. 1681a(d)) is amended—

(1) in paragraph (2), by striking ‘‘The term’’ and inserting ‘‘Except as provided 

in paragraph (3), the term’’; and 

(2) by adding at the end the following new paragraph: 

‘‘(3) RESTRICTION ON SHARING OF MEDICAL INFORMATION.—Except for information or any communication of information disclosed as provided in section 

604(g)(3), the exclusions in paragraph (2) shall not apply with respect to information disclosed to any person related by common ownership or affiliated by 

corporate control if—

‘‘(A) the information is medical information; or 

‘‘(B) the information is an individualized list or description based on a 

consumer’s payment transactions for medical products or services, or an aggregate list of identified consumers based on payment transactions for medical products or services.’’. 

SEC. 702. CONFIDENTIALITY OF MEDICAL CONTACT INFORMATION IN CREDIT REPORTS. 

(a) DUTIES OF MEDICAL INFORMATION FURNISHERS.—Section 623(a) of the Fair 

Credit Reporting Act (15 U.S.C. 1681s-2(a)) is amended by inserting after paragraph 

(7) (as added by section 504(a)) the following new paragraph: 

‘‘(8) DUTY TO PROVIDE NOTICE OF STATUS AS MEDICAL INFORMATION FURNISHER.—A person whose primary business is providing medical services, products, or devices, or the person’s agent or assignee, who furnishes information 

to a consumer reporting agency on a consumer shall be considered a medical 

information furnisher for the purposes of this title and shall notify the agency 

of such status.’’. 

(b) RESTRICTION OF DISSEMINATION OF MEDICAL CONTACT INFORMATION.—Section 

605(a) of the Fair Credit Reporting Act (15 U.S.C. 1681c(a)) is amended by adding 

the following new paragraph: 

‘‘(6) The name, address, and telephone number of any medical information 

furnisher that has notified the agency of its status, unless—

‘‘(A) such name, address, and telephone number are restricted or reported 

using codes that do not identify, or provide information sufficient to infer, 

the specific provider or the nature of such services, products, or devices to 

a person other than the consumer; or 

‘‘(B) the report is being provided to an insurance company for a purpose 

relating to engaging in the business of insurance other than property and 

casualty insurance.’’. 

(c) NO EXCEPTIONS ALLOWED FOR DOLLAR AMOUNTS.—Section 605(b) of the Fair 

Credit Reporting Act (15 U.S.C. 1681c(b)) is amended by striking ‘‘The provisions 

of subsection (a)’’ and inserting ‘‘The provisions of paragraphs (1) through (5) of subsection (a)’’. 

(d) COORDINATION WITH OTHER LAWS.—No provision of any amendment made by 

this section shall be construed as altering, affecting, or superseding the applicability 

of any other provision of Federal law relating to medical confidentiality. 

(e) FTC REGULATION OF CODING OF TRADE NAMES.—Section 621 of the Fair Credit 

Reporting Act (15 U.S.C. 1681s) is amended by inserting after subsection (f) (as 

added by section 301 of this Act) the following new subsection: 

‘‘(g) FTC REGULATION OF CODING OF TRADE NAMES.—If the Commission determines that a person described in paragraph (8) of section 623(a) has not met the 

requirements of such paragraph, the Commission shall take action to ensure the 

person’s compliance with such paragraph, which may include issuing model guidance or prescribing reasonable policies and procedures as necessary to ensure that 

such person complies with such paragraph.’’. 

22

(f) TECHNICAL AND CONFORMING AMENDMENTS.—Section 604(g) of the Fair Credit 

Reporting Act (15 U.S.C. 1681b(g)) (as amended by section 701) is amended—

(1) in paragraph (1) by inserting ‘‘(other than medical contact information 

treated in the manner required under section 605(a)(6))’’ after ‘‘a consumer report that contains medical information’’; and 

(2) in paragraph (2) by inserting ‘‘(other than medical information treated in 

the manner required under section 605(a)(6))’’ after ‘‘a creditor shall not obtain 

or use medical information’’. 

(g) EFFECTIVE DATE.—The amendments made by this section shall take effect at 

the end of the 15-month period beginning on the date of the enactment of this Act.

PURPOSE AND SUMMARY

H.R. 2622, the ‘‘Fair and Accurate Credit Transactions Act of 

2003,’’ provides consumers with the tools they need to fight identity 

theft and to ensure the accuracy of their credit reports while establishing permanent national credit reporting standards by removing 

the sunset from the expiring national consumer protection standards. H.R. 2622 empowers consumers 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 legislation increases consumer awareness of their rights if they believe 

they may be victims of fraud or identity theft by directing the Federal Trade Commission (FTC or Commission) to prepare, and consumer reporting agencies to disseminate, a summary of rights of 

identity theft victims. The legislation enlists financial institutions’ 

support in fighting identity theft by requiring them to develop procedures to ‘‘red flag’’ identity theft, and to investigate certain 

changes in customer addresses. In addition, merchants will be required to truncate credit and debit card information. 

H.R. 2622 also improves the accuracy of consumer records and 

the resolution of consumer disputes. The legislation expands consumer access to credit information to ensure accuracy by giving 

consumers the right to review their credit scores and request a free 

credit report annually. H.R. 2622 provides consumers with important new rights for correcting inaccurate information on their credit reports and discourages the reintroduction of fraudulent information into the credit reporting system. The legislation prohibits furnishers of information from forwarding information on a consumer 

to credit reporting agencies if the furnisher has reasonable cause 

to believe the information is inaccurate. In addition, the bill directs 

regulators to determine how best to ensure the prompt investigation and correction of disputed information in a consumer’s credit 

file. 

H.R. 2622 also provides significant new protections of consumers’ 

medical information by limiting the disclosure of certain medical 

information in the preparation and dissemination of credit reports, 

prohibiting the use of medical information in connection with any 

determination of consumers’ eligibility for credit, and requiring 

credit reporting agencies to code certain sensitive medical information to avoid unwanted disclosure. Other provisions of the bill simplify consumers’ ability to limit unsolicited offers of credit, require 

credit card issuers to disclose risk based pricing practices when 

making unsolicited offers of credit to consumers, and require various studies to ensure the fairness of the credit granting process. 

23

BACKGROUND AND NEED FOR LEGISLATION

One of the hallmarks of the modern U.S. economy is quick and 

convenient access to consumer credit. Although it would have 

seemed unimaginable a generation ago, consumers can now qualify 

for a mortgage over the telephone, walk into a showroom and finance the purchase of a car in less than an hour, and get department store credit within minutes. Over the last 30 years, the availability of non-mortgage credit to households in the lowest quintile 

of income has increased by nearly 70 percent—including a nearly 

three-fold increase in the number of low-income households owning 

credit cards just in the last decade. American families’ ability to 

buy a home has also increased, with homeownership levels now approaching 70 percent, again with the largest gains achieved by 

lower income and minority groups. These improvements in the 

credit and mortgage systems have saved consumers nearly $100 

billion annually, according to some estimates. 

This unprecedented ‘‘democratization’’ in the availability of credit 

to low- and moderate-income consumers has been made possible in 

significant measure by the emergence of a national credit reporting 

system. The Federal statute governing the operation of the national 

credit reporting system is the Fair Credit Reporting Act (FCRA), 

landmark consumer protection legislation enacted in 1970 to bring 

the consumer credit reporting industry under Federal regulation 

for the first time. In establishing this statutory framework, Congress recognized that ‘‘an elaborate mechanism [had] been developed for investigating and evaluating the credit worthiness, credit 

standing, credit capacity, character, and general reputation of consumers,’’ and that ‘‘consumer reporting agencies [had] assumed a 

vital role in assembling and evaluating consumer credit and other 

information on consumers.’’ (15 U.S.C. § 1681.) The stated congressional purpose for the FCRA was ‘‘to require that consumer reporting agencies adopt reasonable procedures for meeting the needs of 

commerce for consumer credit, personnel, insurance, and other information in a manner which is fair and equitable to the consumer, 

with regard to the confidentiality, accuracy, relevancy, and proper 

utilization of such information.’’ (Id.) 

The FCRA applies to files maintained by consumer reporting 

agencies, also commonly referred to as credit bureaus, which are 

broadly defined to include anyone in the business of furnishing reports on the creditworthiness of consumers to third parties. Credit 

bureaus collect information voluntarily supplied by credit grantors, 

collection agencies, and other ‘‘furnishers,’’ as well as information 

from public records. The information included in a consumer credit 

report typically consists of a consumer’s name, Social Security 

number, address, telephone number, employment information, 

credit and payment history (including credit previously obtained, 

available, or outstanding), and other pertinent information (such as 

arrests, bankruptcies, and legal judgments). 

The FCRA outlines certain ‘‘permissible purposes’’ for which a 

consumer credit report may be supplied to a requester. A consumer 

reporting agency may furnish a copy of a consumer’s report to a 

person the agency has reason to believe intends to use the information for the purpose of extending credit or offering insurance to a 

consumer who has initiated the transaction, or for review or collecVerDate jul 14 2003 07:24 Sep 05, 2003 Jkt 019006 PO 00000 Frm 00023 Fmt 6659 Sfmt 6602 E:\HR\OC\HR263.XXX HR263
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tion of the customer’s account. Reports may also be provided in 

connection with unsolicited (or ‘‘prescreened’’) offers of credit or insurance, if the consumer has not requested otherwise and certain 

other notice and disclosure requirements are met; for determining 

eligibility for a government license or benefit; or for employment 

purposes (with the consumer’s consent). 

Any person with information related to consumers’ financial activities or other relevant information may furnish data to a consumer reporting agency. Reporting is voluntary, but those who do 

furnish information have a duty to ensure its accuracy and to investigate disputes. The most common users and furnishers of information are credit card issuers, auto dealers, department and grocery stores, lenders, utilities, insurers, collection agencies, and government agencies. 

In 1996, Congress amended the FCRA to impose new legal duties 

on credit bureaus, as well as on furnishers and users of credit reporting data, and to create a uniform national standard for consumer protections governing credit transactions. According to the 

Congressional Research Service, the legislative history of the 1996 

amendments indicates a congressional intent to ‘‘establish a national standard for the consumer credit industry,’’ and to create 

‘‘operational efficiency for industry * * * and competitive prices for 

consumers in the credit reporting and credit granting [industries 

that are] in many aspects, national in scope.’’ The 1996 amendments allowed for the continued evolution of a national credit system by establishing uniform national standards in a number of key 

areas, including the form of the notice that consumers are entitled 

to receive when adverse action (such as a denial of credit) is taken 

against them based upon credit reporting information; the procedures for consumers to dispute the accuracy of information on their 

credit reports and remove or correct any inaccurate or unverified 

information; the obsolescence periods for reporting of negative information, such as delinquencies and bankruptcies; and the

circumstance under which credit-related information may be 

shared among affiliated entities. 

Absent congressional action, the uniform national standards established by the 1996 amendments to the FCRA will sunset on 

January 1, 2004, permitting States that are so inclined to enact differing additional requirements. Numerous witnesses at hearings on 

the FCRA held by the Subcommittee on Financial Institutions and 

Consumer Credit testified in favor of extending the statute’s uniform national standards. On June 4, 2003, Ms. Dolores Smith, Director of the Federal Reserve Board’s Division of Consumer and 

Community Affairs, outlined the benefits of the credit reporting 

system to lenders and their customers as follows: 

The ready availability of accurate, up-to-date credit information from consumer reporting agencies benefits both 

creditors and consumers. Information from consumer credit reports gives creditors the ability to make credit decisions quickly and in a fair, safe and sound, and cost-effective manner. Consumers benefit from the access to credit 

from different sources, vigorous competition among creditors, quick decisions on credit applications, and reasonable 

costs for credit.

25

In testimony before the full Committee on July 9, 2003, Treasury 

Secretary John Snow strongly endorsed making the FCRA’s uniform national standards permanent, characterizing them as ‘‘essential to the way [that] credit gets made available in this country,’’ 

and going on to explain: ‘‘[W]e have the best credit markets and the 

most available credit and the lowest cost credit in the world, and 

that is, in large part, due to these [national] standards.’’ Testifying 

on April 30, 2003, Federal Reserve Board Chairman Alan Greenspan stressed the importance of preserving the FCRA’s uniform 

treatment of key aspects of the credit reporting system:

There is just no question that unless we have some major 

sophisticated system of credit evaluation continuously updated, we will have great difficulty in maintaining the 

level of consumer credit currently available, because clearly without the information that comes from credit bureaus 

and other sources, lenders would have to impose an additional risk premium. 

While American consumers have realized undeniable benefits 

from the free flow of credit reporting information to lenders and 

other financial services providers, they have also become increasingly concerned about the risk of their personal financial information falling into the wrong hands. The crime of identity theft—in 

which a perpetrator assumes the identity of a victim in order to obtain financial products and services or other benefits in the victim’s 

name—has reached almost epidemic proportions in recent years. A 

hotline established by the Federal Trade Commission to field consumer complaints and questions about identity theft logged over 

160,000 calls in 2002 alone. 

Although it is the financial institution, and not the individual 

victim, that generally absorbs the financial losses from an identity 

theft, victims may have to expend considerable time and energy 

clearing up their credit histories and other financial records. Indeed, the Committee heard compelling testimony from victims of 

identity theft that they felt, in some sense, twice victimized—once 

by the criminal who fraudulently assumed their identity, and again 

by a system that conspired against prompt redress and repair of 

their damaged credit history. 

The FCRA contains provisions intended to facilitate the prompt 

correction of inaccurate or fraudulent information on a consumer’s 

credit report. For example, any individual who believes that he or 

she has been victimized by identity theft is entitled to obtain a free 

report from each credit bureau that maintains a file on the individual. When an individual discovers that he or she has been victimized and an account created by an identity thief is being included in the victim’s credit history, the FCRA enables the victim 

to demand correction. Once the victim disputes the information 

with the credit bureau, the credit bureau must, within 5 business 

days, contact the entity that furnished the account information to 

the bureau. The entity then must investigate the matter and report 

back to the bureau with its findings within 30 days after the victim’s initial complaint. If the entity responds with a correction, the 

bureau must promptly delete the information from the victim’s 

credit history. The information may not be reinserted in the vicVerDate jul 14 2003 07:24 Sep 05, 2003 Jkt 019006 PO 00000 Frm 00025 Fmt 6659 Sfmt 6602 E:\HR\OC\HR263.XXX HR263
26

tim’s file unless the entity furnishing the information certifies that 

it is correct and the victim is notified of the reinsertion. 

Committee Oversight of the FCRA 

The Committee’s review of the FCRA’s expiring uniform national 

standards included extensive consideration of proposals for assisting consumers in preventing identity theft and for mitigating its 

consequences once the crime has occurred. The starting point for 

the Committee’s analysis was bipartisan legislation co-authored by 

Members of the Committee. H.R. 2035, the ‘‘Identity Theft and Financial Privacy Protection Act of 2003,’’ included provisions imposing new requirements on credit card issuers and credit bureaus to 

identify potential identity theft; codifying the use of ‘‘fraud alerts’’ 

in credit reports; requiring the truncation of account numbers and 

expiration dates on credit and debit card receipts; and providing 

consumers with the right to obtain a free credit report annually 

from each consumer reporting agency. 

The Committee began its series of hearings reviewing the FCRA 

and identity theft with a joint hearing of the Subcommittee on 

Oversight and Investigations and the Subcommittee on Financial 

Institutions and Consumer Credit entitled ‘‘Fighting Fraud: Improving Information Security’’. On April 3, 2003, the subcommittees 

heard testimony from witnesses on three specific case studies to review how credit issuers, third-party vendors that process transactions, credit bureaus, and law enforcement coordinate efforts to 

limit harm to consumers when data security is breached. 

On May 8, 2003, the Subcommittee on Financial Institutions and 

Consumer Credit held a hearing on the importance of the national 

credit reporting system to consumers and the U.S. economy. The 

hearing focused on how a national uniform credit system in the 

United States benefits consumers. The Subcommittee reviewed the 

economic benefits of a uniform credit system and current consumer 

protections under the FCRA, as well as the importance of a uniform national credit system to the retail operations of commercial 

users and furnishers of credit reporting data. 

The Subcommittee took a closer look at the FCRA itself on June 

4, 2003, with a hearing entitled ‘‘Fair Credit Reporting Act: How 

it Functions for Consumers and the Economy’’. The hearing reviewed the mechanics of the national credit reporting system and 

focused on the role of the States in FCRA; how credit reports, credit scores, and prescreened information are used by the lending, 

mortgage, consumer finance, insurance, and non-financial industries; the accuracy of credit reports; and the role of national uniform standards in improving markets for consumers, including how 

such uniformity affects the availability, affordability, and timeliness of products and services. 

The Committee continued its series of hearings on the FCRA on 

June 12, 2003, when the Subcommittee on Financial Institutions 

and Consumer Credit held a hearing entitled ‘‘The Role of FCRA 

in the Credit Granting Process’’. The hearing examined the use of 

credit reports in the mortgage lending process as well as other 

forms of consumer lending, including credit cards and bank loans. 

On June 17, 2003, the Subcommittee on Financial Institutions 

and Consumer Credit examined the role of FCRA in employee 

background checks and the collection of medical information. The 

27

first panel focused on the application of FCRA to employee screening and other background checks, while the second panel examined 

how medical information is collected and used for various financial 

products, including a discussion of the prohibition on the use of 

health information in the credit granting process. Witnesses on the 

first panel focused on opinion letters issued in 1999 and 2000 by 

the staff of the FTC, which essentially state that if an employer 

hires outside organizations to investigate suspected workplace misconduct, such as sexual or racial harassment or workplace violence, 

the investigation is an ‘‘investigative consumer report’’ under the 

FCRA and the employer and the investigator must therefore comply with the FCRA’s notice and disclosure requirements. even 

though the investigation does not pertain to credit or credit related 

matters. The panel established that the FTC position would deter 

employers from using outside investigators, which, because of their 

objectivity and expertise, are generally preferred, and in many 

cases, legally required. For example, the technical nature of the alleged misconduct may require investigators with particular expertise. Similarly, allegations of misconduct by high-level officials may 

require investigators with outside objectivity. The FTC has acknowledged the issue created by the letters, but contends that a 

legislative fix is necessary. 

In the 106th, 107th and 108th congresses, bipartisan legislation 

was introduced that would remedy the problems created by the 

FTC letters. H.R. 1543, the ‘‘Civil Rights and Employee Investigation Clarification Act,’’ was included as title VI of H.R. 2622. Title 

VI addresses the issue created by the FTC’s opinion letters by excluding employment investigations that are not for the purpose of 

investigating the employee’s credit worthiness from the FCRA definition of a consumer report. 

The Subcommittee on Financial Institutions and Consumer Credit held its sixth and final background hearing on the FCRA on 

June 24, 2003, when it focused specifically on the issue of identity 

theft with a hearing entitled ‘‘Fighting Identity Theft—The Role of 

FCRA’’. The hearing consisted of three panels, the first focusing on 

current enforcement efforts to apprehend and prosecute identity 

thieves, the second describing the experiences of consumers victimized by identity theft, and the third addressing private sector efforts to prevent identity theft and assist victims. 

Conclusion 

As noted above, much of the Nation’s economic growth over the 

last 20 years has been driven by the wide availability of credit, and 

the relative ease with which it can be obtained. This is due in large 

part to the existence of the national credit reporting system which 

gives the United States firms a concrete advantage over their competitors in Europe and elsewhere. 

H.R. 2622 ensures that the national credit reporting system will 

continue to provide benefits to consumers and the economy, while 

adding important consumer protections to ensure that criminals 

cannot turn the system’s greatest strengths into weaknesses. 

HEARINGS

The House Committee on Financial Services held a hearing on 

Wednesday, July 9, 2003, on H.R. 2622, the ‘‘Fair and Accurate 

28

Credit Transactions Act of 2003’’. The Committee received testimony from: the Honorable John W. Snow, Secretary of the Treasury; the Honorable Timothy J. Muris, Chairman, Federal Trade 

Commission; Mr. Mallory Duncan, Senior Vice President, General 

Counsel, National Retail Federation; Mr. Michael F. McEneney, 

Partner, Sidley Austin Brown & Wood LLP, on behalf of the U.S. 

Chamber of Commerce; Dr. William E. Spriggs, Executive Director, 

National Urban League Institute for Opportunity and Equality; 

Mr. Stephen Brobeck, Executive Director, Consumer Federation of 

America; Mr. John C. Dugan, Partner, Covington & Burling, on behalf of the Financial Services Coordinating Council; Mr. Stuart K. 

Pratt, President, Consumer Data Industry Association; Mr. Joe 

Belew, President, Consumer Bankers Association; Ms. Kayce Bell, 

Chief Operating Officer, Alabama Credit Union, on behalf of the 

Credit Union National Association; Mr. Hilary O. Shelton, Director, 

NAACP, Washington Bureau; Mr. D. Russell Taylor, Chairman, 

America’s Community Bankers; Mr. Chris Jay Hoofnagle, Deputy 

Counsel, Electronic Privacy Information Center; and Mr. L. Richard Fischer, on behalf of Visa U.S.A. 

COMMITTEE CONSIDERATION

On July 16, 2003, the Subcommittee on Financial Institutions 

and Consumer Credit met in open session and approved H.R. 2622, 

the Fair and Accurate Credit Transactions Act of 2003, for full 

Committee consideration, as amended, by a record vote of 41 yeas 

and no nays. 

On July 24, 2003, the Committee on Financial Services met in 

open session and ordered H.R. 2622 reported to the House with a 

favorable recommendation, with an amendment, by a record vote of 

61 yeas and 3 nays. 

COMMITTEE VOTES

Clause 3(b) of rule XIII of the Rules of the House of Representatives requires the Committee to list the record votes on the motion 

to report legislation and amendments thereto. A motion by Mr. 

Oxley to report the bill to the House with a favorable recommendation, with an amendment, was agreed to by a record vote of 61 yeas 

and 3 nays (Record vote no. FC-14). The names of Members voting 

for and against follow:

Record vote no. FC-14

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Oxley ............................... X ........... ............. Mr. Frank (MA) ..................... X ........... .............

Mr. Leach .............................. ........... ........... ............. Mr. Kanjorski ........................ X ........... .............

Mr. Bereuter .......................... X ........... ............. Ms. Waters ........................... ........... X .............

Mr. Baker .............................. X ........... ............. Mr. Sanders* ........................ ........... X .............

Mr. Bachus ........................... X ........... ............. Mrs. Maloney ........................ X ........... .............

Mr. Castle ............................. X ........... ............. Mr. Gutierrez ........................ X ........... .............

Mr. King ................................ X ........... ............. Ms. Vela ́zquez ...................... X ........... .............

Mr. Royce .............................. X ........... ............. Mr. Watt ............................... X ........... .............

Mr. Lucas (OK) ...................... X ........... ............. Mr. Ackerman ....................... X ........... .............

Mr. Ney .................................. X ........... ............. Ms. Hooley (OR) ................... X ........... .............

Mrs. Kelly .............................. X ........... ............. Ms. Carson (IN) .................... X ........... .............

Mr. Paul ................................ ........... ........... ............. Mr. Sherman ........................ X ........... .............

Mr. Gillmor ............................ X ........... ............. Mr. Meeks (NY) .................... X ........... .............

Mr. Ryun (KS) ....................... X ........... ............. Ms. Lee ................................. ........... X .............

29

Record vote no. FC-14—Continued

Representative Aye Nay Present Representative Aye Nay Present 

Mr. LaTourette ....................... X ........... ............. Mr. Inslee ............................. X ........... .............

Mr. Manzullo ......................... X ........... ............. Mr. Moore ............................. X ........... .............

Mr. Jones (NC) ...................... X ........... ............. Mr. Gonzalez ......................... X ........... .............

Mr. Ose ................................. X ........... ............. Mr. Capuano ........................ X ........... .............

Mrs. Biggert .......................... X ........... ............. Mr. Ford ................................ X ........... .............

Mr. Green (WI) ...................... ........... ........... ............. Mr. Hinojosa ......................... ........... ........... .............

Mr. Toomey ............................ X ........... ............. Mr. Lucas (KY) ..................... X ........... .............

Mr. Shays .............................. ........... ........... ............. Mr. Crowley .......................... X ........... .............

Mr. Shadegg ......................... X ........... ............. Mr. Clay ................................ X ........... .............

Mr. Fossella .......................... X ........... ............. Mr. Israel .............................. X ........... .............

Mr. Gary G. Miller (CA) ......... X ........... ............. Mr. Ross ............................... X ........... .............

Ms. Hart ................................ X ........... ............. Mrs. McCarthy (NY) .............. X ........... .............

Mrs. Capito ........................... X ........... ............. Mr. Baca .............................. X ........... .............

Mr. Tiberi .............................. X ........... ............. Mr. Matheson ....................... X ........... .............

Mr. Kennedy (MN) ................. X ........... ............. Mr. Lynch ............................. X ........... .............

Mr. Feeney ............................. X ........... ............. Mr. Miller (NC) ..................... X ........... .............

Mr. Hensarling ...................... X ........... ............. Mr. Emanuel ......................... X ........... .............

Mr. Garrett (NJ) ..................... X ........... ............. Mr. Scott (GA) ...................... X ........... .............

Mr. Murphy ............................ X ........... ............. Mr. Davis (AL) ...................... X ........... .............

Ms. Ginny Brown-Waite (FL) X ........... ............. .............................................. ........... ........... .............

Mr. Barrett (SC) .................... X ........... ............. .............................................. ........... ........... .............

Ms. Harris ............................. X ........... ............. .............................................. ........... ........... .............

Mr. Renzi ............................... X ........... ............. .............................................. ........... ........... .............

*Mr. Sanders is an independent, but caucuses with the Democratic Caucus. 

The following amendments were considered by record votes. The 

names of Members voting for and against follow:

An amendment to the amendment in the nature of a 

substitute offered by Ms. Waters, no. 1a, striking uniform 

national consumer protection standards, was not agreed to 

by a record vote of 6 yeas and 56 nays (Record vote no. FC11).

Record vote no. FC-11

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Oxley ............................... ........... X ............. Mr. Frank (MA) ..................... ........... X .............

Mr. Leach .............................. ........... ........... ............. Mr. Kanjorski ........................ ........... X .............

Mr. Bereuter .......................... ........... X ............. Ms. Waters ........................... X ........... .............

Mr. Baker .............................. ........... X ............. Mr. Sanders* ........................ X ........... .............

Mr. Bachus ........................... ........... X ............. Mrs. Maloney ........................ ........... X .............

Mr. Castle ............................. ........... ........... ............. Mr. Gutierrez ........................ ........... X .............

Mr. King ................................ ........... X ............. Ms. Vela ́zquez ...................... ........... X .............

Mr. Royce .............................. ........... X ............. Mr. Watt ............................... X ........... .............

Mr. Lucas (OK) ...................... ........... X ............. Mr. Ackerman ....................... ........... X .............

Mr. Ney .................................. ........... X ............. Ms. Hooley (OR) ................... ........... X .............

Mrs. Kelly .............................. ........... X ............. Ms. Carson (IN) .................... ........... X .............

Mr. Paul ................................ X ........... ............. Mr. Sherman ........................ ........... X .............

Mr. Gillmor ............................ ........... X ............. Mr. Meeks (NY) .................... ........... X .............

Mr. Ryun (KS) ....................... ........... X ............. Ms. Lee ................................. X ........... .............

Mr. LaTourette ....................... ........... X ............. Mr. Inslee ............................. ........... ........... .............

Mr. Manzullo ......................... ........... ........... ............. Mr. Moore ............................. ........... X .............

Mr. Jones (NC) ...................... ........... X ............. Mr. Gonzalez ......................... ........... X .............

Mr. Ose ................................. ........... X ............. Mr. Capuano ........................ ........... X .............

Mrs. Biggert .......................... ........... X ............. Mr. Ford ................................ ........... ........... .............

Mr. Green (WI) ...................... ........... X ............. Mr. Hinojosa ......................... ........... ........... .............

Mr. Toomey ............................ ........... X ............. Mr. Lucas (KY) ..................... ........... X .............

Mr. Shays .............................. ........... X ............. Mr. Crowley .......................... ........... X .............

Mr. Shadegg ......................... ........... X ............. Mr. Clay ................................ X ........... .............

Mr. Fossella .......................... ........... ........... ............. Mr. Israel .............................. ........... X .............

Mr. Gary G. Miller (CA) ......... ........... X ............. Mr. Ross ............................... ........... X .............

Ms. Hart ................................ ........... X ............. Mrs. McCarthy (NY) .............. ........... X .............

30

Record vote no. FC-11—Continued

Representative Aye Nay Present Representative Aye Nay Present 

Mrs. Capito ........................... ........... X ............. Mr. Baca .............................. ........... X .............

Mr. Tiberi .............................. ........... X ............. Mr. Matheson ....................... ........... X .............

Mr. Kennedy (MN) ................. ........... X ............. Mr. Lynch ............................. ........... ........... .............

Mr. Feeney ............................. ........... X ............. Mr. Miller (NC) ..................... ........... X .............

Mr. Hensarling ...................... ........... X ............. Mr. Emanuel ......................... ........... X .............

Mr. Garrett (NJ) ..................... ........... X ............. Mr. Scott (GA) ...................... ........... X .............

Mr. Murphy ............................ ........... X ............. Mr. Davis (AL) ...................... ........... X .............

Ms. Ginny Brown-Waite (FL) ........... X ............. .............................................. ........... ........... .............

Mr. Barrett (SC) .................... ........... X ............. .............................................. ........... ........... .............

Ms. Harris ............................. ........... X ............. .............................................. ........... ........... .............

Mr. Renzi ............................... ........... X ............. .............................................. ........... ........... .............

*Mr. Sanders is an independent, but caucuses with the Democratic Caucus. 

An amendment to the amendment in the nature of a 

substitute offered by Mr. Sanders, no. 1c, prohibiting ‘‘bait 

and switch’’ practices, was not agreed to by a record vote 

of 22 yeas and 44 nays (Record vote no. FC-12).

Record vote no. FC-12

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Oxley ............................... ........... X ............. Mr. Frank (MA) ..................... ........... X .............

Mr. Leach .............................. ........... X ............. Mr. Kanjorski ........................ ........... X .............

Mr. Bereuter .......................... X ........... ............. Ms. Waters ........................... X ........... .............

Mr. Baker .............................. ........... X ............. Mr. Sanders* ........................ X ........... .............

Mr. Bachus ........................... X ........... ............. Mrs. Maloney ........................ X ........... .............

Mr. Castle ............................. ........... X ............. Mr. Gutierrez ........................ X ........... .............

Mr. King ................................ ........... X ............. Ms. Vela ́zquez ...................... X ........... .............

Mr. Royce .............................. ........... X ............. Mr. Watt ............................... X ........... .............

Mr. Lucas (OK) ...................... ........... X ............. Mr. Ackerman ....................... X ........... .............

Mr. Ney .................................. ........... X ............. Ms. Hooley (OR) ................... ........... X .............

Mrs. Kelly .............................. ........... X ............. Ms. Carson (IN) .................... X ........... .............

Mr. Paul ................................ ........... X ............. Mr. Sherman ........................ ........... X .............

Mr. Gillmor ............................ ........... X ............. Mr. Meeks (NY) .................... X ........... .............

Mr. Ryun (KS) ....................... ........... X ............. Ms. Lee ................................. X ........... .............

Mr. LaTourette ....................... X ........... ............. Mr. Inslee ............................. X ........... .............

Mr. Manzullo ......................... ........... X ............. Mr. Moore ............................. ........... X .............

Mr. Jones (NC) ...................... X ........... ............. Mr. Gonzalez ......................... X ........... .............

Mr. Ose ................................. ........... X ............. Mr. Capuano ........................ X ........... .............

Mrs. Biggert .......................... ........... X ............. Mr. Ford ................................ ........... ........... .............

Mr. Green (WI) ...................... ........... X ............. Mr. Hinojosa ......................... ........... ........... .............

Mr. Toomey ............................ ........... X ............. Mr. Lucas (KY) ..................... ........... X .............

Mr. Shays .............................. X ........... ............. Mr. Crowley .......................... ........... X .............

Mr. Shadegg ......................... X ........... ............. Mr. Clay ................................ X ........... .............

Mr. Fossella .......................... ........... ........... ............. Mr. Israel .............................. ........... X .............

Mr. Gary G. Miller (CA) ......... ........... X ............. Mr. Ross ............................... ........... X .............

Ms. Hart ................................ ........... X ............. Mrs. McCarthy (NY) .............. ........... X .............

Mrs. Capito ........................... ........... X ............. Mr. Baca .............................. ........... X .............

Mr. Tiberi .............................. ........... X ............. Mr. Matheson ....................... ........... X .............

Mr. Kennedy (MN) ................. ........... X ............. Mr. Lynch ............................. ........... ........... .............

Mr. Feeney ............................. ........... X ............. Mr. Miller (NC) ..................... ........... X .............

Mr. Hensarling ...................... ........... X ............. Mr. Emanuel ......................... ........... X .............

Mr. Garrett (NJ) ..................... ........... X ............. Mr. Scott (GA) ...................... X ........... .............

Mr. Murphy ............................ ........... X ............. Mr. Davis (AL) ...................... X ........... .............

Ms. Ginny Brown-Waite (FL) ........... X ............. .............................................. ........... ........... .............

Mr. Barrett (SC) .................... ........... X ............. .............................................. ........... ........... .............

Ms. Harris ............................. ........... X ............. .............................................. ........... ........... .............

Mr. Renzi ............................... ........... X ............. .............................................. ........... ........... .............

*Mr. Sanders is an independent, but caucuses with the Democratic Caucus. 

An amendment to the amendment in the nature of a 

substitute offered by Ms. Lee, no. 1s, prohibiting credit reVerDate jul 14 2003 07:24 Sep 05, 2003 Jkt 019006 PO 00000 Frm 00030 Fmt 6659 Sfmt 6602 E:\HR\OC\HR263.XXX HR263
31

porting agencies from treating the number of enquiries as 

a negative when calculating the credit score, was not 

agreed to by a record vote of 14 yeas and 48 nays (Record 

vote no. FC-13).

Record vote no. FC-13

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Oxley ............................... ........... X ............. Mr. Frank (MA) ..................... X ........... .............

Mr. Leach .............................. ........... ........... ............. Mr. Kanjorski ........................ ........... X .............

Mr. Bereuter .......................... X ........... ............. Ms. Waters ........................... X ........... .............

Mr. Baker .............................. ........... X ............. Mr. Sanders* ........................ X ........... .............

Mr. Bachus ........................... ........... X ............. Mrs. Maloney ........................ ........... ........... .............

Mr. Castle ............................. ........... ........... ............. Mr. Gutierrez ........................ X ........... .............

Mr. King ................................ ........... X ............. Ms. Vela ́zquez ...................... ........... X .............

Mr. Royce .............................. ........... X ............. Mr. Watt ............................... X ........... .............

Mr. Lucas (OK) ...................... ........... X ............. Mr. Ackerman ....................... ........... X .............

Mr. Ney .................................. ........... X ............. Ms. Hooley (OR) ................... ........... X .............

Mrs. Kelly .............................. ........... X ............. Ms. Carson (IN) .................... X ........... .............

Mr. Paul ................................ ........... ........... ............. Mr. Sherman ........................ ........... ........... .............

Mr. Gillmor ............................ ........... X ............. Mr. Meeks (NY) .................... ........... X .............

Mr. Ryun (KS) ....................... ........... X ............. Ms. Lee ................................. X ........... .............

Mr. LaTourette ....................... ........... X ............. Mr. Inslee ............................. X ........... .............

Mr. Manzullo ......................... ........... X ............. Mr. Moore ............................. ........... X .............

Mr. Jones (NC) ...................... ........... X ............. Mr. Gonzalez ......................... X ........... .............

Mr. Ose ................................. ........... X ............. Mr. Capuano ........................ ........... X .............

Mrs. Biggert .......................... ........... X ............. Mr. Ford ................................ X ........... .............

Mr. Green (WI) ...................... ........... ........... ............. Mr. Hinojosa ......................... ........... ........... .............

Mr. Toomey ............................ ........... X ............. Mr. Lucas (KY) ..................... ........... X .............

Mr. Shays .............................. ........... ........... ............. Mr. Crowley .......................... ........... X .............

Mr. Shadegg ......................... ........... X ............. Mr. Clay ................................ X ........... .............

Mr. Fossella .......................... ........... X ............. Mr. Israel .............................. ........... X .............

Mr. Gary G. Miller (CA) ......... ........... X ............. Mr. Ross ............................... ........... X .............

Ms. Hart ................................ ........... X ............. Mrs. McCarthy (NY) .............. ........... X .............

Mrs. Capito ........................... ........... X ............. Mr. Baca .............................. X ........... .............

Mr. Tiberi .............................. ........... X ............. Mr. Matheson ....................... ........... X .............

Mr. Kennedy (MN) ................. ........... X ............. Mr. Lynch ............................. ........... X .............

Mr. Feeney ............................. ........... X ............. Mr. Miller (NC) ..................... X ........... .............

Mr. Hensarling ...................... ........... X ............. Mr. Emanuel ......................... X ........... .............

Mr. Garrett (NJ) ..................... ........... X ............. Mr. Scott (GA) ...................... ........... X .............

Mr. Murphy ............................ ........... X ............. Mr. Davis (AL) ...................... ........... X .............

Ms. Ginny Brown-Waite (FL) ........... X ............. .............................................. ........... ........... .............

Mr. Barrett (SC) .................... ........... X ............. .............................................. ........... ........... .............

Ms. Harris ............................. ........... X ............. .............................................. ........... ........... .............

Mr. Renzi ............................... ........... X ............. .............................................. ........... ........... .............

*Mr. Sanders is an independent, but caucuses with the Democratic Caucus. 

The following other amendments were also considered by the 

Committee:

An amendment in the nature of a substitute offered by Mr. Oxley, no.1, limiting the disclosure of 

certain medical information, establishing a threetier system for victims of identity theft to ensure 

credit is not extended to identity thieves, prohibiting a business from sharing negative information 

about a consumer if they have received a copy of 

a police report indicating an illegal transaction, 

and requiring GAO to report on the role of race 

and gender in the credit granting process, was 

agreed to by a voice vote, as amended. 

An amendment to the amendment in the nature 

of a substitute offered by Mrs. Biggert, no. 1b, requiring credit reporting agencies to notify users of 

32

consumer report address discrepancies and directing the Federal banking regulators to establish 

guidance regarding reasonable policies for lenders’ 

use of a consumer reports when an address discrepancy exists, was agreed to by a voice vote. 

An amendment to the amendment in the nature 

of a substitute offered by Mrs. Kelly, no. 1d, requiring credit reporting agencies to code sensitive 

medical information, was agreed to by a voice 

vote. 

An amendment to the amendment in the nature 

of a substitute offered by Mr. Frank, 1e, requiring 

the credit reporting agencies conduct a reasonable 

reinvestigation to determine whether the disputed 

information is inaccurate and prohibiting furnishers from forwarding information to the credit 

reporting agencies if the furnisher has substantial 

doubts as to its accuracy, was agreed to by a voice 

vote. 

An amendment to the amendment in the nature 

of a substitute offered by Mr. Gillmor, no. 1f, requiring notification of a consumer in the event 

that the number of enquires made with respect to 

the consumer’s report was a key factor that adversely affected a consumer’s credit score, was 

agreed to by a voice vote. 

An amendment to the amendment in the nature 

of a substitute offered by Mr. Baker, no. 1g, clarifying consumers’ ability to obtain one free credit 

report annually from each of the nationwide consumer credit reporting agencies, was agreed to by 

a voice vote. 

An amendment to the amendment in the nature 

of a substitute offered by Mr. Toomey, no. 1h, requiring the Treasury Department to conduct a 

study on the role of technology in fighting identity 

theft, was agreed to by a voice vote. 

An amendment to the amendment in the nature 

of a substitute offered by Mr. Frank of Massachusetts, no. 1i, requiring implementation of the legislation within 4 months instead of 10 months 

after the date of issuance of final regulations, was 

withdrawn. 

An amendment to the amendment in the nature 

of a substitute offered by Mr. Frank of Massachusetts, no. 1j, permitting employees against whom 

an adverse action has been taken based upon an 

investigation of workplace misconduct conducted 

by an outside third party to demand a reinvestigation of any information disputed by the employee, 

was not agreed to by a voice vote. 

An amendment to the amendment in the nature 

of a substitute offered by Mr. Meeks of New York, 

no. 1k, requiring that the Federal Reserve conduct 

a study of further restrictions on offers of credit or 

33

insurance not initiated by consumers, was agreed 

to by a voice vote. 

An amendment to the amendment in the nature 

of a substitute offered by Mr. Meeks of New York, 

no. 1l, requiring that a telephone number be included with any solicitation for a credit transaction not initiated by the consumer, was withdrawn. 

An amendment to the amendment in the nature 

of a substitute offered by Ms. Lee, no. 1m, requiring the Comptroller General conduct a study on 

methods for improving consumers’ financial literacy, was agreed to by a voice vote. 

An amendment to the amendment in the nature 

of a substitute offered by Ms. Carson of Indiana, 

no. 1n, protecting consumers’ rights to obtain a reinvestigation of a consumer dispute directly 

through resellers of consumer reporting information, was agreed to by a voice vote. 

An amendment to the amendment in the nature 

of a substitute offered by Mr. Shadegg, no. 1o, restricting the display and dissemination of a social 

security numbers, was withdrawn. 

An amendment to the amendment in the nature 

of a substitute offered by Mr. Kanjorski, no. 1p, 

extending the uniform national consumer protection standards by 9 years, was not agreed to by a 

voice vote. 

An amendment to the amendment in the nature 

of a substitute offered by Mrs. Maloney, no. 1q, requiring disclosure of an increase in annual percentage rate under certain circumstances, was 

agreed to by a voice vote. 

An amendment to the Maloney amendment to 

the amendment in the nature of a substitute offered by Mr. Bachus, no. 1q(1), requiring the disclosure to include a good faith enumeration, was 

withdrawn. 

An amendment to the amendment in the nature 

of a substitute offered by Mr. Davis of Alabama, 

no. 1r, requiring furnishers to conduct reinvestigations within a reasonable time in case of alleged 

identity theft, was not agreed to by a voice vote. 

An amendment to the amendment in the nature 

of a substitute offered by Mrs. Kelly, no. 1t, extending the phase-in period for credit agencies to 

provide a free report, was withdrawn. 

An amendment to the amendment in the nature 

of a substitute offered by Mr. Inslee, no. 1u, 

amending sections 625 and 626 of the Fair Credit 

Reporting Act, was ruled nongermane by the 

Chair.

34

COMMITTEE OVERSIGHT FINDINGS

Pursuant to clause 3(c)(1) of rule XIII of the Rules of the House 

of Representatives, the Committee made findings that are reflected 

in this report. 

PERFORMANCE GOALS AND OBJECTIVES

Pursuant to clause 3(c)(4) of rule XIII of the Rules of the House 

of Representatives, the Committee establishes the following performance related goals and objectives for this legislation: 

The appropriate Federal regulators will use the authority granted in this bill to combat the growing problem of identity theft by 

assisting consumers in preventing identify theft and in mitigating 

its consequences once the crime has occurred. Federal regulators 

will also make every effort to ensure the smooth operation of the 

national uniform credit reporting system established by the Fair 

Credit Reporting Act that has lowered costs and increased choice 

and convenience for American consumers and has created operational efficiencies for industry. 

NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX

EXPENDITURES

In compliance with clause 3(c)(2) of rule XIII of the Rules of the 

House of Representatives, the Committee adopts as its own the estimate of budget authority, entitlement authority, or tax expenditures or revenues contained in the cost estimate prepared by the 

Director of the Congressional Budget Office pursuant to section 402 

of the Congressional Budget Act of 1974. 

COMMITTEE COST ESTIMATE

The Committee adopts as its own the cost estimate prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act of 1974. 

CONGRESSIONAL BUDGET OFFICE ESTIMATE

Pursuant to clause 3(c)(3) of rule XIII of the Rules of the House 

of Representatives, the following is the cost estimate provided by 

the Congressional Budget Office pursuant to section 402 of the 

Congressional Budget Act of 1974:

U.S. CONGRESS, 

CONGRESSIONAL BUDGET OFFICE, 

Washington, DC, September 3, 2003. 

Hon. MICHAEL G. OXLEY, Chairman, Committee on Financial Services, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 2622, the Fair and Accurate Credit Transactions Act of 2003. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Susanne S. Mehlman. 

Sincerely, 

DOUGLAS HOLTZ-EAKIN, 

Director. 

35

Enclosure. 

H.R. 2622—Fair and Accurate Credit Transactions Act of 2003

Summary: CBO estimates that implementing this legislation would cost about $7 million over the next five years, assuming appropriation of the necessary amounts. The bill could affect direct 

spending and revenues, but CBO estimates that any such impact 

would not be significant. 

H.R. 2622 would provide new consumer protections against identity theft (that is, fraud committed using another person’s identifying information) and would permanently extend the provisions in 

the Fair Credit Reporting Act (FCRA) that prevent states from imposing new restrictions on how financial institutions share consumer information. In 1996, FCRA was amended to create a uniform national standard for consumer protections governing credit 

transactions, and it is scheduled to expire on January 1, 2004. H.R. 

2622 also would give consumers access to certain financial records, 

ensure the accuracy of credit reports, and provide protections of 

consumers’ medical information. 

H.R. 2622 contains an intergovernmental mandate as defined in 

the Unfunded Mandates Reform Act (UMRA), but CBO estimates 

the costs would not exceed the threshold established in UMRA ($59 

million in 2003, adjusted annually for inflation). 

CBO’s assessment of the bill’s impact on the private sector will 

be provided later in a separate report. 

Estimated cost to the Federal Government: CBO estimates that 

implementing this legislation would cost about $7 million over the 

next five years, assuming appropriation of the necessary amounts. 

The bill could affect direct spending and revenues, but CBO estimates that any such impact would not be significant. This legislation would require the Federal Trade Commission (FTC) to prepare 

a model summary of rights for consumers who believe that they 

may be the victims of fraud or identity theft. The FTC also would 

be responsible for developing procedures and forms to be used by 

consumers to report identity theft to creditors and credit reporting 

agencies and for conducting various studies on such topics as the 

accuracy of information contained in credit reports and the impact 

of credit scores and credit-based insurance scores on the availability and affordability of financial products. 

H.R. 2622 would require the federal banking agencies (which includes the Office of the Comptroller of the Currency (OGC), the 

Federal Deposit Insurance Corporation (FDIC), and the Office of 

Thrift Supervision (OTS)) and the National Credit Union Administration (NCUA) to issue various guidelines and regulations concerning identity theft, credit reporting, and use of consumers’ medical information by financial institutions. Finally, this legislation 

would require the Federal Reserve to create a disclosure form for 

financial companies to use when notifying a consumer that negative information has been furnished to a credit reporting agency 

and to study the ability of consumers to avoid unsolicited offers of 

credit and insurance. 

Spending subject to appropriation 

Based on information from the FTC, CBO estimates that the 

studies and additional enforcement effort required under H.R. 2622 

36

would cost that agency $2 million in 2004 and $6 million over the 

2004–2008 period, assuming appropriation of the necessary 

amounts. In addition, this legislation would require the General 

Accounting Office (GAO) to study the role of discrimination in obtaining credit and to study methods for improving financial literacy 

among consumers. CBO estimates that the two GAO studies required under the bill would cost about $1 million in 2004. 

Direct spending and revenues 

The NCUA, the OTS, and the OGC charge fees to cover all their 

administrative costs; therefore, any additional spending by those 

agencies to implement the bill would have no net budgetary effect. 

That is not the case with FDIC, however, which uses deposit insurance premiums paid by banks to cover the expenses it incurs to supervise state-chartered institutions. (Under current law, CBO estimates that the vast majority of thrift institutions insured by the 

FDIC would not pay any premiums for most of the 2004–2013 period.) 

The bill would cause a small increase in FDIC spending but 

would not affect its premium income. Based on information from 

the FDIC, implementing the bill would have a minor impact on the 

agency’s workload. Budgetary effects on the Federal Reserve are recorded as changes in revenues (governmental receipts). CBO estimates that enacting H.R. 2622 would reduce such revenues by less 

than $500,000 a year. 

Impact on state, local, and tribal governments: Title I of H.R. 

2622 would permanently prohibit state and local governments from 

enacting laws that are different from FCRA in certain specified 

cases. Such a preemption of state law is an intergovernmental 

mandate as defined in UMRA, but CBO estimates that it would not 

impose significant costs on state and local governments. Therefore, 

the cost of the preemption would not exceed the threshold established in UMRA ($59 million in 2003 adjusted for inflation). 

Impact on the private sector: CBO’s assessment of the bill’s impact on the private sector will be provided later in a separate report. 

Estimate prepared by: Federal Costs: Susanne Mehlman. Impact 

on State, Local, and Tribal Governments: Sarah Puro. Impact on 

the Private Sector: Paige Piper/Bach. 

Estimate approved by: Peter H. Fontaine, Deputy Assistant Director for Budget Analysis.

FEDERAL MANDATES STATEMENT

The Committee adopts as its own the estimate of Federal mandates prepared by the Director of the Congressional Budget Office 

pursuant to section 424 of the Congressional Budget Act. 

PRIVATE SECTOR MANDATES ESTIMATE

The estimate of private sector mandates provided by the Congressional Budget Office pursuant to section 424(b) of the Congressional Budget Act was not timely filed with the Committee. Pursuant to section 423(f)(2) of the Congressional Budget Act, the Chairman of the Committee shall cause the statement to be published 

37

in the Congressional Record in advance of floor consideration of the 

bill. 

ADVISORY COMMITTEE STATEMENT

No advisory committees within the meaning of section 5(b) of the 

Federal Advisory Committee Act were created by this legislation. 

CONSTITUTIONAL AUTHORITY STATEMENT

Pursuant to clause 3(d)(1) of rule XIII of the Rules of the House 

of Representatives, the Committee finds that the Constitutional 

Authority of Congress to enact this legislation is provided by Article 1, section 8, clause 1 (relating to the defense and general welfare of the United States), and clause 3 (relating to the power to 

regulate foreign and interstate commerce). 

APPLICABILITY TO LEGISLATIVE BRANCH

The Committee finds that the legislation does not relate to the 

terms and conditions of employment or access to public services or 

accommodations within the meaning of section 102(b)(3) of the Congressional Accountability Act. 

SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short title; table of contents 

This section establishes the short title of the bill, the ‘‘Fair and 

Accurate Credit Transactions Act of 2003’’ (the FACT Act), and provides a table of contents. 

Section 2. Definitions 

This section adds several new defined terms to section 603 of the 

Fair Credit Reporting Act, including ‘‘reseller,’’ ‘‘Board,’’ ‘‘credit,’’ 

‘‘creditor,’’ ‘‘credit card,’’ ‘‘Commission,’’ ‘‘debit card,’’ ‘‘electronic 

fund transfer,’’ ‘‘Federal banking agency,’’ ‘‘identity theft,’’ and ‘‘police report.’’ 

With respect to the term ‘‘identity theft,’’ the section includes a 

general definition (i.e., ‘‘a fraud committed using another person’s 

identifying information’’) and gives joint rulemaking authority to 

the Federal Reserve Board and the Federal Trade Commission to 

further define the term. The Committee has granted this authority 

in order to allow for the Board and the Commission to ensure that 

the term remains relevant in light of the continuing evolution of 

identity theft as a crime and the wide variety of techniques employed by identity thieves. The Committee does not intend for the 

Board or the Commission to define the term for other purposes. 

Further, the Committee does not intend for the term ‘‘consumer 

report’’ to be interpreted to include a report to be used in the consideration of an individual’s purchase of insurance primarily for 

business, commercial or agricultural purposes. 

Section 3. Effective dates 

This section specifies effective dates for the provisions of the legislation. Within two months of the date of enactment, the Federal 

Reserve and the Federal Trade Commission are required to jointly 

prescribe final regulations for each provision of the bill, except as 

38

otherwise specified. In exercising their authority under this section, 

the regulators are directed to establish effective dates that are as 

early as possible while also allowing a reasonable time for implementation of the bill’s provisions. No provision of the bill may take 

effect later than 10 months after the date that the regulations required by this section are issued in final form. The section provides 

for a separate effective date for section 701 of the bill, relating to 

the protection of medical information in the financial system. 

TITLE I—UNIFORM NATIONAL CONSUMER PROTECTION STANDARDS

Section 101. Uniform national consumer protection standards made 

permanent 

This section amends section 624 of the Fair Credit Reporting Act 

to remove the January 1, 2004 sunset of the uniform national consumer protection standards and make them permanent. 

TITLE II—IDENTITY THEFT PREVENTION

Section 201. Investigating changes of address and inactive accounts 

This section amends section 605 of the Fair Credit Reporting Act 

to direct the Federal banking agencies and the National Credit 

Union Administration (NCUA), as part of their guidance to depository institutions on identity theft ‘‘red flags’’ (section 206, infra), to 

jointly prescribe regulations requiring credit and debit card issuers 

that receive a request for additional or replacement cards on an existing account shortly after receiving a change of address request 

to notify the cardholder at the former address or as otherwise 

agreed to, or to use other means of validating the address change. 

The section outlines three alternative procedures the card issuer 

may follow in order to provide the cardholder with the additional 

or replacement card if the request for such a card comes shortly 

after a change of address. First, the issuer can notify the cardholder of the request for an additional or replacement card at the 

former address and provide the cardholder a means of promptly reporting incorrect address changes. Second, the card issuer can notify the cardholder of the request for additional or replacement 

cards by other means of communication to which the cardholder 

and the card issuer previously agreed. Third, a card issuer can assess the validity of the change of address request in accordance 

with reasonable policies and procedures established by the card 

issuer pursuant to regulations prescribed by the Federal banking 

agencies and the NCUA pursuant to section 605(k) of the FCRA (as 

added by section 206). 

Because the nature of identity theft and credit card fraud continues to evolve, the Committee believes that responses to identity 

theft must be flexible so that they can be modified as the criminals 

alter their schemes. Accordingly, the Committee has declined to 

specify a period of time between the request for a new card and a 

change of address request that would trigger an issuer’s duty to 

take the steps outlined in this section. The Committee believes that 

30 days would be appropriate under current circumstances, although the Federal banking agencies may find evidence suggesting 

a somewhat shorter or longer time period is more appropriate in 

the future. The Committee does not believe that the card issuer 

39

should be required to take the additional precautions outlined in 

this section if, despite receiving a request for an address change, 

the issuer did not actually change the cardholder’s address for any 

reason (e.g. the card issuer had previously determined that the request for an address change was invalid) or the issuer did not actually issue a replacement card. 

Section 201 also instructs the Federal banking agencies and the 

NCUA to consider, as part of their duties under section 605(k) of 

the FCRA (as added by section 206, infra), whether transactions on 

a credit or deposit account that has been inactive for more than 

two years present a potential ‘‘red flag’’ for identity theft. Should 

that activity be deemed to be a ‘‘red flag,’’ the creditor or depository 

institution will be required to follow reasonable policies and procedures that provide for notice to be given to a consumer in a manner 

reasonably designed to reduce the likelihood of identity theft with 

respect to such account. 

Finally, the section amends section 624(b)(1)(E) of the Fair Credit Reporting Act to clarify that the identity theft prevention protections added to section 605 of the FCRA by this bill are preemptive 

of State law. 

Section 202. Fraud alerts 

This section amends section 605 of the Fair Credit Reporting Act 

to require consumer reporting agencies that operate on a nationwide basis (as defined in section 603(p) of the FCRA) to place fraud 

alerts on consumers’ files in the three circumstances described 

below. A fraud alert is a statement in the consumer’s file that notifies all users that the consumer does not want credit extended 

without special permission through a preauthorized procedure. 

Fraud alerts may be placed on consumer reports in the following 

three situations: 

(1) Upon the direct request of a consumer who asserts in good 

faith a suspicion that the consumer has been or is about to become 

a victim of fraud or a related crime, such as identity theft, a nationwide consumer reporting agency that maintains a file on the 

consumer and has a reasonable belief that it knows the identity of 

the consumer must: (i) include a fraud alert in the consumer’s file 

for at least 90 days (unless the consumer requests that it be removed sooner); (ii) disclose to the consumer that the consumer may 

request a free copy of his or her consumer report within three business days of requesting the fraud alert; (iii) exclude the consumer 

from prescreened offers of credit or insurance for two years (unless 

the consumer requests that such exclusion be rescinded sooner); 

and (iv) refer the information regarding the fraud alert to each of 

the other nationwide consumer reporting agencies, which must 

then fulfill the obligations described in (i), (ii), and (iii) above. 

(2) Upon the direct request of a consumer who contacts a nationwide consumer reporting agency to report details of an identity 

theft and submits evidence that provides the agency with reasonable cause to believe that such identity theft has occurred, the 

agency must, if it maintains a file on the consumer and has a reasonable belief that it knows the identity of the consumer: (i) include 

a fraud alert in the file of the consumer and provide an opportunity 

for the consumer to extend the alert for a period of up to seven 

years (unless the consumer requests that it be removed sooner); (ii) 

40

provide the consumer with the option of including more complete 

information in the consumer’s file, including a telephone number or 

other reasonable means of communication that any person who requests the consumer’s report may utilize for authorization before 

establishing a new credit plan in the name of the consumer; and 

(iii) provide the consumer with at least two free disclosures of his 

or her consumer report during the 12-month period beginning on 

the date of the consumer’s request. Or, 

(3) Upon the direct request of an active duty military consumer 

who contacts a nationwide consumer reporting agency that maintains a file on the consumer and has a reasonable belief that it 

knows the identity of the consumer, the agency must: (i) include an 

active duty alert in the consumer’s file for a period of at least 12 

months (unless the consumer requests that it be removed sooner); 

(ii) exclude the consumer from prescreened offers of credit or insurance for two years (unless the consumer requests that such exclusion be rescinded sooner); and (iii) refer the information regarding 

the active duty alert to each of the other nationwide consumer reporting agencies (which must then fulfill the obligations described 

in (i) and (ii) above). An ‘‘active duty military consumer’’ is defined 

as a consumer in military service who is on active duty or is a reservist performing duty under a call or order to active duty, and 

is assigned to service away from the consumer’s usual duty station. 

A request for a fraud alert must be made directly by the consumer, or directly by an individual acting on behalf of or as a personal representative of the consumer. The Committee used the 

word ‘‘individual’’ instead of ‘‘person’’ to ensure that the provision 

would only apply to specific individuals such as a consumer’s authorized family members or guardians (or attorneys acting as personal representatives), authorized representatives from bona fide 

military service organizations, and not to companies and entities 

such as credit repair clinics. 

Each nationwide consumer reporting agency must establish policies and procedures to comply with the obligations imposed by this 

section, including procedures that allow consumers to request fraud 

alerts in a simple and easy manner, including by telephone. The 

nationwide consumer reporting agencies already provide many of 

these services to consumers on a voluntary basis, and the Committee does not believe that significant changes, if any, to the current policies and procedures will be necessary for purposes of complying with this requirement. 

Any person who obtains a consumer’s consumer report that includes a fraud alert inserted in the consumer’s file pursuant to section 605(i) of the FCRA (as added by section 202 of this legislation) 

may not establish a new credit plan in the name of the consumer 

for a person other than the consumer without utilizing reasonable 

policies and procedures to form a reasonable belief that the user of 

the report knows the identity of the person for whom such new 

plan is established, which may include obtaining authorization or 

preauthorization of the consumer at a telephone number designated by the consumer or by such other reasonable means agreed 

to. The Committee does not intend for the presence of a fraud alert 

to interfere with transactions on an existing credit account, such as 

an authorization request in connection with the consumer’s use of 

an existing credit card. The Committee notes that it has specifiVerDate jul 14 2003 07:24 Sep 05, 2003 Jkt 019006 PO 00000 Frm 00040 Fmt 6659 Sfmt 6602 E:\HR\OC\HR263.XXX HR263
41

cally declined to specify what a user’s reasonable policies and procedures should be with respect to verifying the consumer’s identity. 

The Committee expects that, in developing their policies and procedures, users will examine a variety of mechanisms, including those 

required by other existing laws, such as the relevant portions of the 

regulations issued under section 326 of the USA PATRIOT Act, relating to customer identification programs. 

A reseller that is notified of the existence of a fraud alert in a 

consumer report must communicate to each person procuring a consumer report with respect to such consumer the existence of the 

fraud alert. 

The Committee notes that the obligations described above apply 

only to those consumer reporting agencies that compile and maintain files on consumers on a nationwide basis. However, if a consumer contacts a consumer reporting agency that does not maintain files on a nationwide basis to communicate a suspicion that 

the consumer has been or is about to become a victim of fraud or 

related crime, that agency must provide the consumer with information on how to contact the Federal Trade Commission and the 

nationwide consumer reporting agencies to obtain more detailed information and request a fraud alert. 

Consumer reporting agencies are required to transmit the fraud 

alert information to users of consumer reports in a manner that facilitates clear and conspicuous viewing of the alert by the user. 

Section 203. Truncation of credit card and debit card account numbers 

This section amends section 605 of the Fair Credit Reporting Act 

to prohibit companies that accept credit or debit cards from printing expiration dates or more than the last 5 digits of a card number on any electronically printed receipt provided to the cardholder 

at the point of sale or transaction, with certain exceptions. This 

limitation does not apply to transactions in which the sole means 

of recording the person’s credit card or debit card number is by 

handwriting or by an imprint or copy of the card. This section becomes effective three years from the date of enactment with respect 

to any device for processing credit and debit card transactions that 

is in use before January 1, 2005, and one year from date of enactment for devices that are first put into use on or after January 1, 

2005. These effective dates are designed to allow merchants to 

make an orderly transition to meet the requirements imposed by 

this section. 

Section 204. Summary of rights of identity theft victims 

This section amends section 609 of the Fair Credit Reporting Act 

to direct the FTC, in consultation with the Federal banking agencies and the NCUA, to prepare a model summary of rights under 

the FCRA for consumers who believe they may be victims of fraud 

or identity theft involving credit, electronic fund transfers, or accounts or transactions at or with a financial institution, detailing 

the procedures for remedying the effects of the fraud. When a consumer contacts a consumer reporting agency to report a suspicion 

of applicable fraud or identity theft, the consumer reporting agency 

is required to provide the consumer with the FTC’s model summary 

42

of rights, and information on how to contact the FTC for more information. 

Section 205. Blocking of information resulting from identity theft 

This section amends section 605 of the Fair Credit Reporting Act 

to require consumer reporting agencies to block certain information 

on a consumer credit report resulting from an alleged identity 

theft. To obtain a block, a consumer must provide the consumer reporting agency with appropriate proof of identity; a police report 

(as defined in section 2 of the bill) evidencing the consumer’s identity theft claim; an identification of the information on the consumer credit report that arises out of the alleged identity theft; and 

confirmation that the information is not information relating to any 

transaction by the consumer. Within 5 business days of receiving 

this information, the consumer reporting agency must block the information. The consumer reporting agency is also required to notify 

promptly the entity that furnished the blocked information that the 

information may be the result of identity theft, that a police report 

has been filed, that a block has been requested, and the effective 

date of the block. 

If a consumer reporting agency that has placed a block on a consumer’s file reasonably determines that (1) the information was 

blocked in error or a block was requested by the consumer in error; 

(2) the information was blocked (or requested to be blocked) on the 

basis of a misrepresentation of fact by the consumer; or (3) the consumer knowingly obtained goods, services or money as a result of 

the block, then the consumer reporting agency may decline to 

block, or may rescind a block of the information. If a block is declined or rescinded, the consumer reporting agency must notify the 

affected consumer promptly. 

The blocking provisions of this section do not apply to check services companies, deposit account information service companies, and 

resellers of consumer credit reports under certain conditions. 

Nothing in this section requires a consumer reporting agency to 

prevent a Federal, State or local law enforcement agency from accessing blocked information in a consumer credit file to which the 

law enforcement agency could otherwise obtain access under the 

FCRA. 

Section 206. Establishment of procedures for depository institutions 

to identify possible instances of identity theft 

This section amends section 605 of the Fair Credit Reporting Act 

to direct the Federal banking agencies and the NCUA, in consultation with the FTC, to jointly establish, and update as necessary, 

guidelines for insured depository institutions to identify and ‘‘red 

flag’’ patterns, practices, and specific forms of activity that indicate 

the possible existence of identity theft. The section also directs the 

same regulators to jointly prescribe regulations requiring insured 

depository institutions to adopt reasonable policies and procedures 

for implementing the ‘‘red flag’’ guidelines to identify possible risks 

to customer accounts or to the institutions’ safety and soundness. 

Those policies and procedures may not be inconsistent with, or duplicative of, the customer identification procedures required under 

section 326 of the USA PATRIOT Act (31 U.S.C. § 5318(l)). 

43

The Committee intends the guidelines required by this section to 

provide flexibility given the ever changing nature of identity theft 

and related crimes. The Committee believes that the Federal banking agencies and the NCUA are equipped to establish broad parameters for such guidelines, but that individual insured depository institutions are most appropriately situated to determine how best to 

develop and implement the required policies and procedures. The 

Committee believes that, in the case of account opening procedures, 

insured depository institution’s policies and procedures pursuant to 

section 326 of the USA PATRIOT Act should be sufficient for purposes of this section. 

Section 207. Study on the use of technology to combat identity theft 

This section directs the Secretary of the Treasury, in consultation 

with the Federal banking agencies, the FTC, and other specified 

public and private sector entities, to conduct a study of the use of 

biometrics and other similar technologies to reduce the incidence of 

identity theft. The section includes a one-year authorization of appropriations needed to carry out the study, and directs the Treasury Department to submit a report to Congress within 6 months 

of the date of enactment of the legislation containing the findings 

of the study and any recommendations for legislative or administrative action. 

TITLE III—IMPROVING RESOLUTION OF CONSUMER DISPUTES

Section 301. Coordination of consumer complaint investigations 

This section amends section 621 of the Fair Credit Reporting Act 

to direct those consumer reporting agencies that conduct business 

on a nationwide basis to develop and maintain procedures for referring consumer complaints of identity theft and requests for blocks 

or fraud alerts to the other nationwide agencies, and to provide the 

FTC with an annual summary of this information. That summary 

may be a brief description of the estimated number of calls received 

pertaining to identity theft, the number of fraud alerts requested, 

and other issues which may be relevant. The FTC, in consultation 

with the Federal banking agencies and the NCUA, is directed to 

develop model forms and model standards for identity theft victims 

to report fraud to creditors and consumer reporting agencies. The 

Committee believes that consultations with the Federal banking 

agencies and the NCUA in developing the form and procedures is 

important in light of the fact that depository institutions will likely 

receive the forms from consumers. The Committee notes that the 

model form will not be a substitute for a police report if a police 

report is required in order for the consumer to exercise his or her 

rights under the provisions of this legislation. 

Section 302. Notice of dispute through reseller 

This section amends section 611 of the Fair Credit Reporting Act 

to require that consumer reporting agencies reinvestigate consumer 

disputes forwarded to them by resellers of credit reports (such as 

intermediaries who consolidate reports for mortgage lenders). The 

Committee notes that a consumer reporting agency has no obligation to reinvestigate information if the reseller submitting the reVerDate jul 14 2003 07:24 Sep 05, 2003 Jkt 019006 PO 00000 Frm 00043 Fmt 6659 Sfmt 6602 E:\HR\OC\HR263.XXX HR263
44

quest did not obtain the information in question from the consumer 

reporting agency. 

Section 302 also imposes a reinvestigation obligation on resellers. 

If a reseller receives a notice from a consumer of a dispute concerning the completeness or accuracy of any item of information 

contained in a consumer report on the consumer produced by the 

reseller, the reseller must, within 5 business days and free of 

charge, determine the completeness or accuracy of the information 

in question and either correct it (if the error is the reseller’s), or 

convey the notice of dispute with any relevant information to the 

consumer reporting agency that provided the information (if the 

error is not the reseller’s). 

Section 303. Reasonable reinvestigation required 

This section amends section 611 of the Fair Credit Reporting Act 

to provide that when a consumer disputes the accuracy of information contained in a consumer credit report, the consumer reporting 

agency that prepared the report must conduct a reasonable reinvestigation to determine whether the disputed information is inaccurate. 

Section 304. Duties of furnishers of information 

This section makes several changes to section 623(a) of the Fair 

Credit Reporting Act, which governs the legal duties of persons 

that furnish information to consumer reporting agencies. 

First, the section modifies the standard of care applicable to furnishers of information, to provide that they may not report information to a consumer reporting agency if they know or have reasonable cause to believe that the information is inaccurate. The 

term ‘‘reasonable cause to believe that the information is inaccurate’’ means, based on the furnisher’s procedures designed to report accurate information, that the furnisher has actual knowledge, 

other than solely allegations by the consumer, which would cause 

a reasonable person to have substantial doubts about the accuracy 

of the information. This ‘‘reasonable cause to believe’’ standard is 

based on actual knowledge of the furnisher of factual information 

that would cause a reasonable person to believe that the information is not accurate. It is the Committee’s view that if a furnisher 

has followed reasonable practices to ensure the accuracy of information, it need take no further action unless the consumer provides factual information to the furnisher that, upon review by the 

furnisher, raise substantial doubt regarding the information’s accuracy. 

Second, this section requires a person that regularly furnishes information to nationwide consumer reporting agencies to maintain 

reasonable procedures designed to ensure that the information furnished is accurate. While this section is intended to promote the accuracy of information reported to consumer reporting agencies, it 

does not require furnishers to guarantee the accuracy of each piece 

of information provided to a nationwide consumer reporting agency. 

Rather, it requires that the furnisher have a reasonable belief that 

the information is accurate, based on the furnisher’s regular business practices and procedures. This is a similar standard to that 

adopted by the Treasury and the Federal banking agencies for customer identification under section 326 of the USA PATRIOT Act. 

45

Third, this section provides consumers with the ability to request 

a reinvestigation of information contained in a consumer report directly with the furnisher of information. A consumer who seeks to 

dispute the accuracy of information contained in a report provided 

by a nationwide consumer reporting agency directly with a furnisher must provide a dispute notice to the address specified by the 

furnisher for those notices. The furnisher may specify such address 

in any materials provided to the consumer in connection with the 

consumer’s relationship with the furnisher, or upon the request of 

the consumer. The notice of dispute must clearly identify the specific information being disputed and explain the basis for the dispute. The furnisher must then conduct an investigation with respect to the disputed information, review all relevant information 

provided by the consumer with the notice of dispute, and complete 

the investigation and report the results to the consumer, before the 

expiration of the period under section 611(a)(1) within which a consumer reporting agency would be required to complete its investigation if the dispute were initiated through such agency. The furnisher may report the results to the consumer in writing, orally, or 

electronically (if the consumer has provided an electronic address 

to the furnisher). If the investigation discloses that the information 

reported was inaccurate, the furnisher must promptly thereafter 

report the accurate information found as a result of the investigation to each nationwide consumer reporting agency to which the 

furnisher provided the inaccurate information. 

The purpose of the provision addressing the ability of a consumer 

to dispute information with the furnisher is to permit a consumer 

to raise disputes directly with the furnisher with which the consumer has a relationship, rather than raising those disputes initially with a consumer reporting agency with which the consumer 

does not have an ongoing relationship. A consumer seeking to dispute the accuracy of information with a furnisher must ‘‘directly 

provide a dispute notice to the address specified by the person for 

such notices.’’ The notice must be provided by the consumer and 

not by a third party, such as a credit repair clinic, and the dispute 

must be submitted to the address specified by the furnisher for this 

purpose. Nothing in this provision is intended to preclude a consumer’s authorized family member or guardian (or attorneys acting 

as personal representatives), or authorized representatives from 

bona fide military service organizations, from submitting a dispute 

notice on behalf of the consumer, nor is it intended to preclude a 

furnisher from using a service organization to process disputes on 

the furnisher’s behalf. 

This section is intended to emphasize the importance of furnishing accurate information to consumer reporting agencies without imposing unreasonable burdens on those that furnish that information. The Committee intends that the new duties imposed by 

this section will be interpreted and enforced in a manner that enhances the accuracy of credit reports but does not discourage or impede the furnishing of information to consumer reporting agencies. 

Section 305. Prompt investigation of disputed consumer information 

This section requires the FTC and the Federal Reserve to jointly 

study the performance of consumer reporting agencies and furnishers of credit reporting information in complying with the Fair 

46

Credit Reporting Act’s procedures and timelines for the prompt investigation and correction of disputed information in a consumer’s 

credit file, as well as the completeness of information furnished, 

and report to Congress within 6 months of the date of enactment 

of this legislation with any appropriate recommendations to ensure 

promptness and full compliance. 

TITLE IV—IMPROVING ACCURACY OF CONSUMER RECORDS

Section 401. Reconciling addresses 

This section amends section 605 of the Fair Credit Reporting Act 

to require a nationwide consumer reporting agency that receives 

and processes a request for a consumer credit report that includes 

an address for the consumer that substantially differs from the addresses in the consumer’s file to notify the requester of the discrepancy. The notification need not include any additional information 

other than that a discrepancy exists. Nothing in this section is to 

be construed as requiring a requester of a consumer report to provide a consumer’s address to a consumer reporting agency. 

The Federal banking agencies and the NCUA are directed to 

jointly prescribe regulations providing guidance to users of consumer credit reports on reasonable policies and procedures they 

should follow after receiving a notice of address discrepancy from 

a consumer reporting agency. The regulations must also describe 

reasonable policies and procedures for use by a user of a consumer 

report who receives a notice of discrepancy if the user establishes 

a continuing relationship with the consumer, and the user regularly and in the ordinary course of business furnishes information 

to the consumer reporting agency from which the notice of discrepancy was obtained, to reconcile the consumer’s address with the 

consumer reporting agency by furnishing such address to such 

agency as part of information regularly furnished by the user for 

the period in which the relationship was established. This section 

is intended to require consumer reporting agencies to notify a user 

of a discrepancy, with a further obligation for that user to utilize 

reasonable policies and procedures to resolve those discrepancies. 

The Committee does not intend to place an obligation on consumer 

reporting agencies to affirmatively resolve discrepancies directly 

with the consumers. 

Section 402. Prevention of repollution of consumer reports 

This section amends section 623 of the Fair Credit Reporting Act 

to provide that if a consumer submits a police report to a person 

who furnishes information to a consumer reporting agency, and the 

consumer states that information maintained by the furnisher resulted from identity theft, the furnisher may not furnish the information to any consumer reporting agency, unless the person subsequently knows or is informed by the consumer that the information 

is correct. 

Section 403. Notice by users with respect to fraudulent information 

This section amends section 615 of the Fair Credit Reporting Act 

to require debt collection agents who learn that information in a 

consumer credit report is the result of identity theft or is otherwise 

fraudulent to either notify its principal (if the principal is the 

47

source of the relevant information) or, if the information originated 

from a source other than the debt collector’s principal, the consumer reporting agency that prepared the report. Upon the request 

of the consumer, the debt collector must provide the consumer with 

all the information which the consumer would be entitled to receive 

if the information related to the consumer other than by reason of 

identity theft. 

Section 404. Disclosure to consumers of contact information for 

users and furnishers of information in consumer reports 

This section amends section 609 of the Fair Credit Reporting Act 

to require that a credit report provided to a consumer at the consumer’s request include the addresses of entities that have either 

furnished information appearing on the report or have recently requested copies of the consumer’s report, as well as customer service 

phone numbers if provided by the entity to the consumer reporting 

agency. 

Section 405. FTC study of the accuracy of consumer reports 

This section directs the FTC to conduct an ongoing study of the 

accuracy and completeness of information contained in consumer 

reports, and to submit biennial reports to Congress on its findings 

and conclusions—together with such recommendations for legislative and administrative action as the FTC deems appropriate—over 

an eight-year period, beginning six months from the date of enactment of this bill. Within two years of the submission of the final 

periodic report, the FTC is required to submit a final report to Congress on the study. 

TITLE V—IMPROVEMENTS IN USE OF AND CONSUMER ACCESS TO

CREDIT INFORMATION

Section 501. Free reports annually 

This section amends section 612 of the Fair Credit Reporting Act 

to allow consumers to request annually a free copy of their credit 

report. All consumers may directly request a free copy of their credit report annually from each consumer reporting agency that compiles and maintains files on consumers on a nationwide basis. Consumers who are unemployed, on welfare, or believe their files contain inaccurate information due to fraud may request a free credit 

report once every year from each regional and local consumer reporting agency in addition to a credit report from each national 

consumer reporting agency. 

Section 502. Disclosure of credit scores 

This section amends section 609 of the Fair Credit Reporting Act 

to require consumer reporting agencies to make available to consumers (for a reasonable fee) upon request the consumer’s current 

or most recently calculated credit score, as well as the range of 

scores possible, the top 4 negative key factors used, the date the 

score was created, and the name of the company providing the underlying file or score. If a consumer requests a credit file, then the 

agency must notify the consumer that the consumer may request 

and obtain a credit score. The disclosure of the key factors is intended to be consistent with the provisions of the Equal Credit OpVerDate jul 14 2003 07:24 Sep 05, 2003 Jkt 019006 PO 00000 Frm 00047 Fmt 6659 Sfmt 6602 E:\HR\OC\HR263.XXX HR263
48

portunity Act (ECOA) requiring a creditor making an adverse action to disclose the principal reasons in a credit score that most 

contributed to the adverse action. 

Consumer reporting agencies that do not distribute credit scores 

in connection with residential real property loans or develop scores 

to assist credit providers in understanding a consumer’s general 

credit behavior and predicting the future credit behavior of the consumer are not required to develop or disclose any scores under this 

section. Consumer reporting agencies that distribute scores developed by others are not required to provide further explanation of 

them or to process related disputes, other than by providing the 

consumer with contact information regarding the person who developed the score or its methodology, unless the agency has further 

developed or modified the score itself. Consumer reporting agencies 

are not required to maintain credit scores in their files. 

The credit score provided to the consumer by the consumer reporting agency must be derived from a credit scoring model that is 

widely distributed by the agency in connection with mortgage loans 

or credit risk analysis and the agency must include a disclosure to 

the consumer stating that the information and credit scoring model 

may be different than that used by a particular lender. 

While the consumer reporting agency may charge a reasonable 

fee for the score, the Committee intends that this reasonable fee 

not be used to cover profits and costs for developing and providing 

the free credit report required to be made available under section 

501. In disclosing the top negative key factors affecting a consumer’s credit score, if a negative key factor is the number of 

enquiries made (the number of times the agency provided the consumer’s report to various users), then that factor must be included 

in the disclosure even if it is not among the top 4 negative key factors. 

If a consumer applies for a mortgage loan, and the mortgage 

lender uses a credit score in connection with an application by the 

consumer for a closed end loan or establishment of an open end 

consumer loan secured by 1 to 4 units of residential real property, 

then the mortgage lender is required to provide the consumer with 

a free copy of the consumer’s credit score. In addition, the lender 

must provide a copy of the information on the range of scores possible, the top 4 negative key factors used, the date the score was 

created, and the name of the company providing the underlying file 

or score, to the extent that the information is obtained from a consumer reporting agency or developed and used by the lender. Beyond this information provided to the lender by a third party score 

provider, the lender is only required to provide a notice to the home 

loan applicant. This notice includes the contact information of each 

agency providing the credit score used, and provides specific language to be disclosed to educate consumers about the use and 

meaning of their credit scores and how to ensure their accuracy. 

A mortgage lender that uses an automated underwriting system 

to underwrite a loan or otherwise obtains a credit score from someone other than a consumer reporting agency may satisfy their obligation to provide the consumer with a credit score by disclosing a 

credit score and associated key factors supplied by a consumer reporting agency. However, if the lender uses a numerical credit 

score generated by an automated underwriting system used by the 

49

Federal National Mortgage Association or the Federal Home Loan 

Mortgage Corporation or their affiliates, and the score is disclosed 

to the lender, then that score must be disclosed by the lender to 

the consumer. 

Mortgage lenders are not required by this section to explain the 

credit score and the related copy of information provided to the 

consumer, to disclose any information other than the credit score 

or negative key factor, disclose any credit score or related information obtained by the lender after a loan has closed, provide more 

than 1 disclosure per loan transaction, or provide an additional 

score disclosure when another person has already made the disclosure to the consumer for that loan transaction. 

The only obligation for a mortgage lender providing a credit score 

under this section is to provide a copy of the information used and 

received from the consumer reporting agency. A mortgage lender is 

not liable for the content of that information or the omission of any 

information in the report provided by the agency. This section and 

the requirement for mortgage lenders to provide credit scores do 

not apply to the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation or their affiliates. 

Any provision in a contract prohibiting the disclosure of credit 

scores by a person who makes or arranges loans or a consumer reporting agency is void, and a lender will not have liability under 

any contractual provision for disclosure of a credit score pursuant 

to this section. 

This section also amends section 605 of the Fair Credit Reporting 

Act to provide that if a consumer reporting agency furnishes a consumer report that contains any credit score or other risk score or 

other predictor, the report must include a clear and conspicuous 

statement that the number of enquiries was a key factor (as defined in section 609(e)(2)(B)) that adversely affected a credit score 

or other risk score or predictor if that predictor was in fact one of 

the key factors that most adversely affected a credit score. This 

statement will be made in those instances in which the number of 

enquiries had an influence on the consumers credit score, and it 

will thus alert a user of the consumer report when the number of 

enquiries has had an adverse effect on the consumer’s credit score. 

Section 503. Simpler and easier method for consumers to use notification system 

This section amends the requirements contained in sections 604 

and 615 of the Fair Credit Reporting Act that consumer reporting 

agencies establish and maintain a notification system for consumers to exclude themselves from lists used for unsolicited prescreened offers or credit or insurance to require additionally that 

the notification system be simple and easy to use. Anyone using a 

consumer report in connection with an unsolicited insurance or 

credit transaction must include, in the required disclosure statement to the consumer, a description in a simple and easy to understand format of how the consumer can prohibit his file from being 

used for unsolicited insurance and credit offers including the simple and easy-to-use method for notifying the consumer reporting 

agencies. The Committee believes that most current notification 

systems (such as toll-free phone numbers with straightforward 

choices) and disclosures permit consumers to notify consumer reVerDate jul 14 2003 07:24 Sep 05, 2003 Jkt 019006 PO 00000 Frm 00049 Fmt 6659 Sfmt 6602 E:\HR\OC\HR263.XXX HR263
50

porting agencies of their desire to limit pre-screened offers in a 

simple and easy manner. This section is intended to ensure that as 

technology evolves and different notification and disclosure methods are experimented with that consumers will be protected by a 

standard requiring that any new system continue to be simple and 

easy to understand and use. 

Section 504. Requirement to disclose communications to a consumer 

reporting agency 

This section amends section 623(a) of the Fair Credit Reporting 

Act to provide that if any financial institution that extends credit 

and regularly and in the ordinary course of business furnishes information to a nationwide consumer reporting agency (as described 

in section 603(p) of the FCRA) furnishes negative information to a 

consumer reporting agency regarding credit extended to the consumer, then the financial institution must provide a written notice 

to the consumer that they have done so. The notice must be provided to the customer prior to, or no later than 30 days after, furnishing negative information to the nationwide consumer reporting 

agency. The required notice must be clear and conspicuous and 

may be included on or with any materials provided to the customer, including a billing statement or notice of default. If the notice is provided to the customer prior to the furnishing of the negative information, the notice may not be included in the initial disclosures required under section 127(a) of the Truth in Lending Act, 

but may be included in other communications with the customer. 

Once the financial institution provides a notice to the customer, the 

financial institution may submit additional negative information to 

a nationwide consumer reporting agency with respect to the same 

transaction, extension of credit, account, or customer without providing an additional notice to the customer. 

The Federal Reserve Board must prescribe a brief model disclosure, not to exceed 30 words, for financial institutions to use in 

their efforts to comply with this requirement. If a financial institution uses the model developed by the Board it shall be deemed to 

be in compliance with the requirement of this section. However, a 

financial institution is not required to use the model disclosure. 

This section does not require a financial institution that has provided a customer with a disclosure to furnish negative information 

to a consumer reporting agency. 

A financial institution is not liable for failure to perform the duties required by this section if, at the time of the failure, the financial institution maintained reasonable policies and procedures to 

comply with the requirement. For example, a financial institution 

would not be liable for a failure to provide the disclosure if the financial institution maintained reasonable policies and procedures 

to comply, but was prohibited by law from contacting the consumer. 

Section 505. Study of effects of credit scores and credit-based insurance scores on availability and affordability of financial products 

This section requires the FTC, in consultation with the Office of 

Fair Housing and Equal Opportunity of the Department of Housing 

and Urban Development, to study the effects of the use of credit 

scores and insurance scores on the availability and affordability of 

51

financial products and services, the accuracy of the causality of the 

score factors and historical losses, whether the use of those scores 

results in any disparate impact and whether financial underwriting 

systems could achieve comparable results through factors with less 

disparate impact, the factors used in credit scoring systems, and 

the effects of variables that are not considered. The FTC must seek 

public participation and report on its study with legislative recommendations within 18 months of the date of enactment of this 

bill. The Committee expects that the Commission and HUD will 

seek assistance from the Federal and State financial regulators 

that have jurisdiction over financial services providers and shall 

take into account currently existing studies and legal analysis. 

Section 506. GAO study on disparate impact of credit system 

This section requires the General Accounting Office to study the 

credit system to determine the extent to which, if any, discrimination exists with regard to the availability and the terms of credit 

which has a disparate impact on the basis of race, color, income 

and education level, geographic location, age, sex, sexual orientation, national origin, or marital status and the nature of any discriminatory effect. The Committee intends that the GAO will seek 

assistance from the Board and other Federal and State financial 

regulators that have jurisdiction over credit providers for the relevant portions of the study. The GAO must submit a report to Congress on the findings of the study before the end of the two-year 

period beginning on the date of enactment of this legislation. 

Section 507. Analysis of further restrictions on offers of credit or insurance 

This section directs the Federal Reserve Board to study the ability of consumers to opt out of receiving unsolicited written offers 

of credit or insurance and the impact further restrictions on those 

offers would have on consumers. The Board is required to report 

to Congress within 12 months of the date of enactment of this legislation on the current statutory or voluntary mechanisms for consumers to opt out of receiving unsolicited credit and insurance offers, the extent to which the mechanisms are being used, the benefits to consumers of receiving the offers, whether consumers incur 

significant costs as a result of the offers and whether further restrictions on the offers would affect consumers’ costs, the availability of credit or insurance, consumers’ knowledge about new 

products and services, competition among lenders and insurers, 

and the ability of lenders and insurers to offer products to traditionally underserved consumers. 

Section 508. Study on the need and the means for improving financial literacy among consumers 

This section directs the General Accounting Office to study consumer knowledge of credit reports, credit scores, the credit dispute 

resolution process, and methods for improving consumer financial 

literacy. The GAO is directed to report its findings to Congress 

within 9 months of the date of enactment of this legislation. The 

study will examine the number of consumers who view their credit 

reports, under what conditions consumers obtain their reports, the 

extent of consumer knowledge of the credit system data collection 

52

process and how to obtain a credit report, and consumer understanding of factors that positively or negatively affect credit scores. 

Section 509. Disclosure of increase in APR under certain circumstances 

This section requires that credit card issuers, in any disclosure 

or statement required under the Fair Credit Reporting Act for unsolicited credit card offers (a prescreening disclosure to a consumer 

under section 615(d) of the FCRA), clearly and conspicuously disclose the ability of the issuer to increase any annual percentage 

rate applicable to a credit card account, or to remove or increase 

any introductory annual percentage rate applicable to the account, 

for reasons other than actions or omissions of the cardholder that 

are directly related to such account. The Federal Reserve Board, in 

consultation with the other Federal banking agencies and the 

NCUA, may develop any guidelines necessary to assure that the required clear and conspicuous disclosure is provided in a prominent 

location and that it includes appropriate model disclosure statements. 

TITLE VI—PROTECTING EMPLOYEE MISCONDUCT INVESTIGATIONS

Section 601. Certain employee investigation communications excluded from definition of consumer report 

This section amends section 603 of the Fair Credit Reporting Act 

to provide that communications to an employer by outside third 

parties hired to investigate employee misconduct or compliance 

with the employer’s preexisting written policies will not be considered ‘‘consumer reports’’ (meaning that advance notice or permission would be required). If any adverse action is taken based on the 

communication, the employer is required to disclose to the employee a summary containing the nature and substance of the communication (although certain sources of information are protected). 

TITLE VII—LIMITING THE USE AND SHARING OF MEDICAL

INFORMATION IN THE FINANCIAL SYSTEM

Section 701. Protection of medical information in the financial system 

This section amends section 604 of the Fair Credit Reporting Act 

to generally prohibit a consumer reporting agency from providing 

credit reports that contain medical information for employment 

purposes or in connection with a credit or insurance transaction 

(including annuities). Medical information may be included in a report as part of an insurance transaction only with the consumer’s 

affirmative consent. Medical information may be included in a report for employment or credit purposes only where the information 

is relevant for purposes of processing or approving employment or 

credit requested by the consumer and the consumer has provided 

specific written consent, or if the information meets certain specific 

requirements and is restricted or reported using codes that do not 

identify or infer the specific provider or nature of the services, 

products, or devices to anyone other than the consumer (except for 

certain insurance purposes). 

53

The section establishes that creditors are not allowed to obtain 

or use medical information for credit granting purposes. Certain exceptions are provided where authorized by Federal law, for insurance activities (including annuities), and where determined to be 

necessary and appropriate by the financial regulators. The Committee recognizes that there are limited circumstances in which a 

creditor may require medical information in determining a consumer’s eligibility or continued eligibility for credit, for example, to 

confirm the use of loan proceeds in connection with loans to finance 

a specific medical procedure or device, or to verify a consumer’s 

death or disability in connection with credit-related debt cancellation agreements, and considers the limited use of medical information in these circumstances and any similar circumstances the financial regulators may identify, to be a necessary and appropriate 

use of medical information for purposes of this section. 

Additional restrictions are imposed to limit the redisclosure of 

any medical information received in connection with certain insurance or credit transactions furnished by a consumer reporting 

agency or authorized under certain laws or regulations pursuant to 

the provisions of subsection (g) added by this section. Companies 

that receive medical information through any of the exceptions provided by subsection (g) are prohibited from further disclosure of the 

information to any other person except as necessary to carry out 

the original purpose for which the information was initially provided or as otherwise permitted by statute, regulation, or order. 

This section further amends section 603(d) of the Fair Credit Reporting Act to restrict the disclosure of certain medical-related information among companies affiliated by common ownership or corporate control. Except as authorized under certain Federal law, 

regulation, or order, or under certain applicable State insurance 

authority, the exclusions permitted in section 603(d)(2) from the 

definition of a ‘‘consumer report’’ shall not apply with respect to information disclosed among affiliates or companies related by common ownership if the information is either medical information or 

information that is based on payments for medical products or 

services, or any aggregate list of identified consumers based on 

payment transactions for medical products or services. 

Section 702. Confidentiality of medical contact information in credit 

reports 

This section amends section 623 of the Fair Credit Reporting Act 

to establish that companies (including their agents or assignees) 

whose primary business is providing medical services, products, or 

devices to consumers and who furnish information to a consumer 

reporting agency are deemed to be a ‘‘medical information furnisher’’. Medical information furnishers must identify themselves 

as such before furnishing information on a consumer to a consumer 

reporting agency. If a medical information furnisher is furnishing 

information to a consumer reporting agency on a consumer but not 

notifying the agency as required of its status, then the FTC is directed to take action as necessary, within its jurisdiction, to ensure 

the company’s compliance. 

This section also amends section 605 of the Fair Credit Reporting 

Act to provide that where a medical information furnisher has notified the consumer reporting agency of its status with respect to a 

54

consumer, the consumer reporting agency may not include in a consumer report on that consumer the name, address, or telephone 

number of the furnisher unless that contact information is encoded 

in a manner that does not identify or infer to anyone other than 

the consumer the specific company or the nature of the medical 

services, products, or devices provided. An exception is provided for 

consumer reports provided to insurance companies for insurance 

activities (including annuities) other than property and casualty insurance. The encoding requirement for medical information furnisher contact information applies regardless of the dollar amounts 

involved. 

The Committee does not intend to prohibit the inclusion in a consumer report of information relating to the consumer’s place of employment. Rather, this section is intended to ensure that consumers 

who have medical transactions in their credit files are protected by 

requiring that the contact information be encoded so that third parties can not infer any health implications relating to the consumer.

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

existing law in which no change is proposed is shown in roman): 

CONSUMER CREDIT PROTECTION ACT 

* * * * * * *

TITLE VI—CONSUMER CREDIT REPORTING

Sec. 

601. Short title. 

* * * * * * *

ø605. Requirements relating to information contained in consumer reports.¿

605. Requirements relating to information contained in consumer reports and to 

identity theft prevention

* * * * * * *

§ 601. Short title 

This title may be cited as the Fair Credit Reporting Act. 

* * * * * * *

§ 603. Definitions and rules of construction 

(a) * * *

* * * * * * *

(d) CONSUMER REPORT.—

(1) * * *

(2) EXCLUSIONS.—øThe term¿ Except as provided in paragraph (3), the term ‘‘consumer report’’ does not include—

(A) * * *

* * * * * * *

(D) a communication described in subsection (o) or (q). 

* * * * * * *

55

(3) RESTRICTION ON SHARING OF MEDICAL INFORMATION.—Except for information or any communication of information disclosed as provided in section 604(g)(3), the exclusions in paragraph (2) shall not apply with respect to information disclosed 

to any person related by common ownership or affiliated by corporate control if—

(A) the information is medical information; or 

(B) the information is an individualized list or description based on a consumer’s payment transactions for medical products or services, or an aggregate list of identified 

consumers based on payment transactions for medical 

products or services. 

* * * * * * *

(q) EXCLUSION OF CERTAIN COMMUNICATIONS FOR EMPLOYEE IN- VESTIGATIONS.— (1) COMMUNICATIONS DESCRIBED IN THIS SUBSECTION.—A 

communication is described in this subsection if—

(A) but for subsection (d)(2)(D), the communication would 

be a consumer report; 

(B) the communication is made to an employer in connection with an investigation of—

(i) suspected misconduct relating to employment; or 

(ii) compliance with Federal, State, or local laws and 

regulations, the rules of a self-regulatory organization, 

or any preexisting written policies of the employer; 

(C) the communication is not made for the purpose of investigating a consumer’s credit worthiness, credit standing, 

or credit capacity; and 

(D) the communication is not provided to any person except—

(i) to the employer or an agent of the employer; 

(ii) to any Federal or State officer, agency, or department, or any officer, agency, or department of a unit of 

general local government; 

(iii) to any self-regulatory organization with regulatory authority over the activities of the employer or 

employee; 

(iv) as otherwise required by law; or 

(v) pursuant to section 608. 

(2) SUBSEQUENT DISCLOSURE.—After taking any adverse action based in whole or in part on a communication described 

in paragraph (1), the employer shall disclose to the consumer 

a summary containing the nature and substance of the communication upon which the adverse action is based, except that the 

sources of information acquired solely for use in preparing what 

would be but for subsection (d)(2)(D) an investigative consumer 

report need not be disclosed. 

(3) SELF-REGULATORY ORGANIZATION DEFINED.—For purposes 

of this subsection, the term ‘‘self-regulatory organization’’ includes any self-regulatory organization (as defined in section 

3(a)(26) of the Securities Exchange Act of 1934), any entity established under Title I of the Sarbanes-Oxley Act of 2002, any 

board of trade designated by the Commodity Futures Trading 

Commission, and any futures association registered with such 

Commission. 

56

(r) RESELLER.—The term ‘‘reseller’’ means a consumer reporting 

agency that—

(1) assembles and merges information contained in the database of another consumer reporting agency or multiple consumer reporting agencies concerning any consumer for purposes 

of furnishing such information to any third party, to the extent 

of such activities; and 

(2) does not maintain a database of the assembled or merged 

information from which new consumer reports are produced. 

(s) OTHER DEFINITIONS.— (1) BOARD; CREDIT; CREDITOR, CREDIT CARD.—The terms 

‘‘Board’’, ‘‘credit’’, ‘‘creditor’’, and ‘‘credit card’’ have the same 

meanings as in section 103 of the Truth in Lending Act. 

(2) COMMISSION.—The term ‘‘Commission’’ means the Federal 

Trade Commission. 

(3) DEBIT CARD.—The term ‘‘debit card’’ means any card 

issued by a financial institution to a consumer for use in initiating electronic fund transfers (as defined in section 903(6) of 

the Electronic Fund Transfer Act) from the account (as defined 

in such Act) of the consumer at such financial institution for 

the purpose of transferring money between accounts or obtaining money, property, labor, or services. 

(4) ELECTRONIC FUND TRANSFER.—The term ‘‘electronic fund 

transfer’’ has the same meaning as in section 903 of the Electronic Fund Transfer Act. 

(5) FEDERAL BANKING AGENCY.—The term ‘‘Federal banking 

agency’’ has the same meaning as in section 3 of the Federal 

Deposit Insurance Act. 

(6) IDENTITY THEFT.—The term ‘‘identity theft’’ means a fraud 

committed using another person’s identifying information, subject to such further definition as the Commission and the Board 

may prescribe, jointly, by regulation. 

(7) POLICE REPORT.—The term ‘‘police report’’ means a copy 

of any official valid report filed by a consumer with any appropriate Federal, State, or local government law enforcement 

agency, or any comparable official government document that 

the Board and the Commission shall jointly prescribe in regulations, that is subject to a criminal penalty for false statements.

§ 604. Permissible purposes of reports 

(a) * * *

* * * * * * *

(e) ELECTION OF CONSUMER TO BE EXCLUDED FROM LISTS.—

(1) * * *

* * * * * * *

(5) NOTIFICATION SYSTEM.—

(A) IN GENERAL.—Each consumer reporting agency that, 

under subsection (c)(1)(B), furnishes a consumer report in 

connection with a credit or insurance transaction that is 

not initiated by a consumer shall—

(i) establish and maintain a notification system, including a toll-free telephone number, which permits 

any consumer whose consumer report is maintained 

by the agency to notify the agency, in a simple and 

57

easy manner and with appropriate identification, of 

the consumer’s election to have the consumer’s name 

and address excluded from any such list of names and 

addresses provided by the agency for such a transaction; and 

* * * * * * *

ø(g) FURNISHING REPORTS CONTAINING MEDICAL INFORMATION.—

A consumer reporting agency shall not furnish for employment purposes, or in connection with a credit or insurance transaction, a 

consumer report that contains medical information about a consumer, unless the consumer consents to the furnishing of the report.¿

(g) PROTECTION OF MEDICAL INFORMATION.—

(1) LIMITATION ON CONSUMER REPORTING AGENCIES.—A consumer reporting agency shall not furnish for employment purposes, or in connection with a credit or insurance transaction, 

a consumer report that contains medical information (other 

than medical contact information treated in the manner required under section 605(a)(6)) about a consumer, unless—

(A) if furnished in connection with an insurance transaction, the consumer affirmatively consents to the furnishing of the report; 

(B) if furnished for employment purposes or in connection 

with a credit transaction—

(i) the information to be furnished is relevant to process or effect the employment or credit transaction; and 

(ii) the consumer provides specific written consent for 

the furnishing of the report that describes in clear and 

conspicuous language the use for which the information will be furnished; or 

(C) such information is restricted or reported using codes 

that do not identify, or provide information sufficient to 

infer, the specific provider or the nature of such services, 

products, or devices to a person other than the consumer, 

unless the report is being provided to an insurance company for a purpose relating to engaging in the business of 

insurance other than property and casualty insurance. 

(2) LIMITATION ON CREDITORS.—Except as permitted pursuant 

to paragraph (3)(C) or regulations prescribed under paragraph 

(5)(A), a creditor shall not obtain or use medical information 

(other than medical information treated in the manner required 

under section 605(a)(6)) pertaining to a consumer in connection 

with any determination of the consumer’s eligibility, or continued eligibility, for credit. 

(3) ACTIONS AUTHORIZED BY FEDERAL LAW, INSURANCE ACTIVITIES AND REGULATORY DETERMINATIONS.—Section 603(d)(3) 

shall not be construed so as to treat information or any communication of information as a consumer report if the information 

or communication is disclosed—

(A) in connection with the business of insurance or annuities, including the activities described in section 18B of the 

model Privacy of Consumer Financial and Health Information Regulation issued by the National Association of Insurance Commissioners (as in effect on January 1, 2003); 

58

(B) for any purpose permitted without authorization 

under the Standards for Individually Identifiable Health 

Information promulgated by the Department of Health and 

Human Services pursuant to the Health Insurance Portability and Accountability Act of 1996, or referred to under 

section 1179 of such Act, or described in section 502(e) of 

Public Law 106–102; or 

(C) as otherwise determined to be necessary and appropriate, by regulation or order and subject to paragraph (6), 

by the Commission, any Federal banking agency or the National Credit Union Administration (with respect to any financial institution subject to the jurisdiction of such agency 

or Administration under paragraph (1), (2), or (3) of section 

621(b), or the applicable State insurance authority (with respect to any person engaged in providing insurance or annuities). 

(4) LIMITATION ON REDISCLOSURE OF MEDICAL INFORMATION.—Any person that receives medical information pursuant 

to paragraphs (1) or (3) shall not disclose such information to 

any other person except as necessary to carry out the purpose 

for which the information was initially disclosed, or as otherwise permitted by statute, regulation, or order. 

(5) REGULATIONS AND EFFECTIVE DATE FOR PARAGRAPH (2).—

(A) REGULATIONS REQUIRED.—Each Federal banking 

agency and the National Credit Union Administration 

shall, subject to paragraph (6) and after notice and opportunity for comment, prescribe regulations that permit transactions under paragraph (2) that are determined to be necessary and appropriate to protect legitimate operational, 

transactional, risk, consumer, and other needs, consistent 

with the intent of paragraph (2) to restrict the use of medical information for inappropriate purposes. 

(B) FINAL REGULATIONS REQUIRED.—The Federal banking agencies and the National Credit Union Administration 

shall prescribe the regulations required under subparagraph (A) in final form before the end of the 6-month period beginning on the date of the enactment of the Fair and 

Accurate Credit Transactions Act of 2003. 

(6) COORDINATION WITH OTHER LAWS.—No provision of this 

subsection shall be construed as altering, affecting, or superseding the applicability of any other provision of Federal law 

relating to medical confidentiality.

ø§ 605. Requirements relating to information contained in 

consumer reports¿

§ 605. Requirements relating to information contained in consumer reports and to identity theft prevention

(a) INFORMATION EXCLUDED FROM CONSUMER REPORTS.—Except 

as authorized under subsection (b), no consumer reporting agency 

may make any consumer report containing any of the following 

items of information: 

(1) * * *

* * * * * * *

59

(6) The name, address, and telephone number of any medical 

information furnisher that has notified the agency of its status, 

unless—

(A) such name, address, and telephone number are restricted or reported using codes that do not identify, or provide information sufficient to infer, the specific provider or 

the nature of such services, products, or devices to a person 

other than the consumer; or 

(B) the report is being provided to an insurance company 

for a purpose relating to engaging in the business of insurance other than property and casualty insurance.

(b) øThe provisions of subsection (a)¿ The provisions of paragraphs (1) through (5) of subsection (a) are not applicable in the 

case of any consumer credit report to be used in connection with—

(1) * * *

* * * * * * *

(d) INFORMATION REQUIRED TO BE øDISCLOSED.—Any consumer 

reporting agency¿ DISCLOSED.— (1) TITLE 11 INFORMATION.—Any consumer reporting agency

that furnishes a consumer report that contains information regarding any case involving the consumer that arises under title 

11, United States Code, shall include in the report an identification of the chapter of such title 11 under which such case 

arises if provided by the source of the information. If any case 

arising or filed under title 11, United States Code, is withdrawn by the consumer before a final judgment, the consumer 

reporting agency shall include in the report that such case or 

filing was withdrawn upon receipt of documentation certifying 

such withdrawal.

(2) KEY FACTOR IN CREDIT SCORE INFORMATION.—Any consumer reporting agency that furnishes a consumer report that 

contains any credit score or any other risk score or predictor on 

any consumer shall include in the report a clear and conspicuous statement that a key factor (as defined in section 

609(e)(2)(B)) that adversely affected such score or predictor was 

the number of enquiries, if such a predictor was in fact a key 

factor that adversely affected such score.

* * * * * * *

(g) ‘‘RED FLAG’’ PATTERNS OF POSSIBLE IDENTITY THEFT.—

(1) INVESTIGATION OF CHANGES OF ADDRESS.—The Federal 

banking agencies and the National Credit Union Administration, in carrying out the responsibilities of such agencies and 

Administration under subsection (k), shall jointly prescribe regulations for credit card and debit card issuers to ensure that, 

if any such issuer receives a request for an additional or replacement card for an existing account within a short period of 

time after the issuer has received notification of a change of address for the same account, the issuer will follow reasonable 

policies and procedures that require, as appropriate, that the 

issuer not issue the additional or replacement card unless the 

issuer—

(A) notifies the cardholder of the request at the former 

address of the cardholder and provides to the cardholder a 

means of promptly reporting incorrect address changes; 

60

(B) notifies the cardholder of the request by such other 

means of communication as the cardholder and the card 

issuer previously agreed to; or 

(C) uses other means of assessing the validity of the 

change of address, in accordance with reasonable policies 

and procedures established by the card issuer in accordance with the regulations prescribed under subsection (k). 

(2) INACTIVE ACCOUNTS.—The Federal banking agencies and 

the National Credit Union Administration, in carrying out the 

responsibilities of such agencies and Administration under subsection (k), shall consider including, as a possible ‘‘red flag’’ 

pattern, reasonable guidelines providing that when a transaction occurs with respect to a credit or deposit account that 

has been inactive for more than 2 years, the creditor or depository institution shall follow reasonable policies and procedures 

that provide for notice to be given to a consumer in a manner 

reasonably designed to reduce the likelihood of identity theft 

with respect to such account. 

(h) NOTICE OF DISCREPANCY.— (1) IN GENERAL.—If a person has requested a consumer report 

relating to a consumer from a consumer reporting agency described in section 603(p), the request includes an address for 

the consumer that substantially differs from the addresses in 

the file of the consumer, and the agency provides a consumer 

report in response to the request, the consumer reporting agency 

shall notify the requester of the existence of the discrepancy. 

(2) REGULATIONS.— (A) REGULATIONS REQUIRED.—The Federal banking agencies and the National Credit Union Administration shall 

jointly prescribe regulations providing guidance regarding 

reasonable policies and procedures a user of a consumer report should employ when such user has received a notice of 

discrepancy under paragraph (1). 

(B) POLICIES AND PROCEDURES TO BE INCLUDED.—The 

regulations prescribed under subparagraph (A) shall describe reasonable policies and procedures for use by a user 

of a consumer report—

(i) to form a reasonable belief that the user knows the 

identity of the person to whom the consumer report pertains; and 

(ii) if the user establishes a continuing relationship 

with the consumer, and the user regularly and in the 

ordinary course of business furnishes information to 

the consumer reporting agency from which the notice of 

discrepancy pertaining to the consumer was obtained, 

to reconcile the consumer’s address with the consumer 

reporting agency by furnishing such address to such 

consumer reporting agency as part of information regularly furnished by the user for the period in which the 

relationship is established. 

(i) ONE-CALL FRAUD ALERTS.—

(1) INITIAL ALERTS.—Upon the direct request of a consumer, 

or an individual acting on behalf of or as a personal representative of a consumer, who asserts, in good faith, a suspicion that 

the consumer has been or is about to become a victim of fraud 

61

or related crime, including identity theft, a consumer reporting 

agency described in section 603(p) shall, if the agency maintains a file on the consumer who is making the request and has 

a reasonable belief that the agency knows the identity of the 

consumer—

(A) include a fraud alert in the file of that consumer for 

a period of not less than 90 days beginning on the date of 

such request, unless the consumer specifically requests that 

such fraud alert be removed before the end of such period; 

(B) disclose to the consumer that the consumer may request a free copy of the file of the consumer and provide the 

consumer, upon request, a free disclosure of the consumer’s 

file (as described in section 609(a)) within 3 business days 

after such request; 

(C) for 2 years after the date of such request, exclude the 

consumer from any list of consumers prepared by the agency and provided to any third party to offer credit or insurance to the consumer as part of a transaction that was not 

initiated by the consumer, unless the consumer subsequently requests that such exclusion be rescinded before the 

end of such period; and 

(D) refer the information regarding the fraud alert to 

each of the other consumer reporting agencies described in 

section 603(p), as required under section 621(f)(1). 

(2) EXTENDED ALERTS.—Upon the direct request of a consumer, or an individual acting on behalf of or as a personal 

representative of a consumer, who contacts a consumer reporting agency described in section 603(p) to report details of an 

identity theft and submits evidence that provides the agency 

with reasonable cause to believe that such identity theft has occurred, the agency shall, if the agency maintains a file on the 

consumer who is making the request and has a reasonable belief that the agency knows the identity of the consumer—

(A) include a fraud alert in the file of that consumer and 

provide an opportunity for the consumer to extend the alert 

for a period of up to 7 years from the date of such request, 

unless the consumer subsequently requests that such fraud 

alert be removed before the end of such period; 

(B) provide the consumer with the option of including 

more complete information in the consumer’s file, including 

a telephone number or some other reasonable means of 

communication that any person who requests the consumer’s report may utilize for authorization before establishing a new credit plan in the name of the consumer; and 

(C) provide the consumer with at least 2 free disclosures 

of the information described in section 609(a) during the 

12-month period beginning on the date of such request. 

(3) ACTIVE DUTY ALERTS.—Upon the direct request of an active duty military consumer, or an individual acting on behalf 

of or as a personal representative of an active duty military consumer, who contacts a consumer reporting agency described in 

section 603(p), the agency shall, if the agency maintains a file 

on the consumer who is making the request and has a reasonable belief that the agency knows the identity of the consumer—

62

(A) include an active duty alert in the file of that consumer during a period of not less than 12 months beginning on the date of the request, unless the consumer requests that such active duty alert be removed before the end 

of such period; 

(B) for 2 years after the date of such request, exclude the 

consumer from any list of consumers prepared by the agency and provided to any third party to offer credit or insurance to the consumer as part of a transaction that was not 

initiated by the consumer, unless the consumer subsequently requests that such exclusion be rescinded before the 

end of such period; and 

(C) refer the information regarding the active duty alert 

to each of the other consumer reporting agencies described 

in section 603(p), as required under section 621(f)(1). 

(4) PROCEDURES.—Each consumer reporting agency described 

in section 603(p) shall establish policies and procedures to comply with the obligations of paragraphs (1), (2), and (3), including procedures that allow consumers to request initial, extended, or active duty alerts in a simple and easy manner, including by telephone. 

(5) NOTICE TO USERS.—No person who obtains any information that includes a fraud alert under this section from a file 

of any consumer from a consumer reporting agency may establish a new credit plan in the name of the consumer for a person 

other than the consumer without utilizing reasonable policies 

and procedures described in paragraph (9). 

(6) REFERRALS OF FRAUD ALERTS.—Each consumer reporting 

agency described in section 603(p) that receives a referral of a 

fraud alert from another such agency pursuant to paragraph 

(1)(D) or (3)(C) shall follow the procedures required under subparagraphs (A), (B), and (C) of paragraph (1), in the case of a 

referral under paragraph (1)(D), and subparagraphs (A) and 

(B), in the case of a referral under paragraph (3)(C), as if the 

agency received the request from the consumer directly. 

(7) DUTY OF RESELLER TO RECONVEY ALERT.—A reseller that 

is notified of the existence of a fraud alert in a consumer’s consumer report shall communicate to each person procuring a 

consumer report with respect to such consumer the existence of 

a fraud alert in effect for such consumer. 

(8) DUTY OF OTHER CONSUMER REPORTING AGENCIES TO PROVIDE CONTACT INFORMATION.—If a consumer contacts any consumer reporting agency that is not a consumer reporting agency 

described in section 603(p) to communicate a suspicion that the 

consumer has been or is about to become a victim of fraud or 

related crime, including identity theft, the agency shall provide 

the consumer with information on how to contact the Commission and the consumer reporting agencies described in section 

603(p) to obtain more detailed information and request alerts 

under this subsection. 

(9) FRAUD ALERT.—

(A) DEFINITION.—For purposes of this subsection, the 

term ‘‘fraud alert’’ means, at a minimum, a statement—

63

(i) in the file of a consumer that the consumer may 

be a victim of fraud, including identity theft, or is a 

consumer described in paragraph (3); and 

(ii) that is transmitted in a manner that facilitates 

a clear and conspicuous view of the statement by any 

person requesting such file. 

(B) OTHER INFORMATION.—A fraud alert shall include information that notifies all prospective users of a consumer 

report on the consumer to which the alert relates that the 

consumer does not authorize establishing any new credit 

plan in the name of the consumer, unless the user utilizes 

reasonable policies and procedures to form a reasonable belief that the user knows the identity of the person for whom 

such new plan is established, which may include obtaining 

authorization or preauthorization of the consumer at a telephone number designated by the consumer or by such other 

reasonable means agreed to. 

(10) OTHER DEFINITIONS.—For purposes of this subsection, 

the following definitions shall apply: 

(A) ACTIVE DUTY MILITARY CONSUMER.—The term ‘‘active 

duty military consumer’’ means a consumer in military 

service who—

(i) is on active duty (as defined in section 101(d)(1) 

of title 10, United States Code) or is a reservist performing duty under a call or order to active duty under 

a provision of law referred to in section 101(a)(13) of 

title 10, United States Code; and 

(ii) is assigned to service away from the consumer’s 

usual duty station. 

(B) NEW CREDIT PLAN.—The term ‘‘new credit plan’’ 

means a new account under an open end credit plan (as defined in section 103(i) of this Act) or a new credit transaction not under an open end credit plan. 

(j) BLOCK OF INFORMATION RESULTING FROM IDENTITY THEFT.—

(1) BLOCK.—Except as provided in paragraph (3), a consumer 

reporting agency shall block the reporting of any information in 

the file of a consumer that the consumer identifies as information that resulted from an alleged identity theft and confirms 

is not information relating to any transaction by the consumer 

not later than 5 business days after the date of receipt by such 

agency of—

(A) appropriate proof of the identity of a consumer; 

(B) a police report evidencing the claim of the consumer 

of identity theft; 

(C) the identification of the information by the consumer; 

and 

(D) confirmation by the consumer that the information is 

not information relating to any transaction by the consumer. 

(2) NOTIFICATION.—A consumer reporting agency shall 

promptly notify the furnisher of information identified by the 

consumer under paragraph (1)—

(A) that the information may be a result of identity theft; 

(B) that a police report has been filed; 

64

(C) that a block has been requested under this subsection; 

and 

(D) of the effective date of the block. 

(3) AUTHORITY TO DECLINE OR RESCIND.—

(A) IN GENERAL.—A consumer reporting agency may decline to block, or may rescind any block, of consumer information under this subsection if the consumer reporting 

agency reasonably determines that—

(i) the information was blocked in error or a block 

was requested by the consumer in error; 

(ii) the information was blocked, or a block was requested by the consumer, on the basis of a misrepresentation of fact by the consumer relevant to the request 

to block; or 

(iii) the consumer knowingly obtained possession of 

goods, services, or moneys as a result of the blocked 

transaction or transactions, or the consumer should 

have known that the consumer obtained possession of 

goods, services, or moneys as a result of the blocked 

transaction or transactions. 

(B) NOTIFICATION TO CONSUMER.—If the block of information is declined or rescinded under this paragraph, the 

affected consumer shall be notified promptly, in the same 

manner as consumers are notified of the reinsertion of information under section 611(a)(5)(B). 

(C) SIGNIFICANCE OF BLOCK.—For purposes of this paragraph, if a consumer reporting agency rescinds a block, the 

presence of information in the file of a consumer prior to 

the blocking of such information is not evidence of whether 

the consumer knew or should have known that the consumer obtained possession of any goods, services, or monies 

as a result of the block. 

(4) EXCEPTIONS.—

(A) VERIFICATION COMPANIES.—This subsection shall not 

apply to—

(i) a check services company, which issues authorizations for the purpose of approving or processing negotiable instruments, electronic funds transfers, or similar methods of payments; or 

(ii) a deposit account information service company, 

which issues reports regarding account closures due to 

fraud, substantial overdrafts, automated teller machine 

abuse, or similar negative information regarding a consumer, to inquiring banks or other financial institutions for use only in reviewing a consumer request for 

a deposit account at the inquiring bank or financial institution. 

(B) RESELLERS.—

(i) NO RESELLER FILE.—This subsection shall not 

apply to a consumer reporting agency if the consumer 

reporting agency—

(I) is a reseller; 

(II) is not, at the time of the request of the consumer under paragraph (1), otherwise furnishing 

65

or reselling a consumer report concerning the information identified by the consumer; and 

(III) informs the consumer, by any means, that 

the consumer may report the identity theft to the 

Commission to obtain consumer information regarding identity theft. 

(ii) RESELLER WITH FILE.—The sole obligation of the 

consumer reporting agency under this subsection, with 

regard to any request of a consumer under this subsection, shall be to block the consumer report maintained by the consumer reporting agency from any subsequent use if—

(I) the consumer, in accordance with the provisions of paragraph (1), identifies, to a consumer reporting agency, information in the file of the consumer that resulted from identity theft; and 

(II) the consumer reporting agency is a reseller of 

the identified information. 

(iii) NOTICE.—In carrying out its obligation under 

clause (ii), the reseller shall promptly provide a notice 

to the consumer of the decision to block the file. Such 

notice shall contain the name, address, and telephone 

number of each consumer reporting agency from which 

the consumer information was obtained for resale. 

(5) ACCESS TO BLOCKED INFORMATION BY LAW ENFORCEMENT

AGENCIES.—No provision of this subsection shall be construed 

as requiring a consumer reporting agency to prevent a Federal, 

State, or local law enforcement agency from accessing blocked 

information in a consumer file to which the agency could otherwise obtain access under this title. 

(k) ‘‘RED FLAG’’ GUIDELINES REQUIRED.—

(1) IN GENERAL.—The Federal banking agencies and the National Credit Union Administration, in consultation with the 

Commission, shall jointly establish and maintain guidelines for 

use by insured depository institutions in identifying patterns, 

practices, and specific forms of activity that indicate the possible existence of identity theft with respect to accounts, and update such guidelines as often as necessary. 

(2) REGULATIONS.—The Federal banking agencies and the 

National Credit Union Administration, in consultation with the 

Commission, shall jointly prescribe regulations requiring insured depository institutions to establish and adhere to reasonable policies and procedures for implementing the guidelines established pursuant to paragraph (1) to identify possible risks to 

customer accounts or to the safety and soundness of the institutions. 

(3) CONSISTENCY WITH VERIFICATION REQUIREMENTS.—Policies and procedures established pursuant to paragraph (2) shall 

not be inconsistent with, or duplicative of, the policies and procedures required under section 5318(l) of title 31, United States 

Code. 

(4) INSURED DEPOSITORY INSTITUTION DEFINED.—For purposes of this subsection, the term ‘‘insured depository institution’’—

66

(A) has the meaning given to such term in section 3 of 

the Federal Deposit Insurance Act; and 

(B) includes an insured credit union (as defined in section 101 of the Federal Credit Union Act). 

(l) TRUNCATION OF CREDIT CARD AND DEBIT CARD ACCOUNT

NUMBERS.— (1) IN GENERAL.—Except as provided in this subsection, no 

person that accepts credit cards or debit cards for the transaction of business shall print the expiration date or more than 

the last 5 digits of the card number upon any receipt provided 

to the cardholder at the point of the sale or transaction. 

(2) LIMITATION.—This section shall apply only to receipts that 

are electronically printed, and shall not apply to transactions in 

which the sole means of recording the person’s credit card or 

debit card number is by handwriting or by an imprint or copy 

of the card.

* * * * * * *

§ 609. Disclosures to consumers 

(a) Every consumer reporting agency shall, upon request, and 

subject to section 610(a)(1), clearly and accurately disclose to the 

consumer: 

(1) * * *

(2) The sources of the information, including addresses of the 

sources, and (if provided by the sources of information) the telephone numbers identified for customer service for the sources of information; except that the sources of information acquired solely for 

use in preparing an investigative consumer report and actually 

used for no other purpose need not be disclosed: Provided, That in 

the event an action is brought under this title, such sources shall 

be available to the plaintiff under appropriate discovery procedures 

in the court in which the action is brought. 

(3)(A) * * *

(B) An identification of a person under subparagraph (A) 

shall include—

(i) * * *

ø(ii) upon request of the consumer, the address and telephone number of the person.¿

(ii) the address and (if provided) the telephone numbers 

identified for customer service of the person.

* * * * * * *

(6) If the consumer requests the credit file and not the credit 

score, a statement that the consumer may request and obtain a 

credit score.

* * * * * * *

(d) SUMMARY OF RIGHTS OF IDENTITY THEFT VICTIMS.—

(1) IN GENERAL.—The Commission, in consultation with the 

Federal banking agencies and the National Credit Union Administration, shall prepare a model summary of the rights of 

consumers under this title with respect to the procedures for 

remedying the effects of fraud or identity theft involving credit, 

electronic fund transfers, or accounts or transactions at or with 

a financial institution. 

67

(2) SUMMARY OF RIGHTS AND CONTACT INFORMATION.—If any 

consumer contacts a consumer reporting agency and expresses 

a belief that the consumer is a victim of fraud or identity theft 

involving credit, electronic fund transfers, or accounts or transactions at or with a financial institution, the consumer reporting agency shall, in addition to any other action the agency 

may take, provide the consumer with the model summary of 

rights prepared by the Commission under paragraph (1) and 

information on how to contact the Commission to obtain more 

detailed information. 

(e) DISCLOSURE OF CREDIT SCORES.—

(1) IN GENERAL.—Upon the consumer’s request for a credit 

score, a consumer reporting agency shall supply to a 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 the following information: 

(A) The consumer’s current credit score or the consumer’s 

most recent credit score 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 the key factors that adversely affected the consumer’s credit score in the model used, the total number of 

which shall not exceed four, subject to paragraph (9). 

(D) The date the credit score was created. 

(E) The name of the person or entity that provided the 

credit score or credit file upon which the credit score was 

created. 

(2) DEFINITIONS.—For purposes of this section, the following 

definitions shall apply: 

(A) CREDIT SCORE.—The term ‘‘credit score’’—

(i) means 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 

(and the numerical value or the categorization derived 

from this analysis may also be referred to as a ‘‘risk 

predictor’’ or ‘‘risk score’’); and 

(ii) does not include—

(I) any mortgage score or rating of an automated 

underwriting system that considers one or more 

factors in addition to credit information, including 

the loan to value ratio, the amount of down payment, or a consumer’s financial assets; or 

(II) any other elements of the underwriting process or underwriting decision. 

(B) KEY FACTORS.—The term ‘‘key factors’’ means all relevant elements or reasons adversely affecting the credit 

score for the particular individual listed in the order of 

their importance based on their effect on the credit score. 

(3) TIMEFRAME AND MANNER OF DISCLOSURE.—The information required by this subsection shall be provided in the same 

68

timeframe and manner as the information described in subsection (a). 

(4) APPLICABILITY TO CERTAIN USES.—This subsection shall 

not be construed so as to compel a consumer reporting agency 

to develop or disclose a score if the agency does not—

(A) distribute scores that are used in connection with residential real property loans; or 

(B) develop scores that assist credit providers in understanding a consumer’s general credit behavior and predicting the future credit behavior of the consumer. 

(5) APPLICABILITY TO CREDIT SCORES DEVELOPED BY ANOTHER

PERSON.—

(A) IN GENERAL.—This subsection shall not be construed 

to require a consumer reporting agency that distributes 

credit scores developed by another person or entity to provide a further explanation of them, or to process a dispute 

arising pursuant to section 611, except that the consumer 

reporting agency shall provide the consumer with the name 

and address and website for contacting the person or entity 

who developed the score or developed the methodology of 

the score. 

(B) EXCEPTION.—This paragraph shall not apply to a 

consumer reporting agency that develops or modifies scores 

that are developed by another person or entity. 

(6) MAINTENANCE OF CREDIT SCORES NOT REQUIRED.—This 

subsection shall not be construed to require a consumer reporting agency to maintain credit scores in its files. 

(7) COMPLIANCE IN CERTAIN CASES.—In complying with this 

subsection, a consumer reporting agency shall—

(A) supply the consumer with 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 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; and 

(B) a statement indicating that the information and credit scoring model may be different than that used by the 

lender. 

(8) REASONABLE FEE.—A consumer reporting agency may 

charge a reasonable fee for providing the information required 

under this subsection. 

(9) USE OF ENQUIRIES AS A KEY FACTOR.—If a key factor that 

adversely affects a consumer’s credit score consists of the number of enquiries made with respect to a consumer report, that 

factor shall be included in the disclosure pursuant to paragraph (1)(C) without regard to the numerical limitation in such 

paragraph. 

(f) DISCLOSURE OF CREDIT SCORES BY CERTAIN MORTGAGE LEND- ERS.—

(1) IN GENERAL.—Any person who makes or arranges loans 

and who uses a consumer credit score as defined in subsection 

(e) in connection with an application initiated or sought by a 

consumer for a closed end loan or establishment of an open end 

69

loan for a consumer purpose that is secured by 1 to 4 units of 

residential real property (hereafter in this subsection referred to 

as the ‘‘lender’’) shall provide the following to the consumer as 

soon as reasonably practicable: 

(A) INFORMATION REQUIRED UNDER SUBSECTION(e).—

(i) IN GENERAL.—A copy of the information identified 

in subsection (e) that was obtained from a consumer reporting agency or was developed and used by the user 

of the information. 

(ii) NOTICE UNDER SUBPARAGRAPH (D).—In addition 

to the information provided to it by a third party that 

provided the credit score or scores, a lender is only required to provide the notice contained in subparagraph 

(D). 

(B) DISCLOSURES IN CASE OF AUTOMATED UNDERWRITING

SYSTEM.—

(i) IN GENERAL.—If a person who is subject to this 

section uses an automated underwriting system to underwrite a loan, that person may satisfy the obligation 

to provide a credit score by disclosing a credit score 

and associated key factors supplied by a consumer reporting agency. 

(ii) NUMERICAL CREDIT SCORE.—However, if a numerical credit score is generated by an automated underwriting system used by an enterprise, and that score 

is disclosed to the person, the score shall be disclosed 

to the consumer consistent with subparagraph (C). 

(iii) ENTERPRISE DEFINED.—For purposes of this subparagraph, the term ‘‘enterprise’’ shall have the same 

meaning as in paragraph (6) of section 1303 of the 

Federal Housing Enterprises Financial Safety and 

Soundness Act of 1992. 

(C) DISCLOSURES OF CREDIT SCORES NOT OBTAINED FROM

A CONSUMER REPORTING AGENCY.—A person subject to the 

provisions of this subsection who uses a credit score other 

than a credit score provided by a consumer reporting agency may satisfy the obligation to provide a credit score by 

disclosing a credit score and associated key factors supplied 

by a consumer reporting agency. 

(D) NOTICE TO HOME LOAN APPLICANTS.—A copy of the 

following notice, which shall include the name, address, 

and telephone number of each consumer reporting agency 

providing a credit score that was used: 

‘‘NOTICE TO THE HOME LOAN APPLICANT

‘‘In connection with your application for a home loan, the lender 

must disclose to you the score that a consumer reporting agency distributed to users and the lender used in connection with your home 

loan, and the key factors affecting your credit scores. 

‘‘The credit score is a computer generated summary calculated at 

the time of the request and based on information a consumer reporting agency or lender has on file. The scores are based on data about 

your credit history and payment patterns. Credit scores are important because they are used to assist the lender in determining 

whether you will obtain a loan. They may also be used to determine 

70

what interest rate you may be offered on the mortgage. Credit scores 

can change over time, depending on your conduct, how your credit 

history and payment patterns change, and how credit scoring technologies change. 

‘‘Because the score is based on information in your credit history, 

it is very important that you review the credit-related information 

that is being furnished to make sure it is accurate. Credit records 

may vary from one company to another. 

‘‘If you have questions about your credit score or the credit information that is furnished to you, contact the consumer reporting 

agency at the address and telephone number provided with this notice, or contact the lender, if the lender developed or generated the 

credit score. The consumer reporting agency plays no part in the decision to take any action on the loan application and is unable to 

provide you with specific reasons for the decision on a loan application. 

‘‘If you have questions concerning the terms of the loan, contact the lender.’’. 

(E) ACTIONS NOT REQUIRED UNDER THIS SUBSECTION.— This subsection shall not require any person to do any of 

the following: 

(i) Explain the information provided pursuant to 

subsection (e). 

(ii) Disclose any information other than a credit 

score or key factor, as defined in subsection (e). 

(iii) Disclose any credit score or related information 

obtained by the user after a loan has closed. 

(iv) Provide more than 1 disclosure per loan transaction. 

(v) Provide the disclosure required by this subsection 

when another person has made the disclosure to the 

consumer for that loan transaction. 

(F) NO OBLIGATION FOR CONTENT.— (i) IN GENERAL.—Any person’s obligation pursuant to 

this subsection shall be limited solely to providing a 

copy of the information that was received from the consumer reporting agency. 

(ii) LIMIT ON LIABILITY.—No person has liability 

under this subsection for the content of that information or for the omission of any information within the 

report provided by the consumer reporting agency. 

(G) PERSON DEFINED AS EXCLUDING ENTERPRISE.—As 

used in this subsection, the term ‘‘person’’ does not include 

an enterprise (as defined in paragraph (6) of section 1303 

of the Federal Housing Enterprises Financial Safety and 

Soundness Act of 1992). 

(2) PROHIBITION ON DISCLOSURE CLAUSES NULL AND VOID.—

(A) IN GENERAL.—Any provision in a contract that prohibits the disclosure of a credit score by a person who 

makes or arranges loans or a consumer reporting agency is 

void. 

(B) NO LIABILITY FOR DISCLOSURE UNDER THIS SUB- SECTION.—A lender shall not have liability under any contractual provision for disclosure of a credit score pursuant 

to this subsection. 

71

(g) DISCLOSURE TO CONSUMER.— (1) IN GENERAL.—The ability of a credit card issuer to increase any annual percentage rate applicable to a credit card 

account, or to remove or increase any introductory annual percentage rate of interest applicable to such account, for reasons 

other than actions or omissions of the card holder that are directly related to such account shall be clearly and conspicuously 

disclosed to the consumer by the credit card issuer in any disclosure or statement required to be made to the consumer under 

this title in connection with a credit card solicitation that is not 

initiated by the consumer. 

(2) REGULATIONS AND MODEL STATEMENTS.—The Board, in 

consultation with the Federal banking agencies and the National Credit Union Administration, shall develop such guidelines in regulations as necessary to assure that the information 

to be disclosed to consumers pursuant to paragraph (1) is clearly and conspicuously provided in a prominent location in any 

credit card solicitation that is not initiated by the consumer, 

and shall include model disclosure statements to be used by 

credit card issuers in making the disclosures required to be provided to the consumer by paragraph (1).

* * * * * * *

§ 611. Procedure in case of disputed accuracy 

(a) REINVESTIGATIONS OF DISPUTED INFORMATION.— (1) REINVESTIGATION REQUIRED.— (A) IN GENERAL.—øIf the completeness¿ Subject to subsection (e), if the completeness or accuracy of any item of 

information contained in a consumer’s file at a consumer 

reporting agency is disputed by the consumer and the consumer notifies the agency directly, or indirectly through a 

reseller, of such dispute, the agency øshall reinvestigate 

free of charge¿ shall, free of charge, conduct a reasonable 

reinvestigation to determine whether the disputed information is inaccurate and record the current status of the disputed information, or delete the item from the file in accordance with paragraph (5), before the end of the 30-day 

period beginning on the date on which the agency receives 

the notice of the dispute from the consumer or reseller. 

* * * * * * *

(2) PROMPT NOTICE OF DISPUTE TO FURNISHER OF INFORMATION.—

(A) IN GENERAL.—Before the expiration of the 5-business-day period beginning on the date on which a consumer reporting agency receives notice of a dispute from 

any consumer or a reseller in accordance with paragraph 

(1), the agency shall provide notification of the dispute to 

any person who provided any item of information in dispute, at the address and in the manner established with 

the person. The notice shall include all relevant information regarding the dispute that the agency has received 

from the consumer or reseller. 

(B) PROVISION OF OTHER INFORMATION øFROM CONSUMER¿.—The consumer reporting agency shall promptly 

72

provide to the person who provided the information in dispute all relevant information regarding the dispute that is 

received by the agency from the consumer or the reseller

after the period referred to in subparagraph (A) and before 

the end of the period referred to in paragraph (1)(A). 

* * * * * * *

(e) REINVESTIGATION REQUIREMENT APPLICABLE TO RESELLERS.—

(1) EXEMPTION FROM GENERAL REINVESTIGATION REQUIREMENT.—Except as provided in paragraph (2), a reseller shall be 

exempt from the requirements of this section. 

(2) ACTION REQUIRED UPON RECEIVING NOTICE OF A DISPUTE.—If a reseller receives a notice from a consumer of a dispute concerning the completeness or accuracy of any item of information contained in a consumer report on such consumer 

produced by the reseller, the reseller shall, within 5 business 

days of receiving the notice and free of charge—

(A) determine whether the item of information is incomplete or inaccurate as a result of an act or omission of the 

reseller; and 

(B) if—

(i) the reseller determines that the item of information is incomplete or inaccurate as a result of an act 

or omission of the reseller, correct the information in 

the consumer report or delete it; or 

(ii) if the reseller determines that the item of information is not incomplete or inaccurate as a result of an 

act or omission of the reseller, convey the notice of the 

dispute, together with all relevant information provided by the consumer, to each consumer reporting 

agency that provided the reseller with the information 

that is the subject of the dispute. 

(3) RESELLER REINVESTIGATIONS.—No provision of this subsection shall be construed as prohibiting a reseller from conducting a reinvestigation of a consumer dispute directly.

SEC. 612. CHARGES FOR CERTAIN DISCLOSURES. 

(a) * * *

* * * * * * *

(c) FREE DISCLOSURE UNDER CERTAIN OTHER CIRCUMSTANCES.—

Upon the request of the consumer, a consumer reporting agency 

that is not a consumer reporting agency described in section 603(p)

shall make all disclosures pursuant to section 609 once during any 

12-month period without charge to that consumer if the consumer 

certifies in writing that the consumer—

(1) * * *

* * * * * * *

(e) FREE ANNUAL DISCLOSURE.—Upon the direct request of the 

consumer, a consumer reporting agency described in section 603(p) 

shall make all disclosures pursuant to section 609 once during any 

12-month period without charge to the consumer.

* * * * * * *

73

§ 615. Requirements on users of consumer reports 

(a) * * *

* * * * * * *

(d) DUTIES OF USERS MAKING WRITTEN CREDIT OR INSURANCE

SOLICITATIONS ON THE BASIS OF INFORMATION CONTAINED IN CON- SUMER FILES.— (1) * * *

(2) SIMPLE AND EASY NOTIFICATION.—Any statement given the 

consumer under paragraph (1)(E) shall be in a simple and easy 

to understand format and shall describe the simple and easy 

method established under section 604(e)(5)(A)(i) for the consumer to respond.

ø(2)¿ (3) DISCLOSURE OF ADDRESS AND TELEPHONE NUM- BER.—A statement under paragraph (1) shall include the address and toll-free telephone number of the appropriate notification system established under section 604(e). 

ø(3)¿ (4) MAINTAINING CRITERIA ON FILE.—A person who 

makes an offer of credit or insurance to a consumer under a 

credit or insurance transaction described in paragraph (1) shall 

maintain on file the criteria used to select the consumer to receive the offer, all criteria bearing on credit worthiness or insurability, as applicable, that are the basis for determining 

whether or not to extend credit or insurance pursuant to the 

offer, and any requirement for the furnishing of collateral as 

a condition of the extension of credit or insurance, until the expiration of the 3-year period beginning on the date on which 

the offer is made to the consumer. 

ø(4)¿ (5) AUTHORITY OF FEDERAL AGENCIES REGARDING UN- FAIR OR DECEPTIVE ACTS OR PRACTICES NOT AFFECTED.—This 

section is not intended to affect the authority of any Federal 

or State agency to enforce a prohibition against unfair or deceptive acts or practices, including the making of false or misleading statements in connection with a credit or insurance 

transaction that is not initiated by the consumer.

(e) NOTICE OF FRAUDULENT INFORMATION RELATING TO IDENTITY

THEFT.—If an agent acting as a debt collector (as defined in title 

VIII) of a person who furnishes information to any consumer reporting agency uses information contained in a consumer report on any 

consumer and learns that any such information so used is the result 

of identity theft or otherwise is fraudulent, the agent shall—

(1) if such information—

(A) originated from the person for whom the debt collector is acting as agent, notify the person of the fraudulent 

information; or 

(B) originated from a person other than the person for 

whom the debt collector is acting as agent, notify the consumer reporting agency (that provided the consumer report) 

of the fraudulent information, either directly or through the 

person for whom the debt collector is acting as agent; and 

(2) upon the request of the consumer, provide the consumer 

with all information which the consumer would be entitled to 

receive if the information related to the consumer other than by 

reason of identity theft.

* * * * * * *

74

§ 621. Administrative enforcement 

(a) * * *

* * * * * * *

(c) STATE ACTION FOR VIOLATIONS.— (1) * * *

* * * * * * *

(5) LIMITATIONS ON STATE ACTIONS FOR øVIOLATION OF SECTION 623(a)(1)¿ CERTAIN VIOLATIONS OF SECTION 623(a).—

(A) VIOLATION OF INJUNCTION REQUIRED.—A State may 

not bring an action against a person under paragraph 

(1)(B) for a violation of øsection 623(a)(1)¿ paragraph (1) 

or (6) of section 623(a), unless—

(i) * * *

* * * * * * *

(f) COORDINATION OF CONSUMER COMPLAINT INVESTIGATIONS.—

(1) IN GENERAL.—The consumer reporting agencies described 

in section 603(p) shall develop and maintain procedures for the 

referral, to each such agency, of any consumer complaint received by any such agency alleging any identity theft or requesting a block or a fraud alert. 

(2) MODEL FORM AND PROCEDURE FOR REPORTING IDENTITY

THEFT.—The Commission, in consultation with the Federal 

banking agencies and the National Credit Union Administration, shall develop a model form and model procedures to be 

used by consumers who are victims of identity theft for contacting and informing creditors and consumer reporting agencies of the fraud. 

(3) ANNUAL SUMMARY REPORTS.—Each consumer reporting 

agency described in section 603(p) shall submit an annual summary report to the Commission on consumer complaints received by the agency on identity theft or fraud alerts. 

(g) FTC REGULATION OF CODING OF TRADE NAMES.—If the Commission determines that a person described in paragraph (8) of section 623(a) has not met the requirements of such paragraph, the 

Commission shall take action to ensure the person’s compliance 

with such paragraph, which may include issuing model guidance or 

prescribing reasonable policies and procedures as necessary to ensure that such person complies with such paragraph.

* * * * * * *

SEC. 623. RESPONSIBILITIES OF FURNISHERS OF INFORMATION TO 

CONSUMER REPORTING AGENCIES. 

(a) DUTY OF FURNISHERS OF INFORMATION TO PROVIDE ACCURATE

INFORMATION.—

(1) * * *

(A) REPORTING INFORMATION WITH ACTUAL KNOWLEDGE

OF ERRORS.—A person shall not furnish any information 

relating to a consumer to any consumer reporting agency 

if the person øknows or consciously avoids knowing that 

the information is inaccurate¿ knows or has reasonable 

cause to believe that the information is inaccurate.

(B) REASONABLE PROCEDURES TO ENSURE ACCURACY.—A 

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75

sumers to a consumer reporting agency described in section 

603(p) shall maintain reasonable procedures designed to 

ensure that the information furnished is accurate.

ø(B)¿ (C) REPORTING INFORMATION AFTER NOTICE AND

CONFIRMATION OF ERRORS.—A person shall not furnish information relating to a consumer to any consumer reporting agency if—

(i) * * *

* * * * * * *

ø(C)¿ (D) NO ADDRESS REQUIREMENT.—A person who 

clearly and conspicuously specifies to the consumer an address for notices referred to in subparagraph (B) shall not 

be subject to subparagraph (A); however, nothing in subparagraph (B) shall require a person to specify such an address.

(E) INFORMATION ALLEGED TO RESULT FROM IDENTITY

THEFT.—If a consumer submits a police report to a person 

who furnishes information to a consumer reporting agency 

that states that information maintained by such person 

that purports to relate to the consumer resulted from identity theft, the person may not furnish such information that 

purports to relate to the consumer to any consumer reporting agency, unless the person subsequently knows or is informed by the consumer that the information is correct. 

(F) DEFINITION.—For purposes of subparagraph (A), the 

term ‘‘reasonable cause to believe that the information is inaccurate’’ means, based on the procedures described in subparagraph (B), has knowledge, other than solely allegations 

by the consumer, that would cause a reasonable person to 

have substantial doubts about the accuracy of the information.

* * * * * * *

(6) ABILITY OF CONSUMER TO DISPUTE INFORMATION DIRECTLY

WITH FURNISHER.—

(A) IN GENERAL.—A consumer may dispute directly with 

a person the accuracy of information that—

(i) is contained in a consumer report on the consumer 

prepared by a consumer reporting agency described in 

section 603(p); and 

(ii) was provided by the person to that consumer reporting agency in accordance with paragraph (1)(B). 

(B) SUBMITTING A NOTICE OF DISPUTE.—A consumer who 

seeks to dispute the accuracy of information with a person 

under subparagraph (A) shall provide a dispute notice directly to such person at the address specified by the person 

for such notices that—

(i) identifies the specific information that is being 

disputed; and 

(ii) explains the basis for the dispute. 

(C) DUTY OF PERSON AFTER RECEIVING NOTICE OF DISPUTE.—After receiving a notice of dispute from a consumer 

pursuant to subparagraph (B), the person that provided the 

information in dispute to a consumer reporting agency referred to in subparagraph (A) shall—

76

(i) conduct an investigation with respect to the disputed information; 

(ii) review all relevant information provided by the 

consumer with the notice; 

(iii) complete such person’s investigation of the dispute and report the results of the investigation to the 

consumer before the expiration of the period under section 611(a)(1) within which a consumer reporting agency would be required to complete its action if the consumer had elected to dispute the information under 

that section; and 

(iv) if the investigation finds that the information reported was inaccurate, promptly thereafter report correct information to each consumer reporting agency described in section 603(p) to which the person furnished 

the inaccurate information. 

(7) NEGATIVE INFORMATION.—

(A) NOTICE TO CONSUMER REQUIRED.—

(i) IN GENERAL.—If any financial institution that extends credit and regularly and in the ordinary course 

of business furnishes information to a consumer reporting agency described in section 603(p) furnishes negative information to such an agency regarding credit extended to a customer, the financial institution shall 

provide a notice of such furnishing of negative information, in writing, to the customer. 

(ii) NOTICE EFFECTIVE FOR SUBSEQUENT SUBMISSIONS.—After providing such notice, the financial institution may submit additional negative information to 

a consumer reporting agency described in section 

603(p) with respect to the same transaction, extension 

of credit, account, or customer without providing additional notice to the customer. 

(B) TIME OF NOTICE.—

(i) IN GENERAL.—The notice required under subparagraph (A) shall be provided to the customer prior to, or 

no later than 30 days after, furnishing the negative information to a consumer reporting agency described in 

section 603(p). 

(ii) COORDINATION WITH NEW ACCOUNT DISCLOSURES.—If the notice is provided to the customer prior 

to furnishing the negative information to a consumer 

reporting agency, the notice may not be included in the 

initial disclosures provided under section 127(a) of the 

Truth in Lending Act. 

(C) COORDINATION WITH OTHER DISCLOSURES.—The notice required under subparagraph (A)—

(i) may be included on or with any notice of default, 

any billing statement, or any other materials provided 

to the customer; and 

(ii) must be clear and conspicuous. 

(D) MODEL DISCLOSURE.—

(i) DUTY OF BOARD TO PREPARE.—The Board shall 

prescribe a brief model disclosure a financial instituVerDate jul 14 2003 07:24 Sep 05, 2003 Jkt 019006 PO 00000 Frm 00076 Fmt 6659 Sfmt 6603 E:\HR\OC\HR263.XXX HR263
77

tion may use to comply with subparagraph (A), which 

shall not exceed 30 words. 

(ii) USE OF MODEL NOT REQUIRED.—No provision of 

this paragraph shall be construed as requiring a financial institution to use any such model form prescribed 

by the Board. 

(iii) COMPLIANCE USING MODEL.—A financial institution shall be deemed to be in compliance with subparagraph (A) if the financial institution uses any such 

model form prescribed by the Board, or the financial 

institution uses any such model form and rearranges 

its format. 

(E) USE OF NOTICE WITHOUT SUBMITTING NEGATIVE IN- FORMATION.—No provision of this paragraph shall be construed as requiring a financial institution that has provided a customer with a notice described in subparagraph 

(A) to furnish negative information about the customer to 

a consumer reporting agency. 

(F) SAFE HARBOR.—A financial institution shall not be 

liable for failure to perform the duties required by this 

paragraph if, at the time of the failure, the financial institution maintained reasonable policies and procedures to 

comply with this paragraph. 

(G) DEFINITIONS.—For purposes of this paragraph, the 

following definitions shall apply: 

(i) NEGATIVE INFORMATION.—The term ‘‘negative information’’ means information concerning a customer’s 

delinquencies, late payments, insolvency, or any form 

of default. 

(ii) CUSTOMER; FINANCIAL INSTITUTION.—The terms 

‘‘customer’’ and ‘‘financial institution’’ have the same 

meaning as in section 509 of the Gramm-Leach-Bliley 

Act. 

(8) DUTY TO PROVIDE NOTICE OF STATUS AS MEDICAL INFORMATION FURNISHER.—A person whose primary business is providing medical services, products, or devices, or the person’s 

agent or assignee, who furnishes information to a consumer reporting agency on a consumer shall be considered a medical information furnisher for the purposes of this title and shall notify the agency of such status.

* * * * * * *

§ 624. Relation to State laws 

(a) * * *

* * * * * * *

(b) GENERAL EXCEPTIONS.—No requirement or prohibition may 

be imposed under the laws of any State—

(1) with respect to any subject matter regulated under—

(A) * * *

* * * * * * *

(E) section 605, relating to information contained in consumer reports and to identity theft prevention, except that 

this subparagraph shall not apply to any State law in efVerDate jul 14 2003 07:24 Sep 05, 2003 Jkt 019006 PO 00000 Frm 00077 Fmt 6659 Sfmt 6601 E:\HR\OC\HR263.XXX HR263
78

fect on the date of enactment of the Consumer Credit Reporting Reform Act of 1996; or 

* * * * * * *

(3) with respect to the form and content of any disclosure required to be made under øsection 609(c)¿ subsection (c) or (d) 

of section 609. 

* * * * * * *

(d) LIMITATIONS.—øSubsections (b) and (c)—

ø(1) do not affect any settlement,¿ Subsections (b) and (c) do 

not affect any settlement, agreement, or consent judgment between any State Attorney General and any consumer reporting 

agency in effect on the date of enactment of the øConsumer 

Credit Reporting Reform Act of 1996; and 

ø(2) do not apply to any provision of State law (including any 

provision of a State constitution) that—

ø(A) is enacted after January 1, 2004; 

ø(B) states explicitly that the provision is intended to 

supplement this title; and 

ø(C) gives greater protection to consumers than is provided under this title.¿ Consumer Credit Reporting Reform 

Act of 1996.

* * * * * * *

(79)

ADDITIONAL VIEWS 

I appreciate that this committee has worked very hard to 

produce a bill that has garnered support on both sides of the aisle. 

Certainly, FCRA reauthorization had the potential to become a 

very difficult issue absent the leadership of Chairman Oxley and 

the leadership of many others in this committee. 

As the bill was put together over the past several weeks, compromises were made regarding different elements of the bill. Industry has made many concessions in order to help put strong consumer protections in the legislation. There are, however, new consumer protections contained in title V that are likely to cause lenders and consumer reporting agencies in our country to have great 

concern, and which I am concerned provide little benefit to consumers. 

Specifically, I have concerns about section 502 of the bill. As it 

is currently drafted, section 502 includes new requirements on 

mortgage lenders to disclose credit scores to borrowers. While I 

have no problem with the intent of this provision, I think that this 

language can be improved so that it is less burdensome and more 

workable. 

Borrowers should be able to see what scores their loans are being 

based off of, however, one problem I have with this language is 

that while it sets some clear disclosure standards, it does not make 

these standards uniform or national. We could be placing new disclosure requirements on lenders, but at the same time allowing 

states to place duplicative requirements on those companies. This 

gives me serious concerns because borrowers could be faced with a 

blizzard of duplicate requirements from both the state and federally governments. Section 502 must be made a national standard, 

not a duplicate mandate on lenders. 

I also have concerns that the language in section 502 is vague 

concerning when it is appropriate to make the credit score disclosures. As I said earlier, I have no problem with these disclosures, 

they will help prevent fraud, but we should work to minimize the 

burden they put on lenders. For example, one solution would be to 

allow lenders, when sending these scores, to do in it a way that 

minimizes costs, such as mailing the score with other documents. 

This could help significantly reduce costs for lenders and borrowers. 

I believe that as it moves forward with this important legislation, 

the committee should consider ways to make section 502 more beneficial for consumers so that they get important information while 

not imposing new burdens on lenders. At the same time I think we 

should look at simplifying the disclosure that mortgage originators 

must make to consumers. 

Similarly, I have concerns about significant costs being imposed 

on consumer reporting agencies under section 501. I am concerned 

80

about he propriety of Congress mandating that any business give 

away its products for free. In this instance we are imposing a significant financial burden on consumer reporting agencies on the 

premise that it will provide increased consumer education. In the 

absence of a uniform standard under title V, section 501 could exacerbate the costs to the consumer reporting agencies. I believe 

that both Sections 501 and 502 should serve as a national standard 

for these consumer protections in order to assure the costs of these 

laws are not increased by virtue of inconsistent or duplicative State 

laws regarding reports being furnished.

ROBERT W. NEY. 

(81)

SUPPLEMENTAL VIEWS 

Section 501 of the legislation requires consumer reporting agencies that compile and maintain files on consumers on a nationwide 

basis, upon direct request of the consumer, to provide the consumer 

with a copy of his or her credit report once annually at no charge. 

We have concerns about the impact of this provision as it is currently drafted. 

Congress has already provided consumers with complete access 

to their credit reports. In fact, consumers can obtain their credit reports for free, by law, in many instances such as if they have suffered adverse action as a result of information in their credit reports, if they are unemployed and seeking employment, if they are 

on public assistance, or if they believe false information may be in 

their files as a result of fraud (e.g. identity theft). In all other instances, the price of a credit report is capped by law—the current 

cap is $9 and it is adjusted annually for inflation. We note that the 

$9 fee is not prohibitively expensive and is less than what many 

public sector entities charge consumers for a copy of their records. 

The FBI, for example, charges an individual $18 for a copy of his 

or her arrest record. The Department of Motor Vehicles in the District of Columbia charges consumers $13 for a copy of their 10-year 

driving record. We will spare the Committee a laundry list of other 

examples. 

Requiring nationwide credit bureaus to provide their product for 

free to consumers may have admirable goals. However, we fear 

that Section 501 will actually harm consumers in the long run. As 

noted above, consumers already have full access to their credit reports, and Section 501 does not expand consumers’ rights in that 

regard. Yet, Section 501 will impose hundreds of millions of dollars 

in additional costs on nationwide consumer reporting agencies. It 

seems obvious that at least some of this cost may be passed on to 

consumers in the form of higher costs for credit and insurance. We 

are also concerned that nationwide credit bureaus will be at the 

mercy of unpredictable surges in demand for credit reports. A single story about ′′free′′ credit reports on a national news program, 

or a similar front page headline on a national newspaper or magazine, could result in millions of inquiries to the nationwide bureaus 

in a very short period of time. No business can adequately plan for 

such uncontrollable and unpredictable large scale spikes in demand 

for a product. As a result, consumers in most need of assistance, 

such as those seeking a reinvestigation of information so that they 

can close on a home mortgage, will certainly suffer as the credit bureaus shift resources in order to deal with the unpredictable spikes 

in demand for free credit reports. We strongly hope that the final 

form of this legislation will include reasonable measures that allow 

nationwide credit bureaus to manage the cost impact and consumer 

demand appropriately and fairly. 

82

1Section 502 has been modified to permit a reasonable charge for the provision of credit 

scores. Unlike the credit reports mandated to be provided for free under Section 501, this modification should eliminate any constitutional questions associated with the valuable property interests associated with credit scores, but of course, this important recognition of the private 

property interests at stake does nothing to address the more pervasive taking of the credit reports, themselves. 

Finally, in light of the burden Section 501 will place on nationwide credit bureaus, we have asked a noted constitutional scholar, 

Professor Douglas W. Kmiec, to apprise us of any constitutional 

questions that may arise if Section 501 is enacted as currently 

drafted. Judging by Professor Kmiec’s response to us, we are concerned that Section 501 may not be constitutional. By way of background, Professor Kmiec is former dean of the Catholic University 

Law School and is now the Caruso Chair in Constitutional Law at 

Pepperdine University. Professor Kmiec also served President Ronald Reagan as head of the office of legal counsel in the Department 

of Justice. Professor Kmiec’s detailed analysis is attached. 

JUDY BIGGERT. PATRICK J. TOOMEY. JEB HENSARLING.

PEPPERDINE UNIVERSITY SCHOOL OF LAW, Malibu, CA, September 4, 2003.

Re constitutional taking implications of H.R. 2622.

Hon. JUDY BIGGERT, 

U.S. Congress, Longworth Building, 

Washington, DC. 

DEAR CONGRESSWOMAN BIGGERT: As a professor of constitutional 

law and the former head of the Office of Legal Counsel in the U.S. 

Department of Justice, I have been asked by the national consumer 

reporting agencies to review the constitutionality of certain proposed amendments to the Fair Credit Reporting Act, 15 U.S.C. 

§§ 1681 et seq. (‘‘FCRA’’)—specifically, sections 501 and 502 of H.R. 

2622, the Fair and Accurate Credit Transactions Act of 2003. I am 

pleased to share this analysis with you. 

Section 501 would require Credit Reporting Agencies (‘‘CRAs’’) 

‘‘upon the direct request of the consumer’’ to provide each consumer 

with a copy of his or her credit report ‘‘once during any 12-month 

period without charge to the consumer.’’ Section 502 would require 

CRAs to supply the consumer with his or her credit score and all 

of the key factors that adversely affected the credit score.1

While the desire of Congress to assist consumers in this context 

is admirable, these proposals, in my judgment, will likely operate 

to unconstitutionally deprive CRAs of property without just compensation in violation of the Fifth Amendment. In this regard, Justice Holmes admonition of more than three-quarters of a century 

ago is apt: ‘‘a strong public desire to improve the public condition 

is not enough to warrant achieving the desire by a shorter cut than 

the constitutional way of paying for the change.’’ Pennsylvania Coal

v. Mahon, 260 U.S. at 416 (1922). 

One final word before sharing with you the analysis in detail. 

The concerns like those raised by this letter are of such serious 

magnitude that they have merited the special attention of the PresVerDate jul 14 2003 07:24 Sep 05, 2003 Jkt 019006 PO 00000 Frm 00082 Fmt 6604 Sfmt 6602 E:\HR\OC\HR263.XXX HR263
83

2The damages suffered by CRAs are discussed more extensively below, but they consist, at 

a minimum, of the market value of the free credit reports that would be mandated as well as 

the increased servicing costs—a severe and singular after-investment liability not wholly dissimilar from the retroactive health insurance liability imposed and found to be unconstitutional 

in Eastern Enterprises v. Apfel, 524 U.S. 498 (1988). While it is true that the members of the 

Supreme Court disagreed in Eastern Enterprises over whether the takings clause or the due 

process clause was the appropriate source of monetary remedy, a plurality wrote unambiguously 

that if a law imposes ‘‘severe retroactive liability on a limited class of parties that could not 

have anticipated the liability, and the extent of that liability is substantially disproportionate 

to the parties’ experience,’’ it transgresses the Constitution. Concurring in the judgment, Justice 

Kennedy relied upon both the severity of the loss and its retroactivity or unforeseeability to supply relief as a matter of substantive due process.

idency, and an existing Executive Order (No. 12360) mandates that 

‘‘actions,’’ including proposed federal legislation, that have takings 

implications, must ‘‘account for the obligations imposed by the Just 

Compensation Clause of the Fifth Amendment * * * so that they 

do not result in the imposition of unanticipated or undue additional 

burdens on the public fisc.’’ Further, ‘‘executive departments and 

agencies shall * * * identify the takings implications of proposed 

regulatory actions and address the merits of those actions in light 

of the identified takings implications, if any, in all required submissions made to the Office of Management and Budget.’’ Insofar as 

the Executive Order directs the Attorney General, in particular, ‘‘to 

ensure that the policies of the Executive Departments and agencies 

are consistent with this Order,’’ it would certainly be appropriate 

before proceeding with the proposed amendments to the FCRA to 

seek the Attorney General’s guidance on their constitutional implications. 

Analysis 

Because of the importance of the legislative object sought to be 

achieved by H.R. 2622, I have sought to examine the question indulging whenever possible those standards of analysis that give the 

greatest latitude to Congress’ legislative authority. In this respect, 

several things should be noted at the outset: first, there is not 

abundant judicial precedent applying the Constitution’s protection 

against uncompensated regulatory takings in the context of intellectual property, though what there is (as directed below) is 

credibly supportive of the constitutional concerns of the CRAs; and 

second, as a matter of constitutional law, should a taking be found, 

it does not preclude Congress from acting, but it does obligate Congress to compensate the CRAs adversely affected. 

Of course, current provisions in the FCRA provide for the free 

provision of reports, but only under highly limited circumstances 

(such as a credit denial or fraud); otherwise, CRAs obtain the fair 

market value for their products. The proposed amendments envision a vastly expanded obligation for free reports. Should this not 

be legislatively addressed, the CRAs have a statutory right under 

the Tucker Act, 28 U.S.C. 1346(a)(2) (1988) to seek compensation 

for the property taken—specifically, for the fair market value of the 

millions of free credit reports that would literally be physically 

taken from the CRAs pursuant to the proposed language.2

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3 Nor shall private property be taken for public use without the payment of just compensation. 

Amendment V. 4 Board of Regents v. Roth, 408 U.S. 564, 577 (1972). 5While the proposal currently allows for a reasonable charge for credit scores, it is possible 

that the required score and factor disclosure could place the underlying proprietary algorithms 

at risk in a manner that would implicate the Takings Clause. 

The property at issue 

Any taking analysis begins with the Fifth Amendment 3 and a 

careful assessment of the property at issue. Property cannot be legislatively redefined at will. As the Supreme Court has held: ‘‘property interests * * * are not created by the Constitution. Rather, 

they are created and their dimensions are defined by existing rules 

or understandings that stem from an independent source such as 

state law—rules or understandings that secure certain benefits and 

that support claims of entitlement to those benefits.’’ 4 Intellectual 

property (e.g., patents, copyrightable works or compilations of information, trade secrets) are clearly of importance to a modern, 

21st century economy and they have not been, and cannot be, invisible to the Constitution’s protections. In this instance, it is reasonable to conclude that there is a distinct property interest that is either taken outright or placed at risk of being taken by the proposed 

amendments.5

The credit reports—A distinct property interest 

Credit reports are created when CRAs, employing years of training, labor, skill and judgment, collect and organize information 

about consumers and their credit history from public records, creditors and other reliable sources. Credit reports are then made available by CRAs to a consumer’s current and prospective creditors and 

employers as allowed by law. Specific information contained in a 

typical credit report includes: 

• The consumer’s name, current and previous addresses, phone 

number, Social Security number, date of birth and current and previous employers. 

• Specific information about each credit account held by the consumer, such as the date opened, credit limit or loan amount, balance, monthly payment and payment pattern during the past several years. 

• Federal district bankruptcy records and state and county court 

records of tax liens and monetary judgments. 

• Statements of dispute, which allow both consumers and creditors to report the factual history of an account. 

This information is obtained from many different sources, and 

each CRA may produce a report that varies for any given consumer, depending on the reporting sources to which it has access, 

and the frequency with which those sources provide the CRA with 

updated information. It is reasonable to treat the CRA’s property 

interests in both the credit reports and the credit score reports as 

intellectual property interests in the nature of copyright. See Feist 

Publ’ns, Inc. v. Rural Tel. Svcs. Co., 499 U.S. 340, 348 (1991) (‘‘Factual compilations, on the other hand, may possess the requisite 

originality [to be entitled to copyright protection.] The compilation 

author typically chooses which facts to include, in what order to 

place them, and how to arrange the collected data so that they may 

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6Palazzolo, 533 U.S. at 633 (2001) (quoting Armstrong v. United States, 364 U.S. 40, 49 

(1960)). 7See Preamble to H.R. 2622.

8See Philip Morris, 312 F.3d at 33. 

be used effectively by readers. These choices as to selection and arrangement, as long as they are made independently by the compiler and entail a minimal degree of creativity, are sufficiently 

original that Congress may protect such compilations through the 

copyright laws.’’). See also CCC Info. Servs., Inc. v. MacLean 

Hunter Mkt. Reports, Inc., 44 F.3d 61, 65 (2d Cir. 1994) (noting 

that ‘‘the protection of compilations is consistent with the objectives 

of the copyright law * * *.’’ and further that were a legislature or 

administrative body to adopt a rule abrogating by legislative fiat a 

party’s copyright, it ‘‘would raise very substantial problems under 

the Takings Clause of the Constitution.’’) CCC Info. Svcs., 44 F.3d 

at 74. 

I am informed by the CRAs that the costs associated with the 

production of a credit report exceed $7.50 per credit report, and it 

is fair to surmise that the fair market value for a report is at least 

equal to the $9 per report authorized under the FCRA. The industry has not yet fully monetized the economic value of the millions 

of reports that would be taken or mandated to be provided for free 

under the proposed legislation, but it can be readily anticipated to 

be in the hundreds of millions of dollars, and if the unforeseen and 

imposed cost of servicing these reports are incorporated (see note 

2, supra) and widespread consumer participation assumed, the ultimate sum may range as high as a billion dollars. 

Applying the Fifth Amendment 

As noted, the Fifth Amendment forbids the taking of private 

property for public use without just compensation. It has long been 

recognized that this constitutional guarantee is ‘‘designed to bar 

Government from forcing some people alone to bear public burdens, 

which, in all fairness and justice, should be borne by the public as 

a whole.’’ 6 In the instant case, Congress seeks via the proposed 

FCRA amendments to ‘‘prevent identity theft, improve resolution of 

consumer disputes, improve the accuracy of consumer records, 

[and] make improvements in the use of, and consumer access to, 

credit information * * *.’’ 7 These are worthy goals. Rather than 

providing for compensation for the property taken to accomplish 

these objectives, however, H.R. 2622 seeks to accomplish its purpose at the sole expense of the CRAs. Under existing law, it is fair 

to conclude that this rises to the level of an impermissible regulatory taking in violation of the Fifth Amendment. 

A regulatory taking occurs ‘‘when some significant restriction is 

placed upon an owner’s use of his property for which justice and 

fairness require that compensation be given.’’ 8 Regulatory takings 

can be analyzed either as per se takings, or under the balancing 

test established by the Supreme Court in Penn Central, depending 

on the nature of the alleged taking. Per se takings tests apply in 

two principal contexts: (1) where regulation results in a permanent 

physical occupation and thereby a denial of all rights to use, sell, 

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9See Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 435 (1982). 10See Lucas v. S.C. Coastal Council, 505 U.S. 1003 (1992). 11 Andrus v. Allard, 444 U.S. 51 (1979). 12 Although there is no reported decision finding a per se taking in the case of abrogated intellectual property rights, Judge Selye, concurring in the Philip Morris decision, states that there 

should be ‘‘no principled reason to refrain from extending per se takings analysis to alleged 

takings of trade secrets. Indeed, the Supreme Court hinted at this result when it observed that 

the term ‘‘property’’ in the Takings Clause is meant in its more accurate sense to denote the 

group of rights inhering in the citizen’s relation to the physical thing * * * the value of trade 

secrets, like the value of land, is inextricably tied to both the demand of others for access and 

the legal enforceability of the owner’s right to exclude. In either case, if the sovereign effectively 

deprives the owner of the right to exclude, the value is destroyed—and the Constitution requires 

just compensation. Limiting per se taking analysis to cases involving real property is a crude 

boundary with no compelling basis in the law.’’ See Philip Morris, 312 F.3d at 51 (Selye, J. concurring). See also Nixon v. United States, 978 F.2d 1269 (D.C. Cir. 1992) (applying per se 

takings analysis to alleged deprivation of presidential papers and finding that statutory enactment ‘‘completely abrogated Mr. Nixon’s right unilaterally to exclude others from [his presidential papers]—perhaps the quintessential property right.’’). 13See Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency, 532 U.S. 

302 (2002). 14Penn. Central Transp. Co. v. New York City, 438 U.S. 104, 124 (1978). 15See Palazzolo, 533 U.S. at 634. 

or exclude others from the property in question;9 and (2) where a 

regulation denies all economically beneficial or productive use of 

land.10 It is hard not to understand the mandatory transfer of the 

physical credit reports from the CRAs to individual consumers, 

without qualification, as not falling within this per se physical taking standard. While the Supreme Court has permitted the limitation of the use and enjoyment of personal property,11 there is no 

precedent sustaining, without compensation, the outright confiscation of personal property, itself. Indeed, what little precedent is 

available supports the finding of a regulatory taking.12

Yet, as I indicated at the start, it was my intent in reviewing 

this matter to apply the most generous possible taking standard to 

afford Congress the widest possible legislative authority. To that 

end, it is useful to examine the issue under the Supreme Court’s 

balancing test articulated in Penn Central Transp. Co. v. City of 

New York, 438 U.S. 104 (1978). This is not to suggest that the proposed physical expropriation of the reports is unrelated to the application of the Penn Central factors, discussed below. It is not. Supreme Court jurisprudence suggests that where, as here, a physical 

taking is present, the analysis of the ‘‘character of the government’s 

action’’ (discussed below) will be more rigorous and judges will undertake a ‘‘careful examination and weighing of all of the relevant 

circumstances.’’ 13

Under Penn Central,14 a regulatory taking is analyzed by examining: (1) What is the economic impact of the regulation; (2) whether the government action interferes with reasonable investmentbacked expectations; and (3) what is the character of the government action. Id. Penn Central ‘‘does not supply mathematically precise variables, but instead provides important guideposts that lead 

to the ultimate determination whether just compensation is required.’’ 15 Let us examine each individually: 

Reasonable investment-backed expectations 

There is no clear judicial consensus on what constitutes ‘‘reasonable investment-backed expectations,’’ although in at least one case 

involving trade secrets, the Supreme Court has found the force of 

the deprivation of a party’s reasonable investment-backed expectations to be ‘‘so overwhelming’’ as to be dispositive of the takings 

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16See Monsanto, 467 U.S. at 1005. 17 Id. at 991. 18 Id. 19 Id. at 995–96. 20Monsanto, 467 U.S. at 998–99. 21 Id. at 1006–07. See also Nollan v. Cal. Coastal Comm’n, 483 U.S. 825, 833 n.2 (1987). 22Monsanto, 467 U.S. at 1101. 23 Id. 24 Id. 

issue.16 That case, Monsanto, involved a taking challenge to several 

provisions of the Federal Insecticide, Fungicide and Rodenticide 

Act (‘‘FIFRA’’), which, among other things, required all pesticides 

sold in interstate or foreign commerce for use within the United 

States to be registered with the Secretary of Agriculture and appropriately labeled.17 FIFRA, first enacted in 1947, also empowered 

the Secretary to require applicants for registration to submit testing data, including pesticide formulae and data on the pesticide’s 

health, safety and environmental impact.18 In 1978, FIFRA was 

amended to provide ‘‘for disclosure of all health, safety, and environmental data * * * notwithstanding the prohibition against disclosure of trade secrets’’ found elsewhere in the statute.19

Monsanto challenged this amendment, arguing that the forced 

disclosure of trade secret information submitted by it to the Secretary of Agriculture constituted a regulatory taking in violation of 

the Fifth Amendment.20 The Court agreed in part. Stating that a 

reasonable investment-backed expectation must be more than a 

‘‘unilateral expectation than an abstract need,’’ the Supreme Court 

held that as to information submitted by Monsanto after the 1978 

amendment: 

Monsanto could not have had a reasonable, investmentbacked expectation that EPA would keep the data confidential beyond the limits prescribed in the amended statute itself. Monsanto was on notice of the manner in which 

EPA was authorized to use and disclose any data turned 

over to it by an applicant for registration ***. If Monsanto 

chose to submit the requisite data in order to receive a 

registration, it can hardly be argued that its reasonable investment-backed expectations are disturbed when EPA 

acts to use or disclose the data in a manner that was authorized by law at the time of the submission.21

For information submitted between 1972 and 1978, however, as 

to which the then-current FIFRA regulations gave Monsanto explicit assurances that the EPA was prohibited from disclosing publicly any data submitted by an applicant, the Court found that 

‘‘this explicit governmental guarantee formed the basis of a reasonable investment-backed expectation’’ that submitted data, designated as trade secrets, would be protected.22 In rendering its decision, the Court noted that a trade secret’s value lies in the ‘‘right 

to exclude others.’’ 23 If others are given the trade secret the ‘‘holder of the trade secret has lost his property interest,’’ and the question becomes whether the party received adequate compensation 

for the taking of that interest.24

Similarly, in Philip Morris, the First Circuit considered whether 

Massachusetts’ enactment of the Disclosure Act, Mass. Gen. Laws 

ch. 94, § 307B, which required cigarette manufacturers to provide 

brand-specific ingredient lists in order to sell cigarettes within 

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25Philip Morris,, 312 F.3d at 26. 26 Id. at 39. 27 Id. at 41. 28There are laws in ten states that allow the citizens of those states to obtain copies of their 

credit reports for free, or at a reduced cost, depending on the circumstances. See California, Cal. 

Civ. Code §§ 1785.11.1, 1785.15, 1785.19 and 1785.19.5; Colorado, Colo. Rev. Stat. § 12–14.3–

104(2)(e); Connecticut, Conn. Gen. Stat. § 36a-696(b); Georgia, O.C.G.A. §§ 10–1–392, 10–393(29); 

Maine, Me. Rev. Stat. Ann. tit. 10, § 1316(z); Maryland, Md. Commercial Law code Ann. § 14–

1209(a)(1); Massachusetts, Mass. Gen. Laws Ann. Ch 93, § 59; Minnesota, Minn. Stat. 

§ 13C.01(a); New Jersey, N.F. Stat. Ann. § 56:11–37(a); Vermont, Vt. Stat. Ann. tit. 9, § 2480(c). 

At least two of these states require CRAs to disclose credit scores if requested by the consumer. 

See Ca. Civ. Code § 1785.15.1; Vt. Stat. Ann. tit. 9, § 2480(c). As discussed in the text, these 

statutes—passed for different and narrower purposes—are merely factors in the application of 

the taking analysis under Penn Central, as further applied in Palazzolo v. Rhode Island, 533 

U.S. 606, 634(2001) (hereinafter ‘‘Palazzolo’’). 29See Duquesne Light Co. v. Barasch, 488 U.S. 299, 310 (1989); FPC v. Hope Natural Gas 

Co., 320 U.S. 591, 603 (1944). 30Given that CRAs have accepted existing regulation that, in far less intrusive ways, resembles aspects of the proposed legislation is thus not dispositive. As the Court explained in 

Palazzolo at 626–27: ‘‘The theory underlying the argument that postenactment purchasers cannot challenge a regulation under the Takings Clause seems to run on these lines: Property 

rights are created by the State. See, e.g., Phillips v. Washington Legal Foundation, 524 U.S. 

Massachusetts, and which provided that the state of Massachusetts 

could publicly disclose the precise formulas for these cigarettes 

whenever such disclosure ‘‘could reduce the risks to public health,’’ 

operated to unlawfully deprive cigarette manufacturers of property 

in violation of the Fifth Amendment.25 In holding that the Disclosure Act operated to deprive the cigarette manufacturers of their 

trade secrets in violation of the Takings Clause, the Court noted 

that, unlike Monsanto, the question before it was whether Massachusetts can force the tobacco companies to cede their trade secrets 

in exchange for doing business within its borders.26 Given the protection afforded trade secrets by the state of Massachusetts, the 

Court answered this question in the negative, holding that the tobacco companies had reasonable, investment-backed expectations 

that their trade secrets would remain secret.27

Applied to the facts at bar, in my judgment, the conclusion is inescapable: the CRAs have a colorable argument that the proposed 

FCRA amendments operate to deprive CRAs of their reasonable, 

investment-backed expectations. That said, and again to give every 

possible deference to Congress’ authority, it is possible to argue 

that in light of the limited right of free reports under existing federal and state laws,28 CRAs no longer have any reasonable expectation of a return on investment for even a far broader taking of 

credit reports. To state the proposition, however, is to refute it 

since it defies economic reality. Moreover, supplying credit reports 

to a defined class of individuals denied credit or who have reason 

to believe that a report is in error, facilitates legislative goals that 

coincide with the best practices of the industry. It is quite another 

matter to be treated as the equivalent of a public utility, except 

that public utilities are guaranteed a reasonable rate of return.29

The Supreme Court has also made it clear that a taking claim is 

not defeated merely because one invests in property that has already been regulated. See Palazzolo v. Rhode Island, 533 U.S. 606, 

634 (2001) (hereinafter ‘‘Palazzolo’’ (‘‘[T]he state of regulatory affairs at the time [that the property interest was acquired] is not 

the only factor that may determine the state of reasonable investment-backed expectations ***. Courts instead must attend to those 

circumstances which are probative of what fairness requires in a 

given case.’’).30

89

156, 163, 118 S. Ct. 1925, 141 L.Ed.2d 174 (1998). So, the argument goes, by prospective legislation the State can shape and define property rights and reasonable investment-backed expectations, and subsequent owners cannot claim any injury from lost value. After all, they purchased 

or took title with notice of the limitation. The State may not put so potent a Hobbesian stick 

into the Lockean bundle. The right to improve property, of course, is subject to the reasonable 

exercise of state authority, including the enforcement of valid zoning and land-use restrictions. 

See Pennsylvania Coal Co., 260 U.S., at 413, 43 S. Ct. 158 (‘‘Government hardly could go on 

if to some extent values incident to property could not be diminished without paying for every 

such change in the general law’’). The Takings Clause, however, in certain circumstances allows 

a landowner to assert that a particular exercise of the State’s regulatory power is so unreasonable or onerous as to compel compensation. Just as a prospective enactment, such as a new zoning ordinance, can limit the value of land without effecting a taking because it can be understood as reasonable by all concerned, other enactments are unreasonable and do not become less 

so through passage of time or title. Were we to accept the State’s rule, the postenactment transfer of title would absolve the State of its obligation to defend any action restricting land use, 

no matter how extreme or unreasonable. A State would be allowed, in effect, to put an expiration date on the Takings Clause. This ought not to be the rule. Future generations, too, have 

a right to challenge unreasonable limitations on the use and value of land.’’ 31 Nollan, 483 U.S. at 833 n.2. 32Philip Morris, 312 F.2d at 47. 33 Id. (quoting Pruneyard Shopping Ctr. v. Robins, 447 U.S. 74 (1982)). 

More than once, the Supreme Court has admonished legislative 

bodies that the constitutional protection for property, especially as 

it relates to a core, inherent aspect like the right to exclude, cannot 

simply be redefined away. In Monsanto, the Court held that disclosure of a trade secret could be required as a condition for receiving 

a valuable governmental benefit (there, a license to sell a pesticide 

in a highly regulated environment). However, as Justice Scalia explained for the Court in the later case of Nollan, v. California 

Coastal Commission, ‘‘some core elements of property—like the 

right to build on one’s own property * * * cannot remotely be described as a ‘government benefit.’ And thus the announcement that 

the application for (or granting of) the permit will entail the yielding of a property interest cannot be regarded as establishing the 

voluntary ‘exchange’ that we found to have occurred in Monsanto.’’ 31

Likewise, the Philip Morris court determined, ‘‘allowing a manufacturer to simply sell its legal product is more similar to building 

on one’s land * * *.’’ 32 The sale of credit reports and the right to 

maintain the proprietary value of credit scores and underlying algorithms is much the same. The dissent in Philip Morris did not 

dispute the analysis of the lead opinion, but simply avoided the 

constitutional determination of a taking by pointing to available 

regulatory means under the Disclosure Act that allowed regulated 

companies to pursue a stay prior to disclosure of its valuable trade 

secrets. Thus, because of this regulatory escape hatch, the dissent 

did not think the Disclosure Act was ‘‘unconstitutional in every application.’’ Congress has not proposed a similarly tailored means to 

either compensate CRAs for their property or preserve it from governmental taking contrary to the Constitution. 

Economic impact 

The law regarding economic impact is fairly straightforward. 

‘‘The inquiry is whether the regulation ‘impairs the value of use of 

the property’ according to the owners’ general use of their property.’’ 33 As the Philip Morris court noted, ‘‘not only is the use to 

which the property owner puts her property important, but the ecoVerDate jul 14 2003 07:24 Sep 05, 2003 Jkt 019006 PO 00000 Frm 00089 Fmt 6604 Sfmt 6602 E:\HR\OC\HR263.XXX HR263
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34 Id. See also Connolly v. Pension Benefit Guar. Corp., 475 U.S. 211, 225–26 (1986) (evaluating economic impact of imposing withdrawal fees on employers who have pension funds within 

the context of entire ERISA scheme). 35Philip Morris, 312 F.3d at 41. 36 If disclosure of the key factors behind credit scores foreseeable results in the reverse engineering of those scores, it is possible that a separate taking related to the underlying property 

or trade secrets in the algorithms that give rise to credit scores would also be presented. This 

taking of trade secrets would fall squarely within the reasoning set forth in Philip Morris. 37 438 U.S. at 124. 38Ruckleshaus, 467 U.S. 986, 1011 (1984). 

nomic impact needs to be considered in the context of other laws 

and regulatory schemes.’’ 34

In Philip Morris, the Court noted that economic impact was fairly evident. ‘‘The [tobacco companies] have spent millions of dollars 

developing the formulas for different brands. The evidence shows 

that public disclosure of the ingredients lists, even in part, will 

make it much easier to reverse engineer those formulas. If competitors can obtain these formulas, they can replicate [the tobacco companies’] products, undermining the value of the [tobacco companies’] brands.’’ 35

I believe the argument is similarly straightforward here. Clearly, 

the CRAs can establish the fair market value of a credit report, 

and that deprivation, multiplied by the millions that would mandated to be supplied for free under the proposal yields a substantial 

sum.36

Character of the government action 

In Penn Central, the Supreme Court offered only one example of 

how the character of the governmental action is relevant to its taking analysis. The one example, however, is manifest here. Said the 

Court, if the legislative action results in a physical invasion then 

a taking ‘‘may more readily be found * * * then when interference 

arises from some public program adjusting the benefits and burdens of economic life to promote the common good.’’ 37 Scholarly 

commentators have noted that physical invasion or confiscation so 

resembles eminent domain that compensation should almost always be forthcoming. In such instances, the hallmark of property—

the very right to exclude—is at issue.38

Assessing the character of the governmental action may also require the Court to balance reasonable investment-backed expectations and economic impact against the purposes sought to be advanced by the legislation. Justice O’Connor who is acknowledged to 

be the lead judicial voice for the Court in this area, has suggested 

that assessment of the character of the government’s action includes ‘‘the purposes served, as well as the effects produced, by a 

particular regulation * * * [A regulation] may constitute a ‘taking’ 

if not reasonably necessary to the effectuation of a substantial public purpose, [citations omitted], or perhaps if it has an unduly 

harsh impact upon the owner’s use of the property.’’ Palazzolo, 533 

U.S. at 633 (2001) (O’Connor, J., concurring). 

Following Justice O’Connor’s instruction, the proposed FCRA 

amendments must also be balanced against the interests that Congress seeks to protect—namely, to ‘‘prevent identity theft, improve 

resolution of consumer disputes, improve the accuracy of consumer 

records, [and] make improvements in the use of, and consumer acVerDate jul 14 2003 07:24 Sep 05, 2003 Jkt 019006 PO 00000 Frm 00090 Fmt 6604 Sfmt 6602 E:\HR\OC\HR263.XXX HR263
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39See Preamble to H.R. 2622. 40 Id. 41 Id. 42Philip Morris, 312 F.3d at 41. 43 Id. 44 364 U.S. 40 (1960). As noted by the Philip Morris court, in Armstrong, ‘‘the Supreme Court 

considered the implications of government action that, as a secondary effect, destroyed a private 

party’s lien. The Court held that this was a taking a not ‘a mere consequential incidence of a 

valid regulatory measure.’ ’’ See Philip Morris, 312 F.3d at 42. Similarly, the proposed FCRA 

regulations, which in part would destroy the proprietary credit score algorithms developed by 

the CRAs, cannot be said to have as a ‘‘consequential incidence’’ the taking of the CRAs’ property. 45 444 U.S. 51 (1979) (upholding government regulation banning the sale of items containing 

eagle parts—even though such artifacts essentially lost all economic value after the regulation 

as passed). ‘‘While this was a significant restriction, the Court noted that this destruction of 

one strand of the bundle of property rights did not constitute a taking. Rather, the substantial 

state interest in preserving eagles justified the regulation.’’ Philip Morris, 312 F.3d at 43. As 

proposed, the FCRA amendments operate to deprive CRAs of far more than ‘‘one strand’’ of the 

bundle of their property rights, and thus the Supreme Court’s reasoning in Andrus is not dispositive. 46 481 U.S. 704 (1987) (character of the government action involved dispositive when the government held that regulation destroying the rights of descent and devise which had previously 

attached to undivided fractionated interests in land created an unconstitutional taking). 47Philip Morris, 312 F.3d at 44. 48Id.

cess to, credit information * * *.’’ 39 From the outset of this analysis, these legislative purposes have been conceded to be meritorious, but as the appellate court’s decision in Philip Morris reveals, this is not sufficient to dispose of the taking issue. 

While the state of Massachusetts had in Philip Morris a compelling interest in protecting the health and welfare of its citizens, 

this interest ‘‘must bear some reasonable relationship to the 

ends.’’ 40 The court concluded that ‘‘for a state to be able to completely destroy valuable trade secrets, it should be required to show 

more than a possible beneficial effect.’’ 41 This balance was not 

found in Philip Morris, since the Court accepted as paradigmatic 

the tobacco companies’ assertion that as a result of the Disclosure 

Act provisions, ‘‘they [would] lose the right to exclude others from 

their trade secrets and, consequently, their trade secrets would lose 

all value.’’ 42 The Court noted that in Monsanto, the ‘‘Supreme 

Court recognized that if an individual disclosed his trade secrets to 

others who are under no obligation to protect the confidentiality of 

the information, or otherwise publicly discloses the secret, his property right is extinguished.’’ 43 After discussing Armstrong v. United 

States,44 Andrus v. Allard,45 and Hodel v. Irving,46 the appellate 

court held that while the ‘‘simple loss of economic value, alone, is 

probably not enough,’’ the fact that the tobacco companies’ rights 

had not just been devalued, but had been extinguished, caused the 

Disclosure Act to be unconstitutional.47 The court concluded by observing that ‘‘the tremendous individual loss is simply not justified 

by such a speculative public gain.’’ 48

The credit reports in the present matter are not merely extinguished, but transferred, and the disclosure of scores and factor 

analysis may undermine the value of proprietary algorithms as 

well. In light of this, as salutary as the objectives of the proposed 

amendments are, they do not constitutionally excuse placing the 

disproportionate burden of meeting them upon the CRAs. 

It bears repeating that the Philip Morris analysis does not second-guess the legislative objective—in that case, public health. 

Rather, in light of the totality of the reasonableness of the investVerDate jul 14 2003 07:24 Sep 05, 2003 Jkt 019006 PO 00000 Frm 00091 Fmt 6604 Sfmt 6602 E:\HR\OC\HR263.XXX HR263
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ment expectation, the economic impact, and the character of the 

government’s action (viz., whether there was some related physical 

taking or not), the court inquired into how well-matched the regulatory means were to the presumed-to-be reasonable legislative 

end. The lead opinion in Philip Morris determined that the Disclosure Act ‘‘has not been shown to further the stated goal of promoting public health in such a way as to counterbalance the tremendous private loss involved.’’

Even under the most deferential analysis to Congress, the same 

is true here. With due respect to the objectives sought to be 

achieved and the legislative authority to fashion avenues for doing 

so, the conclusion that the proposed sections implicate the constitutional protections of property is inescapable. 

Respectfully submitted, 

DOUGLAS W. KMIEC.

Æ