By Thomas Ahearn, ESR News Blog Writer
According to a news release on its website, the Federal Trade Commission (FTC) is proposing revisions to the notices that consumer reporting agencies (CRAs) provide to consumers, and also to users and furnishers of credit report information under the Fair Credit Reporting Act (FCRA). The proposed changes are designed to reflect new rules that the FTC has enacted under the Fair and Accurate Credit Transactions Act (FACT Act or FACTA) of 2003, and to make the notices more useful and easier to understand.
In addition to revising the general Summary of FCRA Rights notice (“A Summary of Your Rights Under the Fair Credit Reporting Act”) which informs consumers how to obtain a free credit report and dispute inaccurate information in credit reports, the FTC also is proposing improvements to the notices that credit reporting agencies provide to users and furnishers of credit report information.
The User Notice (“Notice to Users of Consumer Reports: Obligations of Users Under the FCRA”) and Furnisher Notice (“Notice to Furnishers of Information to Consumer Reporting Agencies: Your Obligations Under The Fair Credit Reporting Act”) inform users and furnishers of their obligation to provide certain protections to consumers.
The text of the Federal Register Notice is at: http://www.ftc.gov/os/fedreg/2010/august/100816fcranotice.pdf. A brief summary of some proposed revisions for each of the three notices includes the following:
- A. Summary of Rights: The FCRA requires the Summary of Rights to include an explanation of (1) the consumer’s right to obtain his or her consumer report; (2) the frequency and circumstances under which a consumer may receive free consumer reports under the FCRA; (3) the right of a consumer to dispute incorrect or outdated information in his or her consumer report; and (4) the right of a consumer to obtain a credit score. With respect to a consumer’s right to dispute information in his or her consumer report, on July 1, 2009, the Commission and other federal regulatory agencies issued the Furnisher Direct Dispute Rule, which took effect on July 1, 2010. Prior to the effective date of this Rule, under the FCRA, consumers had a right to dispute the accuracy of information in their consumer reports only by filing a dispute with a CRA. Under the Furnisher Direct Dispute Rule, consumers may dispute the accuracy of information in their consumer report directly with the furnisher of that information as well as the CRA. The proposed revised Summary of Rights reflects this additional dispute right.
- B. Furnisher Notice: The proposed revised Furnisher Notice reflects the new duties of furnishers set forth in the Furnisher Direct Dispute Rule described above. It also reflects new duties contained in the Furnisher Accuracy Rule, which became effective on July 1, 2010. The Rule requires furnishers to establish policies and procedures to ensure the accuracy and integrity of the consumer report information they furnish to CRAs, and to consider the guidelines prescribed by the agencies in establishing these policies and procedures.
- C. User Notice: The proposed revised User Notice reflects the new duties of users set forth in several of the rules finalized pursuant to the FACT Act. 1.) First, effective January 1, 2011, the Risk-Based Pricing Rule will require users of consumer reports to provide risk-based pricing notices in certain circumstances if they extend credit to a particular consumer on less favorable terms than those they offer to others. As an alternative to providing risk-based pricing notices, the Rule permits such users to provide consumers who apply for credit with a free credit score and information about their credit score. 2.) Second, if a CRA notifies a user of consumer reports that the address the user provided about a consumer is different from the address in the consumer report, the Address Discrepancy Rule, which became effective on January 1, 2008, requires the user to implement reasonable procedures to verify that the consumer report relates to the correct consumer. Users of consumer reports that verify the address is accurate, and that regularly furnish information to the CRA, have additional responsibilities under the Rule. 3.) Finally, the Medical Information Rules, which became effective on April 1, 2006, prescribe the circumstances under which creditors may obtain, use, and share medical information.
In addition, the revisions will improve the clarity, readability, and usefulness of the documents for consumers, furnishers, and users. These notices – originally issued in 1997 and revised in 2004 – are further examples of how the FTC works for consumers to prevent fraudulent, deceptive, and unfair business practices.
The FTC is accepting public comments on the proposed changes until September 21, 2010 at the following link: https://ftcpublic.commentworks.com/ftc/fcrarevisednotices/