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1.4.9.2 Key Provisions

The FACTA amendments contained several provisions intended to assist consumers with credit reporting problems. The Act provided for free annual credit reports from the “Big Three” nationwide CRAs and newly defined nationwide specialty CRAs (for instance, tenant screening, insurance, and employment).284 In addition to permanently extending the preemption provisions that were due to sunset, FACTA added a long list of additional preemptions.285

To combat identity theft, the FACTA amendments allowed consumers to place fraud alerts in their credit files286 and to block information caused by identity theft or fraud.287 Active military duty personnel could also add an alert to their files.288 FACTA envisioned a system of communication among consumers, agencies, and furnishers that was intended to assist consumers in removing identity theft related information from CRAs’ and furnishers’ files. It added various notice requirements to consumers from CRAs, furnishers, and debt collectors.289

Congress also created a new right for consumers to receive notices relating to risk-based pricing.290 This notice addressed a flaw in the FCRA relating to failure by creditors to provide notice to consumers when they charged higher interest, fees, or other amounts based on a consumer report, which was specifically highlighted in testimony by the FTC chair.291

The FACTA amendments also modified the standard of accuracy for furnishers of information.292 Furthermore, FACTA required furnishers to have reasonable procedures in place to prevent refurnishing information that is the result of identity theft.293

Debt collectors were prohibited from selling or transferring for consideration, or placing for collection, a debt that they have been notified is the result of identity theft. They were required to notify the creditor that the information may be the result of identity theft and, upon the request of the consumer, disclose to the consumer information about the transaction.294

The FACTA amendments also provided for the truncation of credit card numbers.295 Consumers may also request that when providing a report to a particular consumer, CRAs truncate the consumer’s Social Security number to the last five digits.296 The FCRA was amended to include several provisions that set forth enhanced protections for medical information.297

The prior version of the FCRA specifically provided that agencies were not required to disclose credit scores to consumers, though it did not preempt states from requiring their disclosure. FACTA required disclosure of credit scores, as well as mandating the FTC to set the fee for the disclosure, but it also preempted states from imposing new requirements.298 In addition, mortgage lenders were required to disclose a credit score and certain other information.299 Although state laws regarding these disclosures were preempted, existing state laws of California and Colorado were exempted from the preemption.300

The FACTA amendments also extended the opt-out period for prescreened offers from two years to five.301 It gave the FTC authority to issue regulations prescribing notices for this opt-out right.302

The FACTA amendments exempted employee misconduct investigations from the scope of the FCRA. Industry frustrations with the FCRA notice requirements that applied to certain investigations, such as those for sexual harassment, led Congress to make these changes. Thus, FACTA excluded from the definition of a consumer report certain communications related to these investigations.303

FACTA also amended the FCRA’s statute of limitations. It enlarged the time that a consumer may bring a claim to provide that the two-year limitation period dates runs from the consumer’s discovery of the violation, not the date of the violation itself.304

The FACTA amendments required the FTC and other federal regulatory agencies to issue a significant number of regulations, something previously not found in the original FCRA or the 1996 Reform Act.305 These regulations are included in the list at § 1.3.3.1, supra. Appendix B, infra, includes copies of the final FCRA regulations.306 Proposed rules, as well as Federal Register notices with supplementary information, are available digitally as companion material to this treatise.

The FACTA amendments required a number of studies or reports to be conduct by the FTC, other government agencies, and in some cases, the CRAs. Such studies or reports included those concerning the effectiveness of a FACTA provision requiring victims to receive identity theft transaction information from businesses that conducted business with an identity thief,307 complaints received by the three nationwide CRAs,308 the accuracy of consumer reports,309 reinvestigations of disputed information,310 the efficacy of increasing the number of points of identifying information for matches before releasing consumer reports,311 the ability of consumers to avoid receiving written offers of credit or insurance in connection with transactions not initiated by the consumer,312 and the effect of credit scores and credit-based insurance scores on the availability and affordability of financial products.313

The FACTA amendments were signed into law on December 4, 2003. However, some FACTA provisions did not become effective until the FTC or other federal agencies enacted regulations interpreting the provisions, which occurred as late as 2011.314

Footnotes

  • 284 {284} 15 U.S.C. § 1681j(a)(1)(C), added by Pub. L. No. 108-159, § 211(a)(2) (2003). The FTC issued regulations to implement these provisions. See § 3.3.2, infra.

  • 285 {285} See generally § 10.7, infra.

  • 286 {286} 15 U.S.C. §§ 1681c-1(a), 1681c-1(b), added by Pub. L. No. 108-159, § 112 (2003).

  • 287 {287} 15 U.S.C. § 1681c-2, added by Pub. L. No. 108-159, § 152 (2003). See § 9.2, infra.

  • 288 {288} 15 U.S.C. § 1681c-1(c), added by Pub. L. No. 108-159, § 112 (2003). See § 9.2, infra.

  • 289 {289} See § 8.2, infra.

  • 290 {290} 15 U.S.C. § 1681m(h), added by Pub. L. No. 108-159, § 311 (2003).

  • 291 {291} Housing and Urban Affairs, Prepared Statement of the Federal Trade Commission on the Fair Credit Reporting Act Before the S. Comm. on Banking 11–12 (July 10, 2003) (statement of Timothy Muris, FTC Chair).

  • 292 {292} 15 U.S.C. § 1681s-2(a), as amended by Pub. L. No. 108-159, § 312(b) (2003). See § 6.4.2, infra.

  • 293 {293} Id. See § 6.4.3, infra.

  • 294 {294} 15 U.S.C. § 1681m(g), as amended by Pub. L. No. 108-159, § 312(d) (2003). See § 6.3.3.9, infra.

  • 295 {295} 15 U.S.C. § 1681c(g), added by Pub. L. No. 108-159, § 113 (2003). See § 9.2.5.1, infra.

  • 296 {296} 15 U.S.C. § 1681g(a)(1), amended by Pub. L. No. 108-159, § 115 (2003). See § 9.2.5.2, infra.

  • 297 {297} See § 5.4, infra.

  • 298 {298} 15 U.S.C. § 1681g(a), as amended by Pub. L. No. 108-159, § 212 (2003). See § 16.4.1, infra.

  • 299 {299} 15 U.S.C. § 1681g(a), as amended by Pub. L. No. 108-159, § 212 (2003). See § 16.4.3, infra.

  • 300 {300} 15 U.S.C. § 1681t(b)(3), added by Pub. L. No. 108-159, § 212 (2003). See § 10.7.6, infra.

  • 301 {301} 15 U.S.C. § 1681b(e), as amended by Pub. L. No. 108-159, § 213 (2003). See § 7.3.3.4, infra.

  • 302 {302} 15 U.S.C. § 1681m(d)(2), as amended by Pub. L. No. 108-159, § 213 (2003). See § 8.8.2, infra.

  • 303 {303} 15 U.S.C. §§ 1681a(d)(2)(D), 1681a(x), amended by Pub. L. No. 108-159, § 611 (2003). See §§ 2.3.6.4.2, 15.2.4.2, infra.

  • 304 {304} 15 U.S.C. § 1681p, as amended by Pub. L. No. 108-159, § 156 (2003). See § 12.3.1.3, infra.

  • 305 {305} 15 U.S.C. §§ 1681b(g)(5)(A), 1681c(h)(2)(A), 1681i(e)(4), 1681m(e), 1681m(h)(6), 1681s-2(a)(8)(A), 1681t(e)(1), 1681x, added by Pub. L. No. 108-159 (2003). The Dodd-Frank Act transferred most, but not all, of the FCRA’s rulemaking authority to the Consumer Financial Protection Bureau. See § 1.3.3.1, supra.

  • 306 {306} The FCRA regulations in Appendix B, infra, were initially promulgated by the FTC and banking regulators. Most, but not all, of these regulations were then re-issued by the CFPB after the Dodd-Frank Act transferred must of the FCRA rulemaking authority to the Bureau. See § 1.3.3.1, supra.

  • 307 {307} 15 U.S.C. § 1681g(e)(13), added by Pub. L. No. 108-159, § 151 (2003).

  • 308 {308} 15 U.S.C. § 1681s(f)(3), added by Pub. L. No. 108-159, § 153 (2003).

  • 309 {309} 15 U.S.C. §§ 1681i(e)(1)(A), added by Pub. L. No. 108-159, § 313 (2003). See also Pub. L. No. 108-159, § 319 (2003). The FTC has finished this study, conducting two pilot versions and a comprehensive final version involving over 1000 study participants. See § 4.3.1.3, infra.

  • 310 {310} Pub. L. No. 108-159, § 313(b) (2003). See Fed. Trade Comm’n & Fed. Reserve Bd., Report to Congress on the Fair Credit Reporting Act Dispute Process (2006), available at www.ftc.gov.

  • 311 {311} Pub. L. No. 108-159, § 318 (2003). See Fed. Trade Comm’n, Report to Congress Under Sections 318 and 319 of the Fair and Accurate Credit Transactions Act of 2003 (2004), available at www.ftc.gov.

  • 312 {312} Pub. L. No. 108-159, § 213(e) (2003).

  • 313 {313} Pub. L. No. 108-159, § 215(a) (2003). The Federal Trade Commission and Federal Reserve Board issued these reports. See §§ 16.9.1, 16.11, infra.

  • 314 {314} See, e.g., § 8.7.1, infra (risk-based pricing notices).