15 U.S.C. 1681c - part 3

Part 3 will complete my explanation of 15 U.S.C. 1681c of the Fair Credit Reporting Act.

"(g) Truncation of Credit Card and Debit Card Numbers

(1) In general. Except as otherwise provided in this subsection, no person that accepts credit cards or debit cards for the transaction of business shall print more than the last 5 digits of the card number or the expiration date upon any receipt provided to the cardholder at the point of the sale or transaction.

(2) Limitation. This subsection shall apply only to receipts that are electronically printed, and shall not apply to transactions in which the sole means of recording a credit card or debit card account number is by handwriting or by an imprint or copy of the card."

[I find it odd that Congress decided to make this a part of the Fair Credit Reporting Act, since it has nothing to do with credit reporting. This governs what information is printed on a receipt a consumer is given when the consumer purchases something with either a credit or debit card. If the seller is providing an electronically printed receipt (as opposed to a handwritten one or the old timey imprint kind - you know where the employee takes your card and makes an imprint of the front of it on a piece of paper), the seller can only put no more than the last five digits of the credit or debit card number on the receipt and can not put the expiration date on it. This is a measure to prevent identity theft by thieves who somehow get your receipt (i.e. out of the trash or off the table at a restaurant). Other than that tenuous link to preventing identity theft, this provision really has no reason to be in the FCRA but I am glad that it is, since it is a good law and is now subject to enforcement via 1681n or 1681o.]

"(3) Effective date. This subsection shall become effective --

(A) 3 years after the date of enactment of this subsection, with respect to any cash register or other machine or device that electronically prints receipts for credit card or debit card transactions that is in use before January 1, 2005; and

(B) 1 year after the date of enactment of this subsection, with respect to any cash register or other machine or device that electronically prints receipts for credit card or debit card transactions that is first put into use on or after January 1, 2005."

[Both of these dates have now passed so, business owners that provide electronically printed receipts, make sure you comply!]

"(h) Notice of Discrepancy in Address

(1) In general. If a person has requested a consumer report relating to a consumer from a consumer reporting agency described in section 603(p) [i.e. 1681a(p)], the request includes an address for the consumer that substantially differs from the addresses in the file of the consumer, and the agency provides a consumer report in response to the request, the consumer reporting agency shall notify the requester of the existence of the discrepancy."

[This applies to the situation where a third party requests a consumer's credit report for a permissible purpose but the address provided by the third party for the consumer does not match any of the addresses appearing on the consumer's credit report. In that situation, the consumer reporting agency is required to notify the company requesting the credit report of the discrepancy in the addresses as that could mean its a potential fraud situation (i.e. where the identity thief uses an address other than the consumer's so he or she can get the fraudulent credit card when it arrives.) Lots of times identity thieves use addresses that they have access to but no other connection to, so the address used won't lead directly back to them.]

"(2) Regulations

(A) Regulations required. The Federal banking agencies, the National Credit Union Administration, and the Commission shall jointly, with respect to the entities that are subject to their respective enforcement authority under section 621, prescribe regulations providing guidance regarding reasonable policies and procedures that a user of a consumer report should employ when such user has received a notice of discrepancy under paragraph (1)."

[This section just requires the appropriate agency to provide some type of guidance to the companies that receive credit reports with a discrepancy in addresses so they will know why the discrepancy is potentially important and will know what to do in response.]

"(B) Policies and procedures to be included. The regulations prescribed under subparagraph (A) shall describe reasonable policies and procedures for use by a user of a consumer report --

(i) to form a reasonable belief that the user knows the identity of the person to whom the consumer report pertains; and

(ii) if the user establishes a continuing relationship with the consumer, and the user regularly and in the ordinary course of business furnishes information to the consumer reporting agency from which the notice of discrepancy pertaining to the consumer was obtained, to reconcile the address of the consumer with the consumer reporting agency by furnishing such address to such consumer reporting agency as part of information regularly furnished by the user for the period in which the relationship is established."

[In other words, the suggested procedures provided to the recipient of the credit report containing the address discrepancy should instruct the company to verify the identity of the consumer is what they think it is (i.e. not an identity thief) and, if it is so verified, report the new address to the consumer reporting agency if they make regular reports to the consumer reporting agency at issue.]

This concludes my explanation of 15 U.S.C. 1681c. I will start the explanation of 15 U.S.C. 1681c-1 in the near future.

15 U.S.C. 1681c - part 2

Here's part 2 of my explanation of 15 U.S.C. 1681c of the Fair Credit Reporting Act.

"(b) Exempted cases. The provisions of paragraphs (1) through (5) of subsection (a) of this section are not applicable in the case of any consumer credit report to be used in connection with

(1) a credit transaction involving, or which may reasonably be expected to involve, a principal amount of $150,000 or more;

(2) the underwriting of life insurance involving, or which may reasonably be expected to involve, a face amount of $150,000 or more; or

(3) the employment of any individual at an annual salary which equals, or which may reasonably be expected to equal $75,000, or more."

[This means that, if the credit report is generated either for a transaction whose principal amount (i.e. not including interest or other fees) exceeds $150,000, or life insurance worth more than $150,000 or for a job whose salary is $75,000 or more, then the items on the credit report do not have to be less than seven years old (or 10 years in the case of a bankruptcy).]

"(c) Running of Reporting Period

(1) In general. The 7-year period referred to in paragraphs (4) and (6) of subsection (a) shall begin, with respect to any delinquent account that is placed for collection (internally or by referral to a third party, whichever is earlier), charged to profit and loss, or subjected to any similar action, upon the expiration of the 180-day period beginning on the date of the commencement of the delinquency which immediately preceded the collection activity, charge to profit and loss, or similar action."

[Subsection (4) deals with collections and charge offs while subsection (6) relates to medical accounts published to the credit bureaus. Subsection (c)(1) starts the 7 year obsolescence period 180 days after the delinquency immediately before the account was assigned to collection or charged off. Thus, if the debt was most recently late 30 days before it is sent to collection, it must be removed from the credit report 6 years and 11 months after collection.]

"(2) Effective date. Paragraph (1) shall apply only to items of information added to the file of a consumer on or after the date that is 455 days after the date of enactment of the Consumer Credit Reporting Reform Act of 1996."

[I think the Consumer Credit Reporting Reform Act of 1996 was when the FCRA was amended prior to the 2003 amendments (i.e. the FACTA amendments). The 1996 amendments included the furnisher's duties under 15 U.S.C. 1681s-2(b). Obviously 455 days has already come and gone, so this section has little meaning.]

"(d) Information Required to be Disclosed

(1) Title 11 information. Any consumer reporting agency that furnishes a consumer report that contains information regarding any case involving the consumer that arises under title 11, United States Code, shall include in the report an identification of the chapter of such title 11 under which such case arises if provided by the source of the information. If any case arising or filed under title 11, United States Code, is withdrawn by the consumer before a final judgment, the consumer reporting agency shall include in the report that such case or filing was withdrawn upon receipt of documentation certifying such withdrawal."

[This subsection requires the credit bureau to report the type of bankruptcy (i.e. Chapter 7, Chapter 11, Chapter 13) if the type of information is reported by the source of the information. This subsection also requires the credit bureau to report any withdrawal of a bankruptcy filing if it is provided with documentation certifying the withdrawal.]

"(2) Key factor in credit score information. Any consumer reporting agency that furnishes a consumer report that contains any credit score or any other risk score or predictor on any consumer shall include in the report a clear and conspicuous statement that a key factor (as defined in section 609(f)(2)(B)) that adversely affected such score or predictor was the number of inquiries, if such a predictor was in fact a key factor that adversely affected such score. This paragraph shall not apply to a check services company, acting as such, which issues authorizations for the purpose of approving or processing negotiable instruments, electronic fund transfers, or similar methods of payments, but only to the extent that such company is engaged in such activities."

[In other words, if the number of inquiries (i.e. the number of times the credit report was accessed by third parties) negatively affected the credit score, the credit bureau has to tell the consumer in a "clear and conspicuous statement" that the number of inquires affected his or her credit score.]

"(e) Indication of closure of account by consumer. If a consumer reporting agency is notified pursuant to section 623(a)(4) [Section 1681s-2] that a credit account of a consumer was voluntarily closed by the consumer, the agency shall indicate that fact in any consumer report that includes information related to the account."

[This subsection requires the credit bureau to list any account as closed by the consumer if the credit bureau is notified pursuant to 1681s-2(a)(4) that the account was closed by the consumer.]

"(f) Indication of dispute by consumer. If a consumer reporting agency is notified pursuant to section 623(a)(3) [Section 1681s-2] that information regarding a consumer who was furnished to the agency is disputed by the consumer, the agency shall indicate that fact in each consumer report that includes the disputed information."

[In other words, if the consumer disputes to the company that provided information about the consumer to the credit bureau the way the information is published on his or her credit report (i.e. if the consumer tells the furnisher that the information it is furnishing is wrong or incomplete), then the credit bureau must list the account on the credit report as "disputed".]

That's it for part 2 of the explanation of 15 U.S.C. 1681c. I will finish my explanation of 1681c in the next installment.

15 U.S.C. 1681c - Part 1

In this post, I begin to explain 15 U.S.C. 1681c of the Fair Credit Reporting Act, which lists what types of information the consumer reporting agencies are prohibited from including in credit reports.

"15 U.S.C. 1681c. Requirements relating to information contained in consumer reports.

(a) Information excluded from consumer reports. Except as authorized under subsection (b) of this section, no consumer reporting agency may make any consumer report containing any of the following items of information:

(1) Cases under title 11 [United States Code] or under the Bankruptcy Act that, from the date of entry of the order for relief or the date of adjudication, as the case may be, antedate the report by more than 10 years."

[Thus, any bankruptcy that is older than 10 years is considered obsolescent and may not be included on a credit report.]

"(2) Civil suits, civil judgments, and records of arrest that from date of entry, antedate the report by more than seven years or until the governing statute of limitations has expired, whichever is the longer period."

[Therefore, any judgment, lawsuit or criminal record item can only stay on your credit report for seven years or, if the statute of limitations is longer than seven years (most are not), it can stay on for the length of the statute of limitations.]

"(3) Paid tax liens which, from date of payment, antedate the report by more than seven years."

[This is an interesting one. Paid tax liens can stay on your report for seven years from the date of payment. Unpaid tax liens (being adverse items as identified in 1681c(a)(5) can stay on your credit report seven years from the date the lien is created. Thus, if its already been seven years since the tax lien was created, it is potentially a bad idea to pay the tax lien because that can start the seven years all over again. Also, note that it says "paid" tax lien. If the tax lien is released without being paid (i.e. if the tax lien was simply released for some reason other than payment), then the seven years does not start anew. Instead, the tax lien is obsolete seven years after the date it was created, not after it was released (if it was not paid).]

"(4) Accounts placed for collection or charged off to profit and loss which antedate the report by more than seven years."

[Therefore charge offs and collections can only stay on your credit report for seven years from the date the account was originally charged off. This date does not change simply because the account change hands (i.e. when it is sold to a collection agency for debt collection). The date of charge off stays the same and thus the date the collection is due to fall off your credit report should not change. Some debt collectors engage in the illegal act of reaging the debt, which means they change the date of last activity (the industry word for the date the account was charged off) and thus allow the collection to stay on the consumer's credit report longer (and as a result increase their chances of actually collecting the debt). Reaging the debt violates the Fair Credit Reporting Act and is the subject of multiple lawsuits each year.]

"(5) Any other adverse item of information, other than records of convictions of crimes which antedates the report by more than seven years."

[This is the catchall that requires all adverse items of information to be off the consumer's credit report no later than seven years after the information becomes adverse. So if a consumer is 30 days late on a bill and the account is marked with a 30 day late payment notation, that adverse item of information can only stay on the credit report for 7 years from the date that the account was 30 days late. The account itself can stay on the credit report for longer than 7 years, but after 7 years, the late payment must fall off the report.]

"(6) The name, address, and telephone number of any medical information furnisher that has notified the agency of its status, unless --

(A) such name, address, and telephone number are restricted or reported using codes that do not identify, or provide information sufficient to infer, the specific provider or the nature of such services, products, or devices to a person other than the consumer; or

(B) the report is being provided to an insurance company for a purpose rlating to engaging in the business of insurance other than property and casualty insurance."

[This means that a company that provides medically related information can not be listed with its name, address or telephone number unless such are disguised by codes or if the report is being provided to an insurance company for the business of insurance (rather than collecting a debt or about a job application) other than property or casualty insurance.]

I will continue with the explanation of 15 U.S.C. 1681c in part 2.