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[Senate Report 108-166]
[From the U.S. Government Publishing Office]

                                                       Calendar No. 312
108th Congress                                                   Report
                                 SENATE
 1st Session                                                    108-166

======================================================================

 
                   AMENDING FAIR CREDIT REPORTING ACT

                                _______
                                

                October 17, 2003.--Ordered to be printed

                                _______
                                

 Mr. Shelby, from the Committee on Banking, Housing and Urban Affairs, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 1753]

    The Committee on Banking, Housing, and Urban Affairs to 
which was referred the bill (S. 1753) to amend the Fair Credit 
Reporting Act in order to prevent identity theft, to improve 
the use of and consumer access to consumer reports, to enhance 
the accuracy of consumer reports, to limit the sharing of 
certain consumer information, to improve financial education 
and literacy, and for other purposes having considered the 
same, reports favorably thereon without amendment and 
recommends that the bill do pass.
    On September 23, 2003 the Committee voted unanimously to 
report the bill to the Senate for consideration as promptly as 
circumstances permit.

                      HEARING RECORD AND WITNESSES

    On May 20, 2003, Mr. Howard Beales, Director, Bureau of 
Consumer Protection, Federal Trade Commission testified before 
the Committee to provide ``An Overview of the Fair Credit 
Reporting Act.''
    On June 19, 2003, Mr. Howard Beales, Director, Bureau of 
Consumer Protection, Federal Trade Commission; Mr. Timothy 
Caddigan, Special Agent In-Charge, Criminal Investigation 
Division, United States Secret Service; Michael Cunningham, 
Senior Vice President, JP Morgan Chase Card Member Service; 
Captain John Harrison, U.S. Army--Ret.; Mr. Stuart Pratt, 
President and CEO, Consumer Data Industry Association; Ms. 
Linda Foley, Executive Director, Identity Theft Resource 
Center; Mr. William Hough, Vice President of Credit Services, 
The Neiman Marcus Group and Mr. Michael Naylor, Director of 
Advocacy, AARP appeared before the Committee to testify on 
``The Growing Problem of Identity Theft and Its Relationship to 
the Fair Credit Reporting Act.''
    On June 26, 2003, Professor Joel Reidenberg, Professor of 
Law and Director of the Graduate Program, Fordham University; 
Mr. Ronald Prill, President, Target Financial Services; Mr. 
Terry Baloun, Regional President and Group Head, Wells Fargo 
Bank; Ms. Julie Brill, Assistant Attorney General, State of 
Vermont; Mr. Martin Wong, General Counsel, Global Consumer 
Group, Citigroup, Inc.; Mr. Edmund Mierzwinski, Consumer 
Program Director, U.S. Public Interest Research Group and 
Angela Maynard, Senior Vice President and Chief Privacy 
Executive, Key Bank appeared before the Committee to testify on 
``Affiliate Sharing Practices and Their Relationship to the 
Fair Credit Reporting Act.''
    On July 10, 2003, The Honorable Timothy Muris, Chairman, 
Federal Trade Commission; Mr. Stuart Pratt, President and CEO, 
Consumer Data Industry Association; Mr. Richard LeFebvre, 
President and Chief Executive Officer, AAA American Credit 
Bureau; Mr. Evan Hendricks, Editor, Privacy Times; Mr. Stephen 
Brobeck, Executive Director, Consumer Federation of America and 
Mr. David Jokinen, Consumer Witness, testified before the 
Committee on ``The Accuracy of Credit Report Information and 
the Fair Credit Reporting Act.''
    On July 29, 2003, Ms. Delores Smith, Director, Division of 
Consumer and Community Affairs, Federal Reserve Board; Ms. 
Donna Gambrell, Deputy Director of Compliance & Consumer 
Protection, Federal Deposit Insurance Corporation; Mr. Joel 
Winston, Associate Director, Financial Practices Division, 
Bureau of Consumer Protection, Federal Trade Commission; Ms. 
Stacey Stewart, President and Chief Executive Officer, Fannie 
Mae Foundation; Mr. Scott Hildebrandt, Vice President of Direct 
Marketing Operations, Capital One Financial Corporation; Mr. 
Travis Plunkett, Consumer Federation of America and Ms. Cheri 
St. John, Vice President for Global Scoring Solutions, Fair 
Isaac Corporation testified before the Committee on ``Consumer 
Awareness and Understanding of the Credit Granting Process.''
    On July 31, 2003, The Honorable John Snow, Secretary, 
Department of the Treasury; Mr. Edmund Mierzwinski, Consumer 
Program Director, U.S. Public Interest Research Group and Mr. 
Michael McEneney, Partner, Sidley Austin Brown & Wood LLP 
testified before the Committee on ``Addressing Measures to 
Enhance the Operation of the Fair Credit Reporting Act.''

                   PURPOSE AND SUMMARY OF LEGISLATION

    ``The National Credit Reporting System Improvement Act of 
2003'' was developed after careful consideration of the 
operation of the credit markets, the credit reporting system 
and the law that regulates them, the Fair Credit Reporting Act 
(``FCRA'' or ``Act''). The legislation modifies the FCRA to 
address the significant changes which have occurred in the 
credit markets in the last seven years and contains measures 
which add greater flexibility so that the regulatory regime can 
evolve to adapt to further changes in the marketplace. 
Ultimately, this legislation addresses the needs of credit 
consumers while providing for the efficient operation of the 
national credit markets.
    The legislation enhances the ability of consumers to combat 
identity theft, increases accuracy by providing consumers 
greater notice about, and access to, their credit report 
information, and allows consumers to exercise greater control 
regarding the type and amount of marketing solicitations they 
receive. Additionally, the bill restricts the use and transfer 
of sensitive medical information. Lastly, the legislation 
employs targeted measures to address the significant issue 
regarding the level of financial literacy in the United States.
    The bill contains numerous measures which protect consumers 
from identity thieves. The legislation requires the truncation 
of credit and debit card account numbers on electronically 
printed receipts to prevent criminals from obtaining easy 
access to such key information. The bill directs the banking 
regulators, the National Credit Union Administration (NCUA) and 
the Federal Trade Commission (FTC) to develop identity theft 
``red flag'' guidelines for use by the entities within their 
respective jurisdictions to help protect consumers. The 
legislation requires additional address verification efforts 
with respect to credit card account holders in certain 
circumstances where there is a probability of fraud. The bill 
requires the FTC to conduct a public campaign to increase 
consumer awareness of the methods available to prevent identity 
theft. Additionally, the legislation increases the punishment 
for individuals convicted of identity theft crimes.
    The bill also includes provisions which address the needs 
of consumers who have been victims of identity theft. The 
legislation requires the FTC to prepare a summary of rights of 
identity theft victims that consumers can obtain from the 
national consumer reporting agencies. The bill allows victims 
who have obtained an identity theft report to block reporting 
of the trade lines associated with the identity theft activity 
and requires furnishers to takes steps to avoid re-reporting 
certain information to the credit bureaus when they know that 
it is identity theft-related. The legislation directs the 
national credit reporting agencies to coordinate and share 
consumer identity theft complaints with the other national 
agencies when a consumer makes a report to any one such agency. 
The legislation prohibits certain transfers of identity-theft 
related debts and requires debt collectors to provide identity 
theft victims with specific account information.
    The legislation includes provisions that increase consumer 
access to, and control of, their credit report information. The 
bill provides consumers the right to make an annual request 
through a centralized system and receive, free of charge, 
copies of their credit reports from certain consumer reporting 
agencies. The legislation provides consumers the ability to 
request their credit scores or information about credit scores 
in certain contexts. The bill directs the FTC to develop a 
summary of consumer rights provided under the FCRA, including a 
description of how consumers can obtain credit reports and 
scores. The bill extends the effective period for a telephone 
prescreening ``opt-out'' from 2 years to 7 years and directs 
the FTC, the Federal Banking agencies and the NCUA to 
promulgate rules for the opt-out disclosures contained in 
solicitations involving the use of pre-screened lists. The 
legislation requires affiliated entities that use certain 
information to make certain solicitations for marketing 
purposes to provide consumers notice of such uses and allow the 
consumer an opportunity to prohibit the solicitations.
    The legislation contains numerous provisions to increase 
the accuracy of consumer reports by providing consumers greater 
notice about the content of their reports or by requiring 
regulators, credit bureaus and furnishers to place greater 
emphasis on the accuracy of the consumer report information. 
The legislation directs creditors to provide consumers notice 
when, because of the contents of the consumer's credit report, 
the creditor chooses to make a counter offer to the consumer on 
material terms that are materially less favorable than the 
terms generally available to the public. The bill directs the 
Federal banking regulators, the NCUA, and the FTC to develop 
guidelines for use by the entities under their respective 
jurisdictions to ensure greater accuracy and completeness of 
the information they furnish to the credit bureaus. The 
legislation requires the Federal Trade Commission and the 
Federal Reserve to conduct ongoing studies of the accuracy of 
consumer reports and the resolution of consumer complaint 
investigations. The bill requires credit bureaus and furnishers 
to take additional steps to rid consumer credit reports of 
inaccurate or incomplete information and to make sure consumer 
address information is accurate.
    The legislation contains important new protections which 
significantly limit creditors' use of consumer medical 
information and restrict the dissemination of medical 
information in credit reports. These provisions also prohibit 
the sharing of medical information among affiliated entities 
and require the coding of medical information that is included 
in credit reports.
    The legislation establishes the Financial Literacy and 
Education Commission (Commission). The Commission's primary 
duties are to undertake a review of the federal government's 
financial literacy programs, to coordinate promotion of federal 
financial literacy efforts, and to develop a national strategy 
on financial literacy and education. The Commission will be 
chaired by the Secretary of the Treasury and will hold hearings 
and receive testimony as necessary to fulfill the mandates of 
the Title. In addition, the Commission shall establish a 
website as a one-stop-shop connecting all of the federal 
literacy programs and establish a toll-free number so that 
those who do not have access to the internet may receive 
financial literacy information.

                  BACKGROUND AND NEED FOR LEGISLATION

The Fair Credit Reporting Act

    Consumer credit markets in the United States have grown and 
changed dramatically over the course of the last fifty years. 
Where local banks and retailers once served as the primary 
source of credit for consumers, today, consumers can obtain 
credit from numerous entities located all over the country. 
Moreover, whereas obtaining credit once was once a labor and 
time-intensive process, today consumers can secure credit 
almost instantaneously.
    The development of the current system, which makes more 
credit available, to a greater range of consumers, on a more 
timely basis is the result of the confluence of numerous 
factors. Innovations such as the securitization and sale of 
debt certainly increased the amount of capital available for 
consumer lending. Refinements to the system for evaluating and 
pricing consumer credit significantly contributed to the 
advancement of the speed and efficiency in which the credit 
markets operate.
    The FCRA, passed in 1970, spurred much of this development.
    The FCRA contains the statutory framework governing 
consumer credit reporting. The law applies to information 
bearing on the qualifications and credit worthiness of 
consumers compiled by consumer reporting agencies and reported 
to third parties for use in evaluating consumer eligibility for 
credit, insurance and employment, for example. This information 
is transferred by way of what are commonly referred to as 
consumer reports. Consumer reports typically include such 
information as a consumer's name, address, social security 
number, telephone number, employment information, payment 
history, credit activity and other public record information 
such as legal judgments, including bankruptcies and arrests. 
For certain types of information, including bankruptcies and 
negative credit repayment history, the statute designates the 
length of time consumer reporting agencies can actively report 
such information.
    Beyond consumer reporting agencies, the Act also regulates 
the activities of users of credit reports and furnishers of 
information to the reporting agencies. The FCRA strikes a 
balance between the privacy interests of consumers with respect 
to the contents of their credit reports and the need of 
businesses to access the information required to make accurate 
real time assessments of consumer qualifications. The Act 
states that credit reports may only be supplied to entities 
that have a statutorily designated ``permissible purpose'' to 
use the report. These permissible purposes include, among 
others, use in determining the consumer's eligibility for 
credit, insurance, and employment, or in connection with 
business transactions initiated by the consumer, as well as to 
determining consumer eligibility for ``pre-screened'' offers of 
credit and insurance (i.e. targeted marketing offers made to 
consumers who meet certain pre-established criteria). Consumer 
reporting agencies must take steps to ensure they provide 
reports solely to entities that have a permissible purpose for 
using the report. Furthermore, the Act contains criminal 
penalties for anyone who obtains a consumer report using false 
pretenses. The Act also requires users of consumer reports to 
notify consumers when, based on the contents of the report, 
they take certain adverse actions against the consumer.
    Any entity that has relevant information about certain 
consumer activity may furnish that information to consumer 
reporting agencies. Because furnishing consumer report 
information is voluntary under the FCRA, entities that decide 
to furnish may decide, at any time, to cease furnishing. 
Furthermore, furnishers can select the particular consumer 
reporting agencies to whom they supply information. When 
entities do furnish information, however, the FCRA imposes 
duties on them with respect to the accuracy of the information 
they supply and to investigate consumer disputes.

The 1996 Amendments

    In 1996, Congress significantly amended the FCRA. The 
driving force behind the changes was the significant amount of 
inaccurate information that was being reported by consumer 
reporting agencies and the difficulties that consumers faced 
getting such errors corrected. In fact, during the period 
leading up to the amendments, the FTC consistently indicated 
that it received more complaints about consumer report errors 
than any other item. The accuracy related provisions included 
in the 1996 amendments imposed standards on furnishers, 
required completion of re-investigations within a specific time 
frame, and restricted the re-insertion of previously deleted 
materials.
    Additionally, the authors of the 1996 Amendments sought to 
establish uniform standards in key areas in an effort to 
enhance the development of national credit markets. These 
measures include national standards for: the form and content 
of certain consumer disclosures, pre-screening activities; the 
procedures for consumers to dispute the accuracy of consumer 
reports; the duties of a person who take adverse action; the 
contents of consumer reports; furnisher responsibilities; and 
the sharing of information amongst affiliated entities. State 
laws with respect to these issues were preempted.
    Because of the experimental nature of these provisions, 
however, the authors of the 1996 amendments specifically set 
forth that the preemptions would expire on January 1, 2004. The 
purpose of these sunsets was to prompt Congressional review of 
the impact of the 1996 amendments after such time that the full 
range of their effects on credit markets could be 
comprehensively evaluated.

2003 Senate Banking Committee consideration

    In advance of the expiration of the preemption provisions, 
the Senate Committee on Banking, Housing and Urban Affairs 
conducted 6 hearings on the FCRA. These hearings covered a 
broad range of topics including: the overall accuracy of the 
contents of credit reports; the emergence and impact of 
identity theft on the credit granting and reporting systems; 
the level of consumer awareness and understanding of credit 
granting activity; and affiliate sharing practices. Beyond 
these particular hearing topics, the Committee had the 
opportunity to generally consider the effectiveness of the 1996 
amendments as well as the overall state of the consumer credit 
markets and the consumer credit reporting system.
    Through the course of the hearings the Committee was made 
aware of the vast size and scope of the consumer reporting 
system: Each of the national consumer reporting agencies 
maintain 200 million credit files. Approximately 30,000 data 
furnishers provide data to the national agencies as well as to 
the other regional agencies in the system. These furnishers 
report two billion updates to credit files every month. Lastly, 
over two billion credit files are purchased every year. 
Considering the huge proportions of the system, Stephen 
Brobeck, Executive Director of the Consumer Federation of 
American, testified that, in light of

        * * * the challenges it faces, our credit reporting 
        system functions relatively well. These challenges 
        include keeping track of billions of important changes 
        in the credit histories of nearly 200 million 
        Americans, in doing so when the furnishing of 
        information by lenders is voluntary.

    The logistical difficulties associated with the vast size 
and complexity of the consumer reporting system are necessarily 
confronted because of the tremendous significance of the 
purposes for which the information is used. This information 
supports decision making with respect to trillions of dollars 
of consumer credit and insurance and millions of jobs. To this 
point, Mr. Brobeck further testified:

          Yet these challenges must be met because of the 
        growing influence of this information and the related 
        credit scores. Increasingly, these scores determine 
        whether a consumer can purchase a mortgage loan, a 
        consumer loan, auto insurance, homeowners insurance, a 
        rental unit and utilities, and at what price; and 
        increasingly, these scores influence whether Americans 
        can obtain and retain a job.

    These two critical factors informed the Committee's 
consideration of the FCRA: the practical importance of the 
system to the operation of the economy and the every day lives 
of millions of American consumers; and, the significant 
logistical issues associated with the sheer size and operation 
of a complex and dynamic system.

Accuracy

    Achieving the accuracy in consumer report information was a 
main goal of the FCRA when it was enacted in 1970. Recognizing 
that inaccuracy retains the potential to be particularly unfair 
to any given consumer and to cause general inefficiencies in 
the operation of the credit markets, the Committee paid close 
attention to this issue in its deliberations. Indeed, witness 
testimony regarding the evolution of the credit markets 
provided indication that accuracy in credit report information 
matters more now than ever before. Mr. Howard Beales, the 
Director of the Bureau of Consumer Protection of the Federal 
Trade Commission, observed that:

          With growing frequency, the terms you are offered, 
        whether it's the interest rate or the credit limit or 
        some other aspect of the credit arrangement, depend on 
        the risk that the individual borrower presents. And the 
        higher the risk the worse the terms * * * Certainly in 
        1970, the information-processing technology and the 
        information sharing technology simply wasn't in place 
        to support that kind of system on any very large scale. 
        Now it is. Now it is done. It's much more 
        differentiated pricing of credit and insurance products 
        based on the risks that a particular customer may pose.

    Mr. Beales testimony provides an indication of the changes 
the use of ``risk-based'' pricing (i.e., pricing based on 
quantitative analysis of data related to credit worthiness) 
have brought to consumer reporting. Advancements in information 
technology and underwriting have moved credit markets far 
beyond the days where decisions with respect to eligibility 
were made on essentially a ``pass-fail'' basis. Today, instead 
of being told that he is qualified or not, a consumer's credit 
risk is carefully calculated so that he is offered a particular 
rate or terms that closely match the risks his report suggests 
he poses.
    Because of the precision it affords creditors, risk-based 
pricing has made credit available to many more people. However, 
because the rates and terms are tied to the contents of credit 
reports, any negative inaccuracy can have an impact on the 
price a consumer pays for credit.
    Overall, the use of risk-based pricing provides numerous 
benefits to the economy and consumers. However, its use, which 
will only grow in the future, also underscores the need to 
ensure that consumer reports, on which such decisions are 
based, are as accurate as possible.

Identity theft

    The Committee also paid considerable attention to major 
shifts or changes in the credit markets and the credit 
reporting landscape. Perhaps the most significant development 
since the passage of the 1996 amendments was the emergence and 
impact of identity theft. U.S. Secret Service Special Agent 
Timothy Caddigan told the Committee:

          The burgeoning use of the Internet and advanced 
        technology, coupled with increased investment and 
        expansion, has intensified competition within the 
        financial sector. Although this provides benefit to the 
        consumer through readily available credit and consumer-
        oriented financial services, it also creates a target-
        rich environment for today's sophisticated criminals, 
        many of whom are organized and operate across 
        international borders.

    Millions of Americans have already been victimized by 
identity theft. Many have already dealt with what Special Agent 
Caddigan described as:

        the difficult, time consuming and potentially expensive 
        task of repairing the damage that has been done to 
        their credit, their savings, and their reputation.

    Mr. Beales further elaborated that,

        in addition to harming consumers, ID theft also 
        threatens the fair and efficient functioning of 
        consumer credit markets. It undermines the accuracy and 
        the credibility of the information flows that support 
        those markets.

    Due to the significant costs to consumers and to the 
economy, and because of the constant efforts of criminals to 
find new victims, it is vitally important to address measures 
which will help prevent identity theft and to punish identity 
thieves. Additionally, because so many will become victims 
despite the best efforts of businesses and law enforcement, it 
is also necessary to make it easier for identity theft victims 
to clean-up their credit history.

Consumer financial literacy

    Another issue that the Committee focused on is the level of 
consumer awareness of the credit reporting and credit granting 
processes. Consumer awareness of how the system operates is 
very important because the FCRA assigns them significant 
responsibilities with respect to the content and control of 
their credit reports. Additionally, informed and knowledgeable 
consumers are best able to take advantage of new credit related 
products and services as well as to reduce the likelihood of 
their falling prey to identity thieves or predatory lenders.
    Unfortunately, the information provided to the Committee on 
this issue was not very encouraging. Ms. Dolores Smith, 
Director, Division of Consumer and Community Affairs, Federal 
Reserve Board appeared before the Committee and commented:

          As the financial services industry has grown larger, 
        financial products and services more complex, and the 
        U.S. population more mobile, it is no longer feasible 
        for institutions to evaluate the credit standing of 
        consumers based solely on their direct experiences with 
        consumers. Centralized consumer reporting agencies have 
        evolved to provide a repository of credit history 
        information that can be accessed by creditors to 
        evaluate prospective borrowers. * * * The national 
        credit reporting system has become invaluable to 
        creditors for assessing consumers' creditworthiness. 
        Thus, it is crucial that consumers understand how this 
        system operates and how it impacts access to credit. 
        Educated consumers who make informed decisions about 
        credit are essential to an efficient, effective 
        marketplace.

    However, Mr. Joel Winston, Associate Director, Financial 
Practices Division, Bureau of Consumer Protection Issues, 
Federal Trade Commission indicated that:

          The Commission has a great deal of experience through 
        its law enforcement and education activities in 
        assessing the level of consumer knowledge in this area. 
        Unfortunately, what we have observed is consistent with 
        the Consumer Federation study that came out yesterday; 
        that is many consumers have limited knowledge of how 
        our credit system works.

    Due to the considerable importance of consumer financial 
literacy and what appears to be a general lack of it, action is 
necessary to address this issue.

Information use practices

    The FCRA contains specific standards for the collection, 
transfer and use of certain kinds of sensitive information 
relating to consumers. These standards do not apply, or only 
apply in limited fashion, however, in certain circumstances 
where affiliated businesses engage in the collection, transfer 
and use of consumer data within the affiliated structure. In 
light of this fact and because of the considerable changes 
which now allow financial services firms to operateusing larger 
and much more complex corporate structures in more varied lines of 
business, and greatly increased public concern about privacy and the 
control of sensitive financial information, the Committee conducted the 
only hearing it has ever held on this subject.
    This hearing focused on the types of affiliate structures 
in use today, the kinds of information being shared and the 
purposes for which it is being shared. Additionally, 
consideration was given to the level of consumer understanding 
regarding these sharing practices, including their recognition 
of the range of entities that share information, the nature of 
their concerns about such sharing, and the existence of the 
choices they have regarding controlling it.
    The Committee learned of a broad range of purposes for 
sharing consumer information. These included fraud detection 
and deterrence, internal credit risk evaluation, product 
development, and customer servicing. The Committee also learned 
that information was shared for various marketing purposes.
    Overall, the information furnished to the Committee 
provided a general overview with respect to information sharing 
practices. Professor Joel Reidenberg testified that more than a 
cursory examination of information sharing was actually 
necessary:

          (What is needed) is to investigate the actual sharing 
        practices of credit report information among affiliated 
        companies, and the specific uses of that data by 
        affiliated recipients that escapes the protection. To 
        that end, I think Congress should instruct the 
        functional bank regulators and the Federal Trade 
        Commission to investigate, audit and report back 
        exactly how organizations are using it.

    Furthermore, the Committee learned that consumers generally 
have a vague understanding and only a limited appreciation of, 
or erroneous expectations about, the manner in which their 
information is used and the entities that are using it. On this 
point, Vermont Assistant Attorney General Julie Brill 
indicated:

          It is quite simply the case that consumers do not 
        expect that their Citibank account number will be 
        shared with Travelers or a Citibank affiliate for 
        marketing purposes. We believe that consumers should be 
        notified with respect to this kind of affiliate sharing 
        of information when it is being used for marketing 
        purposes.

    There are many information sharing activities that fall 
outside the scope of the FCRA. These practices are conducted 
for a broad range of purposes. Currently, there is not 
significant consumer awareness or understanding with respect to 
these activities. It is very important to obtain a greater 
understanding of such activities and to provide consumers with 
greater awareness of and control over certain uses of their 
financial information.

National Standards

    One of the stated purposes of the 1996 amendments was to 
spur further development of the national credit markets. To 
this end, the 1996 amendments contained various provisions 
which set forth uniform, national standards. Numerous witnesses 
commented on the seminal importance of these standards for 
economic development, including Secretary of the Treasury Snow, 
who noted:

          It is important to understand that these uniform 
        national standards * * * operate in a very fundamental 
        way to expand the opportunity for consumers to get 
        access to credit and a broad range of financial 
        services. What they really do is allow you to take your 
        reputation with you as you travel around the country. 
        America is a mobile society. Something like one-sixth 
        of American families move in a given year. As you move, 
        you leave the place you are known, you move to another 
        State, another city. You can [still] get credit. You 
        can buy a house. You can buy an automobile. You can go 
        into a store and easily get credit because your 
        reputation follows you around and you do not have to 
        start from scratch, and that is critically important in 
        a mobile society like the one we have in the United 
        States.

    One significant concern expressed about the national 
standards contained in the FCRA is the fact that they preclude 
states from adopting more robust consumer protections. 
Furthermore, many witnesses expressed the perspective that 
without state activity, the law would not appropriately evolve 
to meet changes occurring in the marketplace.
    National credit markets are necessary to meet business and 
consumer demands and are very important to the efficient 
operation of the United States economy. There is also a 
significant need to provide consumer protections which can 
evolve to meet changing circumstances.

                      SECTION-BY-SECTION ANALYSIS

Section 1. Short title

    This section establishes the title of the bill, the 
``National Consumer Credit Reporting System Improvement Act of 
2003'' and provides a table of contents.

Section 111. Definitions

    This section adds new terms to Section 603 of the FCRA 
including, ``active duty military consumer,'' ``fraud alert,'' 
``active duty alert,'' ``creditor,'' ``credit card,'' ``debit 
card,'' ``account and electronic fund transfer,'' ``Federal 
banking agencies,'' ``financial institution,'' ``reseller,'' 
``credit scores,'' ``dwelling,'' and ``identity theft report.''
    For the purpose of achieving uniformity and clarity, the 
Committee sought to cross reference preexisting definitions 
from other sources in the United States Code.

   TITLE I--IDENTITY THEFT PREVENTION AND CREDIT HISTORY RESTORATION

                 Subtitle A--Identity Theft Prevention

Section 112. Fraud alerts and active duty alerts

    This section adds a new Section 605A to the FCRA. This 
provision designates 3 different circumstances where consumers 
and/or military personnel can direct the national consumer 
reporting agencies (as defined in section 603(p) of the FCRA) 
to attach a fraud alert or an active duty alert to their 
consumer reports. A fraud or active duty alert is a statement 
that notifies users of the report that the particular consumer 
could be a victim of fraud or is an active duty member of the 
military and requires such users to take specific steps to 
obtain authorization from the consumer before establishing new 
credit or increasing a credit limit in the name of a consumer 
that has placed an alert in his file. This provision is 
specifically intended to limit the opportunity of criminals to 
take advantage of consumers in situations involving the use of 
credit reports. Thus, it applies only to situations where a 
credit report is being pulled for the purpose of providing new 
credit or increasing the amount of currently available credit.
    In the first circumstance, upon the request of a consumer 
who asserts in good faith that he or she has been or is about 
to become a victim of fraud or related crime, a national 
consumer reporting agency that maintains a file on the consumer 
and has received appropriate proof of the identity of the 
requester shall include a fraud alert in the consumer's file 
for at least 90 days, unless the consumer otherwise requests 
that the alert be removed before that period expires. It is the 
Committee's view that the 90 day alert provides consumers a 
ready means to protect themselves in situations where they have 
concerns without overly burdening the credit reporting system.
    In the second circumstance, upon request of a consumer who 
submits an identity theft report to a national consumer 
reporting agency that maintains a file on the consumer and has 
received appropriate proof of the identity of the requester, 
the consumer reporting agency shall include a fraud alert in 
the file of that consumer during the 7 year period beginning on 
the date of the request, unless the consumer otherwise requests 
that the alert be removed before that period expires. An 
identity theft report is a report alleging identity theft, that 
has been filed with an appropriate law enforcement or local 
government agency, that subjects the person filing the report 
to criminal penalties if, in fact, the information in the 
report is false. Additionally, consumer reporting agencies 
shall also accept, in lieu of an identity theft report a copy 
of a standardized identity theft affidavit as made available by 
the Federal Trade Commission or any affidavit of fact that is 
acceptable to the consumer reporting agency.
    Consumers who have made requests under this section are 
also removed from any lists used to make prescreened offers of 
credit or insurance. Unless the consumer otherwise designates, 
the consumer's exclusion from such lists is effective for seven 
years. This section also requires the national consumer 
reporting agencies to disclose to consumers making requests for 
extended fraud alerts their right to request two free copies of 
their credit report during the 12-month period beginning on the 
date the extended fraud alert was inserted into the consumer's 
file. The Committee provided extended, or 7 year alerts, to 
deal with situations where consumers have firmly established 
that they have been victimized and want to take measures to 
reduce the likelihood that further damage can be done by an 
identity thief.
    In the third and final circumstance, upon the request of 
active duty members of the military, national consumer 
reporting agencies shall include an active duty alert in the 
file of the active military consumer for at least a year. 
Additionally, except as where otherwise provided by the active 
duty military consumer, such consumers who place alerts in 
their files under this section are excluded from eligibility 
for prescreened offers of credit or insurance for a year.
    Under each of the preceding circumstances, any national 
consumer reporting agency that receives an alert request from a 
consumer must pass along that alert request to the other 
national consumer reporting agencies, who must then act to 
include alerts in any files they may maintain on that consumer. 
This section requires resellers of consumer reports to convey 
alerts in any file or report they prepare. Additionally this 
section requires consumer reporting agencies that do not fall 
into the category of ``national'' consumer reporting agencies 
to provide to consumers expressing a concern with respect to 
fraud or other related crime the contact information of the 
Federal Trade Commission and the national credit reporting 
agencies.

Section 113. Truncation of credit card and debit card account numbers

    This section amends Section 605 of the FCRA to require 
businesses that accept credit or debit cards to truncate the 
card account numbers or the expiration dates on any 
electronically printed receipts. This section provides for a 3 
year effective date for any cash registers in use on or before 
January 1, 2005 and a 1 year effective date for any register 
put into use after January 1, 2005. The Committee included this 
provision to limit the number of opportunities for identity 
thieves to ``pick off'' key card account information. The phase 
in periods are designed to give merchants a reasonable 
opportunity to come into compliance with this section.

Section 114. Establishment of procedures for the identification of 
        possible instances of identity theft

    This section amends Section 615 of the FCRA by requiring 
the Federal banking agencies, the National Credit Union 
Administration and the Federal Trade Commission to develop 
guidelines and prescribe regulations in coordination for use by 
banks, credit unions, and other creditors for the purpose of 
identifying and preventing identity theft related risks to 
consumers.
    The Committee intends for the guidelines to provide 
flexibility to institutions given the changing nature of 
identity theft and related crimes. The Committee expects that 
the guidelines adopted under this provision will be risk-based 
and will vary based on a number of factors, including the size 
and sophistication of the institution. The Committee does not 
believe that a ``one size fits all'' approach is appropriate--
the guidelines should be a general outline for use by financial 
institutions, creditors, and other users of consumer reports.
    The Federal banking agencies, the National Credit Union 
Administration, and the Federal Trade Commission must prescribe 
regulations requiring each financial institution and any other 
person that is a creditor or other user of a consumer report to 
establish reasonable policies and procedures for implementing 
the guidelines described above to identify possible risks to 
account holders or customers, or to the safety and soundness of 
the institution. Although institutions and others must 
establish reasonable policies and procedures to identify 
possible risks to customer accounts, the Committee again notes 
that such policies and procedures will vary from institution to 
institution. The Committee believes that the Federal banking 
agencies, the National Credit Union Administration, and the 
Federal Trade Commission are equipped to establish broad 
parameters for such guidelines, but that individual 
institutions are in the best position to determine how best to 
develop and implement the required policies and procedures. The 
Committee also notes that many institutions already must have 
such policies and procedures for purposes of consumers 
establishing new accounts as a result of Section 326 of the USA 
PATRIOT Act.
    Section 114 also directs the Federal banking agencies, the 
National Credit Union Administration, and the Federal Trade 
Commission to prescribe regulations applicable to credit and 
debit card issuers to ensure that each card issuer follows 
reasonable policies and procedures that prohibit, as 
appropriate, the card issuer from issuing an additional or 
replacement card if the card issuer receives the request for 
the additional or replacement card for an existing account 
within 30 days after the card issuer has received notification 
of a change of address for the same account. Because the nature 
of identity theft and credit card fraud continues to evolve, 
the Committee believes that identity theft prevention measures, 
such as those required under Section 615(f) of the FCRA, must 
be flexible so that they can be modified as the criminals alter 
their schemes. The Committee does not believe that it would be 
necessary for a card issuer to take additional steps as a 
result of Section 114 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).
    Card issuers are provided flexibility in formulating the 
policies and procedures required to comply with Section 114. 
Specifically, Section 114 provides three alternative 
formulations the card issuer could use in order to provide the 
cardholder with the additional or replacement card if the 
request for such a card comes within 30 days after a change of 
address. Under the first alternative, the issuer could notify 
the cardholder of the request for an additional or replacement 
card at the cardholder's former address and provide the 
cardholder a means of promptly reporting incorrect address 
changes. Such a means of reporting an incorrect change could be 
through the mail, by telephone, or electronically. Under the 
second alternative, the card issuer could 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. Section 114 provides a third 
alternative that allows a card issuer to 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, the 
National Credit Union Administration, and the Federal Trade 
Commission under Section 615(e) of the FCRA (as added by 
Section 114). The Committee strongly believes that the 
reasonableness of each issuer's policies and procedures will 
depend on a number of factors, including the issuer's risk 
assessment of the cardholder's request and the issuer's 
resources and sophistication. The Committee does not expect for 
there to be an ``industry standard'' with respect to such 
policies and procedures. However, the Committee believes that 
an issuer may rely on authentication procedures that do not 
involve a separate communication with the cardholder so long as 
the issuer has reasonably assessed the validity of the address 
change.

Section 115. Enhancement of identity theft penalties and prohibitions

    This section makes possession of a false identification a 
punishable offense and increases the maximum penalty for an 
identity theft offense from 3 to 5 years in prison. It is the 
Committee'sview that identity theft is a serious crime that 
should result in significant punishment for the perpetrator.

Subtitle B--Protection and Restoration of Identity Theft Victim Credit 
                                History

Section 151. Summary of rights of identity theft victims

    This section amends Section 609 of the FCRA to require the 
Federal Trade Commission to develop, in consultation with the 
Federal banking agencies and the National Credit Union 
Administration, a model summary of rights for consumers 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. 
This section requires consumer reporting agencies to provide 
consumers a copy of the model summary prepared by the 
Commission. Additionally, this section requires the Federal 
Trade Commission to develop and implement a media campaign to 
provide more information to the public on ways to prevent 
identity theft. The Committee included these requirements in an 
effort to provide the public with more information on measures 
they can take to prevent identity theft. By requiring the 
development of the summary of rights, it is the Committee's 
intention to provide victims with easy access to reliable 
information regarding the steps they should take to deal with 
identity theft.

Section 152. Blocking of information relating to identity theft

    This section adds a new Section 605B to the FCRA which 
allows consumers who allege they have been victims of identity 
theft to direct consumer reporting agencies to block the 
reporting of information relating to accounts associated with 
alleged identity theft activity. Consumers are required to 
provide to the consumer reporting agency appropriate proof of 
their identity, a copy of an identity theft report, and 
information which identifies the particular information that is 
to be blocked in the consumer's file. An identity theft report 
is a report alleging identity theft, that has been filed with 
an appropriate law enforcement or local government agency, that 
subjects the person filing the report to criminal penalties if, 
in fact, the information in the report is false. Additionally, 
this section requires consumer reporting agencies to notify the 
furnisher of the information that: the information may be a 
result of identity theft, that the consumer has filed an 
identity theft report, and that a block has been requested. 
This section does allow consumer reporting agencies to choose 
to decline or rescind the block if they determine that the 
consumer made the request in error, misrepresented facts 
relevant to the block or actually received the goods, services 
or money as a result of the blocked transaction. If a block is 
declined or rescinded, the consumer reporting agency must 
quickly notify the consumer.
    Certain exceptions are provided for consumer report 
resellers and check servicing companies. Resellers not 
otherwise furnishing or reselling consumer reports containing 
information identified by the consumer need only inform the 
consumer that he or she report the identity theft to the 
Commission. Resellers with files containing the information 
shall block such information where the consumer has otherwise 
complied with the requirements of this section (i.e., the 
consumer has provided appropriate proof of their identity, a 
copy of an identity theft report, and information which 
identifies the particular information that is to be blocked in 
the consumer's file). Check servicing companies do not have to 
comply with this section except that, beginning three business 
days after receipt of the information consumers are required to 
provide to obtain a block, such companies shall not furnish to 
national consumer reporting agencies any information provided 
in the identity theft report provided by the consumer.
    This section should not be construed to require consumer 
reporting agencies to withhold consumer file information from 
law enforcement agencies when such agencies could otherwise 
obtain such information.

Section 153. Coordination of identity theft complaint investigations

    This section amends Section 621 of the FCRA by requiring 
the national credit reporting agencies (as defined in Section 
603(p) of the Act) to develop and maintain procedures for the 
referral to each other national credit reporting agency of any 
consumer complaint alleging identity theft or requesting a 
fraud alert. This section also requires each of the consumer 
reporting agencies to submit an annual summary to the Federal 
Trade Commission with respect to the consumer complaints the 
agency receives on identity theft or fraud alerts.

Section 154. Prevention of repollution of consumer reports

    This section amends Section 623 of the FCRA to require 
furnishers to have reasonable procedures in place to prevent 
refurnishing information when they have been notified by a 
consumer reporting agency that such information had been 
identified as being associated with identity theft and was 
being blocked by the agency from being reported. This section 
also amends Section 623 of the FCRA to require furnishers to 
conduct investigations of identity theft-related disputes 
raised directly with them by consumers. These obligations are 
only triggered in instances where consumers provide them with 
an identity theft report or a copy of a standardized identity 
theft affidavit. Lastly, subject to certain exceptions, this 
section amends Section 615 of the FCRA to prohibit entities 
that have received notice that a particular debt may be 
identity theft-related from selling or transferring such debt. 
The prohibtions of this section apply to all persons collecting 
a debt after the date of notification. The exceptions include 
transfers or sales involving: the repurchase of debt in 
situations where the assignee of the debt requires such 
repurchase because the debt resulted from identity theft; the 
securitization of a debt; or the transfer of a debt as a result 
of a merger, acquisition, purchase and assumption transaction, 
or transfer of substantially all of the assets of an entity. 
The Committee included these provisions tohelp consumers who 
have been victimized by identity theft to more easily ``clean-up'' the 
damage they have sustained.

Section 155. Notice by debt collectors with respect to fraudulent 
        information

    This section adds to Section 615 of the FCRA the 
requirement that debt collectors, when acting on behalf of a 
third party and when notified that the debt they are attempting 
to collect may be the result of fraud or identity theft, must 
notify the third party of the possible fraud or identity theft. 
This section also requires the debt collector to provide 
information relating to the debt to the consumer alleging the 
identity theft.

Section 156. Statute of limitations

    This section amends Section 618 of the FCRA to extend the 
statute of limitations for violations of the Act. This section 
requires claims to be brought within 2 years of the discovery 
of the violation and with an outside restriction that all 
claims must be brought within 7 years of when the violation 
occurred.

 TITLE II--IMPROVEMENTS IN USE OF CONSUMER ACCESS TO CREDIT INFORMATION

Section 211. Free credit reports

    This section amends Sections 612 of the FCRA to allow 
consumers to receive a free consumer report annually from the 
national credit reporting agencies through a centralized system 
established by Federal Trade Commission rule making. The 
centralized system shall allow consumers to obtain free reports 
from all three agencies using a single request. In light of the 
logistics and cost associated with providing the reports, the 
Committee provided that requests for such reports could be made 
only by mail or the Internet in such fashion that the consumer 
requests would be staggered so that they all would not occur at 
once. The Committee provided rule making authority to stagger 
consumer requests for free reports. Additionally, the Committee 
extended the time the national consumer reporting agencies have 
to provide reports requested under this section to 15 days and 
extended the period for reinvestigation of any disputes raised 
by consumers receiving free reports to 45 days. Requests for 
free reports may still be made by telephone as provided under 
current law if the consumer: has received an adverse action 
notice; believes his or her file is inaccurate due to fraud; is 
unemployed and seeking employment; or is a public welfare 
recipient.
    This section also amends Section 609(c) of the FCRA to 
require the Federal Trade Commission to prepare a summary of 
the rights of consumers as provided by the FCRA. This summary 
shall include a description of: the right of a consumer to 
obtain a free credit report and the method to obtain it; the 
right of a consumer to dispute information contained in his 
file; and the right of a consumer to obtain a credit score and 
a description of how to obtain a credit score. Additionally, 
this section requires the Federal Trade Commission to actively 
publicize the summary of rights made available by this section 
and the consumer's right to a free report and a credit score 
and the manner in which such free report and score may be 
obtained.

Section 212. Credit scores

    This section amends Section 609 of the FCRA to require 
consumer reporting agencies to disclose, upon consumer request 
and, in connection with an application for an extension of 
consumer credit secured by a dwelling, specific consumer credit 
scoring information including a credit score: (1) Derived from 
a model widely distributed to users of credit scores; or (2) 
that assists the consumer in understanding the credit scoring 
assessment of the consumer's credit behavior and predictions 
about future credit behavior.
    This section also amends Section 615 of the FCRA to require 
any person that makes or arranges extensions of consumer credit 
that are to be secured by a dwelling, and that uses credit 
scores for that purpose, to provide the consumer with a copy 
of: (1) The information obtained from a consumer reporting 
agency or that was developed and used by that user of the 
credit score information; or (2) a copy of the information 
provided to the user by a third party that developed the credit 
score, plus a general description of credit scores, their use, 
and the sources and kinds of data used to generate credit 
scores. This section also declares void any contract provision 
that prohibits such mandated disclosures and exempts from 
contractual liability any user of a credit score for making 
such a disclosure.

Section 213. Enhanced disclosure of the means available to opt out of 
        prescreened lists

    This section amends Sections 615(d)(2) and 604(e) of the 
FCRA and directs the Federal Trade Commission, in consultation 
with the federal banking agencies and the NCUA to promulgate 
rules with respect to the contents of solicitations generated 
from the use of ``pre-screened'' lists. Currently, the FCRA 
imposes certain pre-screening disclosure obligations. This 
section directs the Commission to modify the format of these 
disclosures. The Committee intends for the Federal Trade 
Commission to establish reasonable format and type size 
requirements so that the disclosure is presented in a manner 
and location that will make consumers aware of the opportunity 
and method to opt-out. This section extends the effective 
period of a telephone opt-out from 2 to 7 years. This section 
also requires the Federal Trade Commission to actively 
publicize the availability of the pre-screening opt-out and the 
manner in which a consumer canexecute an opt-out selection, 
including requiring the Commission to post such information on its 
website.

Section 214. Affiliate sharing

    This section creates a new Section 624 and requires the 
Federal banking agencies, the National Credit Union 
Administration and the Federal Trade Commission to prescribe 
regulations to establish special rules for solicitation for 
purposes of marketing. The Committee expects the Federal 
banking agencies, the National Credit Union Administration, and 
the Federal Trade Commission to prescribe regulations under 
Section 624 of the FCRA applicable to entities within each such 
agency's respective jurisdiction. The Committee expects such 
agencies to coordinate their regulations to ensure consistency, 
as appropriate. The regulations must ensure that the notices 
provided include a simple means to opt out under Section 624 of 
the FCRA. The Committee intends for notice and opt out required 
under Section 624 of the FCRA to be consistent with the current 
notice and opt out provided under Section 603(d)(2)(A)(iii). 
Therefore, the Committee specifically directs the agencies to 
consider the affiliate sharing notification practices employed 
on the date of enactment of this Act by persons that will be 
subject to Section 624 of the FCRA.
    This section sets forth that any person that receives from 
another person related to it by common ownership or affiliated 
by corporate control a communication of information that would 
be a consumer report, except for clauses (i) through (iii) of 
section 603(d)(2)(A), may not use the information to make a 
solicitation for marketing purposes without complying with the 
section's notice and opt-out requirements. The notice 
requirements mandate that it must be clearly and conspicuously 
disclosed so the information may be communicated among such 
persons for the purposes of making solicitations to the 
consumer. The opt-out provision requires that the consumer be 
provided an opportunity and simple method to prohibit the 
making of such solicitations by such person. If a consumer 
makes an election to prohibit the sending of solicitations, 
such election shall be effective for five years. At such time 
the election is no longer effective, a person using the kinds 
of information in the manner covered by this section must 
provide notice and opportunity to opt-out again in order to use 
the information to make solicitations for marketing purposes.
    Four particular situations are excluded from the scope of 
this provision: (1) A person using information to make a 
solicitation for marketing purposes to a consumer with whom the 
person has a pre-existing business relationship; (2) a person 
using information to perform services on behalf of another 
person related by common ownership or affiliated by corporate 
control, except that such a person can not send solicitations 
on behalf of another person who would not otherwise be 
permitted to send solicitations; (3) a person using information 
in direct response to a communication initiated by the consumer 
in which the consumer has requested information about a product 
or service; or (4) a person using information to directly 
respond to solicitations authorized or requested by the 
consumer.
    The Committee has declined to specify how the notice 
required under Section 624 of the FCRA is provided to the 
consumer. However, the required notice may be provided to a 
consumer together with disclosures required by any other 
provision of law.
    This section is intended to provide consumers notice and 
choices with respect to instances where entities they do not 
have relationships with gather information from the entities 
they do have relationships with and use such information to 
send solicitations for marketing purposes. This section is not 
intended to limit the solicitations for marketing purposes of 
persons or entities with whom consumers have pre-existing 
business relationships, nor is it intended to restrict contact 
with consumers in situations where the consumers themselves are 
requesting information or service.
    This section also requires the Federal banking agencies, 
the National Credit Union Administration and the FTC to study 
the information sharing practices of affiliated creditors to 
determine: the specific purposes of information sharing; the 
specific types of information being shared; the availability of 
consumer choices with respect to control of such sharing; and 
the impact sharing has on the rights consumers are provided 
under the FCRA. The agencies are required to make an initial 
report of their findings to Congress and then follow-up such 
report every three years with further studies which identify 
and examine the effects of any changes in information sharing 
practices.

Section 215. Study of the effects of credit scores and credit-based 
        insurance scores on availability and affordability of financial 
        products

    This section requires the Federal Trade Commission to study 
the use of credit scores and credit-based insurance scores on 
the availability and affordability of financial products; the 
degree of correlation between the factors considered by credit 
score systems and the quantifiable risks and actual losses 
experienced by businesses; the extent to which the use of 
scoring models, credit scores, and credit-based insurance 
scores benefit or negatively impact persons based on geography, 
income, ethnicity, race, color, religion, age, marital status 
or creed; and the extent to which scoring systems are used by 
businesses, the factors considered by such systems and the 
effects of variables which are not considered by such systems. 
In conducting this study, the Commission is directed to obtain 
public input. The Commission is required to submit the detailed 
report to Congress containing its findings, conclusions, and 
recommendations.

    TITLE III--ENHANCING THE ACCURACY OF CONSUMER REPORT INFORMATION

Section 311. Notice with respect to counteroffers

    This section amends Section 603(k) of the FCRA to require 
the Secretary of the Treasury, the Federal Reserve, and the 
Federal Trade Commission to promulgate rules requiring that a 
consumer who receives a grant of credit, based on a counter 
offer by the creditor on material terms, including interest, 
that are materially less favorable than the terms generally 
made available to consumers, receives a notice that indicates 
such terms were based on the contents of the consumer's credit 
report. It is the view of the Committee that ``material term'' 
may include, but is not limited to: interest rate, advanced 
deposit or prepayment requirements, points, fees, and 
prepayment penalties.
    This section is intended to address the frequently 
occurring situation where creditors review consumers' credit 
reports and make risk-based adjustments to the credit terms 
they offer the consumer. Under current law, a consumer is only 
provided an adverse action notice when the consumer does not 
qualify for credit or rejects a counteroffer made by a 
creditor. The Committee record indicates that despite the many 
benefits of risk-based pricing, it has made the current adverse 
action notification construct obsolete in certain 
circumstances. This is problematic in as much as the adverse 
action notice is the primary tool the FCRA contains to ensure 
that mistakes in credit reports are discovered. This section 
requires that consumers be given notice in situations where 
they have accepted terms made by way of a counter offer but 
such terms are materially less favorable then terms generally 
available and their credit report was used to make the decision 
to provide them such terms. The Committee believes that 
consumers should receive these notices when information in a 
credit report leads to a change in terms that significantly 
impacts the cost of the credit offer. It is not the Committee's 
intent that every consumer receive a notice for every term 
change that occurs.

Section 312. Procedures to enhance the accuracy and completeness of 
        information furnished to consumer reporting agencies

    This section amends Section 623 of the FCRA to require the 
Federal banking agencies, the National Credit Union 
Administration and the Federal Trade Commission to develop 
guidelines and promulgate regulations with respect to the 
accuracy and completeness of the information furnished to 
credit reporting agencies. The Committee believes that the 
reporting system benefits creditors and consumers to the 
maximum extent possible when furnishers do not withhold 
information, such as credit limits, to block their client base 
from receiving competitive offers from other creditors.
    These guidelines are to be updated as necessary to keep the 
best standards in place for the credit reporting system. It is 
the intention of the Committee that enforcement of the 
provisions required under this section shall be conducted 
solely by the Federal regulators. Enforcement jurisdiction for 
the various different types of furnishing entities shall comply 
with the jurisdiction provision set forth under Section 621 of 
the Act. The Committee intends these guidelines to be flexible, 
as they will apply to entities of all sizes and levels of 
sophistication. The Committee also recognizes that the 
information furnished voluntarily to consumer reporting 
agencies is essential and therefore these guidelines should 
reflect the need to have accurate and complete information 
reported without creating meaningful disincentives for 
furnishing information to consumer reporting agencies.
    The Committee recognizes that there are both legal and 
practical reasons for not requiring the reporting of 
information in specific situations. For example, the Fair 
Credit Billing Act currently prohibits disclosure of 
information during the pendancy of a dispute. There are also 
other situations where the institution would choose not to 
report negative information about a consumer as a courtesy to 
the consumer, such as where the information may not bear 
directly on the creditworthiness of the consumer but where such 
reporting would trigger consumer concern. The Committee 
recognizes that these and other specific situations may warrant 
being excluded from any regulatory approach taken pursuant to 
this section.
    This section also amends Section 623(a)(5) of the Act to 
provide that a person that notifies a consumer reporting agency 
with respect to information pertaining to a delinquent account 
may rely on the date provided by the entity to whom the account 
was owed at the time that the delinquency occurred, provided a 
consumer has not disputed such information.

Section 313. Federal Trade Commission and consumer reporting agency 
        action concerning complaints

    This section amends Section 611 of the FCRA by requiring 
the Federal Trade Commission to compile all complaints 
regarding incomplete or inaccurate credit report information 
and to transmit all such complaints to each consumer reporting 
agency involved. The national consumer reporting agencies (as 
defined by Section 603(p) of the Act) are required to keep 
track of the complaint referrals received from the Commission 
and regularly report to the Commission the determinations taken 
with respect to the disposition of such consumer complaint 
cases.

Section 314. Ongoing audits of the accuracy of consumer reports

    This section requires the Federal Reserve to study the 
contents of the credit reports produced by the national credit 
reporting agencies and to determine the accuracy and 
completeness of such reports and the relationship the contents 
of such reports have on the credit eligibility of consumers.

Section 315. Improved disclosure of the results of reinvestigation

    This section amends Sections 611 and 623 of the FCRA. It 
requires consumer reporting agencies, upon completion of a 
reinvestigation where information was determined to be 
inaccurate, incomplete, or unverified, to notify the furnisher 
of that information that such information was deleted. This 
section also requires furnishers, upon completion of a 
reinvestigation, to modify the records furnished to the 
consumer reporting agencies as is necessary and appropriate to 
reflect the findings of the investigation.

Section 316. Reconciling addresses

    This section amends Section 605 of the FCRA to require 
consumer reporting agencies to provide users of consumer 
reports notice when the consumer address contained in the 
report differs substantially from the address provided by the 
user when it requested the report. This section further 
requires the Federal banking agencies, the NCUA and the FTC to 
promulgate regulations to require users of consumer reports to 
take measures to ensure the accuracy of the consumer addresses 
they are using.

Section 317. FTC study of issues relating to the Fair Credit Reporting 
        Act

    This section requires the Federal Trade Commission to study 
and provide a report regarding the effects that the use of 
partial matching information by credit reporting agencies has 
on the accuracy of credit reports and to consider the costs and 
benefits to consumers associated with the use of additional 
points of identifying information. The section requires the 
Commission to study and provide a report regarding the impact 
of providing independent notification to consumers when 
negative information is included in their credit reports and to 
consider the effects of requiring that consumers who experience 
adverse actions receive a copy of the same credit report used 
by the lender in taking the adverse action. This section also 
requires the Commission to consider common financial 
transactions that are not currently reported to consumer 
reporting agencies that might bear on creditworthiness, and 
possible actions to encourage the reporting of such 
transactions within a voluntary system.

           TITLE IV--LIMITS ON SHARING OF MEDICAL INFORMATION

Section 411. Protection of Medical Information in the Financial System

    This section amends Section 604(g) of the Act to prohibit a 
consumer reporting agency from furnishing a consumer report 
that contains medical information in connection with an 
insurance transaction unless the consumer affirmatively 
consents (opts-in) to the furnishing of the report. A report 
containing medical information may only be furnished for 
employment purposes or in connection with a credit transaction 
if the information to be furnished is relevant to, or affects, 
the employment or credit transaction, and 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. Alternatively, such 
information can be reported if it is restricted or reported 
using codes that do not identify, or provide information 
sufficient to infer, the specific provider or nature of such 
services, products or devices to a person other than to the 
consumer, unless the information is being provided for a 
purpose relating to the business of insurance other than 
property or casualty insurance. This section also prohibits 
creditors from obtaining or using medical information 
pertaining to a consumer in connection with any determination 
of the consumer's eligibility or continued eligibility for 
credit.
    This section also restricts any person who receives medical 
information by way of the exceptions from disclosing such 
information to any other person except as necessary to carry 
out the purpose for which it was originally disclosed.
    This section also prohibits the sharing of medical 
information among affiliates, including the sharing of an 
individualized list or description based on a consumer's 
payment transactions for medical products or services, or an 
aggregate list of consumers based on payment transactions for 
medical products or services.

412. Confidentiality of medical contact information in consumer reports

    This section amends Section 623 (a) of the FCRA to require 
furnishers whose primary business is providing medical 
services, products, or devices to notify the consumer reporting 
agencies of their status as a medical information furnisher for 
purposes of compliance with the medical information coding 
requirements.

       TITLE V--FINANCIAL LITERACY AND EDUCATION IMPROVEMENT ACT

Section 511. Short title

    This section establishes the short title of ``Financial 
Literacy and Education Improvement Act.''

Section 512. Definitions

    This section establishes two definitions in the Title for 
``Chairperson'' and ``Commission.''

Section 513. Establishment of Financial Literacy and Education 
        Commission

    This section establishes the Financial Literacy and 
Education Commission with the Secretary of the Treasury as the 
Chairperson. The section sets forth the membership of the 
Commission to include federal agencies with significant 
financial literacy programs and authorizes the President to 
designate five additional members. The Commission shall meet at 
least once every four months. The initial meeting shall be not 
later than 60 days after enactment.

Section 514. Duties of the Commission

    In general, this section sets forth the duties of the 
Commission to review financial literacy and education efforts 
throughout the federal government; to identify and eliminate 
duplicative federal financial literacy efforts; to coordinate 
the promotion of federal financial literacy efforts including 
outreach between federal, state and local governments, non-
profit organizations and private enterprises; to develop within 
eighteen months a national strategy to promote financial 
literacy and education among all Americans; to implement the 
strategy; and to submit an annual report, and provide testimony 
on the report if requested. The Commission also shall establish 
a website and a toll-free number as a one-stop-shop for all 
federal financial literacy programs.
    It is recognized that the federal government has many 
different financial literacy programs and partnerships spanning 
a broad array of topics which are targeted at different types 
of consumers. Many of these programs are extremely beneficial 
to consumers, however, many consumers are unaware that the 
programs or educational information exist. The purpose of this 
Title is not to require the Commission to rebuild all existing 
federal financial literacy and education programs. The 
Commission ought to use existing materials, programs and 
partnerships as appropriate and create new materials, programs, 
and partnerships as needed. This Title is also intended to 
provide consumers with one access point for all of the programs 
and partnerships. The Commission is modeled on the Trade 
Promotion Coordinating Committee and it is intended that the 
Commission operate and be administered generally in a similar 
manner.
    The toll-free number shall be operated in a similar manner 
to the toll-free number operated by the Small Business 
Administration for small businesses in that consumers will be 
sent relevant pamphlets or other such information on their 
financial literacy requests or be directed to the appropriate 
federal agency with overall expertise in their area of 
interest. The toll-free number will not provide any financial 
planning advice regarding a consumer's specific personal 
financial situation nor make any specific recommendation 
regarding private sector financial products or services.

Section 515. Powers of the Commission

    This section authorizes the Commission to hold hearings and 
receive testimony as necessary to carry out the Title, to 
receive information directly from any Federal department or 
agency, and to undertake periodic studies regarding the state 
of financial literacy.

Section 516. Commission personnel matters

    This section states that members of the Commission shall 
serve without compensation in addition to that received for 
their primary duties, however, the Commission may pay for 
travel expenses of members for official duties of the 
Commission. In addition, the Director of the Office of 
Financial Education of the Treasury Department shall provide 
assistance to the Commission. The section also permits federal 
employees to be detailed to the Commission.

Section 517. Study by the Comptroller General

    This section mandates that the Comptroller General of GAO 
shall submit a report to Congress not less than three years 
after enactment on the effectiveness of the Commission.

Section 518. Authorization of appropriations

    This section authorizes appropriations to the Commission as 
may be necessary to carry out the mission of the Title, 
including administrative expenses.

                    TITLE VI--RELATION TO STATE LAW

    This section amends Sections 625(d) and eliminates the 
January 1, 2004 sunset provision contained in current law.

                        TITLE VII--MISCELLANEOUS

Section 711. Clerical amendments

                      REGULATORY IMPACT STATEMENT

    In accordance with paragraph 11(b), rule XXVI, of the 
Standing Rules of the Senate, the Committee makes the following 
statement concerning the regulatory impact of the bill.
    ``The National Credit Reporting System Improvement Act of 
2003'' modifies the FCRA to address changes which have occurred 
in the credit markets in the last seven years. This legislation 
enhances the ability of consumers to combat identity theft, 
increases accuracy by providing consumers greater notice about, 
and access to, their credit report information, and allows 
consumers to exercise greater control regarding the type and 
amount of marketing solicitations they receive. Additionally, 
the bill restricts the use and transfer of sensitive medical 
information. Lastly, it employs targeted measures to address 
the significant issue regarding the level of financial literacy 
in the United States.
    By affording consumers greater access and control of their 
credit report information and by providing them with greater 
opportunities to control how such information can be used, this 
legislation should have significant positive impact on the 
privacy of individuals.
    Currently, there are about 600 consumer reporting agencies, 
30,000 furnishers, and an unlimited number of potential 
consumer report users whose activities are governed by the 
FCRA. The changes made by this legislation do not expand the 
FCRA to cover new or different types of entities.
    The legislation establishes permanent, uniform, national 
standards. The legislation also requires the Federal banking 
regulators and the Federal Trade Commission to develop and 
prescribe regulations with respect to identity theft prevention 
and to develop and prescribe regulations to ensure the accuracy 
and completeness of information furnished to the credit 
reporting system. Because the legislation provides uniform 
national standards, allowing for the further development of 
national credit markets and reduces the opportunities for 
identity theft, inaccuracy, and increases consumer awareness 
and understanding of the financial markets, the legislation 
will achieve greater efficiencies in the credit markets. The 
combination of national standards and greater efficiency will 
lead to greater availability of credit that is more cheaply and 
quickly accessible. Ultimately, the new legal and regulatory 
framework established by this legislation will provide 
significant benefits to millions of American consumers and the 
national economy.

                        COST OF THE LEGISLATION

                                     U.S. Congress,
                               Congressional Budget Office,
                                Washington, DC, September 29, 2003.
Hon. Richard C. Shelby,
Chairman, Committee on Banking, Housing, and Urban Affairs,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for the National Consumer 
Credit Reporting System Improvement 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,
                                      Elizabeth M. Robinson
                               (For Douglas Holtz-Eakin, Director).
    Enclosure.

National Consumer Credit Reporting System Improvement Act of 2003

    Summary: CBO estimates that implementing this legislation 
would cost about $13 million over the next five years, assuming 
appropriation of the necessary amounts. We also estimate that 
enacting this legislation would reduce revenues by $4 million 
over the next five years. The bill also could affect direct 
spending, but CBO estimates that any such impact would not be 
significant.
    This legislation 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, but that standard is 
scheduled to expire on January 1, 2004. The bill also would 
give consumers access to certain financial records, help ensure 
the accuracy of credit reports, enable consumers to ``opt-out'' 
of receiving certain commercial solicitations, and provide 
protection of consumers' medical information.
    The National Consumer Credit Systems Improvement Act 
contains an intergovernmental mandate as defined in the 
Unfunded Mandates Reform Act (UMRA), but CBO estimates that the 
costs would not exceed the threshold established in UMRA ($59 
million in 2003 adjusted annually for inflation).
    The bill would impose several private-sector mandates, as 
defined in UMRA, on consumer reporting agencies, individuals 
and businesses that print electronic credit card receipts, 
mortgage lenders, credit and debit card issuers, debt 
collection agencies, and certaincompanies affiliated by 
corporate control. CBO expects that the direct costs of those mandates 
would exceed the annual threshold for private-sector mandates ($117 
million in 2003, adjusted annually for inflation) in at least one of 
the first five years the mandates are in effect.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of this bill is shown in the following table. 
The costs of this legislation fall within budget functions 370 
(commerce and housing credit) and 800 (general government). For 
this estimate, CBO assumes that bill will be enacted in the 
fall of 2003 and that spending will follow historical rates for 
similar activities.

------------------------------------------------------------------------
                                         By fiscal year, in millions of
                                                   dollars--
                                      ----------------------------------
                                        2004   2005   2006   2007   2008
------------------------------------------------------------------------
              CHANGES IN SPENDING SUBJECT TO APPROPRIATION

FTC activities:
    Estimated authorization level....      5      3      *      *      *
    Estimated outlays................      4      3      1      *      *
Financial Literacy and Education
 Commission:
    Estimated authorization level....      1      2      2      0      0
    Estimated outlays................      1      2      2      0      0
Total proposed changes:
    Estimated authorization level....      6      5      2      *      *
    Estimated outlays................      6      5      2      *      *

                           CHANGES IN REVENUES

Estimated revenues...................     -2      0     -1      0     -1
------------------------------------------------------------------------
Notes.--FTC=Federal Trade Commission; *=less than $500,000.

    Basis of estimate: CBO estimates that implementing this 
legislation would cost about $13 million over the next five 
years, assuming appropriation of the necessary amounts. We also 
estimate that enactingthis legislation would reduce revenues by 
$4 million over the next five years. The bill could affect direct 
spending, but CBO estimates that any such impact would not be 
significant.
    The bill 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 and for 
consumers who want to obtain or dispute information contained 
in consumer reports. The FTC also would be responsible for 
developing procedures and forms for consumers to use when 
reporting identity theft to creditors and credit-reporting 
agencies, for implementing a public education campaign on the 
prevention of identity theft, for conducting various studies on 
consumer credit and how to improve the operation of FCRA, and 
developing guidelines and regulations regarding identity theft 
and credit reporting. Finally, the legislation would require 
the FTC to compile consumer complaints about incomplete or 
inaccurate information in their credit file and submit those 
complaints to each reporting agency involved with the file.
    The bill would require the federal banking agencies--which 
includes the Office of the Comptroller of the Currency (OGC), 
the Federal Deposit Insurance Corporation (FDIC), the Office of 
Thrift Supervision (OTS), and the Board of Governors of the 
Federal Reserve System (the Federal Reserve)--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 and to produce studies on information sharing 
practices by financial institutions. Finally, this legislation 
would require the Federal Reserve to conduct ongoing audits of 
information contained in consumer reports prepared or 
maintained by consumer reporting agencies to ensure that such 
information is accurate and complete. In addition, every two 
years the Federal Reserve would be required to submit a report 
of their findings to the Congress.
    The bill also would establish the Financial Literacy and 
Education Commission to improve public awareness of financial 
matters, including the availability and significance of credit 
reports and credit scores. The Secretary of the Treasury would 
serve as the Chairperson of this commission, which would be 
composed of the respective heads of each federal banking agency 
and the NCUA as well as representatives from various other 
agencies.

Spending subject to appropriation

    Based on information from the FTC, CBO estimates that the 
studies, public education campaigns, guidelines, and 
regulations required under this legislation would cost that 
agency $4 million in 2004 and $8 million over the 2004-2008 
period, assuming appropriation of the necessary amounts.
    Based on information from the Treasury, CBO estimates that 
the Financial Literacy and Education Commission would cost 
about $5 million over the next three years, subject to the 
availability of appropriated funds. Such funding would cover 
personnel and administrative costs and costs associated with 
establishing and maintaining a Web site and a toll-free number. 
In addition, this legislation would require the General 
Accounting Office (GAO) to assess the effectiveness of the 
Financial Literacy and Education Commission no later than three 
years after the enactment of this legislation. CBO estimates 
that the GAO study required under the bill would cost less than 
$500,000.

Direct spending and revenues

    The NCUA, the OTS, and the OCC 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.
    CBO estimates that the Federal Reserve's costs associated 
with the rulemaking and studies required under the bill would 
be minimal. However, the audits and related reports specified 
under the bill would require the Federal Reserve to purchase 
additional data from credit bureaus to develop new software and 
models, and conduct in-person interviews with consumers. Based 
on information from the Board of Governors, CBO estimates that 
complying with the requirements of the bill would increase the 
Federal Reserve's expenses by $2 million in 2004, by $4 million 
over the 2004-2008 period, and by $8 million over the 2004-2013 
period. The Federal Reserve remits its net income to the 
Treasury, and those payments are classified as governmental 
receipts, or revenues, in the federal budget. Therefore, 
increasing the Federal Reserve's costs by the aforementioned 
amounts would result in an equal reduction in federal revenues.
    Estimated impact on state, local, and tribal governments: 
The bill would permanently prohibit state and local governments 
from enacting laws that are different from the Fair Credit 
Reporting Act in certain specified cases. Such a preemption of 
state law is an intergovernmental mandate as defined in UMRA, 
but CBO estimates thatwould 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 annually for inflation).
    Estimated impact on the private sector: The bill would 
impose several private-sector manadates as defined in UMRA on 
consumer reporting agencies, individuals and businesses that 
print electronic credit card receipts, mortgage lenders, credit 
and debit card issuers, debt collection agencies, and certain 
companies affiliated by corporate control by:
           Requiring free credit reports upon the 
        request of an individual;
           Requiring truncation of credit card account 
        numbers on receipts printed electronically;
           Requiring disclosure of credit scores when 
        approving certain loans;
           Requiring certain fraud alerts and blocks in 
        consumer credit files; and
           Requiring additional notifications and 
        disclosures to consumers.
    CBO expects the aggregate direct costs of the private-
sector manadates in the bill would exceed the annual threshold 
established by UMRA ($117 million in 2003, adjusted annually 
for inflation) in at least one of the first five years the 
mandates are in effect.

Consumer access to credit reports

    Section 211 would require consumer reporting agegncies to 
provide an annual free credit report within 15 days from the 
date of a request from an individual by mail or through an 
Internet Web site. Based on information from industry and 
government sources, CBO assumes a threefold increase in the 
number of individuals requesting a free credit report each 
year. CBO estimates that the additional direct cost to consumer 
reporting agencies for providing mandatory free credit reports 
would be $1.00 to $2.00 per report with a total cost ranging 
from $30 million to $60 million per year.

Truncation of credit card account numbers

    Section 113 would impose a private-sector mandate by 
requiring individuals and businesses that accept credit cards 
or debit cards to truncate the card account numbers by 
including no more than the last five numbers on an 
electronically printed cardholder receipt. The mandate would 
take effect three years from the date of enactment for machines 
currently in use and beginning in 2006 for machines first put 
into service after January 1, 2005. According to the credit 
card processing industry, some systems are currently in 
compliance because they are capable of electronically printing 
truncated account numbers on customer receipts. To comply with 
this mandate, some merchants would have to make modifications 
to their systems, including software reprogramming, formatting 
changes to dial-up terminals, and purchase of new printing 
devices. Costs to replace machines would range from $300 to 
$1,000 per unit. Assuming merchants would have to replace 25 
percent of the currently used machines in 2007, the cost to 
replace such machines, including programming modifications, 
would amount to at least $85 million in that year.

Disclosure of consumer credit score

    Section 212 would require mortgage lenders or anyone that 
extends credit for consumer purposes secured by a dwelling and 
uses a consumer credit score for approval of such credit to 
provide a copy of the credit score and associated information 
received from a consumer reporting agency or third party to an 
applicant as soon as reasonably practicable. Based on 
approximately 13 million annual mortgage loan applications 
affected by this provision, and handling and mailing costs 
provided by the industry, CBO expects that the direct cost to 
provide such information would range from $35 million to $55 
million per year.

Fraud alert in credit file

    Section 112 would require consumer reporting agencies to 
include a fraud alert in the file of a consumer and disclose to 
the consumer that they may request a free copy of the file when 
the agency receives a direct request that a consumer has been 
or is about to become a victim of fraud, including identity 
theft. A consumer reporting agency would also be required to 
include an active-duty alert in the file of an active-duty 
military consumer upon their request. In addition, section 152 
would require consumer reporting agencies to block any 
information in the file of a consumer that the consumer 
identifies as resulting from an alleged identity theft and 
confirms with a police report. An agency also would be required 
to notify the furnisher of the information identified by the 
consumer of certain information regarding such a block. 
According to the consumer reporting industry and government 
sources, the nationalconsumer reporting agencies generally 
provide such alerts and blocks voluntarily. Therefore, CBO estimates 
that the direct cost to comply with those mandates would not be 
significant.
    Other provisions of the bill addressing fraud alert 
coverage would impose private-sector mandates as follows:
           Require credit reporting agencies to 
        coordinate consumer complaint investigations by 
        developing and maintaining procedures for the referral 
        to other credit reporting agencies any consumer 
        complaint alleging identity theft or requesting a fraud 
        alert or block; and
           Require a debt collection agency that learns 
        information in a consumer report is the result of 
        identity theft or otherwise is fraudulent to notify the 
        furnisher of the information or the relevant consumer 
        reporting agency that the information is fraudulent.
    Based on information from various industry and government 
sources, CBO expects the direct cost to comply with those 
mandates would be small compared with the costs of the three 
most costly mandates in the bill.

Other notification and disclosure requirements

    In addition, the bill would impose other private-sector 
mandates as follows:
           Require a consumer reporting agency that 
        receives a request for a consumer report using an 
        address substantially different from the addresses in 
        the consumer's file to notify the requester of the 
        existence of the discrepancy;
           Require credit reporting agencies to provide 
        certain information, including a summary of rights to 
        be prepared by the Federal Trade Commission, with each 
        written disclosure sent to a consumer;
           Require credit and debit card issuers that 
        receive a request for additional or replacement cards 
        on an existing account within a short period of time 
        after receiving a change of address form to notify the 
        cardholder at the former address or use other means to 
        confirm the address change; and
           Prohibit a consumer reporting agency from 
        providing credit reports that contain medical 
        information with some exceptions and would require 
        medical companies to identify themselves as such when 
        reporting credit information.
    According to industry sources, many entities currently 
comply with such requirements voluntarily; and therefore, the 
direct cost to comply with those mandates would not be 
significant.
    The bill also would require companies affiliated by 
corporate control that share information with affiliates for 
the purpose of making certain solicitations for marketing 
purposes to give consumers notice of such sharing and provide 
consumers the opportunity to prohibit or modify such 
solicitations. Based on information from various industry and 
government sources, CBO expects the direct cost to the private 
sector would be small compared with the costs of the three 
major mandates in the bill.
    Previous CBO estimate: On September 3, 2003, CBO 
transmitted a cost estimate for H.R. 2622, the Fair and 
Accurate Credit Transactions Act of 2003, as ordered reported 
by the House Committee on Financial Services on July 24, 2003. 
CBO estimates that enacting H.R. 2622 would cost about $7 
million over the next five years and any impact on direct 
spending and revenues would be insignificant. The National 
Consumer Credit Systems Improvement Act would preempt state law 
in the same way as H.R. 2622, and CBO estimates that the two 
bills would have an identical impact on state and local 
governments. H.R. 2622 contains most of the same private-sector 
mandates as this Senate bill, including mandates requiring 
consumer access to credit reports, truncation of credit card 
numbers, disclosure of credit scores and fraud alerts in 
consumer credit files. CBO estimates that the direct costs of 
those mandates would exceed the annual threshold for private-
sector mandates in at least one of the first five years the 
mandates are in effect.
    Estimate prepared by: Federal Costs: Susanne Mehlman and 
Melissa Zimmerman. Federal Revenues: Annabelle Bartsch. 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; and G. Thomas Woodward, Assistant 
Director for Tax Analysis.

                 CHANGES IN EXISTING LAW (CORDON RULE)

    On September 23, 2003, the Committee unanimously approved a 
motion by Senator Shelby to waive the Cordon rule. Thus, in the 
opinion of the Committee, it is necessary to dispense with the 
requirement of section 12 of rule XXVI of the Standing Rules of 
the Senate in order to expedite the business of the Senate.

                                
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